BTC and ETH bounced back and edged higher last week, with BTC hitting $38,438 on perpetual futures – its highest level in 18 months – amidst a week that saw pro-bitcoin right-wing libertarian Javier Milei win the presidential election in Argentina and Binance US agree to an anti-money laundering settlement with the US Justice Department. The crypto platform was fined $4.3bn and pleaded guilty to criminal charges related to money laundering, along with its CEO C. Zhao who resigned and agreed to pay a $50m individual fine as part of a plea deal with the US Justice Department. The news had little impact on prices as BTC and ETH were trading near $37,720 and $2,080 on Friday, respectively printing +3.1% and +6.1% over the week and bringing the YTD performances to +128% and +72%.
US Equities wrapped up the past holiday-shortened week higher, clinching a fourth straight week of gains as the narrative of no further rate hikes in 2023 and hopes of a Fed pivot potentially throughout the first half of 2024 continued to fuel markets, despite a declining US consumer sentiment in November to 60.4 – lowest level since May 2023 – and the cautious and hawkish tone employed in the latest minutes from the Fed’s meeting, giving no indication of possible rate cuts. S&P and Nasdaq closed on Friday near 4,559 and 14,250, respectively notching weekly gains of +1 % and +0.9% while the VIX index edged lower to 12.5%, below its 200-Day MA currently near 17.1%.
US Treasury yields inched higher in the wake of the release of the Fed minutes and declining consumer sentiment. The 10Y and 2Y yields closed near 4.47% and 4.96% on Friday from 4.44% and 4.89% the week before. The odds of the Fed keeping interest rates steady at a range of 5.25% to 5.50% in December are 96.8% from 79.1% a month ago, according to the CME FedWatch Tool.
DXY struggled to find some upside momentum in the absence of a major catalyst and edged lower last week despite the declining initial jobless claims. The index closed the week at 103.42 on Friday from 103.82 the week before, its lowest level since Sep 1, 2023.
Oil prices slipped moderately lower for a fifth consecutive week as a ceasefire in Gaza eased concerns regarding potential disruptions in the region. The WTI ended the week near $75.1, from $76.01 the week before as markets look ahead to this week’s online OPEC+ meeting and COP28 climate summit kicking off in Dubai on Nov 30.
BTC and ETH are retracing today as the market’s focus is now shifting to this week’s agenda with Thursday’s PCE index for October – 3.5% expected, the Fed’s preferred gauge of inflation, set to take center stage this week. Markets will also look forward to Tuesday’s Consumer Confidence Index for November – 101 expected – followed by the first revision of the US Q3 GDP on Wednesday and Friday’s ISM manufacturing PMI for November – 47.6% expected. Lastly, investors will keep an eye on some Fed officials’ allocutions throughout the week including Fed chair J Powell on Friday as well as the latest batch of corporate earnings with Crowdstrike, Salesforce, Workday set to report among others. In the rest of the world, November headline inflation numbers for the Eurozone – 2.8% expected – and China’s manufacturing PMI for November will become available on Thursday.
Client Profits
We kept our short positions in Solana (SOL), Chainlink (LINK), ETH, AVAX, RUNE.
We took profits on our shorts NEAR and MATIC.
Currently, our market exposure stands at over 50% of our Assets Under Management (AUM), with the remainder held in USD $ cash.
BTC
BTC bounced back and edged higher last week, hitting $38,438 on perpetual futures – its highest level in 18 months – amidst a week that saw pro-bitcoin right-wing libertarian Javier Milei win the presidential election in Argentina and Binance US agree to an anti-money laundering settlement with the US Justice Department. The crypto platform was fined $4.3bn and pleaded guilty to criminal charges related to money laundering, along with its CEO C. Zhao who resigned and agreed to pay a $50m individual fine as part of a plea deal with the US Justice Department. The news had little impact on prices as BTC was trading near $37,720 on Friday, printing +3.1% over the week and bringing the YTD performances to +128%.
BTC paused and retraced moderately over the weekend with a low near $37,100 on Sunday and is now trading near $37,000 with $38,000 acting as a short-term resistance and $35,000 as the new support level.
As mentioned in our previous reports, while it goes without saying 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. Other variables to take into account could be the Fed’s monetary policy and the evolving and lingering situation between Israel and Palestine, which may continue to jolt markets in the coming weeks.
