Cryptocurrency-based investment products experienced significant inflows during the past week, marking the second consecutive week of such inflows following the recent market downturn. CoinShares reported that digital asset investment products garnered $932 million between May 13 and 17. This surge was largely driven by the immediate response to the U.S. Consumer Price Index (CPI) report, which suggested a slowdown in inflationary pressures. Despite the increased net flows, weekly trading volumes remained relatively subdued at $10.5 billion, notably lower than the $40 billion recorded in March.
The majority of the inflows, accounting for 89% of total flows in the last three trading days of the week, were a direct reaction to the lower-than-expected CPI report released on May 15. This underscores the view that Bitcoin prices have re-linked to interest rates. The CPI report indicated a 0.3% increase in inflation for April, following a 0.4% rise in March, primarily driven by significant growth in the energy and food sectors, resulting in a year-on-year CPI increase of 3.4%.
CoinShares Research previously highlighted a realignment of factors influencing Bitcoin prices with market expectations for interest rates following the approval of a spot Bitcoin exchange-traded fund (ETF) in the United States in January. Grayscale's Bitcoin ETF experienced modest inflows of $18 million during the week, although since the shift in January, the fund has witnessed outflows amounting to $16.6 billion. Regionally, both Hong Kong and Canada saw outflows of $83 million and $17 million, respectively.
Several altcoin funds, including Solana, Chainlink, and Cardano, witnessed inflows last week, as reported by CoinShares, with net flows amounting to $4.9 million, $3.7 million, and $1.9 million, respectively. In contrast, there was an outflow of $23 million from Ether. Ether prices have remained under pressure amidst uncertainty surrounding the U.S. Securities and Exchange Commission's (SEC) decision on spot Ether ETFs, with the commission's first deadline for crypto ETFs scheduled to expire on May 23.
ETF analysts James Seyffart and Eric Balchunas revised their forecasts for SEC approval of a spot Ether ETF, initially anticipating rejection. However, after gaining new insights into the SEC's stance, analysts now perceive a 75% likelihood of approval.
