Bitcoin remains below $63,000 after failing to hold above it over the past two days while Ethereum is also struggling to reclaim $2,440.

The crypto market has been trading sideways since the beginning of this week.

The cautious moves in the crypto market come amid uncertainty over a range of economic and political factors in the US and geopolitics in the Middle East.

Add to that the potential selling pressure that the US government may exert with its permission to sell around 70,000 Bitcoin.

The Supreme Court has allowed the US Marshals Service to proceed with the sale of 69,370 Bitcoins seized from the Silk Road online store, which would be the largest sale of its kind in history. While the nature and pace of this selling is not yet known, it will not necessarily put downward pressure on prices if it is done in over-the-counter (OTC)
transactions, according to Beincrypto.

As for the economic side, in light of the surprise labor market numbers that were much better than expected and Jerome Powell’s hawkish speech, hopes for a rapid continuation of interest rate cuts this year have diminished. While the relatively high rates remain for a longer period and the continued rise in Treasury bond yields will weaken appetite for risky assets in general, including cryptocurrencies.

Whereas, after the hypothesis of a half-percentage point cut at the next November meeting was the most likely, it has now become excluded in the Fed Fund futures market, and the probability of a quarter-percentage point cut has become 87%, according to the CME FedWatch Tool. The remaining 13% is for the possibility of keeping current rates unchanged.

The state of caution may also prevail in the markets in the coming weeks, as we anticipate the presidential elections in the United States, which will begin next month. While the outcome of these elections could cause a structural shift in the crypto industry.

Far away, in the Middle East, markets are still anticipating the nature of the expected escalation in the region, especially regarding the nature of the Israeli response to the unprecedented attack from Iran and the nature of the counter-response. While one of the most prominent scenarios is targeting energy facilities, which would bring inflation back to the forefront, which in turn may require central banks to keep interest rates high.

US Bitcoin exchange-traded funds have posted their longest run of daily net outflows since listing at the start of the year, part of a wider retreat from riskier assets in a challenging period for global markets.

Investors pulled close to $1.2 billion in total from the group of 12 ETFs over the eight days through Sept. 6, data compiled by Bloomberg show.

The drop comes amid a rocky period for shares and commodities on economic growth worries.

Mixed US jobs data and deflationary pressure in China are both taking a toll on traders. The uncertainty is buffeting the cryptocurrency market, whose gyrations have become more closely tied to moves in stocks based on a rising short-term correlation between the two.

Bitcoin has struggled in September, posting a loss of approximately 7%. But the largest digital asset eked out modest gains over the weekend and climbed roughly 1% to $54,870 as of 1pm on Monday in Singapore.

“The small relief rally seems to be driven in part by some prominent influencers closing out their shorts,” said Sean McNulty, director of trading at liquidity provider Arbelos Markets.

He cited as an example a recent social media post from Arthur Hayes, co-founder of the BitMEX trading platform.

An improved showing by Donald Trump, the pro-crypto Republican nominee for the US presidential election, in polls and prediction markets may also be playing a role, McNulty said.

He reported greater demand for options hedges in case Tuesday’s debate between Trump and Democratic nominee Vice President Kamala Harris stirs volatility. Harris has yet to detail her stance on crypto.

The US Bitcoin ETFs investing directly in the original cryptocurrency debuted in January with much fanfare. Unexpectedly strong demand for the funds helped to drive the token to a record high of $73,798 in March.

The inflows subsequently moderated and Bitcoin’s year-to-date rally has cooled to about 30%.

The token will likely trade in its recent $53,000 to $57,000 range until the US releases consumer-price data on Wednesday, said Caroline Mauron, co-founder of Orbit Markets, a provider of liquidity for trading in digital-asset derivatives.

The inflation numbers may shape expectations for the pace of anticipated monetary easing by the Federal Reserve in the US.

Institutional investment in Bitcoin exchange-traded funds (ETFs) has surged by 14% in the second quarter of 2024, according to a recent report by asset manager Bitwise.

This increase in allocations comes despite a 12% decline in Bitcoin’s price during the same period, signaling a robust appetite among institutional investors for cryptocurrency assets.

The report, released on Monday, highlights that the number of institutional investors holding Bitcoin ETFs rose from 965 in the first quarter to 1,100 in the second quarter.

This uptick showed a growing institutional interest in Bitcoin, with these investors now accounting for 21.15% of the total assets under management (AUM) in Bitcoin ETFs, up from 18.74% in the previous quarter.

Bitwise Chief Investment Officer, Matt Hougan, said “The biggest question in crypto right now is whether institutions and professional investors will allocate to crypto in a major way. The fact that they are increasing their Bitcoin ETF allocations even when prices are down is a promising sign.”

Despite the drop in Bitcoin’s price, which fell by 12% in Q2, institutional investors have continued to show strong support for Bitcoin ETFs.

This trend suggests that these investors are either confident in a future price recovery or are strategically positioning themselves for long-term gains.

The report notes that institutional investors ended the quarter holding $11 billion in Bitcoin ETFs, a significant commitment that contrasts with some criticisms suggesting that these ETFs are primarily dominated by retail investors.

Bitwise disputes this view, highlighting that Bitcoin ETFs have seen adoption at an unprecedented rate among institutional players.

“The institutions are coming, and they’re coming in size,” Bitwise’s report asserts. “If institutions are willing to invest in Bitcoin during such a volatile period, it’s exciting to consider what might happen if we enter a bull market.”

This institutional enthusiasm for Bitcoin ETFs is further supported by major financial players such as Goldman Sachs, which disclosed in a recent 13F filing that it holds positions in seven out of eleven Bitcoin ETFs available in the U.S.

This level of engagement from Wall Street giants signals a broader acceptance and potential mainstreaming of Bitcoin investment.

Looking ahead, Bitwise predicts that Bitcoin ETF inflows will continue to grow, with expectations for larger allocations in 2025 and beyond.

The report suggests that the increasing institutional investment in Bitcoin ETFs could be a precursor to more substantial market shifts, particularly if the cryptocurrency market experiences a significant upswing.