Crypto Funds Attract $1.9B as Fed Rate Cut Sparks Investor Confidence

Global investment products linked to crypto drew $1.9 billion in inflows for the second straight week, according to new data from CoinShares. The surge comes after the U.S. Federal Reserve cut interest rates by 25 basis points. This move has boosted investor confidence in digital assets across the industry.

Fed Decision Ignites Crypto Market Interest

For months, investors waited to see if the Fed would adjust rates. When the central bank delivered a hawkish cut last Wednesday, reactions were mixed. However, by the 18th and 19th of September, the inflows returned strongly, with $746 million entering the market in just two days.

CoinShares’ Head of Research, James Butterfill, noted that the combination of steady prices and new inflows pushed assets under management (AUM) in crypto funds to $40.4 billion. This marks the highest level of the year so far and places 2025 on track to match or even surpass 2024’s $48.6 billion in total inflows.

Reportedly, the United States led the charge with $1.8 billion in inflows, showing continued strength from American asset managers. Germany, Switzerland, and Brazil also reported solid growth, raking in $51.6 million, $41.3 million, and $9.3 million, respectively. In contrast, Sweden and Hong Kong bucked the trend, recording outflows of $13.6 million and $3.1 million in that order. 

Bitcoin and Ethereum Dominate Inflows

Bitcoin funds once again took the lion’s share, pulling in $977 million. Short Bitcoin products, however, saw outflows of $3.5 million, driving their assets under management to multi-year lows. U.S. spot Bitcoin ETFs emerged as a major driver of trading activity, accounting for $886.5 million of the inflows, pulling in $886.5 million of the inflows. BlackRock’s IBIT accounted for nearly all of that amount with $866.8 million.

Ethereum products also had a strong showing, attracting $772 million in net inflows, with U.S. spot Ethereum ETFs responsible for $557 million of that total. Other altcoins gained momentum as well; Solana products added $127.3 million, while XRP funds brought in $69.4 million.

Crypto Markets Stumble Despite Strong Inflows 

Despite the strong inflows, crypto markets stumbled early today, the 22nd of September. More than $1 billion in mostly long positions were liquidated within an hour, triggering a broad selloff. Bitcoin (BTC) fell 3% to $112,418, while Ethereum (ETH) dropped 7.2% to $4,157. The GMCI 30 index of leading cryptocurrencies also slid 5.9% to 216.99.

Even as markets turned lower to start the week,  investors remained anchored to the market’s broader optimism. Just last week, BitMine chairman Tom Lee predicted a powerful surge for both Bitcoin and Ethereum in the final quarter of the year, citing a shift toward looser U.S. monetary policy.

Adding to this sentiment, many traders are now watching to see if October, often a strong month for Bitcoin, will spark another rally despite the weak start to the week.