Institutional flows, however, remain cautious. Bitcoin ETFs recorded net weekly outflows of roughly $166 million, with Ethereum products also seeing persistent redemptions, underscoring that sustained accumulation has yet to return. While late-week inflows offered a tentative stabilisation signal, the broader liquidity backdrop remains subdued. The Realised Profit/Loss Ratio continues to compress toward historically defensive territory, indicating limited capital expansion across the network. Meanwhile, derivatives positioning has normalised, with funding rates neutral to slightly negative, reducing liquidation risk but also limiting upside acceleration.
For a durable breakout to materialise, the market will require a clear resurgence in spot demand and stronger institutional participation; until then, Bitcoin is likely to remain range-bound within its established absorption zone.
The US economy closed 2025 with slower headline growth but with still persistent inflation, reinforcing a restrictive policy backdrop. Fourth-quarter Gross Domestic Product expanded at an annualised 1.4 percent, weighed down significantly by the federal government shutdown and reduced public spending. However, private-sector momentum remained resilient. Business investment, particularly in artificial intelligence infrastructure, strengthened, while industrial production improved, and housing starts rose.
Inflation remains the key constraint. Core Personal Consumption Expenditures reached 3 percent year-on-year, limiting the Federal Reserve’s scope for near-term rate cuts. At the same time, the Supreme Court’s decision to strike down emergency tariffs introduces potential fiscal stimulus through refunds that could reach up to $175 billion, though this would widen the deficit and add complexity to inflation expectations.
Meanwhile, Washington has set a March 1 deadline to resolve disagreements over the Digital Asset Market Clarity Act (CLARITY Act), which would divide oversight between the SEC and the CFTC, establish a legal framework for digital commodity spot markets, and potentially end regulation-by-lawsuit. The central dispute is whether stablecoin holders should be allowed to earn yield, with banks pushing for a comprehensive ban on rewards while crypto firms argue this would distort competition and undermine existing business models.
Against this macro backdrop of moderating growth and firm prices, crypto markets continue to institutionalise. Harvard University’s endowment diversified its digital asset exposure by reallocating from a Bitcoin ETF into an Ethereum ETF, signalling portfolio refinement rather than reduced conviction. CME Group’s move toward 24/7 crypto derivatives trading further aligns regulated markets with crypto’s continuous structure, reflecting sustained institutional demand. Meanwhile, new SEC guidance reducing stablecoin capital haircuts to 2 percent lowers balance sheet friction and supports deeper integration of blockchain-based settlement into traditional finance.
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