Bitcoin and Ethereum Spot ETFs Experience Strong Inflows After Federal Reserve Rate Cut

The cryptocurrency investment market has witnessed renewed momentum as Bitcoin (BTC) and Ethereum (ETH) spot exchange-traded funds (ETFs) recorded significant capital inflows following the Federal Reserve's decision to cut its benchmark interest rate by 0.25 percentage points. This marks the first rate reduction in nine months and has resulted in a notable shift in investor sentiment toward digital asset-linked ETFs.

Bitcoin Spot ETFs Record Robust $163 Million Net Inflows

The Bitcoin spot ETF market rebounded strongly with net inflows totaling $163 million (approximately KRW 224.9 billion), based on data from Farside Investors on October 18. This development came just one day after over $500 million exited Bitcoin-focused ETFs in anticipation of the Federal Reserve’s rate decision. Interestingly, despite this general uptick, asset management giant BlackRock did not see any additional flows into its Bitcoin ETFs during this period.

Breakdown of Bitcoin ETF Inflows:

• Fidelity’s FBTC: Led the inflows with $97.4 million (approximately KRW 134.4 billion).
• ARK Invest’s ARKB: Attracted $25 million (approximately KRW 34.5 billion).
• Bitwise’s BITB: Secured $12.8 million (approximately KRW 17.7 billion).
• Grayscale’s BTC: Added $10.9 million (approximately KRW 15 billion).
• Franklin Templeton’s EZBC: Drew in $6.8 million (approximately KRW 9.4 billion).
• Invesco’s BTCO: Received $3.5 million (approximately KRW 4.8 billion).

The remaining three ETFs focusing on Bitcoin remained flat, recording no significant inflows or outflows during this time.

Ethereum Spot ETFs Surge with $213 Million Net Inflows

Ethereum-focused ETFs mirrored this upward trend, recording total net inflows of $213.1 million (approximately KRW 294.1 billion). This influx reversed a two-day streak of consecutive outflows, marking the first significant movement of capital back into Ethereum ETFs over the past three trading sessions.

Breakdown of Ethereum ETF Inflows:

• Fidelity’s FETH: Dominated the inflows with $159.4 million (approximately KRW 220 billion).
• Grayscale’s ETH: Gained $22.9 million (approximately KRW 31.6 billion).
• Bitwise’s ETHW: Attracted $17.5 million (approximately KRW 24.2 billion).
• Grayscale’s ETHE: Saw inflows of $9.8 million (approximately KRW 13.5 billion).
• Franklin Templeton’s EZET: Closed with $3.5 million (approximately KRW 4.8 billion).

Meanwhile, the remaining four Ethereum ETFs remained stable without notable capital inflows. Similar to its Bitcoin counterpart, BlackRock’s Ethereum ETFs also reported no new investments during this period.

Federal Reserve Rate Cut Fuels Investor Optimism

On September 20, during its Federal Open Market Committee (FOMC) meeting, the Federal Reserve implemented its first rate cut in nine months, lowering the federal funds rate by 0.25 percentage points. This move boosted traditional equity markets as investors anticipated softer monetary tightening policies. The digital asset market initially showed a muted response, but Bitcoin soon hit its highest level in a month, signaling a change in market sentiment.

The sudden inflows into cryptocurrency-linked ETFs point to increased optimism among institutional and retail investors about the potential longer-term prospects of digital assets. Improved market conditions and regulatory clarity could further bolster the appeal of crypto-based ETFs as a reliable investment vehicle.

Market Performance Update

As of 1:43 PM (local time) on October 19, Bitcoin was trading at $117,067, reflecting a minor decline of 0.31%, according to data from CoinMarketCap. Ethereum, on the other hand, experienced a slightly sharper drop, falling 1.19% to $4,552. These movements highlight the market's ongoing adjustment to macroeconomic developments, including the Federal Reserve’s rate cut and broader investor sentiment.

Conclusion and Further Updates

The resurgence of net inflows into Bitcoin and Ethereum spot ETFs underscores a renewed wave of confidence amid shifting economic dynamics, especially following the Federal Reserve’s pivot on interest rates. While volatility remains an inherent feature of the cryptocurrency market, the recent fund flows suggest traders and investors are recalibrating their strategies for a more optimistic outlook.

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