Digital asset fund flows | May 20th 2024

Inflows of US$932m in response to prosect of interest rate cuts

• Digital asset investment products saw inflows for the second week totalling US$932m. The inflows were an immediate response to the CPI report, with the latter 3 trading days of the week making up 89% of the total flows.

• Grayscale which has suffered US$16.6bn of outflows since the January ETF launch, also saw minor inflows for the first time.

• Ethereum continues to suffer from bearishness over the prospects for an SEC approval of a spot-based ETF this week with further outflows of US$23m.

Digital asset investment products saw inflows for the second week totalling US$932m. Despite the pickup in inflows, volumes were only US$10.5bn for the week in comparison to US$40bn in March. Interestingly, the inflows were an immediate response to the lower-than-expected CPI report on Wednesday, with the latter 3 trading days of the week making up 89% of the total flows, highlighting our view that Bitcoin prices have recoupled to interest rate expectations.

Regionally, the US dominated, seeing US$1,002m of inflows last week. Unusually, Grayscale which has suffered US$16.6bn of outflows since the January ETF launch, also saw minor inflows for the first time totalling US$18m. Switzerland and Germany also saw minor inflows of US$27m and US$4.2m respectively, while Hong Kong and Canada saw outflows totalling US$83m and US$17m respectively.

Bitcoin saw US$942m of inflows with virtually no flows into short Bitcoin, implying a positive outlook amongst investors. A wide range of altcoins saw inflows, most notable of which were Solana, Chainlink and Cardano, which saw US$4.9m, US$3.7m and US$1.9m respectively. Ethereum continues to suffer from bearishness over the prospects for an SEC approval of a spot-based ETF this week with further outflows of US$23m.

Blockchain equities continue to suffer outflows, with only 6 of the 20 weeks this year seeing inflows. Year-to-date they have seen US$512m outflow so far.

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