Crypto Market Ascends, Fueled by Bitcoin ETFs Inflow and Strengthening Market Structure
Summary:
The cryptocurrency market experienced an upswing today, with both Bitcoin and Ether contributing to the total market value increase of 0.8%. The resurgence of inflow to U.S. spot Bitcoin ETFs and strengthening market structure are primary factors behind this trend. Meanwhile, major ETF provider VanEck filed for a new Solana ETF, and the U.S economy has shown resilience despite high interest rates. Data from CME Group's FedWatch Tool predicts a low chance of the Federal Reserve implementing rate cuts at the next FOMC meeting.
Today saw an upswing in the cryptocurrency market, with a total market value increase of about 0.8% in the past day, bringing the total to $2.28 trillion as of June 27. This includes an increase for the top cryptocurrencies, Bitcoin (BTC) and Ether (ETH), climbing 0.5% and 2.6% respectively on the same day.
Driving forces behind the market's rise include the continuous inflow to U.S-based Bitcoin exchange-traded funds (ETFs) and an overall strengthening of the market structure.
Indicative of these progressive market trends, there has been a resurgence of inflow to U.S spot Bitcoin ETFs, which as of June 26, had around $52.61 billion worth of BTC under management. This is an increase from the $47 billion amount at the start of May.
Information garnered from Farside Investors indicates that these investment products reversed a seven-day trend of continuous outflows, with capital flows turning positive in the past two days. That resulted in net inflows of $31 million and $21.3 million on June 25 and June 26 respectively.
VanEck, among the first brand to launch spot Bitcoin ETFs in the U.S, has filed for a new Solana ETF. This suggests a broader trend, given that recent approval of Bitcoin and Ethereum ETFs may create a pathway for future crypto ETFs in the U.S. This underscores the increase in acceptance and usage of Bitcoin and other crypto assets in mainstream financial sectors, contributing to today's increased crypto market value.
A higher Real GDP print inspired confidence in the market as it came in marginally above the forecast at 1.4%. As reported by the Bureau of Economic Analysis on June 27, this falls under the slowest quarterly increment since spring 2022. In the fourth quarter of 2023, real GDP rose 3.4%.
The U.S Commerce Department had predicted a GDP increase (the total output of goods and services) of about 1.3% between January and March. Meanwhile, consumer expenditure has reduced more than projected. Attention now leans towards the possibility of the Federal Reserve reducing interest rates to mitigate inflation.
Despite high interest rates, the U.S economy has shown resilience. The Federal Reserve increased its benchmark rate 11 times in 2022 and 2023 to a 23-year high to combat the highest levels of inflation in 40 years. Economists previously predicted around four rate cuts for 2024, but the expectation of a rate cut before September has been reduced.
Data from the FedWatch Tool of the CME Group revealed only a 10.3% chance of a cut at the Federal Open Market Committee's (FOMC) upcoming meeting on July 31.
On the technical side, the gains made in the crypto market today mark a rebound from the major support at $2.172 trillion and the mid-point of a descending parallel channel.
The total market cap of $2.23 trillion broke through the upper limit of this channel on June 27, signaling an end to the downtrend. As per this pattern, the crypto market could rise towards the $2.56 trillion zone, along the upper peak of the declining channel. But before this target can be reached, the total market cap must surpass the resistance between $2.30 trillion and $2.35 trillion where all the key EMAs are present.
Disclaimer: This article does not provide investment advice or recommendations. It's crucial that investors conduct their own research before making any investment or trading decisions.
Published At
6/27/2024 11:52:56 PM
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