Global Digital Asset Exchange-Traded Products (ETPs)

Global digital asset exchange-traded products (ETPs) recorded net inflows of $308 million last week, despite intra-week outflows and heightened market volatility following the Federal Reserve’s December 18 rate cut.

Inflows in Major Cryptocurrencies

• Bitcoin recorded $375 million in net inflows for the week.
• Ethereum added $51 million.
• Solana experienced $8.7 million in outflows.

According to CoinShares data, the net inflows highlight continued institutional interest in digital assets despite shifting macroeconomic conditions. CoinShares Head of Research James Butterfill commented on these trends.

Multi-Asset Investment Products

However, Butterfill noted that multi-asset investment products saw more pronounced outflows, totaling $121 million. While many altcoins, including XRP ($8.8 million), Horizen ($4.8 million), and Polkadot ($1.9 million) continued to see inflows, investors are adopting a more selective strategy in the digital asset market.


Market Volatility and Trends

Despite overall net inflows for digital asset ETPs last week, Butterfill warned that significant market volatility towards the end of the week should not be overlooked. The net inflows mask the largest single day of outflows on December 19, totaling $576 million, with total outflows in the last two days of the week reaching $1 billion.


Federal Reserve’s Impact on the Market

The Federal Reserve’s press conference after its December 18 meeting influenced market dynamics. Although the central bank announced a rate cut, Fed Chair Jerome Powell's comments regarding a more hawkish economic outlook triggered risk-off sentiment across markets. Key factors included:
– The Fed’s revised 2025 core PCE inflation projections increased from 2.2% to 2.5%.
– Indications of only two rate cuts in 2025 compared to the previously anticipated four.

According to Wintermute’s OTC trading desk analysts, the market downturn that began mid-week mirrored declines in equities and bonds, as traders adjusted their risk exposure ahead of the low-liquidity holiday season.

Wintermute analysts observed that derivatives traders were protective, especially with put options, suggesting the asset prices might decline. They stated, “General protection demand has pushed skew into put premium until January 10, indicating the market seems positioned for downside volatility in the near term amid shaky traditional risk assets.”