It has been a week since the outbreak of conflict between Israel and Hamas and results in the crypto market have been deeply concerning. On Friday, Bitcoin (BTC), the leading cryptocurrency, was trading at $26,800, down over 3% in the past week. Meanwhile, Ether (ETH), the second largest crypto by market capitalization, suffered the most, declining over 5%, to trade at $1,549.
An analyst at CoinSwitch Ventures noted that the global crypto market fell below the $1.1 trillion mark as tensions started to rise in response to the Israel-Palestine war, which has sent investors into a “risk-off mode”.
Researchers at crypto exchange CoinDCX found that the higher-than-expected US inflation also caused a sell-off pressure in the market. The month-on-month rate of inflation in the US economy rose 0.4% in September to level off to 3.7%, which was higher than the 3.6% expected by market experts.
Outflows From Israeli ETH Cause Ethereum To Perform At Its Lowest Since 2020
Ethereum, which is performing at its weakest level since March, suffered a major price drop after an exchange-traded fund (ETF) linked to the crypto asset in Israel saw sharp outflows. The $116.92 million iShares MSCI Israel ETF, or EIS, has seen net outflows of $4.94 million so far this week. The ETF is on track for its worst weekly showing in a month.
The ETF’s largest contributors are domestic and international financial services companies, including Israeli giant Mizrahi. These companies make up over a third of the fund’s holdings, while tech stocks are said to be the second-largest sector. On Thursday, iShares slipped 1.1% to trade at $49.4, its lowest price since March 2020.
Both Israeli and global markets sold off their shares in the EIS since Hamas fighters began their attacks on Israel, which has left more than 1,300 dead and scores injured or held hostage, causing the ETF to fall nearly 9% this week.
At the same time, net flows in two other ETFs exposed to Israeli stocks – the ARK Israel Technology ETF and the BlueStar Israel Technology – have been negligible this week.
Analysts at MarketVector Indexes, a German market indexing firm, offered some hope, highlighting that Israeli technology companies are considered to have the most global exposure as they have proven and shown their resilience to operate during turbulent times. They say these companies are far more likely to outperform “locally-oriented” firms during the period of war and escalating regional tensions.
The three funds have seen net outflows of between $10 million and $16 million in the past seven days.
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G20 Finance Ministers And Central Bankers Reach Consensus On Global Crypto Regulation
Another major development that occurred in the crypto market this week was the G20 Finance Ministers and Central Bank Governors (FMCBG) body releasing a joint statement announcing the adoption of a regulatory roadmap proposed in the Synthesis Paper for global crypto asset regulation.
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Edul Patel, the CEO of cryptocurrency investment platform Mudrex said the adoption of the G20 Roadmap on crypto assets by the FMCBG represents a “progressive stride in fostering collaboration for the regulation” of the digital asset class. He noted the comprehensive roadmap can guide and shape global policy, evolve risk-mitigation strategies, and establish adaptable regulations for the highly volatile and dynamic crypto market.
The Mudrex chief added that the regulatory framework could also address the “distinct challenges” faced by Emerging Markets and Developing Economies and also provide a more forward-looking approach to a rapidly evolving financial landscape.
At the time of writing, Bitcoin (BTC) was trading at $26,877 – up 0.4% in the last 24 hours, while Ethereum (ETH) is priced at $1,547.