The cryptocurrency market experienced a notable surge following the release of the latest US Consumer Price Index (CPI) data, with Bitcoin and Ethereum posting gains of 3.4% and 2.43% over the past 24 hours, respectively. Despite this positive movement, the market remains uncertain, with Bitcoin hovering around $70,000 and Ethereum struggling to surpass $4,000. Investors are treading with caution, but there has been a notable shift in market sentiment, especially among retail traders on platforms like Binance.
According to recent findings, 70.25% of accounts on Binance currently hold net long positions on Bitcoin, marking a significant increase from 57% just 24 hours prior. This data suggests that retail players are increasingly confident in “buying the bottom,” indicating a strong belief in a potential rebound ahead of the Federal Open Market Committee (FOMC) meeting tonight.
It is important to note that this behavior by retail investors comes amidst ETF outflows, which demonstrate investor caution ahead of impending events. Data compiled by Farside revealed that several prominent ETFs, including Grayscale’s GBTC, ARK Invest’s ARKB, and Bitwise’s BITB, experienced significant net outflows in recent days. These outflows ended a 19-day streak of net inflows for Bitcoin ETFs in the US, with total outflows reaching nearly $65 million the day before.
Furthermore, lower inflation figures are expected to boost the crypto market, which has been range-bound for weeks. The latest CPI data showed that inflation essentially remained unchanged in May, slightly below both predictions and the previous month’s figures. This price movement, coupled with the retail long positions on Bitcoin, suggests that the market may have already priced in this information and is now awaiting the Fed’s decision.
Bitcoin continues to be regarded as a highly intelligent global macro asset by industry experts. According to Mike Alfred, a board member of IREN, Bitcoin has the potential to anticipate and incorporate major economic factors well in advance of their public release. This long-term perspective makes Bitcoin a valuable asset for investors looking to hedge against economic uncertainty and inflation.
In a recent tweet, Charlie Bilello, Chief Market Strategist at Creative Planning, highlighted the consistent upward trend in US inflation over the past several months. Despite fluctuations in the CPI and core CPI figures, inflation in the US has remained above 3% for 38 consecutive months. These trends are likely to influence investor behavior in the cryptocurrency market, especially as economic indicators continue to evolve.
Overall, the cryptocurrency market is in a state of flux, with retail traders showing optimism in the face of uncertainty. ETF outflows and inflation data are key factors influencing market sentiment, as investors navigate the complexities of the digital asset landscape. As events like the FOMC meeting unfold, all eyes will be on Bitcoin and other cryptocurrencies to see how they react to the shifting economic landscape.
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