CoinShares head of research James Butterfill wrote on Friday that global crypto investment products are on track to record a second consecutive week of inflows after ending an eight-week streak of net outflows of nearly $8 billion. report.
Inflation figures change sentiment in digital asset products
The firm said softer-than-expected US inflation data revived investor sentiment and strengthened expectations of a rate cut by the Federal Reserve (Fed).
Global crypto funds recorded inflows of $287 million last week, looking to end the week on a positive note after initially starting with outflows. Total inflows into U.S. spot bitcoin exchange-traded funds (ETFs) between Tuesday and Thursday averaged $368 million, according to data from SoSoValue.
This change happened after the release of US inflation data on Tuesday and Wednesday. Both the June Consumer Price Index (CPI) and Producer Price Index (PPI) came in below expectations, prompting the market to reduce expectations of further monetary tightening.
Bitcoin’s floor may be forming, but gains remain limited
Despite the improvement in sentiment, CoinShares warned that Bitcoin’s gains could remain constrained without a more meaningful change in monetary policy.
“We expect range trading with a break above $80,000 is unlikely, but there will be no meaningful change in monetary policy expectations,” the report said.
Butterfill noted that Bitcoin may be close to finding its market level after the recent recovery, but expectations of an imminent Fed rate cut remain premature. He said market participation typically increases when Bitcoin reaches new highs, but remains relatively low around current price levels.
“The dominant picture is that the current setup is generating interest in adding to positions, but caution remains while sentiment remains broadly negative,” Butterfill said.
Options market points to improving sentiment
In the options market, Glassnode data also suggests that sentiment is turning more constructive. The firm noted that Bitcoin’s implied volatility has decreased due to the improving prices.
The slowdown indicates that much of the fear premium that built up during the June selloff has begun to wane, although uncertainty has not completely disappeared.
At the same time, the Bitcoin options put-to-call ratio has fallen to its lowest level in six months, indicating that traders are reducing downside protection while increasing the risk of potential price gains.
Glassnode added an Post.
Bitcoin is trading at $63,900, down 0.1% over the past 24 hours at the time of writing.
