Bitcoin Tops Crypto Inflows Again, But Ethereum Faces Major Setback—Here’s What Happened

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According to the recent report from CoinShares, a well-known European investment company specializing in digital assets, there have been significant changes in the flow of funds related to cryptocurrencies. This report specifically mentions an inflow of approximately $48 million into crypto investment products over the past week.

It seems that the situation is actually quite intricate, showing how economic trends and investor attitudes affect money movements between funds.

During the initial part of the week, approximately $1 billion was invested in digital asset products, as pointed out by James Butterfill, Head of Research at CoinShares. However, the publication of fresh economic data and the US Federal Reserve’s meeting minutes resulted in a substantial withdrawal of around $940 million during the second half of the week.

Butterfill wrote:

The publication of fresh macroeconomic information and the minutes from the U.S. Federal Reserve indicating a stronger American economy and a more aggressive Fed stance triggered $940 million in outflows during the second half. This implies that the optimistic phase following the U.S. election has ended, with macroeconomic data now playing a significant role in shaping asset prices once more.

Bitcoin Leads Inflows While Ethereum Faces Outflows

As per the latest report from CoinShares, Bitcoin led fund investments last week, accumulating approximately $214 million. Although there were outflows later in the period, Bitcoin still stands out as the top-performing asset this year, with a total of $799 million inflowed since the beginning.

This presentation showcases the ongoing attractiveness of digital assets for investors looking to invest in this sector despite wider market ups and downs. On the flip side, Ethereum experienced substantial stress, with a net withdrawal of approximately $256 million.

Butterfill linked this pattern more to a widespread selling off within the technology sector, as opposed to any particular problems with Ethereum’s network itself. In contrast, Solana emerged as a notable exception, drawing in $15 million, indicating that some altcoin markets remain robust even under tough market circumstances.

In summary, while altcoins displayed a blend of trends with mostly positive leanings, their price movements fell short of expectations. Notably, Aave, Stellar, and Polkadot attracted investments worth approximately $2.9 million, $2.7 million, and $1.6 million respectively, demonstrating persistent investor enthusiasm towards these projects.

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This pattern shows a rising trend towards diverse investment methods as altcoins gain popularity among specialized markets and developers. Notably, XRP experienced inflows worth $41 million, which some relate to ongoing political and legal issues. The Head of Research at CoinShares made this observation:

Last week, there was a significant increase of approximately $41 million in XRP holdings. This trend continues to be largely influenced by political and legal matters. The increased inflow seems to indicate growing optimism among investors as they await the SEC’s appeal decision, which is due on the 15th of January.

Global Crypto Market Outlook

Over the past week, I’ve observed a significant bearish trend in the global cryptocurrency market, resulting in a loss of approximately $400 million from its total market capitalization. To be more specific, the market value plummeted from a peak of $3.662 trillion last Monday to $3.283 trillion as we stand today.

The steep decline in market value is largely due to the persistent pessimism surrounding Bitcoin. As we speak, Bitcoin has fallen below $91,000 and is currently trading at $90,704, representing a 3.9% drop over the past day.

Featured image created with DALL-E, Chart from TradingView

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2025-01-14 08:42