Crypto Inflows Soar as US Market Faces Moody’s Downgrade

Crypto inflows broke records last week as traditional market risks escalated. Specifically, digital asset investment products attracted a staggering $3.3 billion in inflows last week, pushing year-to-date (YTD) totals to a record $10.8 billion. 

The positive flows drove total assets under management (AuM) to a new all-time high of $187.5 billion.

Crypto Inflows Near $3.3 Billion Last Week

According to the latest CoinShares report, last week’s crypto inflows hit $3.29 billion, with the US dominating at $3.2 billion. This reflects the heightened domestic economic anxiety.

Other notable inflows came from Germany ($41.5 million ), Hong Kong ($33.3 million), and Australia ($10.9 million). Meanwhile, Switzerland saw outflows of $16.6 million. The drop came as investors profited from recent market optimism that saw Bitcoin establish a new all-time high.

CoinShares’ researcher James Butterfill highlights that Bitcoin remains the main beneficiary. The pioneer crypto achieved $2.9 billion in crypto inflows, representing over 25% of all digital asset inflows for 2024. 

Meanwhile, Ethereum investment products recorded $326 million in inflows. This marked the highest in 15 weeks, effectively marking five consecutive weeks of gains. The inflows came as sentiment around the network’s Pectra upgrade going mainnet continues to improve.

Nevertheless, short-Bitcoin products also attracted $12.7 million, marking the highest weekly inflow since December 2024. James Butterfill cites investor caution, noting that they may be positioning for near-term volatility.

Notwithstanding, the surge coincides with growing investor anxiety over the health of the US economy. Specifically, concerns arise after Moody’s recent downgrade warning and spiking Treasury yields.

“We believe that growing concerns over the US economy, driven by the Moody’s and the resulting spike in treasury yields, have prompted investors to seek diversification through digital assets,” read an excerpt in the report. 

The weekly total marks a sharp jump from the previous two weeks. BeInCrypto reported crypto inflows of $785 million and $882 million, respectively. This indicates an accelerating pivot toward crypto as macroeconomic concerns mount.

Moody’s has maintained a “negative” outlook on the US credit rating since late 2023. Last week, it reignited fears after cautioning the US government’s deteriorating fiscal profile. 

“Moody’s assessment is right. No other major developed economy is under pressure to grow its GDP by nearly 5% simply to service its debt. None. This is a central pillar of the bearish case for the US dollar,” commented macro investor Otavio Costa.

The warning raised doubts about the sustainability of US debt. It worsens when combined with persistent treasury yields, which hover near multi-decade highs. 

Against this backdrop, analysts increasingly frame digital assets like Bitcoin as a hedge against sovereign credit risk and monetary tightening.

The overarching narrative is that macroeconomic instability revives crypto’s appeal as a portfolio diversifier.

This explains total digital asset inflows over the past six weeks, which reached $10.5 billion. It has recorded an unprecedented streak that mirrors growing institutional participation.

With US fiscal and monetary pressures unlikely to abate soon, crypto may continue benefiting from a broader reallocation of capital away from traditional risk assets and into decentralized alternatives.