Bitcoin Tops $52K, Continuing its Surge, Ether ETF Conversation Reemerges, Stacks (STX) Gains Over 45% Buoyed by Bitcoin, Interest Rate Cut Expectations Lowered Following Strong CPI Data

Takeaways

• Bitcoin tops $52K as ETF inflows build: Bitcoin ETF inflows accelerated this week, with close to $1.5B of inflows over the first three days of the week, and four of the ETFs (excluding Grayscale) now hold over $1B in AUM just one month after launching. Blackrock's iShares Bitcoin Trust (IBIT) leads the pack with over $5B in AUM. As of Friday morning, BTC is currently trading around $52.1K, up 10% over the past week.
• Ether hits $2,800 as its own ETF conversation builds: This week Ethereum broke above the $2,800 level for the first time since May 2022, and investors are spying the $3,500 April 2022 peak should the recent bullish momentum continue. There are currently 9 ETF issuers that have submitted applications for an ether ETF. After experiencing the impact spot bitcoin ETF approvals had on the price of bitcoin and the large inflows that are coming in daily, investors could be expecting a similar move in ETH should an ether ETF be approved.
• Stacks outperforms, gaining over 45% this week: Stacks (STX), a project that aims to enable smart contracts and decentralized finance (DeFI) applications on the Bitcoin network, has been one of the biggest outperformers this week posting gains of 45% over the past seven days. The ability for Stacks to bring smart contract functionality to Bitcoin, has positioned the project well for increased attention alongside Bitcoin following the success of the spot ETFs.
• Interest rate cut expectations lowered as CPI comes in strong: The US consumer price index (CPI) released on Tuesday, showed consumer prices increasing more than expected in January, coming in at 0.3% on the month and 3.1% year on year, while 0.2% and 2.9% were expected. The market saw some readjustments to interest rate cut expectations following the release, now pricing in a 30% chance of a rate cut by the May FOMC meeting, down significantly from the near 100% chance priced in one month ago.

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Bitcoin’s Surge Continues as ETF Inflows Build Up

The price of bitcoin (BTC) saw its first daily decline in over a week on Tuesday, dropping to $48.5K following the release of stronger-than-expected US consumer price index (CPI) data. Nevertheless, BTC quickly shrugged off the news and continued on its positive trajectory smashing through the $50K psychological level.

Bitcoin ETF inflows accelerated this week, with close to $1.5B of inflows over the first three days of the week, and four of the ETFs (excluding Grayscale) now holding over $1B in AUM just one month after launching. Blackrock's iShares Bitcoin Trust (IBIT) leads the pack with over $5B in AUM.

The persistent demand for Bitcoin ETFs may be putting upward pressure on BTC price, with Gemini co-founder Cameron Winklevoss outlining how this could accelerate as we reach the Bitcoin halving event in April, saying on X that “Bitcoin ETFs are taking 10x more bitcoin off the market than are being minted daily. If these inflows hold through the Halvening, then Bitcoin ETFs will be taking 20x more off the market than the daily mint.” As of Friday morning, BTC is currently trading around $52.1K, up 10% over the past week.

Ether Hits Highest Level Since May 2022 as ETF Conversation Ramps Up

After initially jumping to 0.06 on the ETHBTC pair directly after the launch of US-based spot bitcoin ETFs, the price of ether (ETH) has since struggled against BTC dropping as low as ~0.051 on Monday as strong bitcoin ETF inflows dominated the news. As the week progressed, however, increased interest in the possibility of an ether ETF approval later this year started to gain momentum once again.

After experiencing the impact spot bitcoin ETF approvals had on the price of bitcoin and the large inflows that are coming in daily, investors are eyeing a similar move in ETH price should an ether ETF be approved. There are currently 9 ETF issuers that have submitted applications for an ether ETF. This week Ethereum broke above the $2,800 level for the first time since May 2022, and investors are spying the $3,500 April 2022 peak should the recent bullish momentum continue.

Stacks Up Over 45% Amid Excitement Around Bitcoin Smart Contract Functionality Potential

Stacks (STX), a project whose goal is to enable smart contracts and decentralized finance (DeFI) applications on the Bitcoin network, has been one of the biggest outperformers this week posting gains of 45% over the past seven days, breaking above its previous all-time-high of $2.45, to currently trade at $2.58.

The ability for Stacks to bring smart contract functionality to Bitcoin, which lags behind other networks the likes of Ethereum in the space, has positioned the project well for increased attention alongside Bitcoin following the success of the spot ETFs. Total Value Locked (TVL) on the network has also jumped, reaching $83M, up from $53M at the start of the month according to DefiLlama data.

Consumer Price Data Tops Expectations, Lowering Likelihood of May Rate Cut

US stocks markets experienced one of their worst days of the year on Tuesday after inflation numbers came in hotter than expected. The US consumer price index (CPI) released on Tuesday, showed consumer prices increasing more than expected in January, coming in at 0.3% on the month and 3.1% year on year, while 0.2% and 2.9% were expected.

Although coming in higher than expectations, inflation has slowed since December (3.4%) and is not likely to change the Fed’s stance on starting rate cut rates this year, with Chicago Fed President Austan Goolsbee noting “Let’s not get amped up when you get one month of CPI that was higher than what you expected it to be. It is totally clear that inflation is coming down.”

Nevertheless, the market did see some readjustments following the release, now pricing in a 30% chance that we see a rate cut by the May meeting, down significantly from the near 100% chance priced in one month ago. Investors are also now pricing in closer to four rate cuts this year, which is down from the six cuts seen at the start of the year.

-From the Gemini Trading Desk