Market highlights
- Bitcoin reached a new all-time high above US$125,000 on October 6.
- ETH layer-2, Starknet (STRK), debuted bitcoin staking with STRK incentives.
- The U.S. SEC and CFTC announced they will harmonise their regulatory approach to crypto.
- Defiance’s Trillion Dollar Club Index ETF launched on September 29.
- Investigations started on texts missing from former U.S. SEC Chair Gary Gensler’s phone.
Markets Overview
Risk assets shook off recent weak sentiment this week, despite the U.S. Government shutting down from midnight on Wednesday, October 1. Congress was unable to reach an agreement on funding federal departments, as the Democratic and Republican senators voted down each other’s stopgap measures. It’s the first government shutdown since 2018, when policymakers were in a stalemate over funding to construct the US-Mexico border wall. Markets were unfazed by the developments, with the S&P 500 closing at another record high on Friday, October 3.
U.S. non-farm payrolls for September were due on Friday, but the shutdown has delayed the release of this data. It’s now tentatively scheduled for Friday, October 10. The U.S. ISM services PMI came in at 50, below the forecasted 51.8, while the manufacturing PMI came in at 49.1%, an increase of 0.4% from August. The ADP non-farm employment change for September came in at -32,000, significantly lower than the forecast of 52,000. The chance of an October rate cut is currently 94.1%, indicating that the government shutdown hasn’t changed the market’s expectations on the U.S. Federal Reserve’s monetary policy outlook.
Elsewhere, the Reserve Bank of Australia left rates on hold at 3.6% on Tuesday, September 30. This week, traders and investors will presumably be watching for a resolution on the U.S. government shutdown and awaiting delayed employment data.
Weekly performance: S&P 500 +1.1%, Dow Jones +1.1%, Nasdaq +1.3%.
Looking ahead:
- European Central Bank President Lagarde speaks – October 6
- U.S. Federal Open Market Committee (FOMC) meeting minutes – October 9 (tentative)
- U.S. non-farm employment change – October 10 (tentative)
Crypto Market Sector Performance
All sectors saw growth this week, with privacy coins, exchange tokens and staking services leading the gains. This is presumably due to layer-1 protocols seeing some of the largest rallies as bitcoin broke above US$125,000 for the first time on October 5. AI saw the smallest gains.
Biggest gainer
- Exchange tokens: BNB (+19.2%) continued its recent gains as crypto Perp DEX volume topped US$1 trillion in September, mainly led by Aster’s growth, which trades on the BNB chain.
Bitcoin (BTC)
- Opened the week at US$112,197 and rallied to a new all-time high of US$126,296 on Monday, October 6. Recent risk-off sentiment appears to have subsided as over US$200 million in short BTC positions were liquidated within 24 hours on October 5 (+9.4% 7D).
- Bitcoin was spared the “September effect,” gaining 5.2% on the month.
- BTC dominance gained from 58.5% to 59.3% this week.
- Bitcoin investment products saw a record US$3.6 billion inflows this week.
Two Swedish MPs from the Sweden Democrats have proposed a motion to investigate establishing a national bitcoin reserve, arguing it could complement the country’s gold and forex holdings without introducing a central bank digital currency. The motion would explore how Sweden would establish a BTC reserve and define a suitable managing authority.
Kazakhstan launched Central Asia’s first cryptocurrency fund (Alem Crypto Fund), set up under the Ministry of AI & Digital Development and managed within the AIFC to build long-term digital-asset reserves; Binance Kazakhstan is the strategic partner and the fund’s first purchase was BNB.
Past performance is not a reliable indicator of future results.
Ethereum (ETH)
- Opened the week at US$4,143 and rallied to a weekly high of US$4,619 on Sunday, October 5, as Ethereum recovered from its late-September sell-off. The start of the new week saw ETH gain over 4%. (+11.8% 7D).
- September saw Ethereum decline by 2% on the month.
- Ethereum dominance hovered around 13% this week.
- Ethereum-focused funds saw inflows of US$1.5 billion this week.
Starknet, an Ethereum layer-2 network, now allows users to stake bitcoin by delegating it, with rewards paid in STRK. The launch is backed by a US$100 million STRK incentive pool. The integration is non-custodial, meaning users retain control of their BTC while participating in network validation.
In Ethereum buying news:
- BitMine purchased 179,251 ETH last week, increasing its total holdings to over 2.8 million ETH, valued at approximately US$823 million.
Past performance is not a reliable indicator of future results.
