Also Looser Financial Conditions Bias Bitcoin Returns to the Upside & Bitcoin Trades Like a Risk-On Asset, Not Like Gold

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	Forwarded this email? Subscribe here for more Bitcoin ETFs Lack a Sustained Inflow Streak Also Looser Financial Conditions Bias Bitcoin Returns to the Upside & Bitcoin Trades Like a Risk-On Asset, Not Like Gold Ecoinometrics Dec 26   READ IN APP   Welcome to Ecoinometrics’ Friday edition. Each week, we analyze the three most critical market signals impacting Bitcoin and macro assets, delivering institutional-grade insights through data-driven charts and analysis. Today we’ll cover: Bitcoin ETFs Lack a Sustained Inflow Streak Looser Financial Conditions Bias Bitcoin Returns to the Upside Bitcoin Trades Like a Risk-On Asset, Not Like Gold Taken together, these signals point to a market that is stabilizing, but not yet transitioning into a new growth phase. The macro backdrop is gradually improving as financial conditions ease, but investor demand has not followed through, and Bitcoin continues to trade like a risk-on asset rather than a defensive hedge. Until flows turn decisively positive, macro tailwinds alone are unlikely to be enough to break Bitcoin out of its current range. In case you missed it, here are the other topics we covered this week: Bitcoin’s Macro Backdrop Is Improving and Flows Are Close to Turning Ecoinometrics · Dec 22 Read full story Late-Cycle Signals Are Flashing Caution for Bitcoin Ecoinometrics · Dec 24 Read full story Get these professional-grade insights delivered to your inbox: Upgrade to paid Bitcoin ETFs Lack a Sustained Inflow Streak Sometimes Bitcoin’s biggest moves start forming before the price breaks out. One of the cleanest early signals is ETF demand. When investors are positioning for a recovery, spot Bitcoin ETFs tend to show persistent net inflows, not just a few isolated green days. Unfortunately, we’re not there yet. The chart below tracks streaks in spot Bitcoin ETF flows: the number of consecutive trading days with net inflows (red) or net outflows (blue). The last sustained inflow streak happened around the October all-time high. Recently, flows have been mostly directionless, with short inflow bursts that fade quickly and are often followed by outflows. That pattern is enough to help price stabilize, but it’s usually not enough to drive a durable recovery. For upside momentum to return, we would want to see a clear demand signal in the form of a multi-week run of net inflows. Earlier this week, our simulations suggested that early January is the earliest window where conditions could start tilting back toward a recovery. And that would show up as flows turning decisively positive. That would be a welcomed event as Bitcoin’s long term momentum metrics are loosing steam. For now, the flow signal is still neutral. Consecutive-day streaks of net inflows (red) and net outflows (blue) for U.S. spot Bitcoin ETFs. Sustained inflow streaks tend to coincide with periods of strong upside momentum, while short, alternating streaks usually reflect a market that is stabilizing but still lacks sustained demand. Looser Financial Conditions Bias Bitcoin Returns to the Upside In macro analysis, data is often sparse and slow-moving. Many indicators update monthly or quarterly, which limits how precisely we can study short-term market dynamics. One important exception is the National Financial Conditions Index (NFCI), published weekly by the Federal Reserve Bank of Chicago. The NFCI aggregates information from money markets, credit markets, and equity markets to measure overall financial stress and liquidity in the U.S. financial system. Rising values indicate tightening financial conditions, while falling values signal easing conditions. On a week-to-week basis, the direction of the NFCI has a measurable relationship with Bitcoin returns. As the chart below shows, when financial conditions tighten, Bitcoin’s weekly return distribution is centred slightly below zero, reflecting a mild but persistent headwind. When conditions loosen, the entire distribution shifts to the positive side, with a median weekly return of about 1.6%. This does not mean that every easing week produces gains. Rather, easing conditions tilt the distribution of outcomes in Bitcoin’s favour. Over time, that shift in probabilities is what matters for macro investors, not the result of any single week. On its own, a 1–2% weekly bias may not look dramatic. But these effects compound, especially since easing phases in financial conditions tend to persist for several consecutive weeks. Historically, a loosening regime often lasts close to a quarter, turning a small weekly edge into a meaningful tailwind. We explored the full compounding impact in Monday’s edition of the newsletter. What matters today is that financial conditions have started to trend looser again in recent weeks, improving the macro backdrop for Bitcoin even if price action remains muted. Distribution of weekly Bitcoin returns conditional on the direction of the National Financial Conditions Index (NFCI). When financial conditions ease, returns are systematically shifted toward positive outcomes but when conditions tighten, returns cluster closer to zero or slightly negative. Bitcoin Trades Like a Risk-On Asset, Not Like Gold Gold has been making new highs this week, while Bitcoin remains stuck in a narrow trading range. To some observers, this looks puzzling. But that confusion usually comes from relying on simple labels like “Bitcoin is digital gold.” When you look at how Bitcoin actually trades, there is little reason to expect its price to move in lockstep with gold. The chart below shows the rolling correlation between Bitcoin and several major assets. Two patterns stand out. Bitcoin is typically moderately correlated with U.S. equities, especially the Nasdaq 100, while its correlation with gold is usually close to zero. In fact, during short risk-off episodes, Bitcoin can even move against gold. In those periods, gold behaves like a defensive asset, while Bitcoin trades more like a risk asset under pressure. This is why we don’t expect Bitcoin to rally simply because gold is doing well. In practice, Bitcoin behaves far more like a tech and growth-sensitive asset than a traditional store of value. Bitcoin does have unique long-term characteristics, most notably its hard-capped supply, which can matter during structural macro regimes such as currency debasement. But outside of those specific contexts, Bitcoin and gold do not share many similarities in day-to-day trading behaviour. For tactical positioning, treating Bitcoin as a risk-on asset remains the more accurate framework. Three-month rolling correlations between Bitcoin and major assets. Bitcoin shows a persistent positive correlation with U.S. equities and little correlation with gold highlighting its risk-on trading behaviour. Tactical Takeaway The setup argues for patience rather than anticipation. Macro conditions are becoming more supportive, but Bitcoin still lacks the demand confirmation that typically sustains upside, and its risk-on behaviour leaves it vulnerable to equity-driven pullbacks. Until ETF flows establish a persistent inflow streak, rallies are better treated as tactical opportunities than the start of a new trend. Watch out for January as a possible turning point. That’s it for today. Thanks for reading. Cheers, Nick P.S. Every week, our team conducts extensive research analyzing market data, tracking emerging trends, and creating professional-grade charts and analysis. Our mission: Deliver actionable macro and Bitcoin insights that help institutional investors and financial advisors make better-informed decisions. 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