Digital Asset Investment Products Rebound with $436M Inflows After $1.2B Outflow Streak

Digital asset investment products have seen a turnaround, with inflows reaching $436 million following a prolonged period of outflows totaling $1.2 billion.

The reversal is influenced by shifting market expectations, particularly the potential for a 50-basis-point interest rate cut on September 18, fueled by comments from former NY Federal Reserve President Bill Dudley, CoinShares said in a recent report .

U.S. Leads Regional Inflows

While ETF trading volumes remained flat at $8 billion, far below this year’s average of $14.2 billion, regional inflows were strong.

The U.S. led with $416 million in inflows, while Switzerland and Germany saw $27 million and $10.6 million, respectively.

Canada, however, recorded minor outflows of $18 million.

Bitcoin attracted the majority of investment, with $436 million in inflows following a 10-day streak of outflows amounting to $1.18 billion.

As reported, on Friday, spot Bitcoin ETFs saw a surge in inflows, with net purchases reaching $263 million , marking the largest single-day inflow since July 22.

Meanwhile, short-Bitcoin flows saw a reversal, with $8.5 million in outflows after three consecutive weeks of inflows.

In contrast, Ethereum continued to struggle with $19 million in outflows, likely due to concerns over Layer 1 profitability.

Meanwhile, Solana enjoyed its fourth consecutive week of inflows, totaling $3.8 million, and blockchain equities saw $105 million in inflows, boosted by new ETF launches in the U.S.

Crypto Market Dips After Trump Assassination Attempt

On Monday, the cryptocurrency market saw a sharp dip after a second assassination attempt on former U.S. President Donald Trump, coupled with the liquidation of nearly $70 million in long positions before the Asia trading session opened.

With liquidity thin, this downward move worsened, QCP Capital said in a recent note .

“Despite a bearish start, it’s worth noting that BTC rallied 13.8% from 58k to 66k during the same week as Trump’s first assassination attempt on July 13,” QCP added.

The crypto trading firm said this week holds significant events that could impact the market.

Token2049, a major crypto conference, is underway, and the Federal Open Market Committee (FOMC) meeting on Wednesday, September 18, adds to the uncertainty.

The FOMC will decide on a potential interest rate cut, with expectations split between a 25 and 50 basis points reduction.

The probability of a 50bps cut has surged from 30% to 59% in just a week, adding volatility to the market. Implied volatility for BTC rose by 8 points and for ETH by 20 points on Friday.

QCP noted that with the market currently experiencing a downward trend and a skew favoring puts, there’s an opportunity to capitalize on a bullish trade for Q4 through a zero-cost ERKO Seagull strategy.

This trade structure takes advantage of the pricing imbalance in options by creating a balanced approach to limit risk while maximizing potential returns.

In this strategy, a trader would buy a 70k call option with a 100k knock-out, while selling a 50k put option, all set to expire on November 8, 2024.

The cost of entering this trade is zero, but the potential payout is substantial.

If Bitcoin’s spot price approaches just below the $100k level at expiry, the maximum payout could reach an impressive 413% annualized return, or $30,000 per BTC.

With the current spot reference at $58,300, this trade provides an attractive way to position for a potential market rebound heading into Q4.