What Could Spark the Next Crypto Rally? Cointelegraph’s Ray Salmond Points to AI Earnings and Fed Policy

The Kevin has begun at the Fed with potentially being the most pro crypto leader the central bank has ever had.

But she didn't say anything about Bitcoin yesterday.

Instead focusing on steering the central bank back to its dual mandate and away from for guidance.

Now with the release of the latest stop plot rate hike odds climbing as half of the Fed's.

Officials see at least one hike this year, and this cause weakness across asset classes.

Bitcoin had an up and down day yesterday, but the repricing of rate hike expectations ultimately causing weakness in New York morning trade.

We are looking at Bitcoin hovering above the 64,000 level.

Well joining me ahead of a long holiday weekend here in the US is Ray Salmond, head of markets at Cointelegraph.

Good morning.

Thank you so much for joining us.

So markets are digesting the Fed's decision from yesterday, but markets are closed tomorrow and crypto never closes and we'll be trading the three day weekend.

So first and foremost, take us through the price action we saw across crypto markets, in particular Bitcoin after the Fed.

Market sold off after, um, Warsh gave his presser yesterday, which was a little bit odd, but also customary.

I mean, everyone expected a hold, and a hold is what happened.

Uh, I think more concerningly is, um, kind of Warsh's stance on Ford.

Guidance and, um, his ideals on how he wants to transform the Fed, that has concerned markets.

Um, it's also kind of counter to what crypto investors expected to happen.

We thought that Warsh would be kind of a, uh, a rate cut friendly guy.

Um, Which is not the case.

Sorry, I hear some Institutional launches are planned despite recent outflows, and these do include funds from BlackRock and even Goldman Sachs.

So tell us about what we're seeing in terms of recent fund launches, despite what we're seeing across the markets.

Sorry, I hear some yelling in the background.

It's the trading floor of the New York Stock Exchange.

OK.

Sorry about that.

Um, well, this week we had Bitcoin's, uh, BlackRock's premium Bitcoin ETF launch.

Um, uh, yeah, although the AUM in that is not above like 20 million at the moment, uh, it still shows that there are positive developments happening across the crypto market.

So, despite the inflation and monetary policy outlook, um, There was also, um, you know, a slowdown in the outflows from the Bitcoin ETFs.

So, in the previous week, there'd been $200 million to $300 million per day outflows that tapered off after 13 consecutive days of selling.

Um, and we also saw strategy dipping their toes back into the market with a $100 million buy.

So, what this shows is that there's some smart money entities that are still nibbling, uh, on.

Counted Bitcoin, but at the time, retail traders are still mostly sidelined or taking light leverage bets.

So, uh, unfortunately, the early recovery that we saw in the crypto market was disrupted by US markets' response to, um, the Fed's, you know, first pressure, Warsh's first press presser.

Uh, and I think with the price softness that we're seeing this week, it kind of raises the chance for another dip below that $60,000 level.

Yes, and you mentioned strategy, Ray.

Michael Saor has been saying that the AI trade is sucking capital away from Bitcoin.

So tell us where we stand in terms of rotation into crypto when we consider the interest and focus on AI, energy, and of course the mega IPO SpaceX.

I don't think that there is a rotation into crypto happening yet, and a handful of fund managers agree that Bitcoin is discounted, but they say that investors are riding the fastest horse.

They're, they're chasing outperformers in AI and in energy.

Those have proven to be better trades.

So, um, this is leading to a passive or hands-off approach to Bitcoin, and the recent drop to $59,000 was also accompanied by $4.4 billion in ETF outflows.

And the, the ETF.

ETFs have turned negative year to date.

So, beyond strategy propping up the market with some more future multi-billion dollar buys, markets really need to see net flows into the ETFs turn positive over a sustained period of time.

Now, selfishly, I would, I was hoping that the, uh, SpaceX, uh, launch and uh, that, you know, their successful IPO would lead to some profit taking and that some of that would spill over into crypto, you know, the, the saying that a rising tide would lift all boats, um, That has yet to happen.

And right now, it seems the most sensible thing that investors are doing are still chasing after AI related stocks and big tech stocks.

So, um, I think in terms of a rotation into, uh, crypto and Bitcoin, what, what would may be a sign of that, what are some events that investors may keep an eye on is what are the first two quarters of earnings look like for any big AI company that IPOed.

Uh, I'm curious to see how their evaluations and their fundraising contrast against the revenue expectations that the market has and that the shareholders have and what impact that has on markets if they meet those expectations or fall short of them.

So, uh, perhaps through that and, uh, a less interventionist Fed, but we will have to leave it there, and I look forward to continuing the conversation at another time.

Thank you so much for joining me, and I appreciate your perspective.

Thank you.