Crypto Market Shifts Focus to Earnings-Driven Assets Amidst BTC and ETH Consolidation
The crypto market is shifting its focus towards assets that have verifiable earnings and capital-flow support. This shift in focus comes as Bitcoin (BTC) and Ether (ETH) may recover after a period of consolidation, but only if certain conditions are met.
The conditions include US consumer prices not worsening materially, corporate earnings expectations remaining resilient, and demand for crypto exchange-traded funds continuing. Interest-rate pressure remains a major concern following the Federal Reserve's 25 basis point policy rate hike on September 16th, taking the target range to 3.75%-4%.
The US consumer prices rose 3.4% year over year and 0.4% month over month in August, with core CPI rising 0.3% from the prior month. The transmission of oil prices to inflation remains a key risk.
US equities continue to receive earnings support, with third-quarter S&P 500 earnings expected to increase by 28.9% from a year earlier, compared to a 26.7% estimate in June. The index's forward 12-month price-to-earnings ratio is 19.1, close to its 10-year average.
Crypto fund flows have remained significant, with US spot Bitcoin ETFs recording about $1.714 billion in combined net inflows from September 21st-22nd, while Ether ETFs attracted about $432 million. However, the two-day figures do not establish a trend.