Spot bitcoin ETFs, the demand source many bulls had counted on to sustain the rally into year-end, have faltered, leaving the market dependent on broader macro conditions and spot buying to regain momentum.
Analysts therefore expect a temporary relief on the back of a potential soft inflation print and look to ETFs for a sustained rally.
“Any easing in inflation expectations would help risk assets,” analysts at BRN said. “[But], Bitcoin needs real buying, not a lucky break. Until ETF flows turn positive and the Fed turns dovish, the path of least resistance remains lower.”
Analysts at Bitget Wallet voiced a similar opinion.
“This week’s inflation data adds another test. Hotter readings could reinforce December rate-hike expectations, while softer core inflation could trigger a relief rally. But a durable Bitcoin recovery will depend on improving liquidity and spot demand, not macro relief alone,” they said in an email.
Note that the inflation report is the first of several data points lined up over the coming days. Producer price data is due Nov. 13, minutes from the Federal Reserve’s October meeting will be released Nov. 18, and the PCE report, the Fed’s preferred inflation gauge, follows on Nov. 25.
Moon Pursuit Capital founder and managing partner Utkarsh Ahuja said persistent inflation could limit the Federal Reserve’s ability to provide policy support, even if technology stocks weaken, and pointed to recent comments from San Francisco Fed President Mary Daly about possible further rate increases as a reason investors should not assume an imminent Fed rescue.
