US economic data sets the pace for global financial markets – and thus also for crypto. Consumer prices were recently at 2.7%, slightly below expectations of 2.8%. More decisive, however, was core inflation, which came in at 3.1%, above forecasts.
The surprise was even greater in the producer price index: instead of the expected 0.2%, it rose by 0.9% month-on-month. On an annual basis, the figures were 3.3% compared to the forecast 2.5%. These deviations show that price increases are still noticeable and that relief is coming more slowly than hoped.
For investors, this means that the US Federal Reserve could be more cautious about cutting interest rates. The crypto market reacted immediately: Bitcoin climbed to a new record high of over US$124,000, but quickly fell back below US$120,000 following the publication.
Sovereign Wealth Funds get involved – Bitcoin as a Strategic Asset
Institutional purchases remain a driving force. Over 1,200 institutions have already reported Bitcoin holdings in their 13F filings in the US, worth more than US$5.3 billion. Several thousand more filings are still pending, which means that institutional exposure is likely to rise further.
The participation of the Norwegian sovereign wealth fund “Government Pension Fund Global” is particularly impressive. With over US$1.7 trillion, it manages more than four times the German federal budget. The fund now indirectly holds around 7,161 Bitcoin – an increase of almost 200% within a year. This is made possible through shareholdings in MicroStrategy, Coinbase, Block, and other companies that themselves hold large amounts of Bitcoin on their balance sheets. As a result, Bitcoin is becoming increasingly integrated into traditional government and corporate portfolios.
Related article: Bitcoin price fluctuates around $119,000 as Trump-backed American Bitcoin Corp. buys more miners
Ethereum in the Fast Lane
Ethereum is currently performing even better than Bitcoin. In a single trading day, over $1.02 billion flowed into Ethereum spot ETFs. Spread across various providers, this was a record since these funds were launched. Within three days, net inflows totaled over $2.3 billion. By comparison, Bitcoin ETFs recorded only around US$178 million in new funds during the same period.
At the same time, companies are massively expanding their ETH holdings. A publicly traded technology company recently confirmed purchases of more than 317,000 ETH worth around US$1.3 billion. The company now holds a total of almost 1.2 million ETH worth just under US$5 billion. Other companies, including fund managers and technology providers, have also significantly expanded their Ethereum holdings. As a result, the share of institutional ETH holders in the total supply is growing steadily.
Related article: Is Ethereum facing a supply shock? ETH 6.7 years of inflation neutralized
Market Structure and Liquidity
The market structure shows that the rally is not based solely on short-term euphoria. Although Bitcoin reached new records, the realized profit and loss ratio remained average. This points to a healthy market environment in which long-term investors are taking profits but there is no massive selling pressure.
However, there are open price gaps on the futures markets. In particular, there is a CME gap around US$117,000 that has not yet been closed. Such zones exert a magnetic effect on prices, as market makers seek liquidity there. Liquidity clusters at US$115,000 and US$112,300 are also considered possible short-term target areas.
Altcoins in the Shadow of the Big Players
While Bitcoin and Ethereum are taking center stage, many altcoins are lagging behind. The Altcoin Season Index stands at around 53 points, clearly signaling a Bitcoin-dominated market phase. A real altcoin season traditionally only begins when the index reaches a value of 75 points.
Altcoin Season Index (Image: blockchaincenter.net)
The restraint is also related to the behavior of private investors. Activity in the retail market is traditionally weaker during the summer months. Institutional demand is currently focused almost exclusively on Bitcoin and Ethereum, so smaller projects are hardly benefiting.
Cyclical Patterns and Seasonal Effects
A look at the history of the crypto markets reveals recurring patterns. Strong summer months have often been followed by weaker September phases before year-end rallies set in. This pattern could repeat itself this time around: Analysts expect consolidation in late summer, followed by a potential parabolic phase in the fourth quarter.
Ethereum has an additional feature: in addition to massive ETF inflows and corporate acquisitions, large amounts of staked ETH are waiting to be paid out. In total, this potential selling pressure amounts to over US$3 billion. If this volume enters the market, it could lead to short-term corrections – but at the same time be offset by new purchases from institutional investors.
Regulation and Competition in the Blockchain Sector
There is also movement on the regulatory front. The US Securities and Exchange Commission is working to implement new regulations more quickly instead of waiting for lengthy legislative processes. This points to a more proactive stance toward crypto. At the same time, competition in the blockchain sector is intensifying. Ethereum recently recorded a record high in daily transactions, but Layer 2 networks such as Arbitrum and Base are already significantly exceeding these figures – albeit with lower fees and, in some cases, questionable transaction quality.
Competition for scalability and costs remains a key issue that is likely to shape the attractiveness of Ethereum and alternative chains in the coming years.
Author
Ed Prinz is Chairman of https://dltaustria.com, Austria’s most renowned non-profit organization specializing in blockchain technology. DLT Austria is actively involved in educating and promoting the value and application possibilities of distributed ledger technology. This is done through educational events, meetups, workshops, and open discussion forums, all in voluntary collaboration with leading industry players.
Disclaimer
This is my personal opinion and not financial advice.
For this reason, I cannot guarantee the accuracy of the information in this article. If you are unsure, you should consult a qualified advisor whom you trust. This article does not make any guarantees or promises regarding profits. All statements in this and other articles are my personal opinion.
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