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Bitget Hot Takes (January 29 - February 04, 2024) - Market Updates

Bitget Hot Takes (January 29 - February 04, 2024) - Market Updates

2024-02-06 | 5m
Bitget Hot Takes is the exclusive weekly newsletter series by Bitget Academy, which sums up BGB performance, what's new at Bitget, and the latest market movements.
The latest Bitget Hot Takes can be found here: All About Bitget | Market Updates

Central Themes

• Grayscale net flow amassed minus US$782 million; the highest weekly inflows belong to BlackRock and Fidelity's funds.
• The global crypto market cap continued to slide down.
Markets are no longer that confident in the possibility of a rate cut in March.

Week 5: Rate Cut Is Off The Table

The U.S. employment data for January 2024 dropped Friday (February 02). Markets were almost indifferent on Wednesday upon the announcement of the FED's decision to keep the interest rates unchanged, but that sentiment didn't last very long. Weirdly enough, the number of new jobs added in the first month of 2024 is nearly twice the forecasted figure - 353,000 versus 185,000 - hence the collective understanding can be summarised as 'the U.S. economy is going strong, oh well the FED won't lower interest rates any time soon'. Powell actually mentioned in his speech that March is ' probably not the most likely case' for the FED to step back from its aggressive policy.
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Correspondingly, market expectation for a rate cut in March plunged from 70%-something to only a bit higher than 15%. The doom is not yet reflected on the weekly performance of crypto stocks, but the affect can be seen in Monday's numbers below. One factor responsible for mining stocks' bleeding on February 05 is the U.S. Department of Energy's collecting data on the energy consumption of Bitcoin miners. Though the agency states that they 'do not create policy, implement policy, enforce policy or comment on policy', policymakers who analyse the data will obviously handle those numbers with caution.
Regarding Bitcoin ETFs, Grayscale saw a net flow of minus US$782 million in W5, whereas the highest net flows belong to BlackRock's IBIT and Fidelity's FBTC at US$864,752,000 and US$695,386,000, respectively. It's worth noting that the two Bitcoin futures funds by ProShares experienced a total net flow of negative US$163.4 million, with BITO accounting for 96% of that figure. BITX, the leveraged (futures) Bitcoin fund, still ended the week with a positive net flow, which could imply a decent institutional appetite for leveraged Bitcoin positions.

Setting The Tone: Monday Performance

Monday was red for crypto stocks - with Bitcoin and Ethereum prices looking pretty much unchanged. The opening price today (February 06) of Bitcoin is recorded at US$42,657, which is 19% higher than that of yesterday.
Compared to cryptocurrencies, which are yet to demonstrate an obvious relationship with TradFi markets and thus do not suffer as much from the broader economic environment, crypto stocks dipped with mining stocks and Coinbase shares taking the biggest hits. It's the effect of the U.S. job data release on Friday; a strong labour market has finally crushed investors' hope for a rate cut in March. Interest rates still high means capital flow still restricted, which affects both businesses and investors.
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