Unusual Calm in Cryptos Amid Record Run in US Stocks
Stocks on Wall Street hit new record highs, propelled by good results by major banks as the earnings season began on a solid note.
At the same time, the lack of clear drivers and the lead-up to the US election has kept traders on the sidelines, causing Bitcoin to enter an abnormally quiet phase.
The top token's price has remained relatively stable for 37 consecutive sessions ending Friday, matching the longest such run in a year.
Given that cryptos have a history of strong October performance, earning the moniker "Uptober," the lacklustre price movement has disappointed many in the digital assets community.
Over the last decade, Bitcoin saw only two monthly declines in October and an average rise of almost 20%, compared to the average monthly increase of about 6% during that time.
On the stocks front, the S&P 500 index hit a new high, breaching 5,800 points for the first time ever, marking the 45th record for the year.
Fears among equity traders that the beginning of Federal Reserve rate decreases would eat into bank profits were allayed when JPMorgan Chase surprised investors with a gain in net interest income.
The KBW index hit over a two-year high.
Gains for the S&P 500 continued for a fifth consecutive week, marking its longest winning streak since May, as the index advanced 0.6% on Friday.
When the economy is not in recession, the S&P index gains, on average, 17% in a year from the Fed starting a rate cut cycle.
The yield on treasuries changed slightly, with the shorter maturities improving. The bond market index tracked by Bloomberg has fallen for four weeks in a row.
In light of expectations for a more measured approach to interest rate cuts by the Fed, the dollar finished a second week of gains.
Calmness in Crypto Markets to Continue
While options markets point to more market volatility, the current calm is attributed to an absence of definitive catalysts, emphasising the impending US presidential election.
Republican candidate Donald Trump, now an outspoken advocate for the crypto sector, has also engaged in decentralised finance with his World Liberty Financial initiative.
His opponent, Vice President Kamala Harris's stance remains ambiguous, as the industry's suppression under President Biden shows no indication of diminishing.
On Thursday, the US Securities and Exchange Commission (SEC) charged Cumberland DRW, the cryptocurrency division of Chicago-based proprietary trading firm DRW Holdings, with functioning as an unregistered securities dealer in excess of $2 billion in digital assets.
The SEC has already initiated a series of proceedings against other cryptocurrency entities, including Binance and Coinbase.
Most cryptocurrency traders wait to make trades until there is a spot activity. In addition, traders are increasingly drawn to alternatives to the spot crypto market due to an excess in the options market and heightened interest in other asset classes.
Still, a broader acceptance of cryptos as a mainstream asset will keep the see-saw in digital assets down.
Bitcoin's volatility is expected to decline further due to the impending debut of options on BlackRock's Bitcoin exchange-traded fund (ETF) and the increasing use of the original cryptocurrency.