Rate Hike Expectations and Geopolitics Weigh on Global Markets

Global markets felt the weight of rising rate-hike expectations and geopolitical tensions over the weekend. The US Federal Reserve's Chairman Kevin Warsh emphasized that inflation has not shown meaningful improvement, suggesting further interest rate hikes may be needed to meet the 2% target. This sentiment sent shockwaves through the market, causing the 2-year US Treasury yield to rise by 12.8 basis points to 4.36%, while the dollar strengthened.

The Dow, S&P 500, and Nasdaq all declined, with the latter falling by as much as 0.52%. Bitcoin (BTC) also took a hit, dropping about 3.3% on the day before rebounding slightly. Ethereum (ETH) fell to around $2,430.

The renewed US-Iran escalation added fuel to the fire, with Brent crude rising over 2.5% to above $90 per barrel. Asian equities broadly declined, while crypto markets struggled to find stability. BTC support remains around 76K-77K, but resistance has shifted to 79K-80K.

The divergence in institutional demand between BTC and ETH ETFs is also worth noting. While BTC ETFs saw net outflows of $202 million on August 28, ETH ETFs continued to attract inflows, recording their strongest weekly inflow of the year at around $824 million.