LAST WEEK, BTC and ETH closed out the month of October up +28.6% and +8.7% and started November extending their rally over last week, with BTC nearing $36,000 on Thursday– $36,067 on perpetual futures – as markets went through a week filled with monetary policy meetings and key job market data. BTC and ETH were trading near $34,730 and $1,830 on Friday, respectively notching +2.4% and +3.0% over the week and bringing the YTD performances to +110% and +53%.
US Equities bounced back from last week’s losses and clinched their best week of the year as markets digested the latest FOMC meeting and corporate earnings while cheering Friday’s job report. NFP data came in softer than expected with the economy adding 150,000 jobs -vs 170,000 expected – and the unemployment rate rising to 3.9% – vs 3.8% expected – which discounted the scenario of further rate hikes in 2023 and revived hopes of a Fed pivot potentially as soon as March 2024. S&P and Nasdaq closed on Friday near 4,358 and 13,478, respectively notching weekly gains of +5.9 % and +6.6% while the VIX index dropped to 15%, below its 200-Day MA currently near 17.3%.
US Treasury yields tumbled as markets pored over the cooler jobs data last week, increasing the odds the Fed may end its rate hike regime and pivot its monetary policy. The 10Y and 2Y yields closed lower near 4.57% and 4.84% on Friday with the 10Y booking its largest weekly decline since July 2023 of -5.48% or -28bps. While the Fed kept its rate steady at 5.25%-5.50% and may be reluctant to indicate a peak in interest rates, the odds of the Fed keeping interest rates steady in December are now up to 90.2% from 57.6% a month ago, but odds of a 25bps cut in March are now up to 23.7% from 13.2% a month ago according to the CME FedWatch Tool.
DXY fell last week, the index dropping -1.03% on Friday and finding support near the 105 mark – its lowest level since Sep 20, 2023. The pullback was also triggered by the weaker October’s NFP data, discounting expectations of further interest-rate hikes by the FED.
Oil prices declined for a second consecutive week as the weakening of the U.S. dollar drove prices down, the WTI ending the week near $80.83, from $85.11 the week before. However, the price is regaining today, near $82, after Saudi Arabia and Russia reiterated their intention to cut production of more than one million barrels a day through the end of the year.
BTC and ETH are close to flat today as markets look ahead to this week which should come with fresh volatility, starting with the latest batch of corporate earnings where Rivian Automotive, The Walt Disney Company, Uber Technologies, UBS, and Warner Bros are set to report among others. The week will also be filled with Fed officials’ allocutions including Fed chair J Powell on Wednesday and Friday as part of the IMF panel. Lastly, the NY Fed will issue its quarterly report on household debt and credit on Tuesday while the University of Michigan will publish its preliminary Consumer Sentiment Index -MCSI- for November on Friday, which could help gauge financial conditions and confidence in the US economy.
CLIENT PROFIT
We took profits from our long positions on Ripple (XRP) at $0.62 and Polkadot (DOT) at $4.85. Additionally, we have strategically dollar-cost averaged on our short positions in Solana (SOL) and Chainlink (LINK), as well as on our long position in Litecoin (LTC). Our Market exposure is at 40% of AUM, with the rest in $ cash.
BTC
BTC closed out the month of October up +28.6% and started November extending the rally over last week. The cryptocurrency neared $36,000 on Thursday as markets went through a week filled with monetary policy meetings and key job market data. BTC was trading near $34,730 on Friday, notching +2.4% over the week and bringing the YTD performance to +110%.
Price action gradually inched higher in the early part of last week, with a spike near $36,000 on Thursday – $36,067 on perpetual futures – before pulling back and settling near $34,730 on Friday. BTC advanced moderately over the weekend and is now trading just above the $35,000 level, near $35,050.
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. 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 and reconnected with $35,000 this October 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 moderately lower around 42% this week, from 43% 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%. BTC’s performance for November is of +1.1% currently with the YTD performance for 2023 now of +111.8% – from +108.0% the week before.
ETH
Like BTC, ETH rallied this last week, advancing in every trading sessions but Thursday’s to wrap up the week near $1,830 on Friday, notching +3.0% weekly gains.
ETH advanced over the weekend, with a spike above $1,900 on Sunday and trading flat today, trading near $1,890 with a spike near $1,916 with $1,370 and $1,100 further below acting as main supports. As mentioned in our previous reports, the 200-day MA – near $1,775 currently – is a strong indicator of the overall trend, ETH confirming above that level could fuel a move to the upside. near $1,775 currently – being a strong indicator of the overall trend, ETH breaking through and confirming above that level could fuel a move to the upside.
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 +4.6%, and the YTD performance for 2023 now of +58.8% – from+51% the week before.
OTHER MARKETS
US Equities bounced back from last week’s losses and clinched their best week of the year as markets digested the latest FOMC meeting and corporate earnings while cheering Friday’s job report. NFP data came in softer than expected with the economy adding 150,000 jobs -vs 170,000 expected – and the unemployment rate rising to 3.9% – vs 3.8% expected – which discounted the scenario of further rate hikes in 2023 and revived hopes of a Fed pivot potentially as soon as March 2024. S&P and Nasdaq closed on Friday near 4,358 and 13,478, respectively notching weekly gains of +5.9 % and +6.6% while the VIX index dropped to 15%, below its 200-Day MA currently near 17.3%.
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 performances for November are currently +3.7% and +4.8%, and the YTD performances of +13.3% and +28.6% – from +8.7% and +22.3% 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 fell last week, the index dropping -1.03% during Friday’s session and finding support near the 105 mark – its lowest level since Sep 20, 2023. The pullback was also triggered by October’s NFP data that came in weaker than forecast and discounted expectations of further interest-rate hikes by the FED.
DXY found support near 104.8 today and is currently trying to recover from last week, edging higher towards the 105.6 mark. The index is currently trading near 105.28 above its 200-day MA – near 103.47 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 105.6 and 108 marks act as the nearest resistance. The index has been suffering over the past week and the weakening of the US Dollar and is expected to remain volatile with geopolitical risks looming in the Middle East and central banks adjusting their policies and guidance as inflation pressures ease. 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 tumbled as markets pored over the cooler jobs data last week, increasing the odds the Fed may end its rate hike regime and pivot its monetary policy. The 10Y and 2Y yields closed lower near 4.57% and 4.84% on Friday with the 10Y booking its largest weekly decline since July 2023 of -5.48% or -28bps. While the Fed kept its rate steady at 5.25%-5.50% and may be reluctant to indicate a peak in interest rates, the odds of the Fed keeping interest rates steady in December are now up to 90.2% from 57.6% a month ago, but odds of a 25bps cut in March are now up to 23.7% from 13.2% a month ago according to CME’s FedWatchTool.
The 10Y yield and the policy-sensitive 2Y yield are currently exchanging near 4.65% and 4.94% from 4.85% and 5.03% last Monday, widening the inversion of the yield curve to 29 bps, from 19 bps last week. The widening of the inverted 2yr -10yr curve is reflecting the recent turnaround in investors’ expectations following the softer job data, discounting the market sentiment that the rate could stay higher for longer.