What happened last week

U.S. Government Shutdown Averted

The looming possibility of a U.S. government shutdown was averted thanks to bipartisan collaboration in Congress, resulting in the passage of a temporary funding bill. This legislative action effectively ensures the uninterrupted operation of the government until mid-November. Interestingly, the cryptocurrency market responded with remarkable speed to this development. In just a few minutes on Monday morning, BTC experienced an impressive surge of 2.7%, moving it to its highest price levels since mid-August. Nonetheless, the prevailing uncertainty centers around whether this surge can sustain its present momentum, particularly considering the impending debate regarding a potential shutdown by mid-November.

Crypto Retracement, Surging Yields, and Modest ETF Futures Debut

The crypto market began the week with a strong start but later saw a partial pullback in its gains, resulting in BTC trading at $27’600 and ETH at $1’670. This retracement can be attributed to several factors, including profit-taking among long positions and an increase in yields, notably the U.S. 10-year yield, which reached its highest level in over 16 years at 4.69%. Additionally, there may have been a tepid initial response to the launch of ETH futures ETFs, which failed to generate significant investor interest on their first day of trading. In the domain of interest rates, the trend of rising yields persisted, with the 10-year yield achieving new historic highs. This surge in yields followed unexpectedly strong manufacturing data, highlighting the resilience of the U.S. economy. Consequently, there is now greater speculation about the possibility of further interest rate hikes in the near term.

On Monday evening, ETH ETFs made their debut in the market, offering exposure to ETH futures. Among these, five ETFs are exclusively focused on ETH futures, while the remaining four have diversified portfolios that include both bitcoin and ether futures. A notable development is the strategic shift of Valkyrie's Bitcoin Strategy ETF (BTF), which has predominantly emphasized bitcoin for approximately two years but is now adapting to include ETH in its investment portfolio. It's worth noting that the other ETFs in this category are newly launched, marking them as newcomers to the market. According to data from K33, the trading volume for the group of Ether futures ETFs reached just under $2 million on their first day of trading, as shown in the table below. In contrast, the ProShares Bitcoin Strategy ETF (BITO), which made its debut in October 2021 amid a bullish crypto market, experienced more substantial trading activity, exceeding a trading volume of over $1 billion on its inaugural trading day.

Sam Bankman Fried Trial

On Wednesday, the initial day of Sam Bankman-Fried's (SBF) trial in New York concluded without the selection of a jury. Approximately 50 potential jurors remained in the pool, and the judge anticipates choosing 12 jurors and six alternates today. Following the jury selection, the trial will commence with opening statements from both the prosecution and defense. During the process of selecting jurors, several potential candidates revealed personal experiences or biases associated with cryptocurrency, with some mentioning losses incurred by themselves or their loved ones in the crypto market. The judge reassured the jurors that the death penalty was not a possible outcome in this case involving financial crimes. 

Cooler payrolls in the US

Conversely, the U.S. services sector has displayed signs of a slowdown, as indicated by the ISM (Institute for Supply Management). However, this slowdown is still in line with the anticipated robust economic growth. It's worth noting that specific industries, particularly accommodation and food services, are grappling with challenges that could potentially moderate the overall optimistic economic outlook. In the realm of cryptocurrencies, BTC has made advancements and found support at the $27’000 level. Analysts at Matrixport are keeping a keen eye on the possibility of BTC reaching the $30’000 threshold, despite a recent decline in trading volume from $19 billion to $11 billion. On the other hand, K33 Research foresees continued sideways movements in October. Given these developments, investors are strongly advised to closely monitor economic indicators and market trends. The upcoming release of U.S. job data on Friday could have a significant impact on both traditional and crypto markets, underscoring the importance of strategic decision-making for navigating the investment landscape effectively.