The bitcoin markets experienced relatively low volatility this week, a welcome contrast to the rollercoaster ride of the previous week.

Volume declined, contributing to a relatively more stable price environment. Despite last week’s net ETF outflows, there was a notable influx of net inflows the past week, which helped maintain bullish sentiment. The week saw a price decline of -5.22%, which, compared to the volatile price swings earlier in the year, was relatively moderate.

Throughout the trading week, bitcoin formed a pattern of lower highs and lower lows, culminating in a heightened sell-off on Friday morning, with bitcoin shedding over 4% shortly after the NYSE opened. Opening the week at $64,630, bitcoin closed Friday’s session just above the psychological $60k level, at $60,830.

Leveraged liquidations on futures exchanges were low this week, with most liquidations being confined to the long side. Friday’s session witnessed the most long liquidations of the week, with $131 million in long positions wiped out, mostly coming during bitcoin’s move to the downside Friday morning.

Spot ETF Flows Update

ETF inflows regained momentum this past week, particularly following a substantial inflow from Grayscale on the previous Friday. Monday saw a significant influx of $217 million, but Friday experienced a contrasting outflow of -$84.66 million. Nonetheless, it was a positive week overall, with spot ETF flows totaling $117.55 million.

The most substantial inflow of the week occurred on Monday from Fidelity’s FBTC fund, amounting to $99.2 million, while the largest outflow on Friday came from Grayscale’s GBTC fund, totaling -$103 million. In total, net assets now amount to $50.1 billion, marking a $3 billion increase from the previous week’s low of $47 billion.

It’s remarkable to observe the rapid accumulation of $10 billion in assets by bitcoin spot ETFs compared to their traditional counterparts. Blackrock’s IBIT achieved this milestone in a mere 49 days, while Fidelity’s FBTC took slightly longer at 77 days. In stark contrast, the next closest ETF, JEPQ (a Nasdaq-related vehicle), required significantly more time, taking 13 times as long to reach $10 billion in assets, finally achieving this mark 647 days after inception.

Sell In May And Go Away?

A widely circulated saying in the trading and investing community is “sell in May and go away,” suggesting that investors should divest their stock holdings in May and re-enter the market in November, thereby avoiding the historically less favorable summer months for traditional markets. This adage also finds resonance in the cryptocurrency industry, but its veracity warrants scrutiny.

Examining historical data using the BLX index dating back to 2011, we find that out of 14 Mays, 7 yielded positive returns while the remaining 7 were negative. Consequently, a closer analysis reveals that the bullish or bearish nature of May is essentially a coin toss, and adhering blindly to this maxim may not hold much merit for traders and investors in the bitcoin markets.

Key Economic Events This Week That Could Impact Bitcoin

In the upcoming trading week, four key economic data releases have the potential to increase volatility in the crypto markets. Beginning with Monday’s Producer Price Index (PPI) data, followed by the widely watched Consumer Price Index (CPI) data on Tuesday, these releases could set the tone for market sentiment across equity and crypto markets. Lower-than-expected readings in both producer and consumer prices could provide the Federal Reserve with more flexibility for potential interest rate cuts later in the year, which could bode well for risk-on assets like bitcoin.

Additionally, retail sales data and initial jobless claims could also have an impact on the markets. In the current post-COVID high inflation environment, there’s a prevailing sentiment that “bad news is good news” for financial markets.

This suggests that weaker-than-expected economic data could prompt the Fed, led by Jerome Powell, to consider interest rate cuts, potentially benefiting both equity and crypto markets. Conversely, if CPI and PPI readings come in higher than expected, it could prompt the Fed to delay future rate cuts. Similarly, better-than-expected retail sales and lower jobless claims might be interpreted as bearish news for the markets.

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