The recent release of the latest US Consumer Price Index (CPI) data has had a notable impact on the cryptocurrency market, with Bitcoin and Ethereum experiencing a surge in prices. Over the past 24 hours, Bitcoin posted gains of 3.4%, while Ethereum saw an increase of 2.43%. Despite this upward trend, the market remains uncertain, with Bitcoin hovering around $70,000 and Ethereum struggling to break past the $4,000 mark. Investors are approaching the market with caution, unsure of what the future holds.
However, there has been a shift in market sentiment, especially among retail traders on Binance. According to Hyblock’s latest findings, 70.25% of accounts on the crypto exchange now hold net long positions on Bitcoin. This represents a significant increase from 57% just 24 hours prior. It seems that retail players are becoming more optimistic about a potential rebound in prices ahead of the Federal Open Market Committee (FOMC) meeting.
ETF Outflows
Despite the positive sentiment among retail traders, there is evidence of caution among institutional investors. Data compiled by Farside shows that there have been significant outflows from various Bitcoin ETFs in the US. Grayscale’s GBTC experienced the largest net outflows, totaling $121 million, followed by ARK Invest’s ARKB with $65.5 million, and Bitwise’s BITB with $11.7 million in outflows. Fidelity’s FBTC and VanEck’s HODL also saw outflows of $7.4 million and $3.8 million, respectively. Interestingly, BlackRock’s IBIT did not record any activity on Tuesday. These outflows have put an end to the 19-day streak of net inflows for the Bitcoin ETFs in the US, totaling almost $65 million the day before.
Impact of CPI Data
The latest US CPI data showed that inflation figures remained essentially unchanged in May compared to the previous month. Year-on-year, CPI increased by 3.3%, slightly below both predictions and April’s 3.4%. Despite this, the market is anticipating lower inflation figures, which could potentially boost the cryptocurrency market that has been range-bound for weeks. It is possible that Bitcoin had already priced in this latest CPI data and the upcoming FOMC decision.
According to IREN board member Mike Alfred, Bitcoin is a “highly intelligent global macro asset” that has the ability to anticipate and incorporate major economic factors well in advance of their release. This could explain the recent price movement and the increased long positions taken by retail traders on Binance. As highlighted by Charlie Bilello, the Chief Market Strategist at Creative Planning, US CPI moved down to 3.27% year-on-year in May from 3.36% in April, while US Core CPI (ex-Food/Energy) decreased to 3.41% year-on-year from 3.62% last month.
The impact of US CPI data on the cryptocurrency market is multifaceted. While retail traders are becoming more bullish on Bitcoin, institutional investors are showing signs of caution with significant outflows from Bitcoin ETFs. The anticipation of lower inflation figures and the upcoming FOMC meeting are driving market sentiment, with Bitcoin potentially already factoring in these events. As the crypto market continues to navigate through uncertainty, all eyes will be on the decisions made by the Federal Reserve and how they will shape the future of cryptocurrencies.
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