Key takeaways
Why are ETF investors becoming cautious?
Investors have taken a wait-and-see approach amid macroeconomic uncertainty.
Will ETF inflows improve in the third week of October?
Most likely, especially if there is a tariff agreement between the United States and China.
Institutional appetite for crypto has been mixed amid the ongoing US government shutdown.
After massive inflows in the first two weeks, the third week begins with macroeconomic uncertainty and sour sentiment following Friday’s flash crash.
Crypto ETFs face uncertainty?
During the first week of the shutdown, the markets remained unfazed and became a catalyst as the “mark-down trade” became more popular.
During the period, Spot Bitcoin (BTC) ETFs attracted $3.24 billion in weekly inflows.
Spot demand pushed the BTC price from around $113,000 to a new high of $126,000.
Source: Soso Value (weekly Spot BTC ETF entries)
During the second week of the shutdown, some began to take profits from the rally, but Spot BTC ETFs attracted an additional $2.7 billion in weekly net inflows.
But the new Sino-US tariff update on October 10 hit the markets and spoiled the party.
Only $4.5 million in daily net outflows were recorded that day. But the news broke after trading hours.
But the impact was absolute carnage. The liquidation cascade, compounded by the outflow of issues on Binance, triggered panic selling that sent BTC falling significantly below $110,000 from $122,000 within minutes. This represents a drop of around 10% for BTC.
ETH slammed twice as hard. It fell from $4.3k to $3.3k, a drop of 20%, before stabilizing above $3.7k on the Binance exchange.
ETH ETF inflows slow
During the first half of October, US spot ETH ETF investors bought more than $1.7 billion worth, but amid macroeconomic uncertainty and cascading liquidations, they sold nearly half a billion ($428 million in weekly outflows in the third week).
Source: Soso Value
Even though the United States has softened its stance towards China and slightly stimulated the market, the odds The chances of reaching an agreement in early November decreased from 84% to 77%, capping the price of BTC below $115,000.
According to the crypto trading desk QCP CapitalBeijing’s reaction could determine investors’ next move.
At the same time, the U.S. government shutdown could extend into late October or early November, according to the prediction site. Polymarket.
Even if the market expected a further rate cut of 25 basis points in the Fed’s next decision in late October, macroeconomic releases delayed due to the shutdown could add to volatility.
That being said, trader confidence could be boosted if BTC reclaims $115,000, which would double the near-term cost basis and a crucial level for previous rallies.
Source: CryptoQuant
Another relief for investors was that a so-called “Trump Whale‘ has farm its $500 million BTC short position, further highlighting that macro uncertainty on the pricing front could diminish.
