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De - Last week, the recently signed Strategic Bitcoin Reserve (SBR) executive order initially triggered a 'buy the rumour, sell the fact' reaction, with Bitcoin dropping 6% post-announcement. However, details of the order suggest the potential for additional government Bitcoin purchases, with implications for both gold reserves and budget allocation.
- Our in-house Cryptoasset Sentiment Index continues to signal a risk-off environment, reflecting investor uncertainty.
- The recent weakness in the US dollar has fuelled a renewed acceleration in global money supply, which historically supports Bitcoin and cryptoasset growth. This macro tailwind could drive renewed demand over the coming months
Chart of the Week
Performance
Last week, Bitcoin and overall cryptoassets experienced significant volatility amid a challenging macro environment. Despite the fundamentally strong crypto-specific developments, overall market sentiment turned decisively risk-off, triggering a notable price correction.
More specifically, Bitcoin has dropped approximately 28% from its all-time highs this year, caught in the crossfire of broader market concerns. The primary catalysts behind this correction appear to be fears surrounding President Trump's proposed tariff policies, inflationary concerns, signs of a weakening consumer, and potential growth slowdown in the US economy.
Last week, job cut announcements spiked to the highest level since the Covid recession signalling a weakening labour market in the US. Job cut announcements tend to lead changes in initial jobless claims and the unemployment rate which is why additional weakness in labour market indicators over the coming months should be expected. In addition, the latest GDP nowcast by the Fed of Atlanta estimates that the US economy will likely contract by -2.4% in Q1 2025 mainly due to a significant decline in net exports.
As demonstrated in our latest monthly report, Bitcoin has been particularly vulnerable to these developments as global growth expectations remain the most dominant macro factor for Bitcoin. The elevated market uncertainty was also reflected in a notable spike in the VIX index – a key measure of investor fear and global risk aversion.
On the bright side, the recent decline in growth expectations has led to a renewed repricing in Fed rate cut expectations. More specifically, Fed Funds Futures have priced in 3 rate cuts in 2025 again, up from only 1 in mid-February. This has also weakened the Dollar amid diverging rate expectations between the US and the Eurozone amid the recently announced fiscal stimulus packages in Europe.
The weakness in the Dollar is fuelling a renewed re-acceleration in global money supply which bodes well for the development of Bitcoin and other cryptoassets over the coming months (Chart-of-the-Week).
Furthermore, in a highly anticipated development, White House crypto czar David Sacks announced that President Trump has formally signed an executive order establishing a Strategic Bitcoin Reserve (SBR) and a US digital asset stockpile. However, contrary to market expectations, Bitcoin immediately fell approximately 6% following the announcement in a “buy the rumour, sell the fact” type of market reaction.
However, the details of the EO reveal that it will allow the US government to conduct additional purchases of bitcoins although these purchases have to adhere to “budget neutrality”. The question still remains whether budget neutrality has to be achieved in the short term already or whether there might be some wiggle room with respect to long-term budget-neutrality.
On the one hand, short-term budget neutrality would imply that the US government is not allowed to incur additional deficits to buy bitcoin but rather has to sell existing assets to conduct these purchases. Market participants think that the US government could sell existing gold reserves or other government assets to buy bitcoin as well.
The US government could also utilise parts of the existing capital in the Exchange Stabilization Fund (ESF) which is primarily used to stabilize the U.S. dollar by engaging in foreign exchange interventions and managing foreign currency reserves. The latest figures imply that the ESF has around 39 bn USD in net assets.
On the other hand, long-term budget neutrality implies that present deficits need to be balanced with concurrent surpluses in the future. However, that would allow the US government to issue additional debt to buy bitcoin based on reasonable expectations of future price developments of bitcoin.
This week's market attention will centre on February's CPI print releasing Wednesday. Despite CPI's upward trajectory since late 2023, real-time Truflation data indicates inflation may be moderating considerably. While concerns persist about Trump's tariffs potentially fuelling inflation, most of these measures only took effect this month and won't influence February's figures.
In general, among the top 10 crypto assets UNUS SED LEO, TRON and BNB were the relative outperformers.
Overall altcoin outperformance vis-à-vis Bitcoin declined from last week, with only 35% of our tracked altcoins managing to outperform Bitcoin on a weekly basis. However, Ethereum underperformed Bitcoin last week.
Sentiment
Our in-house “Cryptoasset Sentiment Index” continues to signal a bearish sentiment.
At the moment, only 1 out of 15 indicators are above their short-term trend.
BTC Exchange inflows have improved from last week while other indicators remain relatively bearish.
The Crypto Fear & Greed Index currently signals an “Extreme Fear” level of sentiment as of this morning.
Performance dispersion among cryptoassets has remained at very low levels, signalling that altcoins have continued to be highly correlated with the performance of Bitcoin lately.
Altcoin outperformance vis-à-vis Bitcoin has declined again last week, with around 35% of our tracked altcoins managing to outperform Bitcoin on a weekly basis. Ethereum also managed to underperform Bitcoin last week.
In general, increasing (decreasing) altcoin outperformance tends to be a sign of increasing (decreasing) risk appetite within cryptoasset markets and the latest altcoin underperformance signals a bearish risk appetite at the moment.