Altcoins
The altcoin season index remained below 75 this week as the biggest rallies were seen in bitcoin and Ethereum. Many altcoins saw upside as risk-on sentiment returned to the crypto market.
Smart contract gains
- Celo (CELO) gained 74.6% as its Nightfall launch saw price gain over 25%. The layer-3 network enables cheaper, faster peer-to-peer and enterprise payments in emerging markets. It currently has over 640,000 daily active users.
- Astar (ATSR) gained 29%. Whale activity on the network soared as one large holder accumulated over 1.7 million ASTR, valued at almost US$3.2 million. The accumulation comes as trading volume is expected to grow, driven by increasing interest in bridging chains, particularly those that connect with the Ethereum network.
- Mantle (MNT) grew by 26.4% as World Liberty Financial announced that it will launch its USD1 stablecoin on the network. The news saw MNT gain almost 16%, making a new all-time high of US$2.44 on October 7.
DeFi dominates
- PancakeSwap (CAKE) grew by 44.4%. The DeFi network gained on the launch of Cake.Pad, its new launching pad for crypto tokens, which allows users to access new tokens before they are listed on exchanges.
- Osmosis (OSMO) gained 26.1%. The DeFi appchain and DEX gained on news that it will burn 609,000 OSMO tokens in October.
- Wormhole (W) grew by 24.5%, presumably as traders and investors sought to add more altcoins to their holdings, following a bullish shift in market sentiment this week.
Crypto ETF News
Digital asset investment products saw almost US$6 billion in inflows this week as investors returned to risk assets due to a delayed market response to the FOMC’s September rate cut, as well as the weakening labour market and instability caused by the government shutdown.
In altcoins, Solana and XRP inflows set notable records, with inflows of US$706.5 million and US$219.4 million, respectively.
Grayscale launched staking functionality to its two spot Ethereum ETFs. Staking will also be added to its Solana Trust, which is still before the U.S. SEC for approval.
Defiance Exchange-Traded Funds’ (ETFs) Defiance Trillion Dollar Club Index ETF (TRIL) launched on Tuesday, September 29. TRIL tracks the performance of traditional and crypto-focused companies in the “trillion dollar club”. These include companies such as Nvidia, Tesla, Microsoft, Apple, Alphabet, Amazon, Meta Platforms, and BlackRock’s iShares Bitcoin Trust (IBIT).
The U.S. Securities and Exchange Commission’s (SEC) decisions on pending altcoin ETF applications are on hold throughout the U.S. government shutdown. Over 90 ETF applications are currently before the U.S. SEC for consideration.
Other crypto news
- The U.S. SEC hosted a joint roundtable with the Commodities and Futures Trading Commission (CFTC) on September 30. The roundtable discussed how the two agencies can work together to provide greater clarity and alignment on crypto policy, calling for “harmonisation” between the regulators. The renewed approach aims to foster innovation in blockchain and cryptocurrency in the U.S. while eliminating what have often been competing and contradictory “rulebooks”.
- U.S. House of Representatives Republicans launched an investigation into the loss of over a year’s worth of text messages from former U.S. SEC Chair Gary Gensler’s phone. The incident was reported in an Office of the Inspector General Report in September. The deleted messages span from October 2022 to September 2023. All parties have been ordered to appear before a district court on October 8 to address the matter.
- Wisconsin’s bipartisan Assembly Bill 471 was introduced on September 29. The bill proposes exemptions from state money transmitter licensing for certain crypto activities, such as running nodes, developing blockchain software, staking, and peer-to-peer asset transfers, which is an innovative step for the state, considering the sale of its US$300 million BTC ETF stake earlier this year. These developments could attract further crypto activity in the state.
- Publicly-traded brain machine and AI company VisionSys AI (VSA) announced that it will create a Solana (SOL) treasury, aiming to hold up to US$2 billion of SOL. VSA shares declined by 57% on the announcement. The firm’s SOL treasury will start with the purchase of US$500 million worth of SOL over the next six months.
- Avalanche Treasury Co. is merging with SPAC Mountain Lake Acquisition Corp in a US$675 million deal, backed by the Avalanche Foundation. The combined entity will debut with about US$460 million in assets and aims to exceed US$1 billion in AVAX holdings. The company will list on the Nasdaq in early 2026.
- The European Systemic Risk Board warned that multi-issuer stablecoins, those partly issued outside the European Union (EU), pose systemic risks. It emphasised the need for urgent policy reforms to ensure that non-EU issuers adhere to EU-level safeguards, citing the threat of liquidity strains in eurozone reserves during times of stress. The board also called for closer coordination between EU and global regulators.
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