Last Week
BTC and ETH rallied last week, wrapping up the week near $26,910 and $1,670 on Friday, notching +1.2% and +4.7% gains as the two cryptocurrencies weathered concerns over a potential government shutdown, adding up to the SEC postponing its decision on four Spot Bitcoin ETF filings and uncertainties surrounding the Fed’s monetary policy.
US Equities ended the week mixed and closed out September notching their worst monthly and quarterly performances of the year as the surge in bond yields took the momentum out of this year’s rally in Equities. S&P suffered a fourth straight week of losses while Nasdaq managed to pare and recover its losses in the last sessions of the week as the softer-than-expected PCE data supported the idea of a rate pause. Although yearly headline inflation edged higher in August, rising to 3.5% from 3.4% in July, core inflation excluding volatility from food and energy softened, reaching 3.9%, from 4.3% in July. The two indices wrapped up the week near 4,288 and 13,219, down -0.7% and up +0.06% respectively.
US Treasury yields climbed higher despite losing steam in the latter part of the week amidst softening core inflation data and ongoing concerns over a potential US government shutdown. The 10Y yield hit a new 16-year high, near 4.69% on Thursday, and closed the week near 4.58% on Friday.
DXY also gained this week despite struggling to find demand in the latter part of the week in the wake of the PCE report. The index closed near 106.17 on Friday from 105.58 the week before.
Oil price wrapped up the week close to flat, the WTI trading near $90.7 on Friday, eking out +0.5% weekly gains as the prospects of higher rates for longer renewed economic concerns, offsetting the decline in US crude oil stocks – below 22 million barrels – and Russia’s ban on fuel export supporting prices.
BTC and ETH rallied over the weekend following the last-minute US shutdown deal but are retracing today, with ETH hitting a low of $1,643 as several futures-based ETH ETFs debuted quotations with very low volumes at the CBOE today. Markets also digested the latest ISM Manufacturing data coming in at 49% for September – 47.6 expected and shifted their focus to this week’s major labor market updates including August job openings as well as ADP’s private payrolls and September’s NFP report. As for corporate earnings, Levi Strauss and Constellation Brands are among the companies to report this week.
Client Profits
We kept our long positions on large-cap coins, including XRP
The exposure to the market is 11% of the $AUM, the rest being in cash.
BTC
BTC rallied last week, wrapping up the week near $26,910 on Friday, notching +1.2% as the cryptocurrency weathered concerns over a potential government shutdown, adding up to the SEC postponing its decision on four Spot Bitcoin ETF filings and uncertainties surrounding the Fed’s monetary policy.
BTC surged over the weekend, piercing above $28,000 on Sunday as markets cheered the last-minute US shutdown deal. BTC started this week on a strong foot, reaching $28,500 but the steam reversed in the afternoon following the timid debuts of futures-based ETH ETFs from ProShares, VanEck, Bitwise, Valkyrie, Kelly, and VolShares. BTC is now settling near the $27,800.
We remain bullish in the very long term but remain bearish in the medium term. Bitcoin hit a 2023 high near $31,818 on July 13 but has struggled to reclaim its $30,000 level since July 23 and is now trading close to the $27,800 level with major supports near $24,800, $22,500, and $20,000 further below.
Although BTC re-joined the $28,500 level last week, let’s keep in mind a potential catalyst for a rebound for both BTC and ETH, being the approval of spot ETF applications scheduled for later in October, has just been postponed to early 2024 by the SEC.
BTC’s 30-day Historical Volatility – HV- decreased to 25% this week from 35% 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 +3.3% currently with the YTD performance for 2023 now of +68.1% – from 59.4% the week before.
ETH
Like BTC, ETH rallied this past week, notching +4.7%, and continued to gain over the weekend with a high of $1,755 on Sunday as markets eagerly awaited the trading debuts of several futures-based ETH ETFs this Monday. However, the momentum faded today with the timid volumes of the futures-based ETH ETFs at the CBOE.
ETH’s price took a downturn and fell during today’s session to settle near $1,670 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 confirming well below that level could put more downward pressure and fuel a move to the downside.
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 down, currently of -0.2%, and the YTD performance for 2023 now of +39.3% – from+32.8% the week before.
Other Markets
US Equities ended the week mixed and closed out September notching their worst monthly and quarterly performances of the year as the surge in bond yields took the momentum out of this year’s rally in equities. S&P suffered a fourth straight week of losses while Nasdaq managed to pare and recover its losses in the last sessions of the week as the softer-than-expected PCE data supported the idea of a rate pause. Although yearly headline inflation edged higher in August, rising to 3.5% from 3.4% in July, core inflation excluding volatility from food and energy softened, reaching only 3.9%, from the 4.3% in July. The two indices wrapped up the week near 4,288 and 13,219, down -0.7% and up +0.06% respectively.
S&P and Nasdaq ended the month of September down -6.6% and -5.8%. The performances for October are currently +0% and +0.7% and the YTD performances are +11.7% and +27.1% – from +12.5% and +26.5% respectively as of last Monday.
As mentioned in our previous reports, the comparison between the rallying US Equities and the contracting Monetary supply M2 could have put in perspective the timing of a possible correction in stock markets considering the divergence currently occurring in 2023 as we can see in the graphs below. The divergence observed over the past weeks seems to have reduced with Stocks correcting this past month of August and September.
DXY
DXY also gained this week, surpassing 106 despite struggling to find demand in the latter part of the week in the wake of the PCE report. The index closed near 106.17 on Friday from 105.58 the week before.
DXY is currently near 107.01, inching closer to the 109-mark while confirming above the 105.7-level and its 200-day MA – near 103 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 currently near 98.5. On the upside the 109-mark acts as nearest resistance. The index had another good week and is expected to remain volatile as other central banks could adjust their policies later in the year.
US Treasuries
US Treasury yields climbed higher despite losing steam in the latter part of the week amidst softening core inflation data and ongoing concerns over a potential US government shutdown. The 10Y yield hit a new 16-year high, near 4.69% on Thursday, and closed the week near 4.58% on Friday.
The 10Y yield and the policy-sensitive 2Y yield are currently exchanging near 4.69% and 5.11% from 4.54% and 5.13% last Monday, reducing the inversion of the yield curve to 42 bps, from 59 bps last week. The reduction of the inverted 2yr -10yr curve is reflecting the recent hawkish “higher rates for longer” stance expressed during the last FOMC meeting.