Crypto markets see uptick in volatility as geopolitical risks mount

Hello people!

Happy Monday! I hope you all had a great weekend. We are back today with information on low-risk, fixed-return investment alternatives that can help diversify your portfolio and grow your money. Up next, we will have a crypto market round-up followed by a discussion about a book that will fill you in with the basics and history of the Indian equity market. As usual, we will end the newsletter with a fun puzzle.

Looking to invest in a fixed deposit, but don't know how to choose the right one for you? We have your back. We bring you the CoinSwitch Money video explaining key aspects of FDs such as interest rates, tenure, loans against FD, and risks associated with different institutions. Watch the video to get more information about fixed deposits so that you can choose the FD that best matches your investment needs and your risk profile.

Watch the video now to learn more about fixed deposits.

The repo rate is currently high in India as the Reserve Bank of India increased the repo rate to fight rising inflation. Most of us know that higher interest rates mean expensive borrowing. If we were to apply for a home loan today, we would get the loan at a higher rate.

But what most of us fail to realize is that higher interest rates also mean a higher rate of return on fixed deposit investments as well. Fixed deposits, an investment alternative that had earned a bad name for giving low returns, are currently giving a comparatively higher rate of return than what it was giving 2 years ago.

The high-interest rates might start coming down soon as the inflation has started cooling down in India. The inflation for the month of September was 5.02%, a significant cooling from August’s reading of 6.83%. The reduction in September's inflation has brought inflation to RBI’s comfort zone. While the RBI governor did highlight the fact that the inflation target is 4%, the reduction means that interest rates hikes are unlikley.

Conversely, the reduction in inflation has made a strong case for rate cuts from early 2024. This means right now is the best time to book an FD if you are looking for a low-risk, fixed-return investment option.

We at CoinSwitch have published a blog post on ‘Why is right now the best time to invest in FD’. Read the blog to make an informed investment decision.

Crypto markets were trending downward last week as the world witnessed a rise in tensions amid the Israel-Palestine conflict, sending global investors into a risk-off mode. The total crypto market cap was back just above the $1.1 trillion mark, as all major crypto assets witnessed a sell-off during the week, with a revival over the weekend.

Both BTC and ETH fell sharply last week, but have since rebounded and are now trading just below the $28k and $1.6k levels, respectively. ETH's price fall was steeper as investors reacted to the Ethereum Foundation's bulk sale of ETH for operational use, as a net negative for the ecosystem.

But the broader markets staged a recovery over the weekend, driven by a rebound in BTC prices after the SEC failed to appeal against the Grayscale Bitcoin Trust ruling from last month, further strengthening the case for a BTC spot ETF approval.

For the broader crypto markets, it was a sea of red as most major assets came under selling pressure and were trading at lower prices. The fall in Altcoins was much steeper compared to BTC, as investors rushed for safety and rotated back into BTC, sending BTC's market cap dominance back to close to 50% levels.

Amongst top market cap coins, worth highlighting was the fall in AVAX prices as the Avalanche ecosystem's most popular app, Star Arena was hacked for $3mm. Other major tokens that witnessed heightened volatility in prices last week were Rollbit's RLB, Mantle's MNT, and Thorchain's RUNE.

Some of the only green offshoots in the market were gold tracking tokens like PAXG, as investors piled into the "safe haven" with increasing global uncertainty. Even Maker's MKR rose over the week, as the "higher for longer" interest regime benefits from its recent foray into tokenized Treasury Bills!

• BTC $27,759 ⏫ 3.19%

• AVAX $9.49 ⏫ 3.74%

• RLB $0.14 ⏫ 11.98%

• MKR $1,458 ⏫ 3.82%

• MNT $0.32 ⏬ 0.24%

(All data here is as of 3:30 p.m., 16 October, 2023)

Before we conclude, here’s a quick look at some important news from around the crypto world.

• The US Securities and Exchange Commission (SEC) won’t appeal a court’s scathing reversal of its decision not to let Grayscale convert its bitcoin trust into a more investor-friendly exchange-traded fund, according to a person familiar with the matter, possibly clearing the way for the first bitcoin ETF in the US. (Source: CoinDesk)

• JPMorgan has carried out its first live blockchain-based collateral settlement transaction involving BlackRock and Barclays, the US banking giant said on Wednesday. JPMorgan’s Ethereum-based Onyx blockchain and the bank’s Tokenized Collateral Network (TCN) was used by BlackRock to tokenize shares in one of its money market funds. The tokens were then transferred to Barclays Plc for collateral in an OTC (over-the-counter) derivatives trade. (Source: CoinDesk)

We have talked quite a bit about fixed deposit investments today. However, we understand that fixed deposits cannot comprise your entire portfolio. Hence, today’s book recommendation is a great read for people who are interested in equity investments.

Bulls, Bears and Other Beasts

By: Santosh Nair

The book is a comprehensive account of the Indian stock market journey so far. This makes Bulls Bears and Other Beasts a great read for people who want to get started with the stock market but don't have the knowledge of the past booms, slumps, and defining moments of Dalal Street. While this is an informative book, you can enjoy reading it as a novel.

Invest in this book to understand the Indian equity market.

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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