What were the main drivers of Bitcoin’s price action this week?

The article explains how Bitcoin’s price was driven by a mix of spot demand, ETF inflows or outflows, and shifts in derivatives positioning. It also highlights how macro data releases and central bank expectations influenced risk appetite and short‑term volatility in BTC markets.

What does on-chain data say about Bitcoin investor behavior this week?

On-chain metrics in the article focus on long‑term holder supply, realized profits and losses, and exchange balances. These indicators help show whether investors are accumulating, distributing, or sitting tight, and how that behavior aligns with the current stage of the Bitcoin market cycle.

How did Bitcoin ETFs and macro conditions impact the market outlook?

The roundup reviews weekly Bitcoin ETF flows as a gauge of institutional demand and compares them with macro signals such as interest rate expectations, inflation data, and dollar strength. Together, these factors shape Onramp’s view on near‑term upside, downside risks, and likely volatility.

Roundup: Fed Pivot & Fiscal Dominance

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Roundup: Fed Pivot & Fiscal Dominance – Onramp

source: FRED

As Lyn Alden points out, this means that today’s Fed funds rate is actually stimulative to large parts of the economy, as it represents record transfer payments from the public sector to the private sector in the form of higher public debt interest expense. Indeed, interest expense now exceeds military spending and is a large contributor to today’s record fiscal deficits.

These economic conditions — high (>100%) debt-to-GDP, large (>5%) fiscal deficits, high (>5%) interest rates — have never been present in the US in the past. Record debt-to-GDP and fiscal deficits could be a factor for why the US economy was resilient in the face of the rate hiking cycle from 2022-2024 and may not experience a recession as a result of high interest rates this time.

Second, notice how since 1980 every rate cutting cycle has led to a lower low in the Fed funds rate at the bottom of the cycle. Lyn again notes that unless we reach a lower low in interest rates this cycle, spurring a wave of mortgage refinances, the economy similarly might not be very sensitive to rate cuts this cycle, just as it wasn’t very sensitive to rate hikes.

This is fiscal dominance — when fiscal deficits are so large that monetary policy loses its effectiveness.

So if the seemingly imminent rate cutting cycle isn’t likely to impact the US economy except on the margins and in select pockets — such as commercial real estate with floating rate debt that needs to be refinanced, banks who are competing with money market funds for deposits, or new autos which depend on financing rates for affordability — who, and what assets, will it impact?

While monetary policy might not have the same impact on the domestic economy in an era of fiscal dominance, it still has a significant impact on foreign economies and capital flows. As we saw with the yen carry trade unwind, when US rates are 5.5% and Japanese rates are 0% for an extended period of time, imbalances can build up in the system. As interest rates in the US are lowered and catch down to interest rates in the rest of the world, capital is likely to flow out of US assets and into global assets on the margin. Moreover, high rates in the US contributes to a strong dollar, which is an economic headwind for the rest of the world — especially emerging markets with high dollar-denominated debts, like Columbia and Argentina — and a headwind to asset prices. As rates come down, that headwind should turn into a tailwind.

Indeed, in the wake of the yen carry trade unwind, we have already seen the DXY — the dollar index, a measure of dollar strength relative to a basket of foreign currencies — turn lower (blue line):

Source: Onramp, Koyfin. 3-, 5-year figures annualized.

Asset rallied last Friday on Jerome Powell’s dovish comments at Jackson Hole, but gave back those gains in early trading this week. Bitcoin is unchanged over the last week and hovering around the $60k level. NASDAQ was the worst performer as traders were cautious ahead of Nvidia’s earnings report on Wednesday night. Small caps outperformed in equities as they are seen to be the biggest beneficiaries of rate cuts. Gold was flat. Crude rallied 4% on Middle East tensions but is still the worst performing asset over the past year. Treasuries held their recent gains on lower rate expectations.

Podcasts of the Week

The Last Trade E062: The Evolution of Bitcoin Custody with Brian Cubellis & Bradley Chambers

In this episode of The Last Trade, we’re joined by Brian Cubellis, Onramp’s Chief Strategy Officer & Bradley Chambers, Onramp private client & marketing advisor to the firm, to discuss our recently published report “The Evolution of Bitcoin Custody.” Download the full report here. Register to attend our upcoming webinar here.

Final Settlement E012: MENA’s Synergistic Embrace of Bitcoin with Ralph Gebran

In this episode of Final Settlement, Ralph Gebran, Managing Partner of Onramp MENA, joins the pod to discuss innovation in Dubai, bitcoin’s conservative nature, market structure in MENA, synergies btw bitcoin & the region, & more.

Wake Up Call (8.26.24): Paul Scudellari, Founder of RIApex

Wake Up Call is a weekly show that will be streamed live on LinkedIn every Monday morning. To catch the premier of each episode, follow Onramp’s LinkedIn page and add Wake Up Call events to your calendar. Hosted by Mark Connors, Onramp’s Head of Global Macro Strategy, and Rich Kerr, Onramp’s President of Managed Wealth, this show seeks to provide financial professionals the “wake up call” they need, prompt them to have an open mind with respect to bitcoin, rethink their prior assumptions, become more educated on the topic, and learn from others who are already farther down this path.

Closing Note

Onramp provides bitcoin financial services built on multi-institution custody. To learn more about our products for individuals and institutions, schedule a consultation to chat with us about your situation and needs.

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Until next week,
Zack Morris

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