Global equity funds attracted a record $266 billion over four weeks, according to The Kobeissi Letter, while Bitcoin (BTC) failed to join the rally as market-implied odds of a Federal Reserve rate hike in December climbed to 84.4%.
The surge in equity inflows comes as markets expect tighter monetary policy. Higher rates raise Treasury returns relative to non-yielding assets like Bitcoin, creating a second headwind for BTC holders.
Who Is Capturing the Equity Fund Flows?
The Kobeissi Letter said US equity funds have taken in $2.1 trillion since 2020, with $1.5 trillion of that arriving since the start of 2024. In contrast, emerging market Asia equity funds attracted $470 billion over the same period, while European equity funds lost $426 billion.
Even so, Asian stocks rebounding on Monday took their cue from Wall Street rather than setting the direction. Global equity funds gained $89 billion last week, with US funds supplying $32 billion of that, pushing four-week inflows to the record $266 billion.
What Do 84% Fed Hike Odds Mean for Bitcoin?
The CME Group’s FedWatch tool, which converts futures on the Fed’s benchmark rate into probabilities, shows an 84.4% chance of a quarter-point hike on December 9, with 0% assigned to a cut.
However, the Fed held rates at 3.75% to 4% on October 28 in a 10 to 2 vote. Officials Lisa Cook and Beth Hammack dissented in favor of a quarter-point hike at that meeting.
Meanwhile, Bitcoin lagged the Nasdaq rebound on Friday. US spot Bitcoin exchange-traded funds (ETFs) saw $1.28 billion in net outflows from November 2 to 6, the analysis said.
Consumer price index (CPI) data lands later Tuesday and will test those rate expectations. A $42 billion 10-year note auction follows this week’s Treasury sales, which opened with soft demand.
Still, positioning this concentrated may leave US equities exposed to a firmer Fed than priced in. It may also leave crypto exposed if capital keeps skipping it. A softer CPI reading would trim hike odds and weaken that read.
