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Strong Bitcoin ETF Inflows In Q4

Also MicroStrategy Is Going Vertical And Is The Federal Reserve Turning Dovish?

Ecoinometrics

Nov 29

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Welcome to the Friday edition of the Ecoinometrics newsletter.

Every week we bring you the three most important charts on the topics of macroeconomics, Bitcoin and digital assets.

Today we'll cover:

Strong Bitcoin ETF Inflows In Q4
MicroStrategy Is Going Vertical
Is The Federal Reserve Turning Dovish?

Each topic comes with a small explanation and one big chart. So let’s dive in.

In case you missed it, here are the other topics we covered this week:

Bitcoin Is Getting Closer To An Exuberant Bull Market

Ecoinometrics

Nov 25

Read full story

Bitcoin Is Fairly Priced Relative To The Stock Market

Ecoinometrics

Nov 27

Read full story

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Strong Bitcoin ETF inflows In Q4

Bitcoin is stalling just below $100,000, and ETF inflows have slowed down this week.

Coincidence? Nope.

That's why we track these flows in the Bitcoin Market Monitor. The correlation between net ETF flows and price action is strong.

Whether you think ETF flows drive price or price drives flows, this is a valuable metric for gauging momentum.

Here's what the data tells us:

Momentum picked up at the start of Q4
The US elections didn't disrupt this trend
We're seeing a slowdown as we approach year-end

The overall momentum remains strong. But it's logical that after a major Q4 allocation shift from institutional investors, we'd see some deceleration. Once this reallocation phase ends, we'll need either a new quarter or significant FOMO to restart the trend.

This week's slowdown could simply be due to Thanksgiving. Let's see if next week brings a return to the trend or if this marks the end of Q4's momentum.

MicroStrategy Is Going Vertical

I've been talking a lot about MicroStrategy this fall, and for good reason - they keep pushing their Bitcoin acquisition strategy to new heights.

They now hold 1.84% of the total Bitcoin supply, adding +0.5% in just a few weeks.

The chart below shows their holdings going vertical just as Bitcoin approaches $100k.

This aggressive buying makes perfect sense if MSTR believes we're at the start of a bull run.

Yes, they traditionally use DCA (dollar-cost averaging). DCA works best in bear or sideways markets when you can't predict the bottom, or when you need to spread out your purchases due to limited resources.

But if you believe prices are heading up and you can raise cash without excessive leverage, front-loading your position will maximize long-term performance.

That's why MSTR has deployed so much capital in such a short time this year. If their timing is right, they're positioned for substantial gains.

Is the Federal Reserve Turning Dovish?

An interesting dynamic is playing out. The November FOMC press conference sounded hawkish according to our Fed Communication Index (FCI, see chart).

Chair Powell hinter they would pause rate cuts if inflation became problematic.

But this week's FOMC meeting minutes emphasize a different story. The tone was neutral based on the FCI. In fact, the FCI trend is heading straight towards dovish territory.

Rate cuts may come slowly, but the minutes make it clear: this is the path forward, regardless of pace. So the Fed seems to be hedging its message.

The facts are clear: The US economy is growing well, the labor market remains strong, and core inflation is stubborn. This limits the Fed's options.

Yet markets aren't flinching. Bitcoin, gold, and other risk assets appear unfazed. Investors have already priced in that rates will eventually drop.

Beyond the bond market, where these shifts really matter, this is a non-issue as long as the Fed maintains its current direction. For now, that's exactly what they're signalling.

That’s it for today. I hope you enjoyed this. We’ll be back next week with more charts.

Cheers,

Nick

P.S. We spend the entire week, countless hours really, doing research, exploring data, surveying emerging trends, looking at charts and making infographics.

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