After suffering a historic eight-week stretch of outflows totaling $8 billion globally, cryptocurrency funds have finally turned positive. According to James Buttefill, Head of Research at CoinShares, a mid-week shift in sentiment sparked by cooling U.S. economic data has broken the record-setting negative run.
The turnaround was heavily tied to recent macroeconomic indicators, highlighting how closely Bitcoin's performance is now linked to federal monetary policy. Following a significant downside miss in Tuesday's Consumer Price Index (CPI) report, investor expectations for interest rate hikes were rapidly re-rated. This macro shift triggered approximately $250 million in inflows and sparked a modest Bitcoin rally.
Sentiment was further bolstered on Wednesday when the Producer Price Index (PPI) also missed expectations, leading markets to halve the probability of a projected September rate hike. Daily inflows across all issuers reached $218 million on Tuesday and $197 million on Wednesday, with the activity heavily concentrated in Bitcoin.
Despite the positive turn, CoinShares notes that caution remains the dominant theme in client conversations. Buttefill highlighted a psychological hurdle among investors, noting that interest tends to peak when Bitcoin reaches highs of $120,000, while appetite cools significantly when prices hover around $60,000.
While many investors remain hesitant to add positions while broader sentiment stays negative, blockchain equities are emerging as a key area of focus, with clients pointing to strong opportunities in the sector.
