Bitcoin Demand Still Lacks PersistenceAlso Capital Is Stepping Back & The Market Is No Longer Expecting Relief From the Fed
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:
Markets have been moving on headlines again. Geopolitics, inflation prints, and rate expectations are all pulling prices around from one day to the next. But those moves don’t tell you whether the underlying setup is improving or not. To answer that, you need to look at what’s happening beneath the surface: how capital is actually flowing, how it’s being allocated across assets, and what the bond market is signalling about the path of policy. That’s what we’re focusing on today. In case you missed it, here are the other topics we covered this week:
Get these professional-grade insights delivered to your inbox: Bitcoin Demand Still Lacks PersistenceSince Bitcoin peaked in October, the structure of ETF flows has changed in a meaningful way. Checkout the chart below, instead of just tracking inflows and outflows, it tracks streaks i.e. how long demand persists in one direction. There is a pretty obvious before and after:
There was a brief attempt at rebuilding momentum in early March, with a stronger streak of inflows. But that move faded quickly, and the market has slipped back into a mixed regime. This failed attempt at rebuilding momentum is part of a broader pattern we’ve been seeing across the market, where investors are stepping back and reducing risk rather than adding exposure. At this point, inflows and outflows are roughly balanced. That’s enough to stabilize price, but not enough to drive a recovery. Which is exactly why you want to look beneath the price action. The headlines over the past few days have been dominated by geopolitical events and the resulting volatility. But those moves don’t tell you much about underlying demand. The chart below does. There is still no persistence in Bitcoin demand. Until that changes, the market is not in a recovery regime. It’s in a holding pattern. That doesn’t rule out that a bottom is forming. But it does mean the risk-reward is not strong enough yet to justify aggressive positioning.
Capital Is Stepping BackOver the past six months, the macro backdrop has shifted in a way that is easy to miss if you only look at price. Markets are increasingly adjusting to the idea that interest rates will stay elevated for longer. Inflation is not fully under control, and the bar for meaningful rate cuts remains high. You would normally expect that kind of environment, especially combined with geopolitical tensions, to support gold. But that’s not what is happening. As the chart shows, gold ETF flows have broken down sharply after a strong run. The safe-haven bid that pushed gold higher is no longer building. At the same time, Bitcoin has not meaningfully absorbed that capital. Its flows have stabilized, but there is no clear surge of demand. And more importantly, the Bitcoin demand that is still there is not broadly distributed across the market. It has become increasingly concentrated in a single player acting as the marginal source of support, which has important implications for how stable this setup really is. We broke that down in more detail earlier this week. So there is no clean rotation from risk-off to risk-on, from gold to Bitcoin. Investors seem to be in a holding pattern. One reason for that might be that short-term yields are high and stable, which means holding cash becomes a real alternative. Investors don’t need to reach for gold or Bitcoin to protect capital or generate returns in uncertain times. That changes the competitive landscape. Bitcoin is no longer just competing with gold for flows. It is competing with risk-free yield. And that’s a much harder environment to break out of. Even if geopolitical tensions fade, that doesn’t immediately solve the problem. The constraint is not just fear. It’s the level of rates driven by expectations for the U.S. monetary policy. Until the inflation picture improves enough to shift expectations on rates, this remains a structural headwind for Bitcoin.
The Market Is No Longer Expecting Relief From the FedTo understand why demand remains weak, you have to look at what changed in the bond market. The chart below compares the yield curve today to where it stood six months ago. The shift is clear: rates have moved higher across the curve. Six months ago, markets were still pricing a gradual easing cycle. Rate cuts were expected, even if delayed. That assumption is now fading. Today, the yield curve reflects a different reality. The market is no longer counting on the Fed to step in and ease conditions any time soon. That changes the allocation calculus. When rate cuts are expected, liquidity is projected to improve. Investors position ahead of that shift. That’s what supports sustained inflows into risk assets. But when those expectations are removed, that support disappears. What we are seeing now is not just tighter conditions, it’s the removal of the easing narrative. That shift is already feeding through into investor behaviour, with a clear pullback in risk-taking across markets. That helps explain what we saw earlier. Flows into Bitcoin are not persistent. Capital is not rotating out of gold into crypto. Investors are not chasing alternatives. Because the macro backdrop is not expected to improve. As long as the bond market holds this view, Bitcoin is operating without a liquidity tailwind. And without that tailwind, sustained upside becomes much harder to build.
Tactical TakeawayThe current setup does not justify aggressive positioning in Bitcoin. Demand has stabilized, but it has not rebuilt. Capital is not rotating into crypto, and the bond market is not signalling any near-term improvement in liquidity. That combination leaves Bitcoin without a strong tailwind. In this environment, the right approach is to stay measured. Maintain exposure if it fits your long-term allocation, but avoid increasing risk based on short-term price moves or headline-driven rallies. What would change that view is straightforward. We would need to see a clear shift in flows, sustained inflows into Bitcoin ETFs over multiple weeks, not just isolated spikes. At the same time, the bond market would need to move back toward pricing in rate cuts, signalling a loosening of financial conditions. Until those conditions are in place, the market remains in a holding pattern. 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. Ready for institutional-grade research that puts you ahead of the market? Click below to access our premium insights. You're currently a free subscriber to Ecoinometrics. For the full experience, upgrade your subscription.
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