- The world’s second-largest asset manager has opened the door to crypto ETFs.
- Bitcoin ETFs extend a five-day string of inflows.
- Investors expect the Fed to slash interest rates next Wednesday.
Bitcoin has rallied 10% this week, jumping above $93,000 on Wednesday after Vanguard — the second-largest asset manager seen as Wall Street’s most stubborn holdout — embraced crypto exchange-traded funds.
The course reversal by the $11 trillion fund manager coincided with optimism in broader markets as investors now expect the Federal Reserve to slash interest rates at next Wednesday’s chair meeting.
Coinbase’s Singapore country director Hassan Ahmed told DL News that macroeconomic tailwinds will benefit crypto.
“A potential US rate cut could spur renewed risk-on sentiment,” Ahmed said. “If markets start to price in easing, that could lift risk assets globally, benefiting crypto demand globally.”
The CME FedWatch tool shows a 87% chance of a 0.25% rate cut next week. Bettors on Polymarket are even more optimistic, with a 94% chance.
Fueling expectations further, several key officials have openly expressed support for rate cuts at the next Open Market Committee meeting. They include Fed Governor Christopher Waller, New York Fed President John Williams, and San Francisco Fed President Mary Daly.
In the past 24 hours, Coinglass data shows $419 million in short positions were liquidated, compared to $74 million in longs wiped out. That imbalance suggests a majority of traders expected more downside and were flushed out by the rally.
Bitcoin ETFs also recorded a modest $59 million in inflows, according to DefiLlama data, extending a five-day streak of continuous net investment.
The string of inflows follows a bruising November, which saw $3.5 billion in selloffs.
The tech-heavy Nasdaq 100 index, viewed as a barometer of broader risk appetite, climbed almost 1%.
Vanguard effect
Vanguard’s reversal is a symbolic moment in crypto’s institutional story.
The conservative titan, which has repeatedly rejected digital assets as too speculative, now allows more than 50 million of its brokerage clients to buy and sell regulated crypto ETFs.
Vanguard joins fellow giants BlackRock, Fidelity, and Franklin Templeton, which have all jumped on the crypto ETF bandwagon over the past two years.
“THE VANGUARD EFFECT: Bitcoin jumps 6% right around US open on first day after Bitcoin ETF ban lifted,” Bloomberg ETF analyst Eric Balchunas noted. “Coincidence? I think not.”
“I knew those Vanguardians had a little degen in them, even some of the most conservative investors like to add a little hot sauce to their portfolio,” Balchunas wrote.
Crypto market movers
- Bitcoin is up 7% over the past 24 hours, trading at $93,000.
- Ethereum is up 9% over the past 24 hours trading at $3,050.
What we’re reading
- Vanguard’s ETF pivot: Will give clients access to XRP and other crypto funds — DL News
- Michael Saylor’s Strategy is now worth less than the Bitcoin it owns — DL News
- Coinbase Launches Instant Unstaking — Unchained
- Retail Sells, Institutions Buy: The Biggest Misread of This Cycle w/ Sid Powell — Milk Road
- Strategy just created a $1.4bn war chest to protect it when Bitcoin’s price plummets — DL News
Lance Datskoluo is DL News’ Europe-based markets correspondent. Got a tip? Email at lance@dlnews.com.