Crypto Market Sentiment Improves As Investors Wait For The Fed’s Next Move

According to a report published on Monday, there is more optimism amongst investors where the digital asset market is concerned and they are now investing more cash into crypto funds than earlier.

On Monday, CoinShares said that the previous week had seen an inflow of $76 million in crypto funds, which makes it the fourth straight week of such movements.

Some of the funds where the money is going are 21 Shares, 3iQ and Grayscale, which are products that accredited investors can access.

The change

This is a change from the end of the previous year and the beginning of 2023 when investors had actually been withdrawing their money from exchange-traded products and other crypto investment vehicles.

It was primarily due to a brutal bear market combined with the downfall of the crypto exchange FTX back in November.

According to CoinShares, investor sentiment has seen a divisive change from the start of 2023. There has been a 39% increase in the total investment assets under management as compared to the same time last year.

The total value of the assets under management has reached $30.3 billion now, which is the highest the number has been since August of last year.


The company stated in its report that the focus of most of the investors was the biggest digital asset in the market i.e. Bitcoin.

CoinShares stated that the primary focus of investors was Bitcoin, as it had seen inflows of about $69 million, which is about 90% of the total flows recorded in the week.

James Butterfill, the Head of Research at CoinShares, said that the primary reason for the improvement in sentiment was the weakening dollar and the possibility of an end of the monetary tightening cycle.

Fed movements

Last year, the Federal Reserve aggressively hiked interest rates in order to bring down inflation that had touched a high of 40 years.

The US central bank is still hiking interest rates, but there has been a slight easing. Last year, it increased the interest rate by 75 basis points four times.

It slowed down in December to 50 basis points and hiked by 25 basis points in the previous week. Therefore, traders believe that the Fed will slow down further.

In his speech at the Economic Club of Washington D.C., the comments from Fed chair Jerome Powell were perceived as dovish by the markets.

They had been interpreted the same way after his press conference last week at the end of the central bank’s meeting.

Even though the labor market continues to be strong, inflation numbers have already shown a weakening.

Thus, there is a strong possibility that the Fed will hit a pause in its rate hikes soon and could even start cutting rates by the end of the year.

This has helped sentiment in the crypto market and improvement in risk sentiment means that there is greater investment in crypto assets like Bitcoin, which are seen as highly volatile.

Leave a Reply

Your email address will not be published. Required fields are marked *