Market update - Jan. 26th 2024

Could macroeconomics reassert their influence on digital assets?

Before the ETF approval on the 11th, seed capital investors—those who provided initial funding for the ETFs—likely bought bitcoin, driving up its price. However, Grayscale, a major player whose Bitcoin Trust launched in 2015 and was transformed into an ETF, saw investors in this product take the opportunity to sell, likely causing the price to fall despite the positive net inflows recorded in the ETFs.

But Bitcoin's recent price action isn't solely tied to the ETF. We think recent declines in the probability for a rate cut in March have also negatively impacted Bitcoin prices.

Now, the Fed might still choose to cut rates despite positive economic data. It's a delicate balance. Digital asset investors should keep an eye on the bigger picture and closely monitor FED comments in the next few months. With the ETF excitement settling, broader economic factors are likely to reassert their influence on Bitcoin prices.