Crypto investment products saw a significant influx of $321 million last week, largely driven by the Federal Open Market Committee’s (FOMC) recent decision to cut interest rates by 50 basis points.
Bitcoin (CRYPTO:BTC) was the primary beneficiary, attracting $284 million in investments, reinforcing its dominance in the market.
Short-Bitcoin investment products also saw a rise in inflows due to the positive sentiment around Bitcoin’s performance following the rate cut.
According to a report from CoinShares, the U.S. led the regional inflows, contributing $277 million to the total.
James Butterfill, Head of Research at CoinShares, explained the impact of monetary policy on Bitcoin’s value: “Bitcoin competes with other stores of value like the USD, Treasuries, and gold. The recent 50 basis point interest rate cut had an immediate positive impact on Bitcoin’s price, highlighting its sensitivity to interest rates.”
While Bitcoin experienced positive inflows, Ethereum (CRYPTO:ETH) saw its fifth consecutive week of outflows, totaling $28.5 million.
Ethereum ETFs, including Grayscale’s Ethereum ETF (ETHE), have continued to struggle, with net outflows reaching $607.47 million.
Analysts attribute Ethereum’s underperformance to macroeconomic uncertainty, poor timing of ETF launches, and concerns about Ethereum’s Layer-1 profitability following the Dencun upgrade.
Despite Bitcoin's success, the long-anticipated "altcoin season" remains delayed as capital has yet to rotate into smaller market-cap cryptocurrencies.
Analysts suggest that Bitcoin ETFs have positioned BTC as an asset in its own class, causing institutional investors to focus primarily on Bitcoin, slowing the expected rally for altcoins.
Currently, Bitcoin continues to dominate the market, as indicated by the Altcoin Season Index, which remains at 33/100, signaling that the market is still in Bitcoin season.
If market conditions hold steady, investors may see the start of an altcoin season by the end of Q3 in September.