Bitcoin has gained roughly 6% since the Federal Reserve announced its first interest rate reduction in over four years. On Wednesday, the Fed approved a 50 basis points rate cut with a 10-1 vote, though the Federal Open Market Committee’s (FOMC) trajectory for future cuts appears less aggressive than the market had anticipated. BTC briefly surpassed $64,000 during Friday’s Asian trading hours but trimmed some of its gains amid a weak start in US equities trading.
Despite the initial pullback, there has been a noticeable increase in demand for risk assets, including other crypto majors such as Ethereum (ETH) and Solana (SOL). While the rate cut has provided a short-term boost to the crypto market, the short-term economic outlook remains uncertain, and caution is still advised. The broader global economic slowdown, softer macroeconomic indicators, and geopolitical tensions are contributing to ongoing uncertainty, weighing on investor sentiment. In the next three months, the Fed’s ability to steer the economy toward a soft landing will become clearer, with the potential for a recession still in play. The upcoming US presidential election may also prompt crypto investors to remain risk-averse and stay on the sidelines until after November 5th. Over the long term, however, lower interest rates typically support investment in riskier assets such as BTC and ETH, as traditional investment yields diminish.
US equities slipped from their record highs on Friday as the initial rate-cut euphoria faded. However, increased market optimism was also seen in US rates. For example, the US 10-year minus 2-year treasury spread, a key recession indicator that had been negative since July 2022 but recently steepened to +14 basis points. On the ETF front, US spot bitcoin ETFs registered mostly positive flows this week – with the exception of Wednesday – and recorded $158 million in net inflows on Thursday, while spot ether ETFs saw $5.24 million in inflows on the same day. Although bitcoin ETF flows and trading volumes are not yet at the levels seen in Q1 and early summer, assets under management (AUM) are hovering near their all-time high of over $62 billion reached in July. Conversely, US ETH ETFs have accumulated $610 million in negative flows since their July launch driven by large outflows from Grayscale’s ETHE.
Market Overview
The global cryptoasset market capitalization currently amounts to roughly $2.3 trillion – up from $2.13 trillion last week, with bitcoin accounting for 54.3%. Among the Top 30 cryptoassets by market cap, SUI outperformed, gaining about 44% over the week. The price of bitcoin (BTC) rose by 5.5% to $62,906 while the price of ether (ETH) increased by 6.1% to $2,556. The total value locked (TVL) in DeFi is sitting at $81 billion, with Ethereum (excluding Layer 2s) accounting for about 56% of TVL. Arbitrum One remains the largest Layer 2 by value locked, accounting for 38.5% of the $36 billion in assets.
This Week’s Headlines
- Donald Trump-backed World Liberty Financial debuts plans to sell WLFI token
- Solana Mobile reveals latest crypto smartphone “Seeker” and discloses more than 140,000 pre-orders
- UK fintech firm Revolut intends to launch stablecoin, CoinDesk reports
- SEC charges DeFi platform Rari Capital with misleading investors and unregistered broker activity
- German Government shuts down 47 small crypto exchanges, says they’re tied to “illegal activity”
- The Kingdom of Bhutan holds 13,000 bitcoin worth $750 million – the fourth-largest government holdings of bitcoin, Arkham Intelligence reports
- Google’s cloud division introduces new Ethereum remote procedure call (RPC) service to support Web3 development
- Wintermute to launch predictions market called OutcomeMarket, beginning with TRUMP and HARRIS tokens
- Singapore-based crypto exchange BingX faces an estimated $43 million security exploit, according to PeckShield
- MicroStrategy completes upsized $1.01 billion convertible senior notes offering and buys 7,420 bitcoin worth $458 million
- BlackRock publishes new Bitcoin research paper
Notable Deals and Fundraising
- Crypto venture fund Dragonfly seeks to raise $500 million for its next fund, Bloomberg reports
- Solana-based Drift raises $25 million to build “SuperApp” for DeFi trading
- Modular blockchain network developer Hemi Labs raises $15 million
- Permissionless Labs raises $10 million from Multicoin Capital, Solana co-founder Anatoly Yakovenko and others
- Web3 AI wellness company CUDIS raises $5 million
- Vana – a Web3 startup that aims to build a network of user-owned data pools – raises an additional $5 million by Coinbase Ventures and others
- ZK proof generation layer developer Fermah raises $5.2 million in seed funding from a16z and others
- Bitget, Foresight Ventures invest $30 million in TON blockchain
- Foresight Ventures announces strategic investment in Aptos
