Analysts at Wintermute stated that the crypto market received support following a weak US employment report. Against this backdrop, US spot Bitcoin and Ethereum ETFs attracted a total of $1.1 billion over the week.
Experts emphasized that demand via ETFs has recovered, but there is still insufficient data to speak of a sustainable shift in market sentiment.
ETFs Are Attracting Capital Again
Over five trading sessions, US spot Bitcoin ETFs received $853.5 million. This is the best weekly result since mid-April. Ethereum ETFs attracted another $244.9 million, continuing the positive trend for the fifth consecutive week. Over 80% of the inflows into both groups of funds came from BlackRock.
Meanwhile, trading volumes remained relatively restrained. Wintermute believes this could indicate a gradual accumulation of positions by large investors, rather than short-term capital rotation.
On Friday, after the employment data was published, the asset rose above $65,300 but failed to significantly outperform traditional risk assets. According to Wintermute, this may indicate that demand via ETFs is meeting significant supply from sellers.
Weak US Data Changed Rate Expectations
In July, US employment contracted by 23,000 instead of the expected growth of approximately 80,000. After the report's publication, the probability of a Federal Reserve rate hike in September decreased from 55% to 40%.
The yield on 10-year Treasury bonds fell to 4.6%, and risk assets transitioned to growth. Wintermute noted that the labor market weakness provided an additional argument for a more accommodative monetary policy. At the same time, the next important test for the market will be the US Consumer Price Index, scheduled for release on August 12.
If inflation is higher than expected, the probability of a rate hike in September could again exceed 50%. This would create a risk of a reversal in the recent rally of risk assets, including cryptocurrencies, the report says.
Institutional Demand and Regulation
Beyond ETFs, the institutional sector continues transitioning financial infrastructure to blockchain. Wintermute pointed to Wells Fargo, which plans to launch tokenized deposits for corporate clients in the fall. The first will be a corridor between the US dollar and the British pound, with the bank planning to expand the project in the future.
In Wintermute's view, banks are not so much integrating crypto-assets as they are using blockchain technology to modernize their own settlement infrastructure. In the long term, this could become one of the factors for further institutional adoption of digital assets. US regulation remains a separate catalyst.
Wintermute believes the recovery in demand via ETFs is a positive signal, but one week is insufficient to confirm a sustainable trend.
Analysts also want to see if inflows into ETFs and activity by companies with Bitcoin reserves persist until the end of summer. For now, the market remains sensitive to macroeconomic data, and a stronger-than-expected inflation reading could quickly change current rate expectations.
As a reminder, experts previously reported record activity in Ethereum and a growing number of Bitcoin whales.
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