KEY POINTS
Institutional trading volume for Bitcoin on the U.S. exchange Coinbase has reached a key bullish threshold, signaling a potential price increase within a week, according to new analysis. Charles Edwards, founder of digital asset fund Capriole Investments, reported Wednesday that institutional players accounted for 75% of Coinbase’s Bitcoin volume this week, a metric that has historically preceded a rise in BTC value. This surge in institutional demand is largely driven by cooling U.S. inflation figures and growing market certainty of a Federal Reserve interest rate cut next month.
Institutional Demand Hits Bullish Threshold
In a post on X, Edwards highlighted the significance of the institutional volume spike on Coinbase, a favored platform for large-scale U.S. investors. His firm’s data showed that on Tuesday, institutional trading dominated the exchange’s activity.
“All readings above 75% have seen higher prices one week later,” Edwards noted, pointing to a consistent historical pattern. This surge reflects a broader trend of institutions accumulating Bitcoin at a rate far exceeding its creation.
Capriole Investments calculates that institutional “excess demand” this week is 600% greater than the new supply of roughly 450 BTC mined daily. Underscoring this trend, corporate treasuries alone added 810 BTC to their balance sheets on Tuesday, following an even larger acquisition of nearly 3,000 BTC on Monday.
Fed Rate Cut Hopes Fuel Risk-On Sentiment
The renewed institutional appetite for Bitcoin coincides with favorable macroeconomic data, specifically the lower-than-expected U.S. Consumer Price Index (CPI) report for July. When asked why institutions “went crazy” for BTC, Edwards directly linked the activity to the monetary policy outlook.
“Because yesterday inflation was as expected, which means it’s a certainty the Fed will cut rates next month, and probably 3 times this year,” he explained. He added that a weakening job market could even prompt a larger 0.5% cut, stating, “Rates down = risk assets up, and Bitcoin is the fastest horse historically.”
Market expectations strongly align with this view. Data from the CME Group’s FedWatch Tool shows an overwhelming consensus for at least a 0.25% rate reduction in September. However, trading firm QCP Capital noted in a market update that expectations for 2025 and beyond remain more conservative, with investors pricing in a potential floor for rates around 3% in 2026.
Looking ahead, market participants are now turning their attention to the Federal Reserve’s Jackson Hole symposium next week, which is expected to provide further clues on the central bank’s future policy path.
A Bullish Convergence
The convergence of on-chain data and macroeconomic trends paints a bullish short-term picture for Bitcoin. The significant increase in institutional buying on a major U.S. exchange provides a strong, data-backed signal that has reliably preceded price gains. With the Federal Reserve poised to loosen monetary policy, large investors appear to be positioning themselves in Bitcoin, viewing it as a prime beneficiary in a renewed risk-on environment.
