BTC and ETH surged and extended their November rally last week, posting another week of gains with BTC perpetual futures hitting $38,091 on Thursday and ETH price surging above $2,000 – their highest since May 2022 – as rumours of a BlackRock spot ETH ETF filing picked up steam and added to the growing optimism around a potential future approval of spot BTC ETF, propelling prices to 18-months highs. BTC and ETH were trading near $37,315 and $2,080 on Friday, respectively notching strong gains of +7.4% and +13.4% over the week and bringing the YTD performances to +112% and +51%.
US Equities rallied and posted a second straight week of gains amidst a light data week where in the absence of a major economic event, the narrative of no further rate hikes in 2023 and hopes of a Fed pivot potentially as soon as March 2024 continued to fuel markets, despite a declining preliminary Consumer Sentiment – 60.4 vs 64 expected – and hawkish comments from central bank officials throughout the week. S&P and Nasdaq closed on Friday near 4,415 and 13,798, respectively notching weekly gains of +1.3% and +2.4% while the VIX index edged lower to 14%, below its 200-Day MA currently near 17.2%.
US Treasury yields gained this past week, as markets adjusted their expectations following the hawkish remarks made by J Powell who left the door open for further rates hikes. The 10Y and 2Y yields closed higher near 4.65% and 5.07% on Friday. While the Fed seems reluctant to indicate a peak in interest rates, the odds of the Fed keeping interest rates steady in December are 90.9% from 64.5% a month ago, according to the CME FedWatch Tool.
DXY bounced back last week, the index finding support near 104.8 last Monday– its lowest level since Sep 20, 2023- to regain and wrap up the week near 105.8 on Friday.
Oil prices fell for a third consecutive week amid concerns of slowing demand from China and the USA, despite ongoing pressure from the Middle conflict and Iraq supporting more production cuts ahead of the OPEC+ meeting on November 26. The WTI ended the week lower near $77.31, from $80.83 the week before.
BTC and ETH are mixed today as markets look ahead to this week’s agenda with key inflation updates coming up on Tuesday with the Consumer Price index for October expected at +3.3% from last year – Core CPI expected at +4.2% – followed by Wednesday’s Retail Sales for October. Investors will also look forward to the latest batch of corporate earnings with retailers Alibaba, Macy’s, Home Depot, Target, and Walmart set to report among others while keeping a close eye on Friday’s deadline to extend the US government funding as risks of a government shutdown are resurfacing. Lastly, we will get the latest updates on the housing market, including housing starts for October as well as the NAHB’s Housing Market Index for November.
Client Profits
We took profits from our LTC long position at $76. We have also strategically employed dollar-cost averaging on our short positions in Solana (SOL) and Chainlink (LINK), while recently initiating shorts on MATIC and ETH. Currently, our market exposure stands at over 60% of our Assets Under Management (AUM), with the remainder held in USD $ cash.
BTC
BTC surged and extended its November rally last week, posting another week of gains with BTC perpetual futures hitting $38,091 on Thursday – its highest since May 2022 – as rumours of a BlackRock spot ETH ETF filing picked up steam and added to the growing optimism around a potential future approval of spot BTC ETF, propelling prices to 18-months highs. BTC was trading near $37,315 on Friday, respectively notching gains of +7.4% over the week and bringing the YTD performance to +112%.
Price action advanced in every session of the past week but on Monday, it edged lower over the weekend and is now trading just above the $36,600 level with $38,000 now acting as a short-term resistance and $34,000 as the new support level.
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 $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 days 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- edged moderately lower around 40% this week, from 42% 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 +6.1% currently with the YTD performance for 2023 now of +122% – from +111% the week before.
ETH
ETH surged as well this last week to surpass $2,000 – its highest since May 2022 – and the neckline of the Head and Shoulder pattern, thus invalidating the pattern, wrapped up the week near $1,830 on Friday, notching +13.4% weekly gains.
ETH retraced over the weekend, with a low near $2,008 on Sunday and is trading upward today, near $2,085 with a spike near $2,117 while $1,800, $1,370 and $1,100 further below act as main supports. As mentioned in our previous reports, the 200-day MA – near $1,780 currently – is a strong indicator of the overall trend, ETH confirming above that level could fuel a move to the upside, which is currently shaping as rumours of a spot ETH filing from BlackRock intensified last week.
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 +14.5% – from +4.6% last week – and the YTD performance for 2023 now of +73.8% – from+58.8% the week before.
Other markets
US Equities rallied and posted a second straight week of gains amidst a light data week where in the absence of a major economic event, the narrative of no further rate hikes in 2023 and hopes of a Fed pivot potentially as soon as March 2024 continued to fuel markets, despite a declining preliminary Consumer Sentiment – 60.4 vs 64 expected – and hawkish comments from central bank officials throughout the week. S&P and Nasdaq closed on Friday near 4,415 and 13,798, respectively notching weekly gains of +1.3 % and +2.4% while the VIX index edged lower to 14%, below its 200-Day MA currently near 17.2%.
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 the month of November are currently +4.8% and +6.6%, and the YTD performances of +14.5% and +30.9% – from +13.3% and +28.6% 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 bounced back last week, the index finding support near 104.8 last Monday – its lowest level since Sep 20, 2023 – to regain and wrap up the week near 105.8 on Friday.
DXY is trading in a narrow range near 105.7 and trying to recover the 106 and 107-marks it left in early November. The outlook for the index remains constructive as DXY is currently trading above its 200-day MA – near 103.54 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 nearest resistances. The index has been suffering over the past weeks with 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 latest inflation data guidance provided by J. Powell could act as the main driver for the index.
US Treasury
US Treasury yields gained this past week, as markets adjusted their expectations following the hawkish remarks made by J Powell who left the door open for further rates hikes. The 10Y and 2Y yields closed higher near 4.65% and 5.07% on Friday. While the Fed seems reluctant to indicate a peak in interest rates, the odds of the Fed keeping interest rates steady in December are 90.9% from 64.5% a month ago, according to the CME FedWatch Tool.
The 10Y yield and the policy-sensitive 2Y yield are currently exchanging near 4.64% and 5.04% from 4.64% and 4.94% last Monday, widening the inversion of the yield curve to 40 bps, from 29 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.