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Aug 12, 2024: Our weekly Institutional Insights explores the latest market developments — market performance, industry news, exchange-traded fund (ETF) flows, trending topics, upcoming events and token unlocks — with the aim of helping you supercharge your crypto trading.
Enjoy our weekly take on the market!
The majority of economists surveyed by Bloomberg expect the Federal Reserve to implement a 0.25% interest rate cut at its September 2024 meeting, rather than the more aggressive 0.5% cut predicted by some large Wall Street banks. Nearly 80% of the 51 economists surveyed forecast a 5%–5.25% federal funds rate range after the September meeting, with most of the rest expecting a larger reduction.
However, futures markets have priced in a more aggressive 1% reduction by the end of 2024, starting with a 0.5% cut in September. Economists say the weaker-than-expected July jobs report doesn’t necessarily justify such a large move, as the Fed has historically only implemented larger inter-meeting cuts in response to clear negative economic shocks.
Despite the recent market volatility and economic slowdown, most surveyed economists still predict a "soft landing" for the U.S. economy, with 69% forecasting no recession. Only 22% expect an outright recession, while another 10% say a soft landing is possible if the Fed acts aggressively. The survey was conducted August 6-8 in the wake of the July jobs report.
Last week saw a significant sell-off, with Bitcoin briefly falling below $50,000 amid a broader 10%+ plunge in the equity market. This was triggered by weaker-than-expected payroll and employment data, rattling investor confidence. However, Bitcoin regained the $60,000 level in the second half of the week, while the equity market recouped most losses, suggesting a recovery in sentiment. The sharp drop in Bitcoin's price, coinciding with the broader market sell-off, underscores its continued correlation with equities. Nonetheless, Bitcoin's rebound to $60,000 indicates its resilience and persistent investor demand despite the market volatility.
Bitcoin continues to gain traction among institutional investors, with the Michigan Office of Retirement Services following in the footsteps of the State of Wisconsin Investment Board and Jersey City by adding a Bitcoin Spot ETF to its investment portfolio. The Michigan Office of Retirement Services revealed that it owns 110,000 shares worth of the ARK 21Shares Bitcoin ETF as of June 30, as disclosed in the 2024 Q2 report.
Since most investment managers disclose their positions close to the August 15, 2024 deadline, there’s excitement around the prospect of more long-term investors accumulating Bitcoin, which could provide tailwinds to the largest cryptocurrency's short-term price action.
As highlighted in Bybit's previous report, pension funds' investments are more crucial than those of hedge funds for the broader cryptocurrency industry, as they tend to have a more long-term focus and stricter investment restrictions.
On the other hand, corporate America continues to favor Bitcoin as a cash substitute. For example, in May of this year, Semler Scientific®, a medical equipment manufacturer, announced that it would adopt Bitcoin as part of its treasury strategy, emulating the path taken by MicroStrategy (MSTR) under the leadership of Michael Saylor. MicroStrategy famously began converting its cash reserves into Bitcoin, and now holds nearly $14 billion worth of the cryptocurrency.
In summary, Bitcoin investors should continue to watch for announcements in the coming weeks that might disclose further institutional movements in BTC accumulation.
Total Bitcoin Spot ETF Flows.Source: CoinGlass, as of Aug 9, 2024
Over the past week, the price of Bitcoin briefly fell below the $50,000 mark, coinciding with significant outflows observed in Bitcoin Spot ETFs in the early part of last week. However, as investor sentiment started to recover, Bitcoin Spot ETFs recorded inflows again on Wednesday and Thursday of last week.
Meanwhile, Ethereum Spot ETFs saw strong inflows during the early part of last week, potentially indicating that investors were accumulating the second-largest cryptocurrency amid the market pullback. Inflows into Ethereum Spot ETFs, in particular, may reflect increased investor interest in the second-largest cryptocurrency during the market dip.
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