Market Deep Dive: Launch of ETH ETFs and Market Volatility

Last Sunday, as the CME futures market opened, the crypto market experienced a notable uptick, majority-led by ETH. This was in anticipation of the upcoming ETH Futures ETF launches on Monday from ProShares, VanEck, and Bitwise Asset Management. Come Monday, these companies introduced a total of six new ETFs. However, despite the build-up, the collective first-day trading volume reached a somewhat disappointing $1.92 million. Even with ETH’s 6% rise following the CME’s opening and BTC’s 3% climb, the subdued debut of the ETFs, supported by rising yields and weak macro data, led to a market correction during Monday’s session.

Accordingly, ETH reached its weekly peak at $1,760 on Sunday evening, while BTC peaked at $28,600 on Monday afternoon. Compared to ETH, BTC’s momentum has strengthened, retaining gains above the previous week, and settling in a range between $27,200 and $28,100 for the rest of the week. By contrast, ETH has surrendered all of its gains over the course of the week and is presently positioned slightly above the $1,600 trading mark. In addition, the ETH/BTC ratio of 0.06 has been undercut and appears to have lost its supportive role for now.

Other important crypto news includes the XRP ruling and SBF trial, with the latter event being less relevant to the price of crypto assets. On Tuesday, XRP surged +6% in fifteen minutes, after US District Judge Analisa Torres ruled that XRP token sales on public exchanges do not classify as securities, pushing back against the SEC’s efforts to regulate such cryptocurrency transactions. While the SEC pursued an appeal, Torres discerned no solid grounds, differentiating her decision from a separate ruling concerning Terraform Labs’ Terra USD token.

On the macro side, US JOLTS job openings for August exceeded expectations at 9.61 million compared to the estimated 8.80 million on Tuesday. This robust demand in the labour market may lead the Federal Reserve to uphold higher interest rates for an extended period. Concurrently, the dollar index rose to its highest level of the year above 107, settling currently above 106 and remaining on track for a 12-week consecutive rise. Furthermore, Swiss CPI (YoY) came in slightly lower than the forecasts (act. 1.7%, exp. 1.8%).

On Wednesday, the September US S&P Global Service PMI came in at 50.1, a drop from August’s 50.5, and below its forecast of 50.2, while the September ISM Non-Manufacturing PMI met estimates (act. 53.6, exp. 53.6). In a speech, ECB Governing Council member Mario Centeno stated that euro area inflation is declining rapidly, suggesting that the rate cycle might be complete. However, the euro’s value has remained largely unaffected by his comments.

Thursday morning saw a minor dip in Treasury yields, with the 10-year rate declining from its 16-year peak, following data revealing a lower-than-expected number in US weekly jobless claims of 207k (exp. 210k). Investors are scrutinising sovereign bond yields for recession indicators driven by the Fed’s hawkish stance and strong US economic data, raising concerns about the financial system’s stability.

This afternoon, attention centres on US Nonfarm Payrolls and Unemployment Rate. Key economic events to watch out for next week include German CPI, US PPI, and FOMC Minutes on Wednesday; US CPI on Thursday; and, finally, China CPI and US Consumer Sentiment on Friday.

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