LAST WEEK
BTC and ETH surged last week with BTC hitting a high of $35,198 – $35,981 on perpetual futures- as both cryptocurrencies booked double-digit gains and optimism around the SEC’s decision to drop its lawsuit against Ripple coupled with the hype around a potential future approval of spot BTC ETF – now postponed to early 2024 by the SEC – propelled prices to 16 month-highs. BTC and ETH were trading near $33,910 and $1,780 on Friday, respectively notching staggering gains of +14.2% and +10.9% over the week and bringing the YTD performances to +105% and +49%.
US Equities wrapped up the week with losses as investors digested a week packed with mixed earnings and strong economic data that highlighted the robustness of the US economy, adding more weight to the «higher for longer» interest rate scenario ahead of next week’s November FOMC meeting. S&P Global Composite PMI rose to 51 in October from 50.2 in September while the third quarter US GDP rose to 4.9% – VS 4.7% expected, highlighting the capacity of the US economy to withstand further interest rate hikes. Also, PCE inflation data for September came out at +3.4% every year with core PCE rising +3.7%, in line with the market’s expectations. S&P and Nasdaq closed on Friday near 4,117 and 12,643, respectively shedding -2.5% and -2.6%.
US Treasury yields paused and edged lower last week, as the market pored over the raft of fresh U.S. economic and labor market data for clues on the Fed’s next policy moves. The 10Y and 2Y yields peaked at 5.02% and 5.15% throughout last week and closed lower near 4.92% and 5.07% on Friday. Rates are widely expected to stay unchanged in November as markets are currently pricing in a 99.9% chance of no rate hike during the November FOMC meeting. However, the Fed may be reluctant to indicate a peak in interest rates following last week’s strong US economic readings with markets currently pricing in an 80% chance of no rate hike in December according to CME’s FedWatchTool.
DXY edged higher last week, eking out small gains to wrap up the week near 106.58 on Friday, as markets digested the preliminary estimate of Q3 GDP and key PCE inflation data in anticipation of further guidance from this week’s November rates meeting.
Oil price declined and snapped a series of three consecutive weekly gains, despite regaining and paring some of its losses on Friday as the geopolitical turmoil in the Middle East renewed concerns over a tightening of the global oil supply. The WTI ended the week near $85.11, from $88.28 the week before.
BTC and ETH are moderately mixed today as markets brace for another busy week lying ahead, packed with central bank meetings starting with BoJ’s rate decision on Tuesday followed by the FOMC meeting on Wednesday and the BoE on Thursday. Investors will also keep an eye on Wednesday’s ADP employment numbers and Friday’s U.S. nonfarm payrolls for October while monitoring the latest batch of corporate earnings with Airbnb, AMD, Apple, Caterpillar, McDonald’s, Qualcomm, PayPal, Pfizer, Starbucks and Stellantis set to report among others. In the rest of the world, Q3 Gross Domestic Product -GDP- and inflation readings for the eurozone for October will come out on Tuesday.
CLIENT PROFITS
Today, we took profits specifically on our ADA long position while maintaining other longs.
We also kept our short positions in various Altcoins large cap and dollar-cost averaged into LINK, SOL, and BTC.
Market exposure is at 20% of AUM, with the rest in cash.
BTC
BTC surged last week as it reconnected with the $35,000 for the first time since May 2022 and hit a high of $35,198 – $35,981 on perpetual futures- during Tuesday’s session. The cryptocurrency benefitted from the optimism around the SEC’s decision to drop its lawsuit against Ripple coupled with the hype around a potential future approval of spot BTC ETF – now postponed to early 2024 by the SEC – which propelled prices to 16-month-highs. BTC was trading near $33,910 on Friday, notching staggering gains of +14.2% over the week and bringing the YTD performances to +105%.
Price action spiked early in the week, BTC printing +10% gains on Monday and continued to rise, hitting a high of $35,981 -perpetual futures- on Tuesday before pulling back and settling near $33,900 on Friday. BTC advanced moderately over the weekend and is now trading below the $35,000 level, near $34,300.
While we are bullish on the very long term, BTC’s trend in the medium term seems to be closely linked to the outcome of potential approval of pending spot ETF applications now postponed to early 2024 by the SEC. Another variable to take into account could be the evolving and lingering situation between Israel and Palestine, which sparked a rally on safe havens like Gold and the U.S. dollar and may continue to jolt markets in the coming weeks.
