The crypto market continues to be influenced primarily by broader macroeconomic conditions, with the most recent US Consumer Price Index (CPI) report providing a glimmer of optimism for risk assets, including cryptocurrencies.
Crypto Awaits Fed’s Move
In line with a recent Coinbase report, the marginally softer-than-expected July CPI print of two.9% year-over-year – the bottom level in three years – has “calmed market concerns and reinforced expectations of impending Fed rate cuts on the September 17-18 Federal Open Market Committee (FOMC).
Per the report, this has been viewed as positive news for risk sentiment, as it could help dispel fears of a possible US recession, which Coinbase believes is more necessary than the full size of Fed cuts this yr.
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Nevertheless, the crypto market has remained range-bound, with Bitcoin (BTC) unable to interrupt through the $61,000 level. Sentiment has slowed as a consequence of an absence of crypto-specific catalysts, and perpetual futures funding rates in BTC have turned negative this week, potentially indicating lower trader activity.
Within the Ethereum (ETH) ecosystem, gas prices have slumped, which could signal a decline in network activity. On a more positive note, spot Ethereum ETFs within the US have seen inflows this week.
ETF Inflows Signal Strong Institutional Interest
The report also highlighted the growing institutional adoption of crypto, as evidenced by the most recent 13-F filings for US spot Bitcoin ETFs. The info, which captures the state of institutional ownership as of June 30, 2024, reveals notable recent holders resembling Goldman Sachs ($412 million) and Morgan Stanley ($188 million).
The ETF complex saw net inflows of $2.4 billion during this era, despite a drop in total assets under management (AUM) from $59.3 billion to $51.8 billion, as a consequence of Bitcoin’s price decline from $70,700 to $60,300.
Nonetheless, Coinbase analysts imagine the continued ETF inflows during Bitcoin’s underperformance could also be a “promising indicator of sustained interest in crypto from the brand new pools of capital that the ETFs give access to.”
In addition they expect the proportion of investment advisor holdings to extend as more brokerage houses complete their due diligence on these funds.
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Looking ahead, the report notes that the stage is ready for market dynamics to be tested on the upcoming Jackson Hole Economic Symposium, a pivotal event that might sway sentiments and shape the trajectory of crypto markets.
While short-term fluctuations and market slowdowns may dampen immediate enthusiasm, Coinbase highlights the underlying currents of institutional interest and the evolving landscape of ETF inflows that paint a promising picture for crypto prices for the remaining of the yr.
The 1D chart shows BTC’s price recovery towards the $60,000 mark. Source: BTCUSDT on TradingView.com
On the time of writing, BTC is trading at $59,679, regaining the top quality seen in recent days between $57,000 and $60,000.
Featured image from DALL-E, chart from TradingView.com