Weekly Market Update: Cautious Optimism

It was a week of two halves. Despite the strong close last week a more cautious, but still optimistic, sentiment took over the market with a swirl of mixed economic signals. There is a feeling that the market has legs to run but the black swans are gathering. 

Bitcoin saw record whale accumulation and hash rates as volume started to flow back into the ETFs with the BTC price increasing to test the key ATH resistance band. Popular top alt coins made a strong recovery from recent lows as some of the narrative coins lost a bit of shine.

In macro market news, the IMF boldly claims the global fight against inflation is almost won as central banks around the world continue into the rate cutting cycle (except for the RBA).

Gold and silver continue to strengthen with notable highs as the much anticipated BRICS summit kicked off in Russia and nervousness grows around a possible escalation in the Middle East conflict.

The US continues to send mixed signals with reduced jobless claims but sizable industry layoffs and growing consumer and government debt reaching record levels.

The ECB moved further into their rate cutting cycle and the UK is expected to follow.

The Bank of Japan is stuck between a rock and a hard place with the Yen accelerating its decline on doubts of a further interest rate rise ahead of next week’s meeting. The market doesn’t want to see a further carry trade unwind!

In NZ, the housing market shows early positive signs with sentiment improving on the hope of more short term interest rate cuts.

Market sentiment has held up nicely and we remain firmly in greed territory.

Highlights this week: 

• A strong close to last week and start to this week followed by a pullback – but still a lot of green across the board for the top 100 coins.
• Whales are accumulating Bitcoin at an unprecedented rate!
• Bitcoin’s hash rate reached a new all-time high of 703 EH/s.
• At the time of writing BTC is up 1.0% and retesting the breakout levels from a week ago.
• $11.1 billion of shorts stand to be liquidated if Bitcoin passes $70,300. 
• Larger cap alt coins like SOL were up 9.4%, and DOGE also caught a bid up 20.9%.
• The heat came off the rising stars SUI down 4.5% and ASI down 6.4%. 

View all top gainers: Visit the top gainers page to find out more. 

Highlights from the crypto space

There is optimism in the trader community as Bitcoin breaks out of a 7 month long bull flag consolidation pattern:

Bitcoin ETFs have reached $20 billion of inflows in just 10 months, which took Gold ETFs over 5 years to achieve.

The ECB targets Bitcoin again and calls for a ban saying it poses a risk to social stability because the price rise favours early holders.

Polymarket betting volume for the US presidential election winner crosses $2 billion and has odds of Trump winning the US election at over 60%.

An unknown crypto trader turned $3,000 into $9 million in 3 days with 3000x return on a new Solana meme coin as the speculative craze continues.

Other notable highlights from the crypto space:

• Vitalik is ‘on the tools’ again proposing solutions to Ethereum’s potential block production and staking centralisation issues.
• Italy is looking into increasing capital gains tax on crypto by 61% which could lead to a plunge in trading and capital flight from the country.
• Michael Saylor spoke to the NZ Herald about how Bitcoin has transformed Microstrategy with the share price hitting record highs in recent weeks.
• Tesla quietly moved $765 million worth of Bitcoin to unidentified wallets sparking speculation about what Elon Musk may have up his sleeve.
• Payment processing giant Stripe is acquiring stablecoin platform Bridge in a $1.1 billion deal, making good on its promise to support stablecoin payments by summer.

We are coming up to the halfway mark in this current Bitcoin Halving cycle and, if past is prologue, then the most most exciting part is yet to come:

🌎 Macro news TLDR: …Uncertainty, continues.

The IMF boldly claims that the global fight against inflation is ‘almost won’ as central banks around the world move to cut their lending rates and reinflate their economies.  

After a strong close last week, the markets started this week on a more cautious footing as fears of a wider Middle East conflict have grown (a leaked US intelligence document shows Israel’s plans for a retaliatory attack on Iran) – this could mean further choppiness for the markets as we near the US election.

Gold reached a fresh record high and silver surged above $35 US an ounce for a 12 year high.

U.S. economic news

In a continued swirl of mixed signals, US jobless claims fell to a 3 month low (beating expectations) even as the tech industry cut 130,000 jobs. 

Surprisingly, mortgage rates rose to a 3 week high on dollar strength and rising bond yields across the board driven by concerns about the government and consumer debt – with a report showing that nearly 2 in 5 credit card holders are maxed out.

Total US debt has jumped by $473 billion over the last 3 weeks alone, to a record $35.8 trillion and a total interest payment of over $1 trillion for the first time in 2024.

The US now holds $103,700 of debt for every American. The level of debt reignited concerns that neither presidential candidate seems to have a long term plan to address it.

Over in Europe….

As expected, the ECB lowered interest rates for a third time and is eyeing more cuts as the economy sags. 

The European Commission will propose measures in response to growing concerns that migration has become a major security problem and a catalyst for far-right voter sentiment. 

UK inflation fell unexpectedly to 1.7% in the year to September, the lowest rate in three-and-a-half years which paves the way for further interest rate cuts.

And in Asia…

Russia is hosting the much anticipated 3 day BRICS summit in Kazar with two dozen world leaders in attendance. 

Rumours are swirling around about the meeting agenda including ‘plans for a new world order’ and even a new global reserve currency that is blockchain based and backed by a basket of commodities and member currencies – this is one to keep an eye on.

The Japanese Yen continued its decline in recent weeks on doubts around further interest rate rises ahead of the BOJ meeting next week.

Closer to home…

Our neighbours across the ditch are ‘doing it tough’ as the RBA reveals that interest rate cuts are unlikely to come in 2024.

A new report shows that Australia lags behind much of the world when it comes to home ownership, and households are taking on far more debt to buy a house than in other similar nations.

There was record demand for a NZ Govt bonds issue. The book size for $5 billion was exceeded by $23.9 billion showing strong safe haven demand.

More good news for mortgage holders in NZ as the BNZ chief economist predicted that short term mortgage rates are ready to come down further – but long term rates are already reflecting anticipated cuts to the OCR.

“The housing market is still shuffling sideways. Recent and expected mortgage rate cuts have buoyed sentiment and interest, but not so much the hard numbers just yet.”

And that is all for this week – stay tuned for the next update.

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