After surpassing the $31,000 last week, Bitcoin reconnected with the $35,000 this week for the first time since May 2022. It will be interesting to watch if BTC can hold this level in the coming days and if a driver other than the enthusiasm around a Spot BTC ETF approval can maintain the momentum and extend the rally.
BTC’s 30-day Historical Volatility – HV- edged higher around 43% this week, from 32% the week before.
After ending June up +11.9%, July down -4.1%, and August down -11.3%, BTC ended September up +4.0%. BTC’s performance for October is of +27.4% currently -from +16% last Monday- with the YTD performance for 2023 now of +108.0% – from +89.0% the week before.
ETH
Like BTC, ETH rallied this last week, gaining in every trading session but Friday when the cryptocurrency was trading near $1,780, notching +10.9% over the week.
ETH advanced over the weekend and is extending its rally today, trading above $1,800 with a spike near $1,830 with $1,370 and $1,100 further below acting as main supports. As mentioned in our previous reports the 200-day MA – near $1,800 currently – is a strong indicator of the overall trend, ETH breaking through that level could unleash some potential and fuel a move to the upside.
After ending June up +3.2%, and the month of July down -4%, August down -11.3%, ETH ended the month of September up +1.5% and the performance for October is up, currently of – +8.2% – from +1.7% last Monday – and the YTD performance for 2023 now of +51% – from+42% the week before.
OTHER MARKETS
US Equities wrapped up the week with losses as investors digested a week packed with mixed earnings and strong economic data that highlighted the robustness of the US economy, adding more weight to the «higher for longer» interest rate scenario ahead of next week’s November FOMC meeting. S&P Global Composite PMI rose to 51 in October from 50.2 in September while Q3 US GDP rose to 4.9% – VS 4.7% expected, highlighting the capacity of the US economy to withstand a rise in interest rates. Also, PCE inflation data for September came out at +3.4% every year with core PCE rising +3.7%. The news had little impact on prices as the numbers were in line with the market’s expectations. S&P and Nasdaq closed on Friday near 4,117 and 12,643, respectively shedding -2.5% and -2.6% while the VIX index maintained just above 20%.
S&P and Nasdaq ended the month of September down -6.6% and -5.8%. The performances for October are currently +0.06% and +4.7% from -1.7% and -1.5% last Monday, and the YTD performances of +8.7% and +22.3% – from +9.8% and +24.5% respectively as of last Monday.
As mentioned in our previous reports, the divergence observed over the past weeks seems to have reduced with Stocks correcting in the past months of August and September.
DXY
DXY edged higher last week, eking out small gains to wrap up the week near 106.58 on Friday, from 106.16 the week before as markets digested the preliminary estimate of Q3 GDP and key PCE inflation data in anticipation of further guidance from this week’s November rates meeting.
DXY is currently edging lower near 106.1, finding support near the 105.7 level and above its 200-day MA – near 103.35 currently – acting as support and below, the 102 and 100.7 levels, before the 100-mark that could act as a psychological level before the 200-week ie 1000-Day MA further below currently near 98.7. On the upside the 108-mark acts as nearest resistance. The index has been consolidating over the past weeks and is expected to remain volatile with new geopolitical risks looming as central banks could adjust their policies and guidance towards the end of the year. While rates are expected to remain unchanged in 2023, the guidance provided by J. Powell could act as the main driver for the index.
US TREASURIES
US Treasury yields paused and edged lower last week, as the market pored over the raft of fresh U.S. economic and labor market data for clues on the Fed’s next policy moves. The 10Y and 2Y yields peaked at 5.02% and 5.15% throughout last week and closed lower near 4.92% and 5.07% on Friday. Rates are widely expected to stay unchanged in November as markets are currently pricing in a 99.9% chance of no rate hike during the November FOMC meeting. However, the Fed may be reluctant to indicate a peak in interest rates following last week’s strong US economic readings with markets currently pricing in an 80% chance of no rate hike in December according to CME’s FedWatchTool.
The 10Y yield and the policy-sensitive 2Y yield are currently exchanging near 4.85% and 5.03% from 4.85% and 5.07% last Monday, reducing the inversion of the yield curve to 19 bps, from 22 bps last week. The reduction of the inverted 2yr -10yr curve is reflecting the recent hawkish comments made this past week by J Powell and the market sentiment that the rate could stay higher for longer.
Lastly, on the monthly timeframe, we can notice the shaping of a potential topping tail which could signal a possible bearish reversal.