Weekly Market Update: Papering Over the Cracks

Bitcoin has a habit of defying expectations

Trump’s meeting with Xi was as cold as an ice-bath, but the trade deal on soybeans and rare earths is being hailed as “a win”. So successful, in fact, that shortly after Trump ordered the resumption of nuclear weapons testing for the first time in 33 years. 

Meanwhile, the U.S. government shutdown has officially become the longest in history. Will Trump finally end it with a “nuclear option” – changing Senate rules to eliminate the legislative filibuster, allowing spending bills to pass with a simple majority vote (instead of the current 60-vote supermajority).

It’s a bold move with unknown consequences. But for now, the blame game goes on, Democrats are being labelled as “crazed lunatics who have lost their way.”

The Fed also seems to be losing its grip. Liquidity stress is rising, and cracks are showing in the financial system (again).

In the last five days, the Fed has quietly injected $125 billion into overnight repos – more than the peak of the Dot Com Bubble. Deja vu from Sep 2019 anyone?

Put simply, with the U.S. government still in shutdown and the Fed confirming QT will end on 1 Dec, QE may be here sooner than expected.

Geopolitically, the U.S. is papering over old cracks, strengthening ties in the Western Hemisphere. Which explains Trump’s earlier interest in Greenland and Canada, renewed interest in Venezuela – along with warmer relations with Argentina and Brazil. The East may be lost, but the West won’t go quietly.

Putin, ever the statesman, gave a sobering reality check for U.S. elites: the world has changed. Russia, the most sanctioned nation on earth, is now Europe’s largest economy.

Crypto is facing its own turmoil, the bull-bear battle is also intensifying! It’s now unclear if we’re in a standard cycle or an extended one. Retail sentiment is below rock bottom – many longtime holders are publically rage-quitting, posting things like: “I sold everything” and “It’s over, I’m done with crypto.”

The big question: only 21 million Bitcoin ever in existence, with BlackRock, Wall Street, Michael Saylor, governments, and over 235 companies all buying, then why is the price stuck in a grind? 

Simple: Bitcoin is maturing and changing. Institutional adoption brings fractionalization and “paper trading” – just like gold. Ownership is more often becoming just a database entry in an ETF or treasury company stock, enabling increased market manipulation and amplified risk.

Warren Buffet once said “the (stock) market is a device to transfer money from the impatient to the patient.” The classic example is over-leveraged trading, aiming for quick gains like a Lambo by Monday close. Shorter timeframes amplify volatility and risk.

Bitcoin dipped below $100k today, is this it then – catch you at the next halving? It could be. But with sentiment carving out new cycle lows, this sure doesn’t feel like the euphoric peak worthy of capping off Bitcoin’s legendary run up from $15k in Nov 2022.

Don’t forget, Bitcoin thrives on blindsiding the masses – and when the herd’s stampeding for the exits, that’s often the rocket refueling for the next blast-off. Pause and think: when has the crowd ever nailed it in crypto? Hardly ever.

Bitcoin has a habit of defying expectations. UpTober was underwhelming, but November has historically delivered stronger, more consistent gains. Buckle up – MoonVember might just surprise us – to the upside or the downside. Always DYOR.

Market sentiment has dropped back into in: Extreme Fear

Crypto market moves: 

• Bitcoin finished UpTober at $109.5k and -4% vs prior month before starting a plunge below $100k and into “bear territory” today, down more than 20% from ATH’s.
• There was $1.1 billion in liquidations in the 24 hours following the FOMC meeting last week and a further $1.2 billion in the sell-off yesterday. More expected today!
• Even the so-called “Insider Whale” after 14 successful trades and $33 million in profit, got fully liquidated and lost $45 million in a single trade.
• Polymarket is divided on Bitcoin’s next move in so-called MoonVember, showing 11% chance of >$120k and 39% chance of <$90k.
• In a bull market, Bitcoin has never closed a week below the 50 week MA, which is currently sitting around $103k – all eyes on next Monday’s close!
• Bitcoin ETFs saw a net balance of outflows last week totalling -$800 million.
• BTC dominance is now back over 60% as the ETH : BTC ratio has paired back.
• The total crypto market cap is down $1 trillion from the ATH and below $3.4 trillion with just 24 of the top 100 Altcoins outperforming Bitcoin in the past 90 days.  
• Fear & Greed index is back in “Extreme Fear” territory as traders and investors wait for a clearer bull or bear confirmation from the market.
• Despite the negative sentiment, still none of the traditional Bull Market Peak indicators have fired yet, leaving some to wonder if this time is different.
• Google search volumes on both “Bitcoin” and “Crypto” have taken the elevator down to the basement, as retail is clearly tapped out and disengaged at this point in time.
• The big winner of the week is DASH (Dash) +138% as the privacy coin rally continues.
• The surprise mover of the week is ICP (Internet Computer) +58%.
• The big loser of the week is ENA (Ethena) -34.5%..

