Crypto markets calm amid increasing "risk-off" sentiment

Hola folks!
Welcome to our weekly update on money, investments, crypto market, and more. Besides the risks posed by possible hikes in interest rates, the Palestine-Israel conflict that erupted over the weekend added to market volatility. In personal finance, we discuss the debt trap and how to avoid falling into one.

Hope this week's NL will bring you some clarity about investments, savings, and much more!

We are all aware of fixed deposits as investment tools. But, is FD the right investment option for you? The answer is yes if you have a low-risk appetite or are looking for an investment alternative with an assured return on maturity. For people with a low-risk profile, now is the best time to book an FD as the fixed deposit interest rates are high as of now. Amid macroeconomic and geopolitical factors which impact financial markets, a longer-tenure FD may be your best bet against short-term volatility.

Watch the video now to learn more about fixed deposits so that you can make an informed investment decision.

Let’s move on from investments to lack of investments and how the Indian household savings rate is falling at an alarming rate. And learn how you can save yourself from falling down the debt rabbit hole.

The Indian household net saving rate is at a multi-decade low at just 5.1%, a whopping fall from 11.5% in 2020-21. The savings rate has fallen to this low for the first time since the 1970s oil crisis. The fall in savings and the rise in Indian household debt is alarming.

The revenge spending post-Covid has taken its toll on the Indian savings, destroying the core value of a typical Indian middle-class household; being frugal with money to save every penny that we can. It is time for millennials and Gen Z to understand the importance of savings and how not to fall into the debt trap.

Today’s Money Simplified section will talk about how you as an individual can save yourself from the vicious debt cycle.

Debt is addictive and it is now easily accessible as well. The easy availability of credit makes it all the more dangerous as people tend to forget how to be economical with money.

Money is scarce and always will be. Credit makes it easy to access money that you don't have but will have to pay back with interest at the end of the credit period. This means credit is making money scarcer for you.

Here is what you can do to stay away from the debt trap:

• Never run your credit card bills more than you can pay at the end of the credit cycle.

• Avoid using buy-now-pay-later options at any cost

• Avoid availing any type of unsecured loans

• Do not opt for personal loans to fund your lifestyle

• Do not opt for loans for unnecessary expenses like vacations, shopping, gifting, etc.

If you already have credit card debt or have some form of unsecured loan that you need to repay, make it a priority. Cut down on all your frills and extra spending until you have repaid any debt which is attracting an interest rate higher than 10%.

Start developing your repayment plan today. In the meantime, we will be back next with a low-risk investment option that will give you a fixed return.

Crypto markets continued their rangebound trading, albeit with a slight upward bias as "risky assets" face resistance due to increasing interest rates. Overall, the total crypto market cap remains above the $1.1 trillion mark, as BTC outperformed ETH over the week, trading in the green at just below the $28k level, while the latter traded slightly in the red but settled above the $1.6k level.

With the SEC setting a final date for ARK Invest's BTC Spot ETF review, we are now within 100 days of getting a possible approval, resulting in strong support in prices. It's interesting to note that this strength in prices comes in the backdrop of "murky" macro conditions, as US national debt accelerates at a record pace and US Treasury Bond markets are under severe stress, which is causing panic in most other "risky" asset classes. The war between Israel and Palestine will add further uncertainty in the near future.

The much-awaited SBF court trial began last week and will have major implications on how US regulations take shape. Co-founder and CTO Garry Wang testified against SBF and over the next few weeks, we'll witness several other testimonies from FTX's inner circle executives.

In a major positive on the regulatory front, Singapore made positive moves by approving a Major Payment Institution (MPI) license for 3 crypto firms last week: Coinbase, Ripple, and Sygnum!

For the broader crypto markets, prices traded in a tight range with a few token-specific triggers resulting in outlier performance, mostly on the positive side.

Leading the pack of gainers were some major blue chips like XRP, SOL, and AVAX.

XRP prices reacted positively to two major developments around the court's order to dismiss SEC's plea for a re-hearing and the MPI license in Singapore!

For AVAX, it was a roller-coaster week, as the trigger for the price increase had been a jump in transactions on the network following the launch of its SocialFi Dapp, Stars Arena. However, with increasing interest comes increasing risks, and the Dapp was attacked by hackers stealing $3 million in user funds over the weekend.

For SOL, the trigger for the price increase has been the constantly increasing DeFi TVL, which hit all-time highs, along with major accumulation and buying pressure on exchanges.

• XRP $0.5096 ⏬ 2.67%

• SOL $22.82 ⏬ 5.34%

• AVAX $9.92 ⏫ 1.80%

(All data here is as of 3.15 p.m., 9 October, 2023.)

As a crypto enthusiast, you should understand what’s causing all the price action. So here’s some news to help you digest the market’s ups and downs.

• The Hong Kong Stock Exchange’s Stock Connect System is getting an upgrade thanks to blockchain technology. The upgraded Stock Connect, dubbed Synapse, will incorporate smart contracts to help execute post-trade workflows and reduce settlement risk. Read more here.

• Chainlink, the blockchain data oracle provider, has launched “Data Streams,” a new product designed to reduce network latency. The offering has now entered early access on layer 2 platform Arbitrum. Read more here.

I Will Teach You to Be Rich

By: Ramit Sethi

I Will Teach You to Be Rich is an innovative personal finance book as it doesn’t focus just on cutting expenses, but talks about ways to stop pinching pennies and live the life you’ve always imagined. Sethi encourages readers to spend confidently on things they love, and cut back mercilessly on things they don’t.

Read the book to benefit from Sethi’s valuable knowledge and deep insights.

Before you get on with your day, don’t forget to flex those brain muscles with our weekly crypto crossword

That’s it for now. Thanks for sticking around.

See you later, folks! 👋

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