The cryptocurrency sector’s initial positive momentum developed against a backdrop of regulatory and geopolitical factors. In particular, the US Securities and Exchange Commission’s (SEC) decision to conditionally permit trading in eligible tokenized US stocks supported expectations of a clearer regulatory framework for the crypto industry. Traders were also encouraged by renewed diplomatic efforts between the United States and Iran: a delegation led by Iranian President Masoud Pezeshkian attended the United Nations General Assembly in New York, while proposals were conveyed through intermediaries, raising hopes of de-escalation in the Middle East. Expectations of easing geopolitical tensions in the Persian Gulf weighed on the dollar, helping BTC reach 87300.00, before digital assets corrected lower without giving up all their earlier gains.
The US currency resumed its advance as expectations for the Federal Reserve’s near-term monetary policy became more hawkish. September business activity data released on Wednesday showed the manufacturing index rising from 53.9 to 57.0, the services index from 56.5 to 58.7 and the composite index from 56.0 to 58.4. According to S&P Global, overall activity expanded at its fastest pace in more than five years, underscoring resilience in key economic sectors and giving the central bank room to continue fighting inflation. Fed officials, including Alberto Musalem, have also pointed out that consumer price growth is being driven by more than rising energy costs. These comments supported expectations of two further interest rate adjustments before year-end. The CME FedWatch figures cited in the review put the probability of a change in borrowing costs at 70.9% in October and 94.0% in December.
Additional pressure on the digital asset sector came from the security breach at cryptocurrency exchange Bitget. The company initially estimated the affected assets at $351.6 million, before raising the figure to $387.5 million in its September 25 incident update. Company representatives said that any customer losses would be compensated, citing its protection fund.
Nevertheless, the market correction remained partial. During the week, investors looked to the summit between US President Donald Trump and Chinese President Xi Jinping, which included discussions on artificial intelligence (AI), for positive developments. Treasury Secretary Scott Bessent had previously described progress in talks with Chinese representatives and outlined a proposed system for notifying each other about AI-related incidents. The summit concluded without a major AI agreement being announced, although further progress in cooperation could provide additional support for sentiment in the cryptocurrency industry.
Overall, trader sentiment has improved, supported by inflows into cryptocurrency exchange-traded products and a rise in the Fear & Greed Index to 71, within the “greed” zone, in the snapshot used for this review. Against this backdrop, renewed growth or consolidation is expected next week.
