Investors flock to crypto as US politics takes priority over Fed
Main U.S. indexes advance; Nasdaq out front, up ~1%
Tech leads S&P 500 sector gainers; Energy is sole loser
Dollar up ~0.2%; bitcoin up ~5%; gold slips ~0.2%; crude off >2%
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INVESTORS FLOCK TO CRYPTO AS US POLITICS TAKES PRIORITY OVER FED
Investors' recent love for crypto and crypto-related assets has more to do with U.S. politics ahead of elections that are less than a month away, rather than monetary policy by the Federal Reserve.
Data from digital asset manager CoinShares showed blockchain equity ETFs saw one of the largest weekly inflows this year, totaling $34 million for the week ended on Monday, tracking higher bitcoin prices.
Crypto assets are sensitive to the Federal Reserve's monetary policy and higher interest rates dent their prices.
However, recent economic data reflected a resilient U.S. economy, wiping out most chances for another one-time 50 basis points interest rate reduction by the Fed this year. And yet, the data did little to stop crypto inflows.
On the other hand, CoinShares believes U.S. politics might be playing the invisible hand here, with Republicans having an edge, following the vice presidential debate earlier this month.
Republican candidate Donald Trump's odds of winning the Nov. 5 U.S presidential election have edged higher on PredictIt, an online prediction marketplace, to 54 cents from 52 cents four days ago.
However, the latest Reuters/Ipsos poll showed rival Kamala Harris marginally ahead, further reflecting the tight race.
Trump has positioned himself as a pro-bitcoin candidate and vowed to fire SEC Chair Gary Gensler - who has been accused of heavy-handed enforcement by the industry - "on day one."
Bitcoin has gained about 3% so far in October, its second straight month in gains, with weekly inflows totaling $419 million, while digital asset investment products saw inflows of $407 million, as per CoinShares. On the day alone, the cryptocurrency has gained over 4%.
Separately, an exchange traded fund (ETF) following stock trades of Republican lawmakers KRUZ.N has risen 16.7% so far this year, while a Democratic-oriented ETF NANC.N has gained nearly 26%.
For the month, both the funds have gained about 2% each.
(Johann M Cherian)
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