Global crypto investment products are on track to record a second consecutive week of inflows after ending an eight-week streak of net outflows totaling roughly $8 billion, CoinShares Head of Research James Butterfill wrote in a Friday report.
Inflation data shifts sentiment across digital asset products
The firm noted that softer-than-expected US inflation data revived investor sentiment and strengthened expectations of the Federal Reserve (Fed) cutting rates.
Global crypto funds recorded $287 million in inflows last week, with this week set to finish positive after initially starting with outflows. Total inflows into US spot Bitcoin exchange-traded funds (ETFs) between Tuesday and Thursday averaged $368 million, according to SoSoValue data.
The shift followed the release of US inflation data on Tuesday and Wednesday. The June Consumer Price Index (CPI) and Producer Price Index (PPI) both came in below expectations, prompting markets to reduce projections of further monetary tightening.
Bitcoin floor may be forming, but upside remains limited
Despite the improving sentiment, CoinShares cautioned that Bitcoin’s upside may remain constrained without a more meaningful shift in monetary policy.
“We expect range trading, with a break above $80,000 unlikely, absent a meaningful shift in monetary policy expectations,” the report stated.
Butterfill noted that Bitcoin may be close to finding its market floor after its recent recovery, but expectations of an imminent Fed rate cut remain premature. He noted that market participation typically increases when Bitcoin approaches new highs, but remains relatively subdued around current price levels.
“The dominant picture is that the current setup is prompting interest in adding positions, but caution prevails while sentiment remains broadly negative,” Butterfill added.
Options market points to improving sentiment
In the options market, Glassnode data also suggests sentiment is becoming more constructive. The firm noted that Bitcoin’s implied volatility has eased as prices recovered.
The slowdown indicates that much of the fear premium built during June’s selloff has begun to unwind, although uncertainty has not disappeared entirely.
At the same time, the Bitcoin options put-to-call ratio has fallen to its lowest level in six months, signaling traders are reducing downside protection while increasing exposure to potential price gains.
“As price stabilizes around $64K, traders appear to be reducing downside hedges and rebuilding upside exposure, a constructive shift in sentiment,” Glassnode wrote in an X post.
Bitcoin is changing hands at $63,900, down 0.1% over the past 24 hours at the time of writing.