Crypto looks to reset

On Thursday, Bitcoin momentarily popped but promptly pulled back. The muted rally/quick swing followed reports of cooling U.S. inflation. 

But even residual, if fleeting, momentum, plus a sense that perhaps a corner has been turned, has rubbed off on an altcoin field clamoring for dip-buyers' attention.

Many familiar names are sticking out as solidly green this morning, including: XRP (+5.3% in 24 hours); MKR (+5.2%); XLM (+3.3%) and LTC (+1.4%). The latter is up 16% since last week. The fact that often-overlooked No. 23 Litecoin (three months removed from $100) has turned itself around over the past seven days (back within reach of $70) is a kind of emotional lift in and of itself; it's a fresh air blast especially when taken alongside a discernable warm breeze that may well be a macro tailwind, i.e. inflation demons at long last appear to have been wrestled to the ground.

In the same vein, the eighth-largest token, XRP, while not quite $0.47, can be viewed as being in victory-lap mode if only because the dreaded sub-forty-cent level has just been hastily discarded. The coming dawn of spot Ethereum ETFs has turned attention to a handful of large altcoins deemed ready to taxi to the runway for similar product take-off.

Solana, an Ethereum challenger and CoinGecko's fifth-largest asset, may well be the next crypto to make its ETF bones. But it'll take several months if it happens at all. In the meantime, SOL is shedding its status as an altcoin to watch as crypto markets try to reset.

SOL fell 5.5% in the past 24 hours, as of 7:17 a.m. (EST).

Yesterday morning around this time, Bitcoin jumped from $58,400 to $59,300 following the release of the U.S. government's closely watched consumer price index (CPI) which showed that in June the monthly inflation rate dipped (albeit by merely 0.1%) for the first time since the spring of 2020.

For a brief and shining moment on Thursday, it sure appeared as if BTC bulls would regain a foothold well above the $57K mark, deemed as a critical, historically charted intersection of optimism and despair. However, shatter the descending trend line the largest crypto did not; the $57K mark vanished from view last night.

As of today, at about 6 a.m. (EST), BTC was $56.8K, down about 2%. "Bullish hopes were quickly dashed," CoinDesk said of yesterday's short-lived return to glory.

It should be noted that as of about 7:30 a.m. (EST), BTC was indeed clawing back toward $57K.

It was only last month that JP Morgan analysts were floating a potentially juicy figure of $26 billion in terms of annualized net inflows into crypto assets, looking out to the end of 2024.

But before the month of June was done, that same team started to question whether this pace was realistic when considering that the price of BTC – nearly $72K as of June 7 – looked increasingly lofty relative to mining costs and gold.

On Wednesday, the JP Morgan digital markets research team, led by Nikolaos Panigirtzoglou, who is based in London (and whose last name we choose to pronounce unflinchingly as "panny-gertzo-glue"), released a newly revised year-to-date estimate for the size of the crypto-asset universe (comprising ETFs, CME futures and VC funds, and adjusted to reflect the shift from exchange wallets to new spot BTC ETFs).

Panigirtzoglou and his peers now peg the total as being roughly $8B, down from $12B, an estimate that was being bandied about only a few weeks ago.

"The reduction in the estimated net flow is largely driven by the decline in Bitcoin reserves across exchanges over the past month," Panigirtzoglou said.

The good news, he adds, is that crypto liquidations are on the verge of decreasing, likely later this month, thus teeing up the potential for a commanding crypto market recovery starting in August.