BTC and ETH closed out the month of November up +8.9% and +13% near $37,700 and $2,050 and started the first half of December extending the rally with BTC breaking through the $44,000 and hitting a high of $44,765 on perpetual futures on Friday – its highest level since April 2022 – as expectations of some spot BTC ETFs approval as early as January 2024 picked up steam and added to the growing optimism around a softening monetary policy and the looming BTC mining reward halving, propelling prices to 20-months highs. BTC and ETH were trading near $44,160 and $2,360 on Friday, respectively printing +17.1% and +14.9% over the week and bringing the YTD performances to +167% and +97%.
US Equities carried on with gains this past week, clinching a sixth 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 Friday’s stronger-than-expected NFP and consumer sentiment data, supporting the case of a more hawkish stance from the Fed.
The US economy added 190,000 jobs in November – 180,000 expected – while consumer sentiment data peaked at 69.4, well above the 62 expected and from November’s reading of 61.3 as inflation expectations declined. S&P and Nasdaq closed on Friday near 4,604 and 14,403, respectively notching weekly gains of +0.2 % and +0.7% while the VIX index steadied near 12.3%, below its 200-Day MA currently near 16.3%.
US Treasury yields experienced a difficult start in December and were poised to suffer a second week of losses but managed to bounce back and pare their losses on Friday with the release of the strong NFP data, just one week ahead of the Fed’s next monetary policy meeting. The 10Y and 2Y yields closed near 4.23% and 4.72% on Friday from 4.19% and 4.54% the week before. The odds of the Fed keeping interest rates steady at a range of 5.25% to 5.50% in December are 97.1% from 90.1% a month ago, according to the CME FedWatch Tool.
DXY rebounded further away from its November low of 102.47 to finish the week up, near 103.98. The index reacted favorably to the strong NFP report and the unemployment rate edging lower to 3.7% from 3.9% last month. DXY’s next potential catalyst will come out on Tuesday with the CPI inflation data followed by the Fed’s policy meeting.
Oil prices slipped further for a seventh consecutive week – its longest streak of weekly declines in over 5 years – on signs of a weakening global demand renewed by the disappointing consumer prices in China and the slowing of crude imports in November, despite the voluntary production cuts agreed by OPEC+ countries to support prices. The WTI ended the week near $71.2, from $74.34 the week before.
BTC and ETH are pausing and sliding today, with BTC breaking below $41,000 and possibly validating the scenario of an overheating market as investors brace for this week’s agenda starting with key data on Tuesday with the release of the CPI inflation numbers for November expected at 3.1% – Core CPI at 4.0% – followed by the Fed’s interest rate decision and on Wednesday, which should take center stage this week. On Thursday, the ECB and the BoE will follow suit and hold their December meeting. Lastly, markets will keep an eye on a small batch of corporate earnings with Adobe, Costco, and Oracle set to report among others.
Client Profits
We have maintained our short positions in Solana (SOL), Chainlink (LINK), and RUNE while continuing our Dollar-Cost Averaging (DCA) strategy in BTC, ETH, and AVAX. Additionally, we have initiated a modest short position in ADA to strategically capitalize on any potential market reversal.
Presently, our market exposure exceeds 70% of our Assets Under Management (AUM), with the balance securely held in US dollars.
On the daily timeframe, we can observe a strong bearish divergence at the RSI level, which could signal the market is overbought and might reverse in the coming weeks. Another key indicator is the stablecoin dominance (USDT and USDC), currently at a major low across daily, weekly, and monthly timeframes. This pattern resembles the scenario observed before BTC’s last ATH in November 2021, signaling a potential major market shift.
BTC
BTC closed out the month of November up +8.9% near $37,700 and started the first half of December extending the rally, breaking through the $44,000 and hitting a high of $44,765 on perpetual futures on Friday – its highest level since April 2022 – as expectations of some spot BTC ETFs approval as early as January 2024 picked up steam and added to the growing optimism around a softening monetary policy and the looming BTC mining reward halving, propelling prices to 20-months highs. BTC was trading near $44,160 on Friday, printing +17.1% over the week and bringing the YTD performance to +167%.
BTC paused and took a nosedive today with a low near $40,180 possibly validating the scenario of an overheating market and is now trading near $40,850 with $40,000 and $38,000 acting as short-term supports. On the upside, the next resistance sits at $45,000.
