The Scoop: Bad macro, bad flows, bad price

This column was co-written by Frank Chaparro, director of special projects at The Block, and Laura Vidiella of MNNC Group. The views expressed in this column are their own and do not reflect the opinions of their employers.

Today [Thursday] was an interesting day for token prices. We've often highlighted the three major forces driving crypto prices in 2024: political and regulatory uncertainty, macroeconomic trends, and market flows. Today, macro trends took center stage, driving the market up earlier in the session before pulling it back down by day's end.

Bitcoin largely mirrored global equities and other risk-on assets, which rallied initially but closed lower. The market had to digest a mix of economic data that could affect the timing and scale of future Federal Reserve rate cuts. August payrolls came in below expectations, while jobless claims declined last week, according to the Department of Labor. Private-sector job growth for August was just 99,000 — the smallest increase since January 2021.

However, tomorrow could be pivotal, with the Labor Department set to release a jobs report that may heavily influence Fed policy. Markets have been anticipating rate cuts, which would provide a tailwind for risk assets like bitcoin. But if the labor market weakens too much rather than stabilizing, it could derail the Fed’s plans and reduce the chances of the substantial cuts many are hoping for.

Even if tomorrow’s data is "just right," bitcoin and crypto as a whole are facing a major problem: spot ETF flows. They’ve been absolutely brutal lately. I’m checking The Block's data dashboard, and it's not looking good. We've seen outflows since Aug. 27. On Tuesday, $287 million flowed out of spot bitcoin ETFs, followed by $46 million in outflows the next day. So buckle up for tomorrow — if we get bad macro data and continued poor flows, we could be looking at a significant price drop.

Can someone ask the devs to do something about this?