US Economic Indicators Boost Speculation on a 50-Basis Point September Fed Rate Cut
Investors raised expectations of a 50-basis point September Fed rate cut, fueling crypto demand.
- CPI Report: Annual inflation rate fell from 2.9% in July to 2.5% in August, while core inflation remained steady at 3.2%.
- Producer prices increased by 1.7% year-on-year in August, down from 2.1% in July.
- Initial jobless claims rose from 228k in the week ending August 31 to 230k in the week ending September 7.
- Michigan Consumer Sentiment Index increased from 67.9 in August to 69.0 in September.
- Michigan Inflation Expectations fell from 2.8% in August to 2.7% in September.
Despite steady core inflation, lower producer prices and falling inflation expectations raised bets on a more dovish Fed rate path. According to the CME FedWatch Tool, the probability of a 50-basis point rate cut increased from 30.0%, on September 6, to 50.0%, on September 13.
Increasing bets on a more dovish Fed rate path drove crypto demand. The crypto market was up 8.62% to $2.068 trillion from Monday, September 9 to Saturday, September 14. Additionally, the Nasdaq Composite Index gained 5.95% in the week ending September 13.
US BTC-spot ETF Flow Trends Signal Stronger BTC Demand
Rising expectations of a 50-basis point September Fed rate cut contributed to positive trends in US BTC-spot ETF market flows.
According to Farside Investors, the US BTC-spot ETF market saw net inflows for the first week in three weeks. For the week ending September 13, notable flows included:
- Grayscale Bitcoin Trust (GBTC) saw net outflows of $27.2 million (previous week: -$160.7 million).
- iShares Bitcoin Trust (IBIT) had net outflows of $9.1 million (PW: zero net flows).
- Fidelity Wise Origin Bitcoin Fund (FBTC) had net inflows of $218.0 million (PW: -$404.9 million).
- ARK 21Shares Bitcoin ETF (ARKB) had net inflows of $83.1 million (PW: -$40.8 million).
- Bitwise Bitcoin (BITB) reported net inflows of $67.3 million (PW: -$59.8 million)
Overall, the US BTC-spot ETF market saw net inflows totaling $403.9 million for the week ending September 13 (previous week: net outflows of $706.1 million).
Five out of the eleven issuers reported net inflows, driving BTC demand.
Monday, September 9, through Saturday, September 14, BTC was up 9.82% to $60,381.
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MicroStrategy Acquires 18,300 BTC, Supporting a BTC Return to $60,000
On Friday, September 13, MicroStrategy (MSTR) founder and chairman Michael Saylor announced the acquisition of 18,300 BTC, stating,
“MicroStrategy has acquired 18,300 BTC for ~$1.11 billion at ~$60,408 per bitcoin and has achieved BTC Yield of 4.4% QTD and 17.0% YTD. As of 9/12/2024, we hodl 244,800 BTC acquired for ~$9.45 billion at ~$38,585 per bitcoin.”
On Friday, MicroStrategy’s share price surged by 8.18%, ending the week ending September 13 up 23.77% to $141.47.
BTC rallied 3.96% to close the Friday session at $60,480 as investors reacted to US BTC-spot ETF inflows, rising bets on a 50-basis point Fed rate cut, and MicroStrategy’s purchase.
Grayscale Launches Grayscale XRP Trust
On Thursday, September 12, Grayscale announced the launch of its Grayscale XRP Trust. The trust allows investors to gain exposure to XRP returns without the need to directly buy or store the token. News of the launch fueled speculation about an XRP-spot ETF, contributing to a 5.04% rally, with XRP ending Thursday at $0.5625.
Reacting to the news, Ripple CEO Brad Garlinghouse stated,
“ Was (pleasantly) surprised to see this news…though inevitable, as well?! As I’ve said before, with XRP having regulatory clarity in the US and other countries, I expect it’s only a matter of time for this space to grow.”
Positive sentiment toward the Grayscale launch and hopes of an XRP-spot ETF contributed to further gains on Friday and Saturday.
From Monday, September 9, to Saturday, September 14, XRP climbed 9.36% to $0.5793.
US ETH-spot ETF Market Outflows Leave ETH Lagging Behind
The US ETH-spot ETF market saw outflows continue in the week ending September 13.
According to Farside Investors, the US ETH-spot ETF market had total net outflows of $12.9 million (previous week: -$91.1 million). Since launch, the ETH-spot ETF market reported total net outflows of $581.4 million, dampening ETH demand.
Despite the outflows, ETH gained 5.91% from Monday, September 9 to Saturday, September 16, reaching $2,434.
