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Key Takeaways
As geopolitical tensions in the Middle East have played out since last weekend; crypto markets seem to have held their nerve.
US employment data is landing to end this week. I look at how it could drive volatility, as we’ve seen layoffs in tech companies due to AI advancements.
Chart of the week: A glance at BTC & ETH Exchange-Traded Funds (ETFs) flows
What a difference a week can make.
It’s interesting right; how crypto is responding as geopolitical tensions have presented. Instead of folding, crypto mostly held its ground. In fact, total market cap has grown approximately 8% since the Saturday 10am AEST open.
But as we know with crypto, that’s probably not the end of the story. So, what does the market have to deal with heading into the weekend. Is it all smooth sailing from here?
Let's dig in.
The Uncertainty
Friday night brings a gauntlet of key employment data out of the US, with the big-ticket items being monthly changes in employment numbers and the official unemployment rate.
Now, if you’ve been following our last few Squawks (if you haven’t...you can check them out on Swyftx Learn or YouTube) we’ve focussed on two key macro themes: Inflation and jobs. This is because it’s front and centre for monetary policy makers.
Over the last six months, inflation has become less of a bearing issue, and the jobs market has started to move more into the spotlight instead.
More recently, we’ve seen layoffs in public media in the US, attributed to the booming success of recent AI advancements. Block is the most notable name in the headlines, as former Twitter co-founder Jack Dorsey announced his technology firm is laying off approximately half its workforce because AI “fundamentally changes what it means to build and run a company”. And if you’ve had time yourself to use the latest suite of products from Claude, it makes it easier to understand why this is happening now.
Therefore, official jobs data could be a narrative the market is watching closely. Good or bad, volatility could be the outcome.
Further to this, we are still waiting and observing the situation in the Middle East, another potential driver for volatility in crypto markets.
Next, let’s look at the institutional buyers and what they are doing, as they can be a more persistent participant in the market; a trend of buying or selling that can stick around.
Chart of the week: A look at BTC & ETH Exchange Traded Funds (ETFs) flows
ETF flows are still the simplest scoreboard for real money buying spot assets. Price can lift on short-term positioning, hedges coming off, or weekend headline relief, but a sustained trend usually need a consistent marginal buyers, and in this cycle that buyer has often shown up through the ETF channel.
Right now, the chart is saying that the bounce in price hasn’t been matched by a clean, confident surge in net inflows – at least yet.
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Think about it this way. Watching how ETF markets perform heading into the weekend will be a good proxy for separating how much of crypto's recent rise is just speculative traders closing out their books, vs long term investors strengthening their positions with little need to sell right now.
See you all again next time.