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 its forward guidance for next year, which may continue to drive markets in the coming weeks.
Now that BTC surpassed the $40,000 and reconnected with the $44,000 before retracing, it will be interesting to watch if BTC can hold on over the $40,000 mark and potentially reach $50,000 upon the approval of a spot BTC ETF in January and if a driver other than the enthusiasm around a Spot BTC / ETH ETF approval – possibly the looming halving? – can maintain the momentum and extend the rally. In that respect, Bitcoin’s market dominance peaked at 55% this month, its highest in the last 30 months, suggesting a potential strengthening in anticipation of the halving event scheduled for April 2024.
After ending June up +11.9%, July down -4.1%, August down -11.3%, September up +4.0% October up +28.6%, BTC concluded November up +8.8% and the MTD performance for December is +9.2% currently with the YTD performance for 2023 now of +149%.
ETH
After trailing behind BTC over the past months, ETH reversed the trend in November and outperformed BTC, notching +13% monthly gains, with prices mainly benefitting from Blackrock Spot ETH ETF’s application filing. ETH also advanced in the first half of December as the cryptocurrency reconnected with the $2,400 and wrapped up the week higher near $2,360 on Friday, printing +14.9% over the week and bringing the YTD performances to +97%.
Like BTC, ETH steadied over the weekend and is pulling back today, with a low near $2,145 while $1,900, $1,370, and $1,100 further below act as main supports.
After ending June up +3.2%, July down -4%, August down -11.3% and September up +1.5%, October up +8.7%, ETH ended the month of November up +13% and the MTD performance for December is up, currently of +7.5% and the YTD performance for 2023 now of +84%.
Other markets
US Equities carried on with gains this past week, clinching a sixth 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 Friday’s stronger-than-expected NFP and consumer sentiment data, supporting the case of a more hawkish approach from the Fed. The US economy added 190,000 jobs in November – 180,000 expected – while consumer sentiment data peaked at 69.4, well above the 62 expected and from November’s reading of 61.3 as a year ahead consumer inflation expectation declined 3.1% in December, from 4.5% in November. S&P and Nasdaq closed on Friday near 4,604 and 14,403, respectively notching weekly gains of +0.2 % and +0.7% while the VIX index steadied near 12.3%, below its 200- Day MA currently near 16.3%.
After suffering losses of -2.2% and -2.8% in October, S&P and Nasdaq closed out the month of November up +8.9% and +10.7%. The two indices’ performances for December are currently +1.2% and +1.4%, bringing the YTD performances to +20.4% and +37.8%.
Stocks wrapped up November with strong gains, accentuating the divergence that is still visible on the charts between Stocks and Monetary Supply.
DXY
DXY rebounded further away from its November low of 102.47 to finish the week up, near 103.98. The index reacted favorably to the strong NFP report and the unemployment rate edging lower to 3.7% from 3.9% last month. DXY’s next potential catalyst will come out on Tuesday with the CPI inflation data followed by the Fed’s policy meeting.
DXY has been struggling to find some upside momentum over the past weeks, breaking below its 100-day MA and 200-day MA and slipping below the 104.2 mark before finding support near its 200-day MA near 103.5, which could signal the formation of a possible bearish flag pattern. The index closed the week at 103.98 on Friday and is currently trading near 104.08 while 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 98.8.
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 experienced a difficult start in December and were poised to suffer a second week of losses but managed to bounce back and pare their losses on Friday with the release of the strong NFP data, just one week ahead of the Fed’s next monetary policy meeting. The 10Y and 2Y yields closed near 4.23% and 4.72% on Friday from 4.19% and 4.54% the week before. The odds of the Fed keeping interest rates steady at a range of 5.25% to 5.50% in December are 97.1% from 90.1% a month ago, according to the CME FedWatch Tool.
The 10Y yield and the policy-sensitive 2Y yield are currently exchanging near 4.24% and 4.71% from 4.39% and 4.88% 2 weeks ago, moderately reducing the inversion of the yield curve to 47 bps, from 50 bps 2 weeks ago. The slight reduction of the inverted 2yr -10yr curve is reflecting the recent turnaround in investors’ expectations following stronger NFP data from earlier this month, translating the caution around the next Fed’s guidance at its December meeting.