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Research contradicts the consensus opinion that ETFs, the Bitcoin halving, and Fed policy have been driving the asset’s price action. In 2024, the consensus in crypto is that Bitcoin’s price has been influenced mostly by the emergence of Bitcoin ETFs, the protocol’s halving, and the Fed’s monetary policy, but data shows otherwise. According to research by André Dragosch, head of research at ETC Group, more than 80% of the asset’s price action can be explained by changes in global growth expectations over the past six months. Bitcoin Macro Correlation Another key observation Dragosch made is that global crypto hedge funds have reduced their BTC exposure to the lowest level since October 2020. This “significant reduction in net long exposure,” he said, coincides with an acceleration in net outflows from global crypto Exchange Traded Products (ETPs). For instance, CoinShares reported that outflows from institutions in the past week reached a whopping $600 million. That does come after five consecutive weeks of net purchases by large entities, however. What’s the bottom line? “Because of increasing macro risks, and U.S. recession risks in particular, Bitcoin and cryptocurrencies might be facing further downside in the short term,” Dragosch told The Defiant. Macro Outlook Looks Grim According to Dragosch, the macroeconomic environment doesn’t look compelling. He explained that, in general, U.S. economic data have continued to underwhelm market expectations, and the market is now catching up with what he calls “this worse reality in macro data.” Dragosch added that the Bloomberg “surprise index,” which measures whether market participants are more optimistic or pessimistic about the real economy than indicated by data is at its lowest point since 2019. In other words, pessimism is at its highest level in five years. Bloomberg Economic Surprise Index Additionally, a report by the U.S. House of Representatives budget committee…

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Filed under: News - @ June 21, 2024 8:22 pm