- Record inflows into crypto funds signal optimism despite potential market correction concerns.
- Bitfinex’s Jag Kooner warns of downside if the Federal Reserve delays expected interest rate cuts.
- An unprecedented $2.45B inflow in digital assets, driven by U.S. Bitcoin ETFs, showcases institutional interest.
Cryptocurrency markets are currently experiencing a surge of optimism which is showcased by record inflows into investment funds and bullish predictions for Bitcoin’s future. However, a shadow of uncertainty looms due to the concerns about a potential near-term correction and the Federal Reserve’s stance on interest rates.
Jag Kooner, who is the Head of Derivatives at Bitfinex, has cautioned that the market may experience a downside correction because it is overestimating the chances of the U.S. Federal Reserve cutting interest rates soon. If the Fed postpones a cut, it could trigger risk-averse sentiment and negatively impact Bitcoin and other cryptocurrencies.
Federal Reserve Chair Jerome Powell has dismissed the possibility of an earlier rate cut in 2024 which is contrary to the expectations of wider markets that anticipated the commencement of the central bank’s rate-cutting cycle in March. In an interview with CBS’ 60 Minutes, Powell stated that a rate cut in March is “not likely” to happen. He further explained that the Fed wants to be more confident that inflation is moving down to 2%, and it is unlikely that the committee will reach that level of confidence in time for the March meeting.
However, as per CoinMarketCap data, the cryptocurrency market cap which is at $1.99 trillion represents a 0.09% increase over the last day. This data also showcases Bitcoin’s dominance currently at 51.72%, with a slight decrease of 0.09% over the day.
According to Coinshares, digital asset investment products witnessed an unprecedented inflow of $2.45 billion last week, marking the highest on record. This influx which is largely driven by the emergence of U.S. spot Bitcoin ETFs, has propelled total assets under management (AUM) to $67 billion, exceeding the peak seen in December 2021. This data paints a picture of surging investor interest in the crypto space.
Also, IntoTheBlock, an on-chain data analytics firm, paints a promising picture for Bitcoin. Their analysts predict an 85% chance of the king of cryptocurrencies reaching a new all-time high within six months. This optimistic forecast is based on several factors, including the upcoming Bitcoin halving event, the growing prominence of spot Bitcoin ETFs, potential monetary easing by central banks, upcoming U.S. elections, and the increasing trend of companies adding Bitcoin to their treasuries.
Adding to this, Coinbase analysts also foresee continued support for Bitcoin’s price in the coming months due to the growing involvement of institutional investors through newly launched spot Bitcoin ETFs.
We have seen tremendous net inflows, totaling an impressive over $4.2 billion year-to-date,the Coinbase analysts added.
They draw a parallel to the successful launch of Gold ETFs, suggesting that Bitcoin could follow a similar trajectory of attracting significant institutional capital.
