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The crypto market is beginning to bounce back globally, and digital asset funds are seeing large inflows as a result of expectations for an extremely liberal monetary policy in the US. The amount of money reportedly invested in digital asset products totalled over $1.2 billion last week—the highest it has been in the past two months. However, growing confidence about prospective interest rate decreases by the Federal Reserve. It is also worthy of note that beneficial regulatory actions in the US have been the main driver of these inflows.
Meanwhile, Bitcoin continues to dominate these inflows, with the leading cryptocurrency gathering fresh investments of $1 billion. This uptick can be majorly traced back to the SEC’s approval of physically settled Bitcoin ETFs like BlackRock’s IBIT, which has helped boost investor confidence in the sector. The statement has been seen as one of the biggest wins for institutional adoption of Bitcoin, officials say in their latest report.
While that represents a large increase in inflows, trading activity in all digital asset investment funds actually fell 3.1%, which would indicate that growing investor confidence has not yet equated to greater trade volumes. According to news sources, Bitcoin’s price was up 3.5% to $63,456 during the week but fell 3.12% in the last 24 hours.
Bitcoin at the Forefront as Investors Bet on US-Friendly Policy
The rise in crypto investor sentiment was most striking in the United States, where Bitcoin products alone accounted for $1 billion of the total inflows. This is as investors bet on a friendly policy shift in the US, or at least one in which the Federal Reserve would revert to looser monetary conditions, cutting rates further to benefit risk-on assets like digital currencies.
This has been partly driven by the SEC’s approval for physically settled Bitcoin ETFs, which should help drive further institutional interest in the coming months. “With this in-date green light, we’re seeing a clear shift in how institutional investors are viewing Bitcoin as a legitimate asset class,” said a senior analyst at CoinShares.
Regional Differences Show Varying Sentiment in Digital Asset and Crypto Markets
Although the U.S. market has shown great inflows, the sentiment among crypto investors in the worldwide crypto market is much more mixed. In countries such as Switzerland, for instance, the outlook on digital assets has been just as bright, with Swiss-based funds hauling in $84 million of new investments to a high not seen since mid-2022.
Meanwhile, Germany and Brazil had marked outflows, with $21 million and $3 million, respectively, being withdrawn from crypto funds. This contrast was indicative of the prevailing mixed sentiment in different markets due to the varying economic and regulatory landscapes that prevail across those countries. According to sources, investors have become increasingly optimistic for Swiss investors while cautious in other geographies.
Altcoins Fail to Impress Amid Bitcoin’s Price Action
Away from Bitcoin and Ethereum, the altcoin market still demonstrates quite volatile conditions. Solana reported outflows of $4.8 million, while Litecoin and Ripple managed modest inflows of $2 million and $800,000, respectively. That in itself speaks volumes to the fact that, although global crypto investor sentiment in big cryptocurrencies has been improving, altcoins are still seen as more volatile and a riskier investment class.
Other digital assets, such as Binance Coin and Stacks, reported minor outflows of $1.2 million and $900,000, respectively. These figures serve as an indicator that altcoins have not been able to attract sustained investor interest, even while Bitcoin and Ethereum are recovering.
Conclusion
The worldwide markets are responding to changes in U.S. monetary policy, even though the crypto market for huge cryptocurrencies like Bitcoin and Ethereum is still mainly positive. The regional divergences and the ongoing volatility of altcoins hint at the unevenness of the recovery across the board. While investors in the U.S. seem more optimistic due to favourable regulatory changes, the international market still seems divided, with huge outflows in certain regions.
The outlook for digital assets into the near term is likely to continue to be driven by macroeconomic policies notably in the U.S.-where investors are looking to Bitcoin ETFs and further interest rate cuts to provide a steady tailwind for the market. It remains to be seen if this growing sentiment can extend beyond Bitcoin and Ethereum.
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