Macro clouds hover over crypto markets even as ETF inflows slow down

Hey folks!

Even as summer marches on across India, macroeconomic uncertainty casts a cloud over the global crypto markets. 

Bitcoin breached the $60k mark and continued its downward slide to fall below $57k. It started recovering over the weekend after the weaker-than-expected US job data signaled that higher interest rates have finally started slowing down the economy. 

Our weekly newsletter will give you a bird's eye view of crypto market movements in the past week. Read on to learn more about all that shook the global crypto market.  

Crypto markets witnessed a major pullback as the macroeconomic conditions around interest rates remaining "higher for longer" were further cemented. This coupled with a marked slowdown in Spot BTC ETFs flows, sent the overall crypto market cap much lower to just below the $2.5 trillion level. In fact, in terms of price action April was the worst month for the market, since FTX Crash in 2022. 

However, the weekend brought some cheer as US jobs data came in weaker than expectations suggesting that the high interest rates have finally started slowing down the economy. This would help bring inflation under control and prompt the Fed to decrease interest rates, boding well for "risky assets" like crypto.

Market leader Bitcoin fell sharply in price as the run-up associated with the "Halving event" and the demand inflow for Spot ETFs began to dwindle. The Fed's announcement around interest rate cuts getting further delayed, didn't help prices either, which fell as low as $57k but rebounded over the weekend to settle just below the $64k level. 

In the US, last week witnessed strong daily outflows for the first time from both Blackrock's IBIT and Fidelity's FBTC, with the largest single-day outflow exceeding $570 million. 

Around the globe, the other big spot ETF-related development was the launch in Hong Kong, where trading began for both spot BTC and ETH ETFs. However, there was tepid demand and underwhelming volume for these products further accelerated the downward spiral in prices.

Ethereum's price volatility was lesser than Bitcoin's, with ETH currently trading just below the $3.2k price level. The big update for the Ethereum ecosystem was that post the launch of Eigen Layer Mainnet, the "Restaking" giant announced its token EIGEN airdrop for early users. Unexpectedly, it received criticism, as the various restrictions imposed and longer vesting schedule irked most investors!

Another major development from last week was the sentencing of Binance's Founder and CEO CZ. He was served with a four-month jail sentence and more than $4bn in fines, in connection with his ongoing lawsuits around money laundering and KYC compliance, against US authorities. 

Putting money where its mouth is, Blackrock led a major investment in the asset tokenization platform, Securitize. Coinbase too reported stellar returns in its quarterly financial release, with both earnings and revenue massively exceeding analyst estimates. Even Jack Dorsey's Block announced that it'll be investing in monthly purchases of BTC, using 10% of the company's gross profit.

The broader crypto markets saw a lot of rangebound trading, with most tokens trading in the red initially but ending the week in the green after the weekend surge in buying. 

A beta play on Bitcoin, Layer 2 Stacks protocol's STX token fell by 20% as its much-touted Nakamoto upgrade has failed to gain steam however it did rebound over the weekend. 

Major AI theme tokens that have run up in the past like Bittensor's TAO and NEAR, saw brisk selling amongst profit booking by investors but were quick to garner investor interest as the markets turned around. 

Meme coins like DOGE, SHIB, and, WIF too corrected sharply during the downturn in prices, but came back strongly with the broader markets over the weekend, as PEPE and FLOKI led the pack in recovery, ending the week in green.

Amid other major positive price action in tokens, we saw Optimism's OP token shoot up by 20% after rumors of a $90m purchase by a16z started doing the rounds. 

• BTC $64,524 ⏫ 3.31%

• OP $2.96 ⏫ 16.74%

• DOGE $0.1647 ⏫ 16.33%

• STX $2.35 ⏬ 1.74% 

(All data here is as of 1:35 p.m., 6 May 2024)

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

• Six-spot bitcoin and ether exchange-traded funds (ETFs) gained in their Hong Kong debut on April 30. The debuts mark the first launch of spot cryptocurrency ETFs in Asia and come just three months after the US launched its first ETFs to track spot bitcoin. Read more here. 

• Investors dumped US-based spot BTC ETFs at the fastest pace ever on May 1, even as Federal Reserve chairman Jerome Powell dismissed the prospect of a rate hike. The 11 ETFs saw a cumulative net outflow of $563.7 million. Read more here. 

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

See you later, folks! 👋

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