In the coming days, the macroeconomic landscape will not be dominated by US economic reports. Instead, the Fed takes center stage with a series of speeches from top officials. Although Chairman Jerome Powell is not expected to be among them, markets will still watch the language used by governors and others for clues about future policies. So, what can we expect for Bitcoin during this period? Let’s explore together.
US Data and the Crypto Market
The minutes of the Federal Open Market Committee’s May meeting, where interest rates were discussed, will be released on May 22. Subsequently, unemployment claims in the US could create a new phase for risk assets and continue the trend seen in May and previous months.
At the same time, attention is increasingly focusing on favorable liquidity conditions both in the US and beyond. Financial commentator Tedtalksmacro suggested in a recent post that the crypto bull run is far from over. Tedtalksmacro indicated that an early liquidity cycle is now beginning, with the M2 money supply showing plenty of room for easing liquidity conditions. He continued about crypto market trends:
“Bitcoin ETF funds have certainly seen liquidity return, but the pace of inflows has not yet reached a manic phase consistent with peaks.”
ETF Funds and Bitcoin Dynamics
Tedtalksmacro discussed how a strong comeback from US spot Bitcoin investment funds could take shape. After struggling for weeks since Bitcoin’s all-time high in March, spot ETF products have started to regain interest. Last week, inflows reached nearly $1 billion, the best weekly performance since March, and the expert commented:
“We expect these to only increase as prices rise and tradFi renews its faith in the asset once more.”
ETF demand is occurring in a new environment. The Bitcoin halving event process is half of what it was in March, and large inflows are causing ETF providers to purchase much more Bitcoin than is added to daily supply by miners.
Thomas Fahrer, CEO of the crypto review portal Apollo, stated last week that Bitcoin ETF funds have purchased 21,700 Bitcoin worth $1.5 billion per month to date. This is three times the new Bitcoin supply from miners. US spot ETF funds now hold approximately 2.8% of the total Bitcoin supply alone.
