With the US leading the push, lower-than-expected inflation numbers and a strong Bitcoin have spurred a wary comeback to crypto investment. But murmurs of government inspection cloud Ethereum and cause outflows for the second-largest cryptocurrency in the world.
Leading digital asset management CoinShares notes $932 million in positive inflows for crypto investment products, a second straight week. Attracting a massive $942 million, Bitcoin, the always divisive “digital gold” that just crossed the $71,000 threshold in as many weeks, is clearly leading.
This optimistic attitude seems connected to the latest US Consumer Price Index (CPI) data, which inspired expectations of a less forceful interest rate increase by the Federal Reserve. Historically, for riskier assets like Bitcoin, lower interest rates are considered as positive.
US Flexes Its Bitcoin Muscle
The United States has solidified its leadership as the world crypto hotspot. With inflows more than a cool $1 billion, the comparatively newcomer to the game—the US ETF market ranked highest.
With its first tiny inflow of $18 million, even Grayscale, a significant cryptocurrency investment company seeing around $17 billion outflow since a Bitcoin ETF opened in January, showed some hope.
This points to a possible change in investor mood since some would consider the Grayscale’s proven safety as compared to the more recent ETF.
A Mixed Bag For Altcoins And Regional Players
While Bitcoin takes front stage, other cryptocurrencies show a mixed picture. All well-known altcoins, Solana (SOL), Chainlink (LINK), and Cardano (ADA) attracted small inflows of approximately $5 million, $3.7 million, and almost $2 million correspondingly.
Still, Ethereum, the sometimes-touted “king of altcoins,” finds itself in a perilous position. Investment products based on Ethereum showed an alarming outflow of around $23 million.
The approaching US Securities and Exchange Commission (SEC) decision on a possible Ethereum spot-based ETF could be the source of this criticism. Investors are often spooked by regulatory uncertainty; the outcome of the SEC is yet unknown.
Lower Volumes Hint At Cautious Optimism
Though there are good inflows, one important statistic presents a somewhat different image. Compared to March, a period of peak of $40 billion, trading volumes for the week were far lower.
This suggests careful investor behaviour. Although they might be putting their toes back into the crypto pool, they are probably moving with measured steps, cautious of the market’s natural volatility.
The state of cryptocurrencies now shows a complicated interaction among investor mood, economic data, and legal obstacles. Driven by anticipation of a dovish Fed, Bitcoin seems to be making some recovery. The US market claims supremacy, although other areas struggle with different degrees of success.
Featured image from Pexels, chart from TradingView