Market sell-off despite $2 billion ETF inflows triggers bull cycle speculation

The price of Bitcoin is trading below $113k, after a wider sell-off that led to $1.7 billion in liquidations of long positions. The sell-off has come despite a strong performance from crypto ETFs last week, and the first Fed rate cut of 2025.

BTC is down 3.5% and ETH is down 8.5% in the last 5 days. 

Some analysts are suggesting an end to the crypto bull cycle despite the Fed indicating that more rate cuts are likely to come before the end of the year. 

Prediction market Polymarket is indicating a 65% chance that the Fed will cut interest rates by 25bps two more times this year, reducing the rate by 75bps in total in 2025. 

The September Fed rate decision has historically been an important moment for crypto prices. Bitcoin all-time highs typically occur 12-18 months after the halving and it has now been 17 months since the last halving on April 19 2024. 

Rachael Lucas, crypto analyst at BTC Markets said this:

 "Investors are cautious, long-term holders aren’t panicking, but short-term traders are restless. On-chain data shows holders aren’t selling, so sentiment is more 'nervous optimism' than outright fear."

Many traders will be nursing their wounds after $1.65 billion was liquidated from longs on 22nd September because of the sell-off. 

The sell-off occurred despite BTC ETF inflows nearing $1 billion last week and ETH ETF inflows of $772 million. Total crypto ETF inflows were $1.9 billion last week. 

Additionally, Japanese digital asset treasury company MetaPlanet completed its largest ever BTC purchase, buying 5,419 BTC for around $632.5 million. Strategy and BitMine also added to their respective crypto treasuries. 

‍Arthur Hayes, founder of BitMEX and inventor of the perpetual swap, has argued that the crypto bull market is not over and is instead primed for an “up only” October.