Cryptocurrency investment products saw inflows of up to $321 million in the previous week, an increase that is related to the Federal Reserve’s interest rate cuts.
Bitcoin, continues to be the dominant asset, drawing the most investment attention, while altcoins remain the most important cryptocurrency direction in the market.
Bitcoin at the Forefront of Cryptocurrency Investment Inflows
Digital asset investment products recorded another round of inflows, with Bitcoin leading the way, capturing $284 million. This increase also led to inflows from Bitcoin investment products intended for the short term. According to the latest CoinShares report, the Federal Reserve’s decision to cut interest rates by nearly 50 basis points last week played a vital role in driving these inflows. At the regional level, the U.S. led inflows, potentially contributing $277 million to the total value. This reaction to the Fed’s rate cut highlights the growing impact of monetary policy on crypto investments.
Ethereum, on the other hand, recorded its fifth straight week of outflows, totaling $28.5 million the previous week. CoinShares attributes this to Grayscale’s continued outflows along with the performance of Ethereum ETFs. Ethereum ETFs have struggled, with cumulative net outflows reaching $607.47 million. On September 20, the Grayscale Ethereum ETF (ETHE) reported $2.77 billion in cumulative net outflows, although other issuers, including the Grayscale ETH Mini ETF, notched positive flows.
In contrast, Bitcoin ETFs are registering strong demand, continuing to provide institutional-level investors with access to Bitcoin. According to Sosovalue data, cumulative net inflows reached $17.69 billion as of September 20, with all issuers reporting flows in the green, except for Grayscale’s GBTC, which reported about $20.07 billion in outflows.
Bitcoin Capital Rotation Heading to Altcoins
While Bitcoin continues to see increasing demand, the much-ballyhooed altcoin season continues to lag as capital has failed to flow to smaller market cap coins. Institutional investors and Wall Street players have played a significant role in driving demand for Bitcoin, particularly after the approval of Bitcoin ETFs earlier this year. As a result, Bitcoin has slowed the capital rotation into altcoins, putting the long-awaited altcoin rally on hold.
The anticipated “altseason” remains delayed. This phase is typically when investing in altcoins provides better returns than Ethereum or Bitcoin. According to the Altcoin Season Index, the market continues to be in a Bitcoin season, with a score of 33/100. This means that Bitcoin continues to dominate, even though altcoins are slowly gaining ground.
