In 2024, the consensus in crypto is that Bitcoin\u2019s price<\/a> has been influenced mostly by the emergence of Bitcoin ETFs, the protocol\u2019s halving, and the Fed\u2019s monetary policy, but data shows otherwise.<\/p>\n According to research by Andr\u00e9 Dragosch<\/a>, head of research at ETC Group, more than 80% of the asset\u2019s price action can be explained by changes in global growth expectations over the past six months.<\/p>\n Another key observation Dragosch made is that global crypto hedge funds have reduced their BTC exposure to the lowest level since October 2020. This \u201csignificant reduction in net long exposure,\u201d he said, coincides with an acceleration in net outflows from global crypto Exchange Traded Products (ETPs).<\/p>\n For instance, CoinShares reported that outflows from institutions in the past week reached a whopping $600 million<\/a>. That does come after five consecutive weeks of net purchases by large entities, however.<\/p>\n What\u2019s the bottom line? \u201cBecause of increasing macro risks, and U.S. recession risks in particular, Bitcoin and cryptocurrencies might be facing further downside in the short term,\u201d Dragosch told The Defiant.<\/p>\n According to Dragosch, the macroeconomic environment doesn\u2019t look compelling.<\/p>\n He explained that, in general, U.S. economic data have continued to underwhelm market expectations, and the market is now catching up with what he calls \u201cthis worse reality in macro data.\u201d Dragosch added that the Bloomberg \u201csurprise index,\u201d which measures whether market participants are more optimistic or pessimistic about the real economy than indicated by data is at its lowest point since 2019.<\/p>\n In other words, pessimism is at its highest level in five years.<\/p>\n Additionally, a report<\/a> by the U.S. House of Representatives budget committee shows that fears of a looming recession continue to grow as consumer confidence continues to wane for the second month in a row.<\/p>\n The report showed that the Expectations Index\u2014based on consumers\u2019 short-term outlook for income, business, and labor market conditions \u2013 is below 80, a level that suggests a recession is ahead.<\/p>\n For riskier assets like cryptocurrencies, this type of sentiment could dampen crypto investors’ eagerness to recapture the upward trajectory the market has experienced since Bitcoin ETFs launched on Jan. 11.<\/p>\n Angel investor Jason Choi echoes the bearish sentiment. On June 21, Choi explained<\/a> on Twitter that his investment firm, Tangent, had liquidated all its ETH positions and had taken a \u201cdefensive stance\u201d on the market.<\/p>\n According to Choi, we are back in the early innings of a bear market \u2013 which he categorizes as a three-month general downtrend, no new highs, and shrinking volatility \u2013 and crypto is \u201cat the mercy of macro influences.\u201d<\/p>\n James Butterfill, head of research at CoinShares, disagrees with Dragosch.<\/p>\n Butterfill, who writes a weekly institutional report, told The Defiant that the lack of price appreciation is actually due to the Fed. \u201cIt remains stubbornly hawkish\u201d which appears to be offsetting potential gains from inflows, he said. He expects the Fed to cut interest rates by 50 basis points instead of 25. In other words, \u201cthe Fed reacting late,\u201d Butterfill said.<\/p>\n Until that happens, and despite all the macro factors that Dragosch points to, there will be a lid kept on Bitcoin prices.<\/p>\n As the summer months get underway, investors should prepare for mostly sideways volatility, sprinkled with some further downside.<\/p>\n \u201cThe \u2018chopsolidation\u2019 perfectly dovetails the standard seasonality of BTC: below-average returns during June, July, August and especially September; above-average performance during Q4 towards the end of the year,\u201d said Dragosch.<\/p>\n But even though Dragosch might come off as a bear, he has a positive outlook for the rest of the year. He points to three main reasons: the halving effect, which usually moves the needle around the 100-day mark after<\/a> it takes place and Donald Trump\u2019s possible re-election. Trump has been unabashedly pro-crypto<\/a> on the campaign trail, which might translate to an auspicious future for crypto investors.<\/p>\n Lastly, he pointed to the likely continuation of inflows into Bitcoin ETFs and the imminent launch<\/a> of Ethereum<\/a> ETFs. Although Dragosch predicts that ETH ETFs will receive just 12.5% of the flows that Bitcoin instruments attracted \u2013 he bases his number off Bloomberg ETF expert Eric Balchunas\u2019 predictions \u2013 he believes this should also sway the price positively.<\/p>\n While 2024 kicked off to a roaring start, enthusiasm for ETFs has fizzled out, at least in terms of price appreciation.<\/p>\nMacro Outlook Looks Grim<\/h2>\n
![\"Bloomberg](\"https:\/\/thedefiant.io\/_next\/image?url=https%3A%2F%2Fcdn.sanity.io%2Fimages%2F6oftkxoa%2Fproduction%2F6af2eb3cca95595418c2e96f5327fa3d7a12a7eb-770x772.jpg&w=828&q=100\")
Others Point Fingers at the Fed<\/h2>\n
Expect \u201cChopsolidation\u201d<\/h2>\n
Significant Background Selling<\/h2>\n
![\"BTC](\"https:\/\/thedefiant.io\/_next\/image?url=https%3A%2F%2Fcdn.sanity.io%2Fimages%2F6oftkxoa%2Fproduction%2Fe96b44322bec406357b99dbbdc2f5652cf786171-1437x744.jpg&w=828&q=100\")