The crypto market continues to be influenced primarily by broader macroeconomic conditions, with the latest US Consumer Price Index (CPI) report offering a glimmer of optimism for risky assets including cryptocurrencies.
Crypto awaits Fed action
According to a recent Coinbase reportJuly’s slightly softer-than-expected CPI print of 2.9% year-on-year – the lowest level in three years – “calmed market concerns and reinforced expectations of upcoming Fed rate cuts at the Federal Open Market Committee of September 17-18. (FOMC).
According to the report, this is seen as positive news for risk sentiment as it could help allay fears of a possible US recession, which Coinbase believes is more important than the overall size of Fed cuts this year.
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However, the crypto market has remained within reach Bitcoin (BTC) is unable to break the $61,000 level. Sentiment has waned due to a lack of crypto-specific catalysts, and funding rates for BTC perpetual futures have turned negative this week, possibly indicating lower trading activity.
In the Ethereum (ETH) ecosystem, gas prices have fallen, which could indicate a decline in network activity. On a more positive note, spot Ethereum ETFs in the US have seen inflows this week.
ETF inflows indicate strong institutional interest
The report also highlighted the growing institutional adoption of crypto, as evidenced by the latest 13-F filings for US spot Bitcoin ETFs. The data, which shows the state of institutional ownership as of June 30, 2024, reveals notable new holders such as Goldman Sachs ($412 million) and Morgan Stanley ($188 million).
The ETF complex saw net gains inflow from $2.4 billion during this period, despite a decline in total assets under management (AUM) from $59.3 billion to $51.8 billion, due to Bitcoin’s price drop from $70,700 to $60,300.
Nevertheless, Coinbase analysts believe that continued ETF inflows during Bitcoin’s underperformance could be a “promising indicator of continued interest in crypto from the new pools of capital that ETFs provide access to.”
They also expect the share of investments in investment advisors to increase even further real estate houses complete their due diligence on these funds.
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Looking ahead, the report notes that the stage is set for testing market dynamics at the upcoming Jackson Hole Economic Symposium, a pivotal event that could influence sentiment and determine the trajectory of the crypto markets.
While short-term fluctuations and market slowdowns While this 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 rest of the year.
At the time of writing, BTC is trading at $59,679, regaining the top of the range seen in recent days between $57,000 and $60,000.
Featured image of DALL-E, chart from TradingView.com