Institutional Demand For Bitcoin Remains Strong
Also Liquidity Conditions Are Back in Bitcoin’s Favour & The Fed’s Path Remains Supportive
Welcome to Ecoinometrics' Friday edition.
Each week, we analyze the three most critical market signals impacting Bitcoin and macro assets, delivering institutional-grade insights through data-driven charts and analysis.
Today we'll cover:
Institutional Demand For Bitcoin Remains Strong
Liquidity Conditions Are Back in Bitcoin’s Favour
The Fed’s Path Remains Supportive
Together, these three signals point to the same underlying dynamic: the macro backdrop remains constructive for Bitcoin. Institutional flows are strong, liquidity is improving, and the Fed isn’t standing in the way. Short-term noise aside, the structural support is still in place.
In case you missed it, here are the other topics we covered this week:
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Institutional Demand For Bitcoin Remains Strong
Geopolitical tensions aren’t great for risk assets and Bitcoin is no exception. It’s not a safe haven asset, so it is no surprise that the Israel–Iran conflict has weighed on price.
But for long-term investors, these types of headwinds usually don’t last.
And under the surface, the core trend still favors Bitcoin.
That becomes especially clear when you look at cumulative net flows into spot Bitcoin ETFs.
Since launch last year, there’s been a strong link between institutional demand via ETFs and Bitcoin’s price action. When flows rise, the price tends to follow. When they pause, so does price momentum. That correlation is very strong.
The good news? Since mid-April, ETF flows are rising again.
Unlike short-term price moves driven by sentiment, ETF inflows often reflect allocation decisions with a longer horizon. That’s why their direction matters.
So while geopolitical risks may be dragging on Bitcoin in the short term, institutional flows point to a bullish trend and a potential opportunity for patient investors.
Liquidity Conditions Are Back in Bitcoin’s Favour
Bitcoin consolidating around $105K might look like it's losing steam, but zoom out, and the macro backdrop still looks strong.
After the U.S. tariffs tantrum triggered a wave of deleveraging, it briefly looked like financial conditions were tightening again. But that concern proved short-lived. The market overreacted, and conditions snapped back as soon as it became clear the U.S. administration would take a more moderate approach.
We can see that clearly in the National Financial Conditions Index (NFCI), which measures how tight or loose the U.S. financial system is. Lower values mean looser conditions, more liquidity, easier credit, and greater willingness to take risk.
The big picture is clear from the chart below.
And right now, the NFCI is at its loosest since early 2022, before the Fed started hiking rates.
Historically, that’s an ideal setup for Bitcoin and other risk assets. More liquidity gives institutional investors room to increase exposure to growth assets. And that’s exactly the role Bitcoin’s play in many portfolios.
It also fits with the rebound in ETF flows we’ve seen since mid-April. Structural liquidity is improving, and that’s a key driver of long-term upside, even if short-term headlines are noisy.
The Fed’s Path Remains Supportive
The Federal Reserve has been consistent: it still expects to cut rates twice in 2025.
That stance hasn’t changed since December 2024 and the logic holds.
Inflation remains the top concern for the U.S. economy, which otherwise continues to perform well.
The disinflation trend is intact, but slow. This is a multi-year process.
What matters for investors is that the Fed isn’t tightening again and the market still expects a return to normal over time. The debate is just about how long it will take.
That’s why financial conditions, as shown in the previous section, continue to ease. The Fed’s rate policy is no longer a drag.
Rates still matter for housing and bonds. But Bitcoin, as a growth asset, is more sensitive to liquidity than the nominal rate level.
The latest dot plot reflects some caution. Fewer FOMC participants are backing two cuts, likely due to inflation uncertainty from new tariffs. But the median still points to two cuts.
That’s enough to keep liquidity on a positive trajectory and Bitcoin’s setup intact.
That's it for today. Thanks for reading.
Cheers,
Nick
P.S. Every week, our team conducts extensive research analyzing market data, tracking emerging trends, and creating professional-grade charts and analysis.
Our mission: Deliver actionable macro and Bitcoin insights that help institutional investors and financial advisors make better-informed decisions.
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