Global Crypto Funds See 10-Week High, but Bitcoin Falls Amid Conflict in Middle East
Welcome to our Weekly Market Update. Explore weekly crypto price movements, read a quick digest of notable market news, and dive into a crypto topic — this week we learn more about how to earn crypto rewards.
Takeaways
Crypto Prices Drop After Iran Retaliates Against Israel
Bitcoin has experienced a sharp pullback after enjoying a broad rally, driven in part by the US Federal Reserve's 50 basis-point rate cut nearly two weeks ago.
A major factor driving bitcoin’s price decline is the news of Iran’s retaliation against Israel’s ground invasion of Lebanon. The selloff, which saw bitcoin fall to around $60,000, has made this week the worst beginning to so-called ‘Uptober’, according to Presto Research. Over the past nine Octobers, the price of bitcoin has risen nearly 23% on aggregate.
The selloff was also triggered in part by the election of Shigeru Ishiba as Japan's new prime minister; a move seen as signaling a shift toward tightening monetary policy. Ishiba is expected to support the Bank of Japan's (BOJ) plan for higher interest rates, which has increased uncertainty among investors in the region. The news of Ishiba’s election caused the yen to increase in value and led to a sharp decline of 5% in Japan's Nikkei stock average.
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The market skepticism comes shortly after the Fed implemented rate cuts for the first time in more than four years, sparking a short-lived rally in the digital asset sector. Investors will be hoping for another cut at their next meeting in early November, with traders betting they will cut rates by another 50 basis points.
Crypto Funds Saw Largest Net Inflows in 10 Weeks
Global crypto funds managed by major asset managers, including BlackRock, Bitwise, Fidelity, and Grayscale, recorded $1.2 billion in net inflows last week. The positive activity marks the largest net inflow in 10 weeks, fueled in part by expectations of dovish monetary policy in the US and positive price momentum.
Additionally, the recent SEC approval for trading options linked to BlackRock’s spot bitcoin ETF helped improve sentiment. US-based funds made up the majority of the inflows, generating $1.2 billion, with spot bitcoin ETFs accounting for $1.1 billion. Bitcoin investment products saw the majority of net inflows, totaling $1.1 billion globally. Additionally, short bitcoin investment products garnered $8.8 million amid bitcoin’s price increase last week.
Ethereum-based investment products also saw an end to their five-week streak of outflows by gaining $87 million. Analysts noted that the performance of these funds last week made it the second best week for US spot ehter ETFs since they went live in July.
How Can I Make Returns or Rewards on My Crypto?
As the blockchain industry evolves, more crypto holders are looking for ways to generate a return on their assets. For some, this process involves minting new tokens that can be sold for profit, while others choose to stake their tokens and earn rewards as validators. Many users are also engaging with centralized and decentralized lending protocols that can generate additional returns through yield farming. Alternatively, some crypto rewards credit cards are now offering bitcoin (BTC) instead of cash or points. Although all of these options present opportunities, investors should always consider the risks associated with each. For example, staking usually requires that assets remain locked in a smart contract, which can expose investors to negative market movements and other staking-related risks. Further, DeFi protocols operate via automated smart contracts that may include vulnerabilities that can threaten security.
Onward and Upward,
Team Gemini