Crypto Market Sees Q3 Rally, But Will Demand Hold Up?

The crypto market experienced a significant rebound in Q3, with Bitcoin rising over 44% and Ethereum climbing more than 70%. This has sparked renewed talk of a new crypto boom. However, experts warn that the rally may be short-lived due to rising real yields, a stronger dollar, and shocks to risk appetite.

One key indicator of whether demand for investment products will continue is the performance of spot Bitcoin ETFs. If these funds see sustained inflows, it would demonstrate institutional demand reinforcing the move rather than simply following it.

The Federal Reserve's stance on liquidity is also a concern. While its focus on keeping bank reserves ample may help at the margin, it is not a new round of quantitative easing. The 10-year Treasury yield sits above 5%, and higher yields and a firm dollar could outweigh any support from reserve management.