Crypto Flows Now Track Fed Rate Bets
Crypto investors are increasingly reacting to shifts in the US interest-rate outlook rather than crypto-specific news, according to CoinShares. The firm's head of research James Butterfill notes that Bitcoin is beginning to trade 'like gold again,' but monetary policy remains a constraint on its ability to break above $80,000.
The recent flow swings in digital asset investment products are linked to changes in the Fed's perceived path for rates rather than new crypto catalysts. Following remarks from Fed Chair Kevin Warsh at Jackson Hole, 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.