Wintermute Links Bitcoin’s Smaller Decline to Capital Rotation From Stocks

4 Min Read Tags:
  • Bitcoin ended the week above $80,000 despite stronger-than-expected US labor market data, according to Wintermute.
  • Wintermute identified $82,000 as key resistance and said a sustained break below $72,000 would prompt a reassessment of its market outlook.
  • Bitcoin spot ETFs attracted $987 million during the week, while Ethereum ETF inflows slowed to $215 million.
  • Wintermute said gains among altcoins remained concentrated in DePIN and AI-related tokens.

Bitcoin ended the week above $80,000 after absorbing stronger-than-expected US labor market data, according to a Wintermute report. The cryptocurrency’s performance exceeded that of most traditional risk assets as the market continued to attract capital through spot exchange-traded funds.

Wintermute said bitcoin approached $82,000 several times during the week. Strong labor-market data pushed expectations of a US Federal Reserve rate increase in September to nearly 60%, but did not trigger a sustained sell-off in crypto assets, according to the firm.

Bitcoin tests key resistance

Wintermute identified $82,000 as the key level bitcoin must break to continue moving higher. The firm said a sustained decline below $72,000 would provide grounds to reassess its current market view.

Inflows into spot bitcoin ETFs remained a major source of support, according to Wintermute. The funds attracted $987 million during the week, marking a third consecutive week of positive flows and bringing cumulative inflows over that period to about $3.8 billion.

Ethereum ETF inflows slowed to $215 million from $816 million a week earlier.

Altcoin recovery remains uneven

Wintermute said the recovery among altcoins remained limited. Tokens in the decentralized-finance and layer-2 sectors traded mostly sideways for two weeks, while DePIN and AI-related tokens posted gains.

The firm highlighted Uniswap and Arbitrum among individual assets and said a separate move had emerged in tokens tied to the AI sector.

The end of gas subsidies on Robinhood Chain in late September will provide another test for the market, Wintermute said. The firm expects the change to show whether the ecosystem’s current activity can hold up after the incentives expire.

Drawdowns narrow across bitcoin cycles

About 340 days after its all-time high, bitcoin was trading roughly 50% below its peak, according to Wintermute. At a comparable stage of the 2018 and 2022 bear markets, bitcoin’s drawdown exceeded 75%.

The firm said the depth of bitcoin’s cyclical drawdowns had narrowed from about 83% to 77% and then to 50%. Earlier participation by ETFs and institutional capital may be one reason for that shift, it said.

Wintermute also pointed to a change in the structure of capital flows. As the stock market slowed, some funds moved into crypto assets, the firm said, suggesting that current market dynamics may reflect both changing macroeconomic expectations and a reallocation of capital across asset classes.

However, Wintermute said it remained unclear whether bitcoin’s June low marked the final bottom.

Inflation data and Fed meeting in focus

Wintermute identified the release of the US Consumer Price Index on September 11 and the Fed’s September 15-16 meeting as the next key events. Large token unlocks in the second half of the month could also affect the crypto market, it said.

The firm said its outlook would remain constructive while bitcoin held key support levels. A sustained break below $72,000, combined with a material deterioration in spot ETF flows, would prompt it to reassess that scenario.

CryptoQuant analysts had previously assessed bitcoin’s chances of breaking above $83,000.

Source: Incrypted

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