Federal Reserve Chairman Powell gave a very clear signal at the Jackson Hole annual meeting last Friday: the Fed is about to lower the benchmark interest rate from its multi-decade high, signaling a more favorable global market liquidity background. As rate cuts become the market consensus, other fundamental factors of bitcoin are also changing.
Thanks to the news of the Fed's loose monetary policy, the market is bullish. $Bitcoin (BTC.CC)$Bitcoin rose by about 1.2% to $65,030 on Monday, reaching its highest level in about three weeks. However, it later retreated in the afternoon.
Inflow of spot ETF funds
Data shows that last weekend, Powell's macro signal stimulated an inflow of 0.252 billion US dollars into the US bitcoin spot ETF, the highest level in over a month, with more than a dozen US bitcoin spot ETFs receiving fund inflows. These ETFs have attracted inflows for seven consecutive days. ETF inflows have helped bitcoin to strengthen.
On August 24th (last Saturday), according to Farside Investors, the US spot bitcoin ETF has accumulated a net inflow of 17.88 billion USD since its launch, reaching a record high.
$iShares Bitcoin Trust (IBIT.US)$ Total net inflow of $20.707 billion;
$Fidelity Wise Origin Bitcoin Fund (FBTC.US)$ Total net inflow of $9.892 billion;
$Bitwise Bitcoin ETF (BITB.US)$ Cumulative net inflow of $2.045 billion USD;
$ARK 21Shares Bitcoin ETF (ARKB.US)$ Cumulative net inflow of $2.535 billion USD;
$Grayscale Bitcoin Trust (GBTC.US)$ Cumulative net outflow of $19.732 billion USD.
Stablecoin minting
In addition to the inflow of funds into spot ETFs, according to Matrixport's official Chinese account, stablecoin minting has been strong in the past two to three weeks, and it is also one of the driving forces behind the rebound of Bitcoin. As the main fiat currency deposit channel for cryptocurrencies, stablecoin minting is an important driving force for the rise in digital currency prices and a means of controlling the volatility of Bitcoin prices. Its influence may be no less than macroeconomic policies.
Miner Reserve
In the past three months, the balance of bitcoin over-the-counter (OTC desk) transactions by miners has increased by over 70%, from 215,000 BTC in June to 368,000 BTC in August, reaching a new high in two years. Such a significant increase suggests that miners may be preparing to sell a large amount of bitcoin, which could bring selling pressure to the price of bitcoin and may become an unstable factor in the recent policy favorable environment. From historical data, when the balance of bitcoin over-the-counter (OTC desk) transactions by miners reaches a relatively high level, it usually indicates that the price of bitcoin is about to decline.
The miner reserve (Miners Reserve) data from CryptoQuant also contradicts this view.
Miners' sell-off may be due to the rising operating costs of miners and the reduction in rewards after the Bitcoin halving, which squeezes profit margins. Many miners and companies with higher operating costs are operating at a loss.
Conclusion
Although the bullish impact of interest rate cuts has already been released, according to the current market dynamics, the future of Bitcoin still has a strong degree of uncertainty. The bullish impact of interest rate cuts on cryptocurrencies is evident, as investors naturally seek high-yielding risk assets in a low-interest rate environment, and the inflow of funds into Bitcoin spot ETFs proves this point indirectly. The minting of stablecoins will also strengthen these bullish aspects. However, the selling pressure from miners still needs to be taken into account as a factor that may cause price fluctuations in the Bitcoin during the interest rate cut cycle.
Edited by/Andreswang