Crypto flashes red as ETF flows reverse

Markets turned risk-off as crypto sectors saw a broad sell-off, notably with BTC down 4.5%. Traditional assets like the Nasdaq 100 and S&P 500 also slipped, while gold lost its safe-haven appeal amid rising Treasury yields. The crypto sector's performance was mixed; miners and L2 solutions saw gains of 2.5% and 2.0%, respectively, but AI and DePIN sectors lagged with declines of 13.4% and 13.6%. Key macroeconomic events, including the US payrolls report and Federal Reserve commentary, have led traders to reassess risk exposure, with BTC dominance increasing as altcoins suffered. Rapid outflows from major BTC ETFs, especially after mid-October inflows, indicate a waning institutional appetite for crypto investments, contributing to a cautious market sentiment. Market participants are now closely monitoring ETF flows as a measure of risk. Additionally, Morpho's recent challenges over user fund losses raise important questions about its responsibility as a permissionless protocol.

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