Weekly fund inflows into crypto derivatives amounted to $436 million

What’s new? Experts of the investment company CoinShares recorded an inflow of funds of $436 million in cryptocurrency derivatives over the past week. This is the first positive result after a two-week outflow totaling $1,2 billion (from August 26 to September 8).

CoinShares report

What else is known? According to CoinShares analysts, the sharp positive dynamics are caused by a significant change in market expectations regarding the possible reduction of the US Federal Reserve interest rate by 50 basis points on September 18.

Thus, the former president of the New York Fed Bill Dudley, previously in favor of a rate cut, during the Future of Finance forum from the Bretton Woods Committee in Singapore said that in favor of a rate cut by 50 bps “there was a strong case.”

He added that rates are currently 150-200 bps above the so-called neutral rate for the US economy, where policy is neither restrictive nor stimulative. “So the question is: ‘Why don’t you just get started?’” Dudley concluded.

As for CoinShares’ market report, it also said that trading volumes of cryptocurrency exchange-traded fund (ETF) shares were flat for the week at $8 billion, well below the average of $14,2 billion this year.

Regionally, the largest inflow was traditionally recorded in the United States ($416 million), Switzerland and Germany were also notable, with figures of $27 million and $10,6 million, respectively. Canada saw a significant outflow of $18 million.

The main focus was once again on bitcoin-based investment products, which attracted $436 million after a 10-day outflow totaling $1,18 billion. Short positions in the asset saw renewed outflows after three weeks of inflows, last week totaling $8,5 million.

Ethereum was the only asset, apart from short positions in BTC, to see an outflow. This time it amounted to $19 million. According to analysts, this is due to concerns about the profitability of the underlying Ethereum blockchain after the Dencun hardfork. This March upgrade reduced fees on Ethereum-based Layer 2 (L2) networks by 60-90%, leading to a drop in activity on the underlying blockchain.

Ethereum developers will vote on splitting the Pectra hardfork into two parts on September 19

The first part of the upgrade could be implemented in Q1 of next year

Read more

The decline in Ethereum activity, in turn, has led to a drop in the size of transaction fees. And since ETH fees are being burned to support deflation, the drop in the size of fees has led to an increase in the supply of the asset.

Products based on the Solana (SOL) blockchain’s native token have been steadily raising funds for four weeks in a row, with inflows totaling $3,8 million.

Blockchain stocks also attracted $105 million, following the launch of new cryptocurrency exchange-traded funds.

Brazilian Stock Exchange listed ETH ETF ETHA from BlackRock

Earlier, bitcoin fund IBIT also started trading on the platform

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Spot BTC ETFs were launched in the United States on January 11. A total of 12 funds are traded on the Nasdaq, NYSE, and Cboe exchanges with total inflows of $17,3 billion and assets under management of $54,31 billion. The most successful is the IBIT fund from the world’s largest investment company BlackRock, available on Nasdaq. It has raised $20,91 billion since launch, with $21,39 billion in bitcoins under management.

Conversely, Grayscale’s GBTC fund GBTC, traded on the NYSE, continues to perform the worst due to the highest management fee in the industry. Investors have withdrawn $20,04 billion from it, but it still has $13,27 billion worth of BTC under management. The rest of the funds, including Grayscale’s new BTC mini trust, are showing positive results.

As for spot ETH ETFs, trading was opened on July 23. In the US, nine funds are available on the same Nasdaq, NYSE, and Cboe, the best is also ETHA from BlackRock with inflows of $1,03 billion and the worst is ETHE from Grayscale with outflows of $2,72 billion.

In late August, US securities regulator SEC rejected applications to launch SOL ETFs from VanEck and 21Shares, citing concerns over the asset’s controversial status.