Market Overview
On Tuesday, October 8, U.S. stock markets saw gains across all three indices, with Nasdaq leading at a 1.45% rise. Futures for stocks indicated a downward trend. Gold and oil futures edged higher to around $2,641/ounce and $73.8/barrel, respectively.
Bitcoin, however, dropped to $62,000, with most altcoins following the downtrend. Major altcoins like BNB and ETH showed slight gains. The total crypto market capitalization stands at $2.62 trillion.
Meanwhile, U.S. BTC spot ETFs recorded an outflow of $18.6 million on Wednesday, October 8, and ETH spot ETFs saw an outflow of $8.1 million. As of October 8, cumulative outflows from U.S. spot ETFs reached $556 million since their launch, showing a lack of significant investor interest, especially in ETH ETFs. Most of the selling pressure originated from Grayscale's funds, while other ETFs saw limited inflows.
On-chain data shows an increase in the number of new Bitcoin whales, who are actively accumulating BTC. The proportion of new whales is now close to that of existing whales.
China and FED: What’s Happening?
Hong Kong’s Hang Seng Index had a disastrous trading session, dropping 9.41%, while China’s CSI 300 index also experienced significant volatility. Initially surging by 10%, the CSI 300 eventually settled for a modest 6% gain.
Is there bad news from China? Not really. Officials from China’s National Development and Reform Commission (NDRC) reiterated their commitment to achieving economic targets but refrained from introducing new stimulus measures. While this isn’t outright negative news, investors had become accustomed to China’s recent stimulus packages and were hoping for more, which led to a negative market reaction.
Recently, China has taken various steps to boost its economy, such as:
- Reducing the reserve requirement ratio (RRR) by 0.5%.
- Cutting the 7-day reverse repo rate to 0.2%.
- Lowering mortgage rates.
- Injecting $142 billion into its banking system.
The absence of additional measures seems to have dampened investor confidence, leading to increased market volatility. Markets had expected China’s government to continue its economic stimulus, but the lack of further measures prompted a negative reaction in the stock market. Similarly, the U.S. market has become reliant on FED’s aggressive rate cuts like those in September, so any divergence from that could elicit a similar response from investors.
Globally, both the U.S. and Chinese economies are closely watched. If they falter, the global economy will feel the effects. Stimulus from the FED or China would mitigate damage in the case of a recession, while in non-recessionary times, these measures would drive further economic growth.
In the U.S., a massive storm is approaching, with potential damages estimated at $175 billion, which could impact financial markets.
Meanwhile, St. Louis FED President Alberto Musalem has advocated for a cautious approach to rate cuts, favoring a 0.25% reduction in future meetings. He warns that cutting rates too aggressively could pose higher risks compared to a more measured approach.
With positive economic data and last week’s FED chair speech, the likelihood of a 0.25% rate cut remains high, as indicated by CME's FED contracts. However, if this week’s CPI data comes in worse than expected, it could influence FED’s decision.
Youth Prioritize Crypto Over Traditional Investments
A recent Bank of America study reveals that younger investors are increasingly prioritizing crypto over traditional U.S. stocks, showcasing a stark generational divide in investment strategies.
As Generation X enters their 60s, a massive wealth transfer is shifting the investment preferences of Americans. Crypto is emerging as a favored alternative for younger investors, second only to real estate.
Among Generation Z (ages 18-27) and Millennials (ages 28-43), the top investment priorities are:
- Real estate (31%)
- Crypto (28%)
- Private equity funds (26%)
- Private companies (24%)
- Direct investments in companies (22%)
In contrast, older generations (44+) favor U.S. stocks (41%) and real estate (32%).
BlackRock notes that Millennials are entering their prime earning years and are playing an increasingly significant role in the global economy. Having grown up with the internet, they’ve embraced crypto at a rapid pace. The adoption rate of crypto is outpacing that of the internet and mobile phones.
Additionally, 83% of Millennial millionaires hold crypto. BlackRock suggests that financial advisors unfamiliar with crypto may find it difficult to earn the trust of this demographic.
As younger generations, who are more inclined toward crypto, inherit wealth from older generations, more institutions and banks are positioning themselves to meet this future demand.
Bitcoin’s Adoption Expands Globally
Bitcoin is entering a new phase of adoption, expanding from tech experts and retail investors to institutional players, from small businesses to major corporations on Wall Street, and from tech firms to financial institutions. Now, even countries are beginning to see the economic value of Bitcoin—take Bhutan as an example.
Bhutan is charting a path to economic independence through Bitcoin mining, leveraging its abundant hydropower resources. The country has built an extensive hydropower infrastructure, and with surplus energy, it has begun mining Bitcoin to further its economic autonomy and social development.
Currently, Bhutan holds over 13,000 BTC, making it the fourth-largest government holder of Bitcoin globally, trailing only the U.S., China, and the U.K., and surpassing El Salvador.
Bhutan’s hydropower investments have contributed to its economic growth, and accumulating Bitcoin could further transform the country’s economic outlook in the future.
By utilizing its energy resources for Bitcoin mining, Bhutan is creating a new model for economic prosperity through Bitcoin.
Additional Information:
- Crypto.com vs. SEC: Crypto.com has received a Wells Notice from the SEC, indicating the regulator’s intent to file a lawsuit. In response, Crypto.com has preemptively filed its own lawsuit against the SEC, signaling their readiness to fight the SEC in court. The Wells Notice echoes the SEC’s prior allegations against other crypto exchanges like Coinbase and Binance.
- Russia Bans Discord: Russia’s media regulator has blocked access to Discord for violating Russian law. Discord is a key platform for many crypto projects. The country has previously blocked access to X (formerly Twitter) and Meta Platforms.
- XRP ETF Filing: Canary Capital has officially filed an S-1 with the SEC for an XRP ETF. Canary is a newly founded crypto investment firm by Steven McClurg, who also founded Valkyrie Funds. This is the second XRP ETF filing, following the first by Bitwise.
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