Weekly Market Update: Crypto Strength Continues

Crypto markets built on last week’s break out and continued their strong performance this week. The 27% increase in the price of Bitcoin over the last 14 days has started to flow through to Alts with prices up. Bitcoin has decoupled from equities with the S&P, Dow Jones and Nasdaq all drifting lower over the last month.   

Bitcoin ETF fever continues on, and expectations (or hopium) continue to rise that we will soon see an approval. This week, we saw another raft of institutional announcements in the space, as well as some great signs of growth in staking and gaming. 

The global macro picture is becoming increasingly uncertain. Safe haven assets like gold are up, with it breaking $2000 an ounce. 

Yields on US treasuries broke above 5% briefly, and oil prices are drifting higher as there are signs of regional expansion in the Gaza – Israel war. Tellingly, US equities are down ~10% since the Gaza situation blew up, Bitcoin on the other hand + 27%. 

In the US, their economy is going quite well with GDP numbers exceeding forecasts. Worryingly, core PCE is grinding higher. Higher for longer is now accepted, but ‘how high?’ is the real question. 

In Europe, their PMI’s continue to fall and some of those individual economies are clearly struggling, notably Germany and the UK. The ECB did the expected and held rates. 

In Asia, China has stepped up its stimulus to reinvigorate its economy and the Bank of Japan made the first step to relax its yield curve controls. At home, our cost of living crisis rumbles on, however the ANZ truckometer seems to be indicating resilience in the business sector. 

This week has been relatively stable following last week’s surge and as a result the crypto market sentiment has increased only slightly but sees us remaining in greed territory.

Trend highlights this week: 

• Another mainly green week this week for the top 30 assets with the flow on affect to Alts permeating the market. 
• At the time of writing BTC and ETH we both up a modest 1.5%. 
• SOL and LINK continue their fantastic runs up  15%. 
• THORChain (RUNE) was our biggest gainer on the week, up 35%. 
• Our biggest loser this week was Maker (MKR), down 8%.

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Highlights from the crypto space

Crypto is Macro did a comparison of the last time Bitcoin was at US$34k. They like what they see. They also note there is an ATH in Bitcoin HODLing. Game on. 

Bankrupt lender, Blockfi has put forward a plan to wind down its bankruptcy and repay users. The plan apparently relies on getting $1.2bn in funds from FTX/Alameda. Estimates of repayments range from 39%-100%. 

UK’s Archax plans to launch a regulated exchange for tokenised (RWA) assets like bonds this year.

Rekt Capital outlines the 5 phases of the bitcoin halving.

Coinshares weekly report on Institutional money flows says it all. $326m in net inflows, most BTC.  🚀

Deutsche Bank joins Standard and Chartered in testing an interoperability system for stablecoins and CBDC’s that could be a SWIFT killer. Their answer appears to be an alliance of banks, consultants and financial institutions. 🫨

Other notable highlights this week:

• JP Morgan has said that they are doing about $1bn a day in JPM coin transactions. Which is a big number, but dwarfed by their fiat business. 
• Moonpay is using the Mastercard credential system to boost web 3 adoption.
• One of Thailand’s largest banks, Kasikornbank has bought local crypto exchange, Satang.
• Gemini filed a suit against Genesis seeking $1.6bn in GBTC shares it says it was promised.
• Solana labs is launching an incubation program to woo would be start ups to their blockchain.
• Coinbase is filing for dismissal in its ongoing battle with the SEC. 
• Users are raising concerns about MEXC and a pattern of them confiscating user funds. Make sure you get your coins into a safe wallet that you control people.
• Staked has put out a report on the state of the staking market (that is a mouthful), and it shows a continued increase in staking for Proof of Stake networks, averaging 52% of circulating supply.
• The ECB is entering a 2 year preparation phase to launch a digital Euro. 
• The World Bank issued a $100m, 3 year bond on digital securities on Euroclear’s platform.
• FTX’s administrators are considering 3 bids to restart the exchange; any decision will be made in December. 
• Web3 gaming is the next big growth area according to Blockworks. Definitely some work to do to make the experience comparable. 
• Bitcoin options volume on CME futures exchange had its largest day, EVER. Probably nothing. 

And that sums up the major updates from around the crypto space. Moving on, we’ll take a closer look at other macroeconomic developments from around the globe.

What is going on in the world of Finance … 

US aircraft carried out two strikes in Syria linked to Iran’s revolutionary guard. This has happened before, but does nothing to calm the market’s nerves. 

🌎 Macro news TLDR: … Markets uncertain as the Gaza war seems to be spreading. 

U.S. economic news

October’s Flash PMI readings of 51 show that the manufacturing sector is out of their contraction cycle. Retail spending was also up 5% year on year. 

The US economy grew faster than expected in Q3 with GDP coming in at 4.9% annualised, vs 4.7%. The result seems to have been affected by a consumer spending spree with personal consumption expenditures at a whopping 4% over that quarter. 

The closely watched PCE index was up 0.4% in September, and is at 3.4% annualised. Core PCE was 3.7%. The Fed reviews its rates policy on Thursday NZT, who knows where they go. The powerful UAW union looks like it has forced Detroit’s big 3 autoworkers into a tentative deal. The headline – a 33% increase in wages over the term. 

In Canada, their central bank held rates steady at 5%. 

Meanwhile in Europe….

October’s Flash PMI for Europe makes grim reading with its continuing to decline. Currently at 46.5, it is down from 47.2 in September.

Germany looks like it is well into a recession, PMI’s are down and consumer sentiment remains very weak. France’s PMI’s are improving but remain in contraction territory. 

ECB president Legarde said that inflation may have turned, but the eurozone will have a couple of quarters of stagnant growth. 🤮 Shortly after that, and in a widely expected announcement, the ECB left interest rates unchanged at 4%. 

Despite president Legarde’s efforts to talk down the pause, markets saw the announcement as dovish and speculation about rate cuts immediately ramped up. Rinse repeat. 

Things aren’t looking good in the UK either with PMI down, new factory orders down and unemployment creeping up. That looks like a recession. 

Russia has shrugged off the sanctions imposed on it, saying they are well placed to weather it and it has helped restore domestic demand.

And in Asia Pacific…

China’s government is issuing 1 Trillion in debt next year as a disaster relief fund. Underscoring the seriousness of their situation, President Xi is making his first ever visit to the central bank. There are growing signs they are about to unleash fresh stimulus. Evergrande got a 5 week court reprieve to come up with a deal with its creditors or face liquidation.

The Bank of Japan is facing growing pressure to relax its currency curve controls. The Philippines central bank unexpectedly announced an out of cycle rate rise to 6.5%. South Korea’s GDP for Q3 rose 0.6%.

Australia is facing a rental crisis of sorts as rent prices spike.  Red hot immigration, under supply of housing. Sounds familiar.

In New Zealand, the ANZ Truckometer, a measure of traffic flows showed a small monthly decline, but stayed in mild macro uptrend. Statistics NZ data for September showed that the average household has experienced a 7.4% increase in their cost of living in the last year. 

This is up on June’s 7.2%, with the largest increase being a 27% increase in interest payments. RBNZ research into the agricultural sector has said that the sector is struggling and defaults will grow if there is a prolonged downturn in prices. 

That’s a wrap for this week. Thanks for reading!

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