Where now for cryptocurrencies after last week’s surge?

Bitcoin and Ether rise from the grave 

For months, the question has been what, if anything, can revive cryptocurrencies from their ongoing downturn. Outshone by gold and by the AI mania, bitcoin, ether and others seemed destined to drift ever lower. But Scott Bessent’s decision to go meddling in the US Treasury market has revived the spectre of dollar ‘debasement’. This is almost the dream scenario for cryptocurrencies, playing into the asset class’ entire raison d’être, sparking a rally the likes of which hasn’t been seen for over two years. Recent strength in cryptocurrency inflows helped the move, and it is the kind of compelling story that has been lacking from the space for quite some time.

Bitcoin inflows provide hope for more gains

While the Bitcoin price moves excited retail investors, it is the institutional flows that are needed to keep the rally going. For the moment it looks like the outflows have been staunched, and the beginnings of an inflow revival are in play. This is the key ingredient for a sustained bounce, so all eyes will be on flow data for the week ahead.

What we’re watching – Nvidia, yields and Jackson Hole

There is enough to keep investors occupied even without the need to watch flow data. Nvidia’s results duly crowd out all other company news this week, while the flurry of activity in the Treasury market comes just as Warsh is set to take the stage at his inaugural Jackson Hole get-together. Warsh’s words will be parsed for signs that the Fed is working hand-in-glove with the Treasury – a break between the two is very unlikely, but with the debasement trade apparently back on it will be a tricky job to maintain the appearance of independence without sounding like the two are at loggerheads.