Essential highlights:
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Coinbase’s institutional Bitcoin trading volume reaches 75%, a trend historically correlated with a BTC price increase in the following week.
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Institutions are acquiring significantly more Bitcoin than the daily mining output.
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Risk assets are discovering fresh motivations to rally again as the outlook on US economic policies improves.
Bitcoin (BTC) is expected to experience new gains within a week as institutions amplify BTC purchases, new analysis suggests.
In an X post on Wednesday, Charles Edwards, the founder of the quantitative digital asset fund Capriole Investments, highlighted significant outflows from the US exchange Coinbase.
Assessment: Institutions likely to trigger new BTC price increases
Once again, Bitcoin is appealing to institutional investors as US inflation declines and markets anticipate lower interest rates in the upcoming month.
Capriole’s data indicated that on Tuesday, 75% of Coinbase’s trading volume stemmed from institutional investors.
“Any readings surpassing 75% have historically led to price increases one week later,” he remarked.
Capriole estimates an institutional “excess demand” this week to be 600% of the approximate 450 BTC mined each day.
Bitcoin corporate treasuries alone incorporated 810 BTC into their reserves on Tuesday, with Monday’s count even higher at nearly 3,000 BTC.
Bitcoin thrives on Fed rate-cut expectations
The actions coincided with lower-than-predicted US Consumer Price Index (CPI) figures for July and a BTC price surge toward historical peaks.
Related: Ethereum hits new multiyear high as Tom Lee’s BitMine plans $20B ETH raise
When inquired about why institutions “went wild,” Edwards specifically attributed it to the forecast for interest rates.
“As inflation yesterday aligned with expectations, it indicates the Fed will likely cut rates next month, and possibly three times this year,” he wrote.
“The market is now evaluating the likelihood of a substantial 0.5% cut, given the weak job situation. Lower rates = higher risk assets, and historically, Bitcoin has been the quickest performer.”
The latest insights from CME Group’s FedWatch Tool indicate that markets largely expect a 0.25% reduction in September.
“Market-implied cuts for 2025 remained unchanged after the announcement, with pricing still indicating about 60bps of rate reductions,” trading entity QCP Capital noted regarding CPI reactions in their latest Asia Color market updates.
“The terminal rate has maintained its stability, even amidst a softer job market and expectations of a more dovish Fed Chair in 2026. Futures positioning suggests investors consider 3% as the Fed’s lower limit in 2026.”
QCP anticipated next week’s Jackson Hole symposium for additional insights regarding the Fed’s future actions.
This article doesn’t comprise investment advice or suggestions. Each investment and trading decision carries risk, and readers ought to engage in their own research when making choices.