In a significant turnaround, cryptocurrency investment products have recorded inflows for the first time in five weeks. Last week, these products saw a net inflow of $130 million, with Bitcoin investment products accounting for $144 million of that figure. This positive trend suggests a potential upside for the crypto market.

Bitcoin ETF Inflows Rebound

The U.S. Bitcoin ETFs recorded net inflows of $116 million last week, despite ongoing outflows from the Grayscale Bitcoin Trust (GBTC). As U.S. macroeconomic signals remain uncertain, investors have been cautious in recent weeks. However, the resumption of inflows indicates a renewed interest in Bitcoin-based investment products.

Hong Kong's Bitcoin ETFs, which launched in the first week, saw inflows of $19 million, suggesting that a significant portion of the initial capital was seed money. Issuers are now focusing on attracting wealthy Chinese investors, which could lead to stronger capital inflows in the coming weeks.

Regional Breakdown of Inflows

The U.S. led the way with inflows totaling $135 million, while Grayscale observed its lowest weekly outflows since January, amounting to $171 million. Switzerland recorded inflows of $14 million. Canada and Germany, on the other hand, continued to see outflows of $20 million and $15 million, respectively, bringing their year-to-date combined outflows to $660 million.

ETP volumes decreased to $8 billion for the week, compared to the $17 billion average in April. This decline suggests reduced participation from ETP investors in the crypto ecosystem, representing 22% of total volumes on global trusted exchanges, down from 31% last month.

Outlook for Bitcoin and Ethereum

Bitcoin witnessed $144 million in inflows, marking a recovery after a weak month. Short-Bitcoin ETPs experienced outflows totaling $5.1 million, continuing the trend of outflows over the last 8 weeks, amounting to $18 million.

The prospects of a spot Ethereum ETF approval in the U.S. by the end of the month appear to be bleak. Conversations between U.S. regulators and ETF issuers have been minimal in recent times. Amid this uncertainty, the Ethereum price faced selling pressure earlier today, dropping below $2,900.

Upcoming U.S. Inflation Data

The market eagerly awaits crucial insights from the release of U.S. inflation data, starting with the Producer Price Index (PPI) on Tuesday, followed by the Consumer Price Index (CPI) on Wednesday. In anticipation of these reports, the CME's FedWatch tool predicts a 24.6% probability of a rate cut at the July Federal Open Market Committee (FOMC) meeting and a 48.6% chance at the September meeting. Interest traders project a 96.5% likelihood of unchanged rates at the June meeting.

Ahead of the PPI and CPI data release, the Bitcoin price has bounced back 2.5% and is currently trading at $62,639. The positive inflows into Bitcoin investment products and the anticipation of U.S. inflation data suggest a potential upside for the crypto market, although caution remains due to ongoing macroeconomic uncertainties.