Now that BTC surpassed $31,000, $35,000 and reconnected with the $38,000 this November for the first time since May 2022, it will be interesting to watch if BTC can hold on over the coming weeks and if a driver other than the enthusiasm around a Spot BTC / ETH ETF approval can maintain the momentum and extend the rally.
BTC’s 30-day Historical Volatility – HV- cooled down to around 42% this week, from 47% the week before.
After ending June up +11.9%, July down -4.1 %, August down -11.3 %, and September up +4.0%, BTC ended October up +28.6% and the performance for November is +6.5% currently with a YTD performance of 2023 now of +123% – from +126% last Monday.
ETH
ETH also gained last week as the cryptocurrency reconnected with the $2,100 and wrapped up the week higher near $2,080 on Friday, notching +6.1% over the week and bringing the YTD performances to +72%.
Like BTC, ETH retraced moderately over the weekend with a low near $2,040 on Sunday and is trading lower today, near $2,010 while $1,900, $1,370 and $1,100 further below act as main supports. As mentioned in our previous reports, the 200-day MA – near $1,730 currently – is a strong indicator of the overall trend, ETH confirming above that level could lay the ground for a move further to the upside along with the application for a spot ETH ETF filing from BlackRock that continue to bring optimism to prices.
After ending June up +3.2%, July down -4%, August down -11.3%, and September up +1.5%, ETH ended the month of October up +8.7% and the performance for November is up, currently +10.8% – from +13.2% last week – and the YTD performance for 2023 now of +68.0% – from+71.8% the week before.
Other markets
US Equities wrapped up the past holiday-shortened week higher, clinching a fourth straight week of gains as the narrative of no further rate hikes in 2023 and hopes of a Fed pivot potentially throughout the first half of 2024 continued to fuel markets, despite a declining US consumer sentiment in November to 60.4 – lowest level since May 2023 and the cautious and hawkish tone employed in the latest minutes from the Fed’s meeting, giving no indication of possible rate cuts. S&P and Nasdaq closed on Friday near 4,559 and 14,250, respectively notching weekly gains of +1 % and +0.9% while the VIX index edged lower to 12.5%, below its 200-Day MA currently near 17.1%. On the daily chart, S&P is nearing its 4,605 resistance and a breakthrough past its best levels of this year could provide some momentum for a move further to the upside by the end of the year.
After suffering losses of -6.6% and -5.8% in September, S&P and Nasdaq closed out the month of October down -2.2% and -2.8%. The two indices are now set to wrap up a strong month with performances for November currently of +8.5% and +11.0%, bringing the YTD performances to +18.5% and +36.2% – from +18.0% and +36.0% respectively as of last Monday.
Even though, over the past months Stocks have been corrected, the divergence is still visible on the charts between Stocks and Monetary Supply.
DXY
DXY struggled to find some upside momentum in the absence of a major catalyst and edged lower last week despite the declining initial jobless claims. The index closed the week at 103.42 on Friday from 103.82 the week before, its lowest level since Sep 1, 2023.
The index has been trading between its 100-day MA near 104.2 and its 200-day MA near 103.6 and has recently broken below this range, currently trading near 103.2. The 102 and 100.7 levels act as supports, before the 100-mark that could act as a psychological level before the 200- week i.e. 1000-day MA further below currently near 98.7. On the upside the 104.2 and 105.6- marks act as nearest resistances. The index has been suffering over the past weeks with the weakening of the US Dollar and cooling inflation data and is expected to remain volatile and driven by short-term rate expectations with geopolitical risks looming in the Middle East and central banks adjusting their policies and guidance as inflation pressures ease.
US Treasuries
US Treasury yields edged higher in the wake of the release of the Fed minutes and declining consumer sentiment. The 10Y and 2Y yields closed higher near 4.47% and 4.96% on Friday from 4.44% and 4.89% the week before. The odds of the Fed keeping interest rates steady at a range of 5.25% to 5.50% in December are 96.8% from 79.1% a month ago, according to the CME FedWatch Tool.
The 10Y yield and the policy-sensitive 2Y yield are currently exchanging near 4.39% and 4.89% from 4.42% and 4.90% last Monday, moderately widening the inversion of the yield curve to 50 bps, from 48 bps last week. The continued widening of the inverted 2yr -10yr curve is reflecting the recent turnaround in investors’ expectations following the cooling inflation CPI, adding to the softer job data from earlier this month, all discounting the market sentiment that the rate could stay higher for longer.