Digital Asset Funds Pull in $1.9bn After Fed’s “Hawkish” Rate Cut

Digital asset investment products pulled in a robust US$1.9 billion of fresh money last week as investors reacted to the Federal Reserve’s surprise rate move, lifting total assets under management to a year-to-date high and rekindling hopes that 2025 could match or even surpass last year’s inflows.

The tally, published in CoinShares’ weekly “Volume” report, shows Bitcoin and Ethereum led the charge. Bitcoin-focused funds drew US$977 million while Ethereum products attracted US$772 million, together accounting for most of the week’s demand. Smaller but notable allocations went into Solana and XRP, which recorded inflows of roughly US$127.3 million and US$69.4 million, respectively.

That surge pushed total AuM across digital asset funds to about US$40.4 billion, putting the market on track to approach last year’s roughly US$48.6 billion of inflows. CoinShares described the market reaction as a measured response to what it called a “hawkish cut” by the Fed, with most flows concentrated later in the week as investors digested the policy implications.

The policy backdrop was unmistakable. On Sept. 17, the Federal Open Market Committee reduced interest rates, an easing move that many market participants had been anticipating but which was accompanied by language that signaled the Fed would remain vigilant on inflation risks.

The committee’s statement framed the cut as a cautious, risk-management step, language that some investors read as “hawkish” relative to a fully dovish pivot. That nuance appears to have shaped flows: after initial caution, buyers returned to digital asset funds later in the week, with roughly US$746 million arriving on Thursday and Friday alone.

Market Down Today

Price action over the weekend and into Monday underscored the market’s ambivalence. Bitcoin slid from recent highs. It dropped to roughly US$113,000 on Monday, a pullback analysts linked to a combination of profit-taking and elevated leverage that built up after the Fed move.

Ethereum experienced a larger intraday correction as the token fell nearly 6% on Sept. 22 to levels in the low US$4,000s. Solana and XRP also retraced after the initial inflow-driven rally, with Solana down about 7% on the same day.

Those moves prompted some short-term volatility, but market commentators suggested the sell-off also reflected forced liquidations rather than a wholesale change in sentiment toward crypto allocations.

Flows Outlook

The flow data also revealed interesting regional patterns: the United States dominated demand, accounting for roughly US$1.8 billion of last week’s inflows, while Germany, Switzerland and Brazil showed smaller but positive contributions. Hong Kong was the lone market with minor outflows, about US$3.1 million, a reminder that regional regulatory and macro narratives still matter for investor behavior.

CoinShares’ note emphasized that the rebound in flows came even as some product types, notably short-Bitcoin funds, continued to shrink, with short-BTC vehicles posting outflows that reduced their combined AuM to near multi-year lows.

Investors and strategists watching the tape took a cautiously optimistic view. For allocators who favor a macro playbook, lower policy rates tend to support risk assets over time by easing discount rates and lowering the cost of capital; that argument helps explain why large, passive and active crypto funds saw renewed demand once the market absorbed the Fed’s message.

Yet the near-term picture remains choppy: elevated leverage, headline volatility, and rapid rotation into large-cap protocols mean that sizable intraday swings are likely to continue. Several analysts warned that inflows do not immunize the market from pullbacks and that liquidity conditions will be the key variable to watch in the coming weeks.

For now the story is one of renewed institutional interest. Ethereum’s record year-to-date inflows, CoinShares reports YTD inflows into ETH products have reached about US$12.6 billion and pushed ETH product AuM to an all-time high of around US$40.3 billion, underline how much appetite there remains for the smart-contract ecosystem even amid macro uncertainty.

Whether that appetite translates into a sustained leg higher for crypto prices will depend on a mix of macro data, central bank signaling, and whether volatility subsides enough to let long-term buyers accumulate without getting whipsawed.

Digital asset investors will be watching upcoming economic reads and any further guidance from the Fed for clues on whether this “hawkish cut” ushers in a gradual easing cycle or merely buys the central bank time. In the meantime, the fresh inflows show that many institutions remain willing to put new money to work in crypto, even if they do so cautiously and with an eye on risk management.