Bitcoin awaits two drivers that will send ‘wave of inflows’ after US inflation rocks price

Bitcoin had a rough weekend.

It has fallen from March 14′s all-time high above $73,500 to about $66,900, as US inflation data in the past few days have knocked its price.

‘Never decouple’

Bitcoin dropped to an 11-day low of $64,450 on Sunday.

“Drops like this serve as a reminder that BTC will never totally decouple from macro drivers,” Noelle Acheson, author of the “Crypto is Macro Now” newsletter, wrote on Saturday.

The inflation measure known as the US Producer Price Index rose a higher-than-expected 1.6% in February compared to 12 months ago, with a surprise 0.6% gain since January.

However, the ongoing dilution of fiat currency is expected to reclaim its central role in investment discussions once market volatility subsides, Acheson said.

Others agree that fundamentals in traditional markets are at play.

“Although the changing macro environment deserves close attention, this is looking just like a typical crypto bull market correction,” David Lawant, head of research at crypto brokerage FalconX, wrote in a newsletter on Friday.

A correction is a 10% drop in an asset; Bitcoin’s fall from its high earlier this month to its Sunday marks a decline of about 12%.

The analyst pointed to two factors that will continue to drive speculation over the coming months: releases detailing fund management firms’ holdings of Bitcoin, as well as possible listings of options on spot Bitcoin ETFs.

Institutional investment managers with assets exceeding $100 million must submit their quarterly 13F forms detailing their security holdings by May 15.

That should give investors a glimpse into whether institutional investors are really buying up the asset, and could bring about surprises, Lawant said.

Meanwhile, the US Securities and Exchange Commission earlier this month delayed until late April its decision on whether to greenlight the trading of options on spot Bitcoin ETFs, including a filing from Nasdaq to list and trade options on BlackRock’s iShares Bitcoin Trust.

The potential listing of options on Bitcoin spot ETFs “could bring in a new wave of inflows,” Lawant said.

Options are derivatives that are often used to hedge against losses or wager on the underlying asset’s future price.

A slow in total inflows comes amid outflows from Grayscale’s Bitcoin Trust, which average at around $262 million daily, data shows. The average for total inflows, as of February 26, stands at $270 million.

The outlook for spot Bitcoin inflows “remains bright,” as large institutions are still in the early stages of opening access for their clients, Lawant said.

Crypto market movers

• Bitcoin rose 1.4% overnight and now trades at $67,900.
• Ethereum is trading evenly at $3,559.
• Solana is up 8.1% to $205.

What we’re reading

• The $7.4bn court case Craig Wright could still win — DL News
• Standard Chartered Bullish On Bitcoin, Raises Price Forecast To $150,000— Milk Road
• Odds Of Spot Ethereum ETF Approval Plunge To 23% — Milk Road
• Solana volume leapfrogs Ethereum as memecoin frenzy seen sending price to $415 — DL News
• Base Daily Transactions Spike to 2 Million Post Dencun Upgrade — Unchained

This article has been corrected to remove a reference to total ETF inflows.

Sebastian Sinclair is a markets correspondent for DL News. Have a tip? Contact Seb at sebastian@dlnews.com.