Last Week
BTC and ETH rallied last week as BTC reconnected with the $30,000 for the first time since August 2023 and hit a high of $30,233 during Friday’s session against a backdrop of optimism fuelled by the SEC’s decision not to appeal its loss in the Grayscale Spot BTC ETF case. The two cryptocurrencies were trading near $29,680 and $1,605 on Friday, respectively notching a staggering +10.5% and +3.4% over the week.
US Equities tumbled this past week, despite robust retail sales numbers, rising by +0.7% in September, well above the +0.3% estimate, as investors had their focus locked on J. Powell’s latest comments reiterating the Fed’s commitment to its « higher for longer » rates stance, adding up to the ongoing geopolitical tensions in the Middle East and the rise in oil prices, which could lay the ground for further monetary tightening to contain inflation. S&P and Nasdaq closed on Friday near 4,224 and 12,983, respectively shedding -2.4% and -3.2%.
US Treasury yields gained this past week and extended their multi-week rally with the 10-year yield reaching 5.001% during Friday’s session, its highest level since July 2007 following the hawkish stance from J. Powell and the unexpectedly strong retail economic data driving yields upward. The 10Y and 2Y yields were trading near 4.92% and 5.07% on Friday. There is still a strong expectation that rates will remain unchanged in November as markets are currently pricing in a 98.5% chance of no rate hike during November FOMC meeting and a 75% chance of no rate hike in December – from 67% as of last week – according to CME’s FedWatchTool.
DXY paused and edged lower last week, wrapping up a consolidation week near 106.16 on Friday, ahead of this week’s preliminary estimate of Q3 GDP and key PCE inflation data.
Oil prices clinched a third consecutive straight week of gains as the geopolitical turmoil in the Middle East continued to shed concerns over a tightening of the global oil supply. The WTI ended the week marginally up near $88.28, from $87.68 the week before.
BTC and ETH are advancing today as markets welcome the SEC’s decision to drop its lawsuit against Ripple and brace themselves for a busy week ahead starting with Tuesday’s flash PMI Manufacturing and Services for October followed by the preliminary estimate of Q3 US GDP and the PCE inflation data – Core PCE expected at 3.7% – which are set to take center stage this week, ahead of FOMC’s rate decision on November 1st. We will also get a final update on the US consumer sentiment for October on Friday. Lastly, investors will also keep an eye on the next batch of companies set to report this week – including Alphabet, Amazon, Boeing, Mastercard, Meta Platforms, Microsoft, Visa, and SNAP among others.
Client Profits
We took profits on BTC when BTC broke above $30,950 and opened a short position today on some Altcoins – LINK .
The exposure to the market is 13% of the $AUM, the rest being in cash.
BTC
BTC rallied last week as it reconnected with the $30,000 for the first time since August 2023 and hit a high of $30,233 during Friday’s session against a backdrop of optimism fuelled by the SEC’s decision not to appeal its loss in the Grayscale Spot BTC ETF case. The cryptocurrency was trading near $29,680 on Friday, notching a staggering +10.5% over the week.
Price action steadily increased over last week, printing gains in every session to drive up BTC and have it flirt with $30,000 on Friday. BTC continued its rally over the weekend and spiked today, breaking through the $31,000 resistance with a high near $31,800.
We remain bullish on the very long term but remain bearish on the medium term. However, Bitcoin reconnecting with the $31,000 for the first time since July 2023 marks a keystone and it will be interesting to watch if BTC can hold this level in the coming days.
Besides the approval of 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 may jolt markets in the coming weeks. While safe havens like Gold and the U.S. dollar are likely to benefit from a bullish pump, Equities could face headwinds. In that respect, BTC’s case will be interesting to monitor as the asset’s correlation with Equities remains ambiguous during geopolitical crises.
BTC’s 30-day Historical Volatility – HV- edged higher around 32% this week, from 30% 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 +16% currently -from +5.6% last Monday- with the YTD performance for 2023 now of +89.0% – from +72.0% the week before.
ETH
Like BTC, ETH rallied this last week and recouped some of the losses incurred earlier in the month. The cryptocurrency was trading near $1,605 on Friday, notching +3.4% over the week as markets welcomed the optimism around a potential approval of a Spot BTC ETF in the coming months.
Like BTC too, ETH managed to print gains in every trading session of the week to settle near $1,605 on Friday, overlooking the hawkish interest rate outlook and the ongoing concerns over the Palestinian-Israeli conflict. ETH advanced over the weekend, and, like BTC, is extending its rally today, testing the $1,700 with a spike near $1,725 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 inching closer to that level and breaking through 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 – +1.7%, and the YTD performance for 2023 now of +42% – from+32.5% the week before.
OTHER MARKETS
US Equities tumbled this past week, despite robust retail sales numbers, rising by +0.7% in September, well above the +0.3% estimate, as investors had their focus locked on J. Powell’s latest comments reiterating the Fed’s commitment to its « higher for longer » rates stance, adding up to the ongoing geopolitical tensions in the Middle East and the rise in oil prices, which could lay the ground for further monetary tightening to contain inflation.
S&P and Nasdaq closed on Friday near 4,224 and 12,983, respectively shedding -2.4% and -3.2% while the VIX index hovered just above 20%. S&P and Nasdaq ended the month of September down -6.6% and -5.8%. The performances for October are currently -1.7% and -1.5% and the YTD performances are +9.8% and +24.5% – from +13.9% and +29.6% 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 this past months of August and September.
DXY
DXY paused and edged lower last week, wrapping up a consolidation week near 106.16 on Friday – from 106.78 the week before, ahead of this week’s preliminary estimate of Q3 GDP and key PCE inflation data.
DXY is currently edging lower near 105.6, finding support near the 105.7 level and above its 200-day MA – near 103.3 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 98.6. On the upside the 108-mark acts as nearest resistance. The index is expected to remain volatile with new geopolitical risks looming and as central banks could adjust their policies towards the end of the year.
US TREASURIES
US Treasury yields gained this past week and extended their multi-week rally with the 10-year yield reaching 5.001% during Friday’s session, its highest level since July 2007 following the hawkish stance from J. Powell and the unexpectedly strong retail economic data driving yields upward. The 10Y and 2Y yields were trading near 4.92% and 5.07% on Friday. There is still a strong expectation that rates will remain unchanged in November as markets are currently pricing in a 98.5% chance of no rate hike during the November FOMC meeting and a 75% chance of no rate hike in December – from 67% as of the last week – according to CME’s FedWatchTool.
The 10Y yield and the policy-sensitive 2Y yield are currently exchanging near 4.85% and 5.07% from 4.70% and 5.10% last Monday, reducing the inversion of the yield curve to 22 bps, from 40 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.