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

Highlights from the crypto space

Bitcoin is battling a wall of worry, struggling to make a convincing breakout – tumbling to $109K after the U.S. Fed meeting last week, and then dropping below $100k today as the Tech Sector sell off continued.

Early “Whales” have offloaded nearly half a million BTC in the past 30 days! And the rinse and repeat pattern of grinding recovery followed by a violent sell-off is noticeably wearing on retail investors, leaving many to wonder if the bears are now in control?

PayPal and OpenAI signed an agreement to embed a payments wallet into ChatGPT, proclaiming “it’s a whole new paradigm for shopping. It’s hard to imagine that agentic commerce isn’t going to be a big part of the future.”

Historic payment network Western Union says moving to digital assets is “the next evolution,” revealing plans to launch a new U.S. dollar-backed Stablecoin on Solana to facilitate international money transfers for its 100 million customers.

Larry Fink, the CEO of BlackRock, has endorsed Bitcoin as an inflation hedge, saying “you own crypto if you believe countries are going to continue to debase their currency.”

Jamie Dimon, the CEO of JPMorgan has finally admitted that he was wrong and crypto is “real” – in a remarkable u-turn, the bank will allow institutional clients to use Bitcoin and Ethereum as collateral for loans. Wow!

Permabull Michael Saylor of Strategy, the biggest Bitcoin treasury company, forecasts that Bitcoin will hit $150,000 by the end of 2025. The clock is ticking!

Payment rail wars escalate as Mastercard is in talks to acquire Zero Hash for nearly $2 billion. And Coinbase targets a BVNK deal for $2 billion.

US Democrat Congressman Khanna is introducing a bill that bans all elected officials, including the President and his family, from owning Bitcoin or creating cryptocurrencies – citing blatant corruption. About time.

Grayscale’s Solana Trust ETF rang the NYSE bell last week to celebrate joining Bitwise and Rex-Osprey in growing the U.S. Solana ETF market. Ding ding! 

Other crypto news:

• France introduced a bill to buy 420,000 Bitcoin (2% of supply) for their national reserves. But instead another bill set to tax unrealised gains on crypto was advanced. 

• Trump’s Truth Social is teaming up with Crypto.com to launch the world’s first social media prediction market platform. Might be too late to compete with Polymarket?

• Australia now classifies stablecoins and wrapped tokens as financial products and mandates a financial services licence.

• The Quantum Threat to Bitcoin just got ‘a little more real’ as Google claims a significant breakthrough. 

• Balancer, an ETH-based DEX and automated portfolio manager, appears to have been exploited for over $128 million.

• Hong Kong’s SEC says it’s concerned with digital asset treasury firms trading at extremely high premiums.

• Sigma Capital warns Bitcoin could drop 70% in the next downturn despite a long-term $1M target.

🌎 Macro news TLDR: Is the emperor actually wearing any clothes?

A staggering statistic: all of the net wealth created in the US stock market since 1926 has come from just 3.44% of companies. That means nearly 97% of stocks have barely contributed to long-term shareholder returns.

The two-speed economy has never been more extreme! Last week, the “Magnificent Seven” tech giants reported Q3 earnings – with wildly divergent results: 

• Nvidia surged 5%, becoming the first company ever valued above $5 trillion.  
• Google jumped 5% on beats, adding $175 billion in market cap.  
• Meta and Microsoft fell 10% and 5%, respectively – erasing nearly $400 billion combined.

