- The price of bitcoin rose above $43,000 for the first time in two weeks as markets anticipate the Fed will pause rate hikes at this week’s FOMC meeting.
- A rate pause is seen as bullish for bitcoin as a risk-on asset, potentially facilitating further price increases if the Fed cuts more than expected.
- Early signs show outflows from Grayscale’s spot bitcoin ETF may be slowing down as institutional interest grows and other ETFs gain traction.
The price of bitcoin climbed back above $43,000 on Monday for the first time in two weeks, as markets considered the possibility of another interest rate pause at this week’s Federal Reserve policy meeting. There were also signs that outflows from Grayscale’s spot bitcoin ETF may be slowing down.
Possibility of a Fed Rate Pause Fuels Bitcoin Gains
Monday’s bitcoin price increase comes as markets broadly expect the Federal Reserve to pause rate hikes at this week’s Federal Open Market Committee (FOMC) meeting. According to CME’s FedWatch tool, there is a 97.9% probability that the Fed funds rate will remain at its current 5.25-5.50% target range.
Bitcoin is classified as a risk-on asset, meaning it could outperform in a bullish scenario facilitated by a rate pause and potential cuts, according to analysts at Ryze Labs. However, founder Mathew Graham said a pause is likely already priced in. He added that subsequent rate cuts beyond what’s expected would boost bitcoin prices.
Institutional Interest in Bitcoin Set to Grow
Ryze Labs analysts said they expect institutional interest in bitcoin to continue developing, with increased spot bitcoin ETF inflows as fund managers ramp up sales. As sales teams get familiar with the new products, inflows should accelerate.
Grayscale Outflows Potentially Slowing Down
There are early signs that outflows from Grayscale’s spot bitcoin ETF may be decreasing. Bloomberg Intelligence ETF analyst James Seyffart noted that volume in Grayscale’s fund was lower than some of its new competitors, marking the first day this has occurred.
Conclusion
The jump above $43,000 comes as bitcoin continues to gain broader institutional adoption. If the Fed pauses rate hikes as expected, or cuts more than anticipated, prices could continue to trend upwards. Meanwhile, the slowing of Grayscale outflows hints at a maturation in the bitcoin ETF marketplace.
