Crypto Market Sentiment Improves as Investors Await the Fed’s Next Move

Investors are feeling more optimistic about the digital asset market now and are plugging more cash into crypto funds than previously, according to a Monday report. 

CoinShares said Monday that inflows of $76 million last week flowed into funds—the fourth consecutive week of such movements. The money is flowing into funds such as Grayscale, 3iQ, and 21 Shares—products available to accredited investors.

This is different to the end of last year and the start of 2023, when investors were pulling money out of exchange-traded products and similar crypto investment vehicles, mainly down to a brutal bear market compounded by the collapse of exchange FTX in November. 

CoinShares now says that there has been a “divisive change in investor sentiment from the beginning of 2023.”

Total investment assets under management are up 39% from this time last year and now stand at $30.3 billion—the highest August 2022. 

The firm added in its report that investors are mostly eyeing up the biggest digital asset: “Bitcoin continues to be the primary investor focus, with inflows totalling US$69m, representing 90% of the total flows for the week,” CoinShares said. 

Head of Research at CoinShares James Butterfill told Decrypt that “the softening monetary policy stance from the U.S. and the weakening dollar are the main reasons for the improving sentiment.”

The U.S. Federal Reserve aggressively upped interest rates last year to get 40-year-high inflation under control. It’s still raising interest rates—but the central bank has eased up in its approach. Last year, the Fed hiked interest rates by 75 basis points four times; in December, the central bank raised rates by only 50 basis points, and then again by 25 basis points just last week. 

Traders are now eagerly awaiting to see if Federal Reserve Chairman Jerome Powell will give anything away about the bank’s next moves when he speaks at the Economic Club of Washington, D.C. tomorrow. 

U.S. equities are down today, and Bitcoin and crypto have followed: the largest digital asset by market cap is right now trading for $23,000, according to CoinGecko—a 0.3% 24-hour drop.