Bitcoin hits 3-week high due to cooling inflation data, ETFs filing first 13Fs

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The price of Bitcoin is up since Wednesday, hovering around $66,000—the highest since April 24—according to CoinGecko data, in reaction to better-than-expected inflation data. The latest Consumer Price Index, published Wednesday by the Labor Department’s Bureau of Labor Statistics, shows that inflation increased by 0.3%, seasonally adjusted.

This beat analyst predictions, with economists polled by Reuters forecasting the CPI gaining 0.4%, in line with February and March. The CPI climbed 3.4% year over year after increasing by 3.5% the prior month.

The CPI has been in the “driver’s seat” for the past few months when it comes to Bitcoin prices, Teddy Fusaro, president of Bitwise Asset Management, told Fortune, adding that traders have been watching that number more closely than any other economic indicator. That’s because the market understands that a lower CPI increases the odds that the Federal Reserve will loosen monetary policy. “Bitcoin investors see looser monetary policy as positive,” Fusaro adds, as it’s understood the original cryptocurrency is a volatile, high-risk asset.

The CPI remains “the most significant factor for crypto price formation” David Lawant, head of research at FalconX, told Fortune. The 90-day correlation between Bitcoin and the exchange-traded fund tracking the S&P 500 Index reached 0.26, the highest since November 2023, he explains.

Another market force driving Bitcoin’s uptick is the 13F filings for the 10 trading U.S. spot Bitcoin ETFs that were published on Wednesday. A 13F is a quarterly report filed by investment managers to the Securities and Exchange Commission that discloses U.S. equity holdings.

The filings show that 937 professional firms were invested in the ETFs as of March 31. By comparison, that’s 10 times the number investing in gold ETFs, according to Bitwise’s analysis. Professional investors held exposure of $11.06 billion by the end of Q1, representing 18.7% of the total assets under management, according to analysis by K33 Research.

“As the market sees that real, large, well-established institutional investors have begun to allocate to Bitcoin, the market is interpreting a virtuous cycle of increasing allocations from other institutions,” Fusaro explained. He describes here some “skepticism” from market commentators that the over $53 billion of inflows have been purely driven by retail interest. In his view, the first 13F reporting season “has disproved that theory.”

Lastly, also underscoring the recent price move is a single Bitcoin withdrawal of over $1 billion from the centralized crypto exchange Coinbase in the early hours of Wednesday. The recipient of the 16,021 tokens remains unknown, CryptoQuant reported. Analysts from CryptoQuant suggest it was an institutional player.

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