Crypto flashes red as ETF flows reverse
Markets turned risk-off as crypto sold off sharply, with Bitcoin leading the decline at -4.5%. The Nasdaq 100 and S&P 500 also experienced modest slips. The crypto sector displayed mixed performance, with miners and L2s seeing gains of 2.5% and 2.0% respectively, while AI and DePIN sectors faced significant losses of over 13%. Amid macroeconomic concerns and rising Treasury yields, traders reassessed exposure ahead of critical reports including US payrolls. Recent volatility in small-cap crypto suggested decreasing liquidity. The downturn reflected waning institutional interest, as ETF flows shifted from inflows to outflows, with October seeing large redemptions exceeding $500 million. The overall sentiment index for ETF flows is flashing yellow, indicating caution among institutional players. If this trend continues, the market could shift from a “buy the dip” mentality to one of protecting capital, impacting volatility in both altcoins and Bitcoin. Additionally, Morpho faced criticism over asset depletion linked to vault curator losses, raising concerns about the balance of permissionless architecture and brand responsibility, and how it promotes specific projects on its platform.
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