Gushiken Yona
Geopolitical tensions, shifting interest rate expectations, and potential U.S. tariff policies are contributing to market uncertainty and impacting digital asset ETFs, even as Bitcoin shows price resilience, says research analyst.
While Bitcoin (BTC) demonstrated relative price stability last week, a complex web of macroeconomic factors is creating significant uncertainty in the broader digital asset market, leading to continued outflows from exchange-traded funds (ETFs). Matteo Greco, Research Analyst at the publicly listed digital asset and fintech investment business Fineqia International (CSE: FNQ), highlighted the key drivers behind this cautious investor sentiment in a short note seen by The Shib Daily.
Shifting Sands: Interest Rate Expectations and Inflation Data
“Market participants are closely monitoring geopolitical developments and shifts in monetary policy expectations,” Greco explained. “Uncertainty surrounding these factors is contributing to volatility in Federal Reserve (FED) rate outlooks.” He pointed to a recent shift in expectations: “Current market outlook suggests the FED will cut interest rates by 50–75 basis points in 2025, down from last week’s expectations of a 75–100 basis point reduction.”
This change comes despite seemingly positive inflation news. “Last week’s inflation data showed lower-than-expected figures both year-on-year (YoY) and month-on-month (MoM),” Greco noted. However, he suggested that “concerns over U.S. tariff policies affecting key trading partners such as Canada, Mexico, and Europe” might be offsetting the positive impact of the lower inflation data. “These tariffs could drive inflation higher, increasing the risk of stagflation if economic growth remains sluggish,” he warned.
Trump’s Potential Impact on Treasury Yields and Debt
Greco also explored the potential influence of former President Trump’s economic policies on the market. “One potential objective of Trump’s economic policy is to lower long-term U.S. Treasury yields to facilitate refinancing government debt at reduced rates,” he stated. He observed a downward trend in the 10-year Treasury yield, which “peaked at 4.8%” in the weeks leading up to Trump’s presidency and “now hovers around 4.3%.”
Bitcoin Price Stability vs. ETF Outflows: A Divergence
Despite the macroeconomic headwinds, Bitcoin itself showed resilience. “Bitcoin (BTC) closed the week at approximately $82,575, reflecting a 2.3% increase from the previous week’s close of around $80,735,” Greco reported. He described a week of fluctuating prices, with BTC ultimately settling within a range of $80,000 to $85,000.
However, this price stability contrasted sharply with the continued outflows from Bitcoin ETFs. “Despite this relative price stability, BTC spot ETFs recorded outflows of approximately $870 million, marking the fifth consecutive week of negative flows,” Greco stated. “Over the past few weeks, more than $5 billion has been redeemed from these ETFs.” Ethereum (ETH) ETFs mirrored this trend, with outflows of around $145 million.
While short-term outflows are significant, Greco put them in a broader context: “Total net inflows since inception…remain at approximately $35.2 billion” for Bitcoin ETFs and $2.5 billion for Ethereum ETFs, “underscoring continued investor interest despite the recent short-term trend.”
Bitcoin: Navigating a Sea of Uncertainty
Greco concluded with a sobering assessment: “Overall, market sentiment remains highly uncertain, with expectations shifting rapidly based on economic data, geopolitical events, and monetary policy decisions.” This assessment highlights the complex and often unpredictable relationship between macroeconomic factors and the cryptocurrency market. The divergence between Bitcoin’s price stability and the continued ETF outflows underscores the nuanced and cautious approach investors are taking in this uncertain environment.
Read More
- Bitcoin on Apple and Android? Saylor Predicts Big Tech Embrace
- CZ Blasts MSM: ‘Baseless Hit Pieces’ Fueled by Anti-Crypto Agenda
- Crypto Market Slides as Macroeconomic Fears Rattle Investors
Yona has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Daily is an official media and publication of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
