Crypto Markets Rally as Fed Cut Spurs Institutional Inflows

Cryptocurrency markets continued to rally on Monday after the Federal Reserve's decision to lower interest rates by 0.50% last week triggered inflows into digital asset investment products.

Bitcoin (BTC) rose 1% to $63,400, while Ethereum (ETH) jumped 3% to $2,660. Polkadot (DOT) climbed 1%, though Solana (SOL) dipped 1%.

Among the top 100 digital assets by market cap, Bittensor (TAO) surged 16%, followed by Immutable (IMX) and Popcat (POPCAT), which are up 12% and 11%, respectively.

Ethereum Outperforms Despite Outflows

Ether has outperformed Bitcoin since the Fed’s rate cut even as investment products linked to the second-largest cryptocurrency continue to bleed assets.

The ETH/BTC ratio is up 10% since bottoming at 0.038 on Sept. 18.

Notwithstanding the price action, Ethereum-based investment products experienced outflows for the fifth consecutive week, totaling $29 million. CoinShares attributed the ETH outflows primarily to consistent withdrawals from the Grayscale Ethereum Trust (ETHE), with limited inflows from newly launched Ethereum exchange-traded funds (ETFs).

“Ethereum remains an outlier,” CoinShares head of research James Butterfill wrote in a research note.

Bitcoin Dominates $321 Million in Inflows

According to a report from CoinShares, digital asset investment products recorded inflows totaling $321 million for the week ending Sept. 21, slightly down from $436 million the previous week.

Bitcoin-based investment products accounted for $284 million of the total. Despite Bitcoin’s dominance, CoinShares noted a $5.1 million influx into short-Bitcoin products, signaling investor interest in hedging strategies.

According to Farside Investors data, spot Bitcoin exchange-traded funds (ETFs) in the U.S. recorded $397 million in net inflows last week. The top contributors included Fidelity’s Bitcoin ETF (FBTC), which posted $138 million in inflows, followed by Ark Invest’s ARK Next Generation Bitcoin ETF (ARKB) with $102 million and Bitwise’s Bitcoin Strategy ETF (BITB) with $70.9 million.

SEC Approves Options for BlackRock’s Bitcoin ETF

In a regulatory milestone, the U.S. Securities and Exchange Commission (SEC) has approved options trading for BlackRock’s iShares Bitcoin Trust. IBIT will offer index options, providing institutional investors with tools to hedge or amplify their exposure to Bitcoin.

Stock markets were relatively calm to begin the week. The Dow gained 0.08% on Monday morning, with the S&P 500 and Nasdaq 100 rising 0.17% and 0.28%, respectively.