Federal Reserve easing may help crypto and potentially reverse Ethereum ETF outflows

From Investing.com

September 24, 2024 08:31 AM:

Ethereum (ETH) ETFs have struggled since July 2024 launch, facing $610 million in net outflows, compared to Bitcoin ETFs’ $330 million in outflows. ETH’s market share has declined against Bitcoin, with Layer 1 activity subdued but Layer 2 usage rising. Citi analysts see potential for ETH support if risk-on market environment continues.

ETH-BTC ratio has slightly fallen post-FOMC decision, with only 30% of days seeing positive net inflows into spot ETH funds. Citi highlights need for increased Layer 1 activity for ETH’s market share to recover meaningfully. Bitcoin ETFs, on the other hand, have seen $17.2 billion in net inflows since launch, outperforming ETH.

Recent surge in cryptocurrencies-U.S. equities correlation due to macroeconomic factors like labor data and Fed’s policy outlook. Citi predicts the correlation to remain strong amid clarity on economic outlook and regulatory changes, especially leading to the U.S. presidential election. Equities have become the leading macro driver for the crypto market, with the crypto-USD correlation turning positive on August 5.

Citi analysts note that fears of monetary debasement, which could benefit crypto and gold, are not prominent at this time but continue to be monitored for any resurgence.

Read more at Investing.com: Will Fed easing support crypto and reverse Ethereum ETF outflows? By Investing.com