Crypto markets witness heavy volatility as the Middle East crisis flares up

Hola folks!

Welcome back to the cryptosphere. The crypto market had a highly volatile week amid escalating geopolitical tensions in the Middle East, persistent US inflation, and the spot BTC and Ethereum ETF approval in Hong Kong. The upcoming Bitcoin Halving is also expected to increase volatility in the crypto space further. 

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Crypto markets defied the macroeconomic uncertainties last week and continued their price gains, pushing the overall market cap to just above $2.75 trillion. But there was a sharp reversal over the weekend as Iran launched strikes against Israel, making risky assets less appealing to investors, leading to a fall in the overall crypto market cap to $2.5 trillion. 

Market leader Bitcoin had a rollercoaster week after an initial dump in prices that followed the surprise US macroeconomic data releases. Both CPI inflation data and non-farm payroll data exceeded expectations, suggesting that the US economy is running hotter than expected and will cause the Fed to hold back on any rate cuts. It is widely expected that Fed rate cuts will happen post-June and might be reduced to just 2 cuts in 2024. 

"Risk-on" assets reacted negatively to the news, but crypto made a comeback later in the week on the back of ETF-related news. In the US, the daily outflow from GBTC fell to its lowest at $18m.  

A big development is happening in Hong Kong, as we saw spot BTC and ETH ETF approvals coming through today morning before the halving. We can expect a wave of Chinese capital to get exposure to crypto via these instruments as local markets of real estate and stocks continue to underperform. Bitcoin price gyrated from $70k high to $62k low during the week, as the Middle East news broke out, and is now trading back above $66k. 

Ethereum's price fall was sharper than Bitcoin's, with ETH trading above the $3.2k level. Ethereum developers are at it again and have already moved ahead from the DenCun upgrade. They are working on the Pectra upgrade, which will make it a more investable institutional asset. However, the big update for the Ethereum ecosystem was the launch of Eigen Layer Mainnet and the beginning of the 'Restaking Era" as TVL on Eigen Layer already exceeds $12 billion.

For the broader crypto markets, it was mostly red candles all around, as the BTC dominance reached a three-year high, and altcoins were punished severely during the dump. 

Ordinals token ORDI surged in price, as the first Bitcoin Inscription NFTs will be sold in a Christies' auction soon. Recently launched, Ethena's ENA token also rose sharply by ~50% as its delta-neutral, yield-generating stablecoin gained more traction but came under selling pressure during the fall in prices, wiping out all the gains.

There were pockets of gloom for the market, with the starkest one being the fall in Uniswap's UNI token as the SEC sent a Wells notice to the protocol, continuing its stance of regulation by enforcement. 

Post the run-up to its halving, Bitcoin Cash's BCH too corrected sharply in price last week. Aptos' token also came under selling pressure and corrected by 10% in the run-up to one of its biggest upcoming token unlocks.

• BTC $66,706 ⏬ 7.80%

• ETH $3,253 ⏬ 9.68%

• ORDI $48.71 ⏬ 37.01%

• UNI $7.78 ⏬ 33.68%

(All data here is as of 3:07 p.m., 15 April 2024)

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

• Hong Kong approves first batch of spot bitcoin, ether ETFs; could unlock $25B in demand. China Asset Management’s Hong Kong unit has received approval from the Hong Kong Securities and Futures Commission to offer retail asset management services related to spot crypto ETFs. Read more here. 

• EigenLayer, a “restaking” service for Ethereum that has already racked up $12 billion in user deposits, announced on April 9 that it is officially launching to the blockchain’s mainnet. The launch comes alongside the release of EigenDA, a data-availability (DA) service from the team behind EigenLayer. Read more here.

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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