Sentiment in traditional financial markets as measured by our in-house measure of Cross Asset Risk Appetite (CARA) improved slightly last week, moving from -0.03 to 0.18. The index signals a slightly bullish cross asset risk appetite.
Fund Flows
Weekly fund flows into global crypto ETPs decelerated last week, remaining negative but less severe than the previous week, mainly due to ongoing outflows from Bitcoin ETPs and a risk-off posture in the markets.
Global crypto ETPs saw around -863.1 mn USD in weekly net outflows across all types of cryptoassets, after -2997.3 mn USD in net outflows the previous week.
Global Bitcoin ETPs have continued to experience with net outflows totalling -767.3 mn USD last week, of which -799.4 mn USD in net outflows were related to US spot Bitcoin ETFs .
The Bitwise Bitcoin ETF (BITB) in the US experienced net outflows, totalling -49.4 mn USD last week.
In Europe, the Bitwise Physical Bitcoin ETP (BTCE) also experienced minor net outflows equivalent to -5.0 mn USD, while the Bitwise Core Bitcoin ETP (BTC1) managed to attract capital of around +0.7 mn USD.
Outflows from the Grayscale Bitcoin Trust (GBTC) continued last week with around -125.4 mn USD in net outflows last week. The iShares Bitcoin Trust (IBIT) also experienced net outflows of around -129.5 mn USD last week.
Meanwhile, flows into global Ethereum ETPs remained negative but decelerated last week, with around - 79.9 mn USD in net outflows last week
US Ethereum spot ETFs even recorded net outflows of around -119.8 mn USD on aggregate. Nonetheless, the Grayscale Ethereum Trust (ETHE) continued to experience net outflows with around -52.6 mn USD last week.
The Bitwise Ethereum ETF (ETHW) in the US saw some net inflows of + 4 mn USD last week.
In Europe, the Bitwise Physical Ethereum ETP (ZETH) saw minor net inflows of +1.1 mn USD while the Bitwise Ethereum Staking ETP (ET32) had sticky AuM (+/- 0 mn USD).
Altcoin ETPs ex Ethereum continued to be weak last week, with around - 10.1 mn USD in global net outflows.
Furthermore, thematic & basket crypto ETPs experienced minor net outflows of around - 5.8 mn USD on aggregate last week. The Bitwise MSCI Digital Assets Select 20 ETP (DA20) managed to attract capital of around + 0.6 mn USD in net inflows.
Global crypto hedge funds have continued to increase their market exposure to Bitcoin. The 20-days rolling beta of global crypto hedge funds' performance to Bitcoin increased around 0.73 per yesterday's close, up from 0.63 the week before.
On-Chain Data
In general, Bitcoin's on-chain developments have remained somewhat stagnant.
Selling pressure has decelerated from last week, with around -0.25 bn USD in net selling volumes on BTC spot exchanges.
In terms of Spot Cumulative Volume Delta (CVD), which measures the difference between buying and selling volume, the metric remains negative, indicating dominance of sell-side pressure. However, it is worth noting that supply dynamics on exchanges tend to provide a slightly clearer explanation of price action.
While BTC exchange balances have stagnated given last week's events, whales have on removed bitcoins from exchanges on a net basis. More specifically, BTC whales removed -8,764 BTC off exchanges, indicating a decrease in whale selling pressure. Network entities that possess at least 1,000 Bitcoin are referred to as whales.
At the time of writing, only 2.72 million BTC remain on exchanges (13.7% of circulating supply), according to data provided by Glassnode, the lowest level since November 2018.
That being said, a measure of “apparent demand” for bitcoin over the past 30 days has continued its negative trend since February 2025 which is signalling that demand for bitcoins has been decelerating lately.
Futures, Options & Perpetuals
Last week, BTC futures open interest increased by around +12k BTC while perpetual open interest increased by around +6k BTC.
BTC perpetual funding rates turned negative on Sunday last week, signalling bearish sentiment among perpetual futures traders.
In general, when the funding rate is positive (negative), long (short) positions periodically pay short (long) positions, which is indicative of bullish (bearish) sentiment.
The BTC 3-months annualised basis stabilised last week to around 6.6% p.a. averaged across various futures exchanges. BTC option open interest, however, increased somewhat by around +14k BTC. The put-call open interest ratio remained relatively flat.
The 1-month 25-delta skew for BTC continued to rise last week, indicating a modest increase in demand for put options and a less bullish market sentiment.
BTC option implied volatilities also remained relatively stable, with 1-month realized volatility slightly increasing.
At the time of writing, implied volatilities of 1-month ATM Bitcoin options are currently at around 57.93% p.a.
Bottom Line
- Last week, the recently signed Strategic Bitcoin Reserve (SBR) executive order initially triggered a 'buy the rumour, sell the fact' reaction, with Bitcoin dropping 6% post-announcement. However, details of the order suggest the potential for additional government Bitcoin purchases, with implications for both gold reserves and budget allocation.
- Our in-house Cryptoasset Sentiment Index continues to signal a risk-off environment, reflecting investor uncertainty.
- The recent weakness in the US dollar has fuelled a renewed acceleration in global money supply, which historically supports Bitcoin and cryptoasset growth. This macro tailwind could drive renewed demand over the coming months
Appendix
Important information:
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