February 19, 2025, London, UK & Vancouver, Canada.
Bitcoin (BTC) closed the week at approximately $96,120, marking a slight 0.4% decline from the previous week’s close of around $96,465. Volatility remained low throughout the week, continuing a trend that began in the prior week.
Over the past 13 trading days, BTC has fluctuated between $94,000 and $100,000, exhibiting reduced volatility compared to its historical average. This reflects a phase of market consolidation and uncertainty, influenced by macroeconomic concerns and speculation over the Federal Reserve’s (FED) and other major central banks’ future interest rate decisions.
BTC spot ETFs experienced an outflow of nearly $600 million in the last week, breaking a six-week streak of positive inflows. This aligns with historical trends, where periods of sustained positive flow are typically followed by a brief negative week.
Since mid-September, this marks only the fourth week of negative flow, underscoring the strong demand and overall bullish sentiment for BTC-backed ETPs. Total net inflows since inception now stand at $40.1 billion, averaging over $3 billion per month since their launch in January last year.
Ethereum (ETH) spot ETFs remained more stable over the past week, recording a net inflow of approximately $12 million. This brings the total inflows since inception to $3.2 billion, reflecting the positive sentiment observed in Q4 2024, which appears to be carrying into early 2025.
Market sentiment remains uncertain, with investors closely monitoring macroeconomic indicators and evolving geopolitical developments. Recent inflation readings exceeding expectations during the last few FED meetings have prompted a shift in market participants’ outlook for 2025 monetary policy.
A few months ago, investors anticipated a 100-basis-point rate cut in 2025, continuing the trend seen in late 2024. Given the latest economic data, however, expectations have adjusted to a potential 25 or 50 basis-point cut this year. The first cut is now anticipated in the summer, with a second, if it occurs, likely toward the end of the year.
Labour market strength and inflation trends will be key indicators of the FED’s next moves. A weakening labour market alongside declining inflation could additional rate cuts, whereas a robust labour market combined with persistent inflation may force the FED to maintain higher interest rates for longer.
