Crypto for Advisors: Weekly Market Review and Insights on Inflation, ETFs, and Market Trends

Crypto for Advisors – Weekly Market Review

In this week’s edition, Xinghua Luo from Pioneer Asset Management Limited offers a comprehensive overview of recent market activities, including insights on the US Inflation Rate and the Federal Reserve’s outlook, as well as developments in ETFs and overall trends in crypto flows. Additionally, Jason Leibowitz from Hashnote shares expert analysis on market trends and the ongoing search for yield in the “Ask an Expert” section.

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Market Overview

Recently, the digital asset market experienced minimal fluctuations, as cryptocurrencies were notably absent from the highly anticipated X space discussion featuring Elon Musk and Donald Trump. Bitcoin (BTC) maintained a position around $58,750, reflecting a slight decline of over 1% from the previous day. The broader cryptocurrency market, represented by the CoinDesk 20 Index, mirrored this trend with a similar downturn. Despite high hopes from the crypto community and a 65% probability bet on Polymarket regarding “crypto” being mentioned, the topic was overlooked during the two-hour session, which attracted over 1 million listeners.

US Inflation Rate & Federal Reserve Outlook

The upcoming U.S. Federal Open Market Committee (FOMC) meeting is scheduled for September 18. Following a recent market downturn, expectations have shifted, with the market anticipating that the Federal Reserve may initiate rate cuts as early as September, projecting a total reduction of approximately 100 basis points (bps) by the end of December. For July’s data release, the Consumer Price Index (CPI) year-over-year is anticipated to remain at 3.0%, while the Core CPI year-over-year is expected to dip from 3.3% to 3.2%. As is customary, the Fed will take a measured approach, avoiding hasty decisions and opting to assess economic data closely. They find themselves in a challenging position, balancing the need for increased credit with the imperative to combat inflation.

ETF Developments

This past Monday witnessed net inflows of $4.93 million into U.S.-listed spot Ether ETFs, with Fidelity’s FETH leading the charge at $3.98 million. Other notable inflows include Franklin Templeton’s EZET and Bitwise’s ETHW, which posted inflows of $1 million and $2.86 million, respectively. Conversely, VanEck’s ETHV faced an outflow of $2.92 million. In the realm of Bitcoin ETFs, there was a remarkable daily inflow of $27.87 million, despite Grayscale’s GBTC and Bitwise’s BITB experiencing outflows of $11.7 million and $17 million, respectively. Interestingly, Grayscale’s two Ether funds reported no significant flows.

BTC & ETH Option Flows

This week saw successful hedge and bear strategies targeting put options in the $54-58K range, with funds increasing their exposure to October-March $60-65K call options as a rebound strategy. Although the short-term put skew indicates caution in the market, long-term call bullishness remains robust, especially as traders eagerly await the upcoming Producer Price Index (PPI) and CPI data releases. While near-term volatility and skew have retraced, long-term calls and spreads have not only remained intact but have also seen an increase, reflecting growing confidence in buying upside potential, funded by strategic selling.