Digital asset investment products, particularly exchange-traded products (ETPs), saw a decrease in inflows last week as investors exercised caution due to robust economic data. CoinShares reported that despite the overall market sentiment being dampened by weaker hopes for significant interest rate cuts, trading volumes for ETPs increased by 15% to $10 billion. In terms of geographical trends, Canada and Switzerland saw the most inflows, while the United States, Germany, and Hong Kong experienced significant outflows. Bitcoin and Ethereum both faced outflows, with Bitcoin seeing $159 million exiting the market and Ethereum experiencing $29 million in outflows. However, multi-asset investment products continued their positive streak, attracting $29 million in inflows.
Despite the initial turbulence, the “Uptober” narrative seems to be gaining strength, with Bitcoin stabilizing around the $60,000 mark. Factors such as strong Non-Farm Payroll data and renewed interest from an upcoming HBO Bitcoin documentary have supported the market sentiment. Even themed memecoins, inspired by figures like Len Sassaman, are garnering increased attention. Options flows are indicating a positive outlook for the fourth quarter, with notable interest in December BTC call spreads targeting the $75,000 and $95,000 levels, reinforcing the “Uptober” narrative.
The focus this week shifts to the U.S. Consumer Price Index (CPI) release on Thursday, with investors watching for any signs of inflation pressure. Recent solid wage and employment data have caused a shift in Federal Reserve rate cut expectations from 50 basis points to 25 basis points in just a week. The upcoming CPI figures could influence future policy adjustments. QCP suggested a potential strategy of a zero-cost Principal Protected Sharkfin with a maturity of December 27, 2024, targeting a strike of $75,000 and a barrier of $90,000, offering a maximum payout of 90% per annum if Bitcoin’s price stays just below $90,000 at expiry.
In summary, last week saw a cautious approach from investors in the digital asset market, with outflows recorded in investment products such as Bitcoin and Ethereum. Despite this, multi-asset products continued to attract inflows, indicating diversification strategies among investors. The market sentiment seems to be improving, with the “Uptober” narrative gaining strength and Bitcoin stabilizing at around $60,000. Factors such as strong economic indicators and upcoming events like the HBO Bitcoin documentary are contributing to this positive outlook. Investors are now focusing on the U.S. CPI release and potential policy adjustments by the Federal Reserve based on inflation data. Overall, the digital asset market remains dynamic, with investors closely monitoring economic developments and upcoming events to make informed investment decisions.
