Bitcoin Flows Track Fed Rate Bets, Not Crypto-Specific News
Crypto investment flows have become increasingly influenced by shifts in the US interest-rate outlook rather than crypto-specific news, according to CoinShares. The firm's head of research, James Butterfill, argued that Bitcoin is beginning to trade like gold again, but monetary policy remains a constraint on its ability to break above the $80,000 level.
Recent flow swings in digital assets are linked to changes in the Federal Reserve's perceived path for rates rather than new crypto catalysts. After Fed Chair Kevin Warsh's Jackson Hole remarks, about $100 million left digital asset investment products as markets raised expectations for a September rate hike.
However, flows reversed over the next week, reaching roughly $1 billion by Sept. 4, coinciding with signals from Fed Governor Christopher Waller that he could support holding rates steady in September if inflation data continues to improve.
The US Treasury's plan to double certain long-dated bond buybacks, aimed at increasing demand for Treasurys over a defined window, may also provide a supportive liquidity backdrop. The buyback program is expected to run from Sept. 9 through Nov. 4, spanning multiple weeks into the period when markets will be re-evaluating the Fed's stance and inflation trajectory.