Bitcoin Leads $436 Million Crypto Fund Surge as Ethereum Struggles to Gain Traction

Global crypto investment products saw a major rebound last week, bringing in $436 million in net inflows, according to CoinShares. Bitcoin was the clear leader, while Ethereum-based funds continued to struggle with significant outflows. This article takes a closer look at the driving factors behind these trends.

Bitcoin Leads the Crypto Fund Resurgence

After two consecutive weeks of net outflows, crypto investment products have rebounded with a net inflow of $436 million globally. This surge, led primarily by Bitcoin, comes as market expectations shift towards a potential 50 basis point rate cut from the U.S. Federal Reserve. According to CoinShares Head of Research, James Butterfill, comments from former New York Federal Reserve President Bill Dudley were likely a key factor in boosting investor confidence.

Bitcoin-based funds alone saw $436 million in net weekly inflows after suffering a 10-day losing streak with $1.2 billion in outflows. Short Bitcoin funds, which had been seeing inflows for three straight weeks, reversed course with $8.5 million in net outflows.

Flat Trading Volume Still a Concern

Despite the inflows, trading volume remained relatively flat for the week at $8 billion, far below the 2024 average of $14.2 billion. This suggests that while investors may be optimistic about the potential for interest rate cuts, overall market activity has yet to pick up to its usual pace.

U.S. Dominates, While Europe Sees Modest Gains

The majority of the inflows came from U.S.-based spot Bitcoin exchange-traded funds, which accounted for $403.9 million. European markets also showed positive trends, with Swiss and German funds bringing in $27 million and $10.6 million, respectively. However, Canadian crypto funds weren't so lucky, experiencing net outflows of $18 million for the week.

Solana Sees Modest Gains, Ethereum Still Struggling

While Bitcoin was the star of the show, Solana investment products saw a more modest inflow of $3.8 million, marking the fourth consecutive week of positive gains for the Solana ecosystem. Meanwhile, Ethereum continues to struggle. Ethereum-based funds saw another $19 million in net outflows last week, adding to the $98 million in negative flows from the previous week. The Ether/Bitcoin ratio also dropped below 0.04 over the weekend, a level not seen since April 2021.

Conclusion: Bitcoin’s Dominance Continues

As Bitcoin leads the charge in global crypto fund inflows, Ethereum continues to face challenges in attracting investor capital. With market expectations now leaning toward a significant interest rate cut, Bitcoin’s role as a safe haven in the crypto space appears to be strengthening. However, the struggles of Ethereum-based funds could suggest a widening divide in investor sentiment between the two leading cryptocurrencies.

Crypto markets are likely to see further shifts in the coming weeks as the Federal Reserve’s decision unfolds, making Bitcoin the one to watch while Ethereum works to regain its footing.