These are eye-watering swings, each larger than the entire market cap of most S&P 500 companies – driven almost entirely by shifts in future earnings expectations, not actual profits.

Feeling the FOMO, OpenAI is gearing up to join the club, reportedly laying groundwork for an IPO that could value it at up to $1 trillion on the lofty ambitions of AGI – which the Microsoft AI CEO doubts is even possible.

The irony: the entire US economy now appears propped up by seven (soon to be eight) mega-caps endlessly trading trillions back and forth with each other. In the dot-com era, they called this a circular economy.

For context: Cisco peaked at 3.9% of U.S. GDP in 2000. Nvidia alone now represents ~16%.

Meanwhile, other companies worldwide are slashing jobs at an increasing rate, and the chasm between the AI-fueled, testosterone-charged tech bubble and the real economy is widening by the day. 

Is the emperor actually wearing any clothes? 

Economic news from the Americas

President Trump wrapped up a busy ASEAN summit last week that included a flurry of trade deals and handshakes that gave South East Asian nations their moment in the sun ahead of his much-awaited meeting with Chinese leader Xi Jinping. 

The U.S. Fed decided to cut the key benchmark interest rate by a further 25 bps but cautioned that the Dec meeting is far from a done deal.

Fed Chair Powell said President Trump’s tariffs are causing “higher overall inflation” and risks to inflation are tilted to the upside, while risks to employment are tilted to the downside.

Polymarket is calling Fed Chair Powell’s bluff and assigning a 69% chance of 25 bps cut. All eyes on the 10 Dec meeting, which will be the last of this year.

President Trump’s approval rating just hit a new low as the majority believe the country is “pretty seriously off on the wrong track.”

Satellite imagery is showing the U.S. army is edging closer to Venezuela, even after President Trump said last Friday that he is not considering strikes within the country. Is this the same cloak and dagger move that we saw with Iran a few months ago? 

Microsoft AI CEO says only biological beings are capable of consciousness, and that developers and researchers should stop pursuing projects that suggest otherwise.

Amazon announced that it will start laying off the first 30,000 workers and replace them with AI – as the CEO tries to calm concerns by calling it a “cultural reset”. Yeah right!

Argentina’s legislative elections resulted in a landslide victory for President Milei as voters overwhelmingly backed his free-market reforms and deep austerity measures – but some are starting to question his motives and effectiveness after a new $20 billion IMF loan plus a $20 billion currency swap line with the U.S. Treasury.  

Over in Europe & the Middle East…

Russian President Putin ratified a strategic partnership treaty with Venezuela last week, formalising a broad cooperation between the two countries that extends across political, economic, and security domains.

President Trump said that, for now, he is not considering a deal that would allow Ukraine to obtain long-range Tomahawk missiles.

Eurozone inflation eased to 2.1% in October, nearing the target – ECB President Lagarde praised progress but warned of global and wage-related risks. 

Elon Musk has stirred up controversy across social media again, this time saying “a civil war in Britain is inevitable” and it’s just a question of when. 

And in Asia Pacific…

U.S. President Trump received a rather cold reception from China’s President Xi Jinping as they finally reached a deal cutting tariffs to 10% in exchange for Beijing cracking down on the illicit fentanyl trade, resuming soybean purchases and keeping rare earths exports flowing.

Indonesia has issued its first Yuan-denominated bonds worth nearly $1 billion, directly circumventing the US dollar system.

The Reserve Bank of Australia will have to revise its inflation forecasts higher after quarterly numbers came in far hotter than expected, casting doubts on any further rate cuts this year – as the property market continues to surge forward.

Back in NZ, business confidence has jumped from 50 to 58 in October, the highest level since February, whilst inflation indicators were little changed. Green shoots are emerging, particularly for interest-rate sensitive sectors like retail and construction.

NZ’s Labour Party has proposed a 28% Capital Gains Tax on investment properties to fund free GP visits. Just don’t ask them how it works until after the 2026 election!

New Zealand’s unemployment rate rose to 5.3% in the September quarter as the working age population grew 0.3% while no new jobs were created.

That’s a wrap for this week!

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