Weekly Market Update: Waiting…

Ok, so things got pretty exciting leading into the US election night with most assets recovering nicely and Bitcoin hitting an ATH. Crypto baby.  

ETF inflows were a great barometer as they posted record inflows. Nice to see them growing again. In other news Microstrategy announced an ambitious plan to raise billions to buy more BTC, a UK pension added BTC to their assets, Robinhood’s crypto volumes doubled and Coinbase posted some solid Q3 results.

Unfortunately it wasn’t all good news, there were some pretty aggressive layoffs announced,1inch was hacked and Immutable joined the long line of crypto companies getting a visit from the SEC. Just another week in crypto.

In macro market news, the markets are basically on hold pending the outcome of the US election. However, backward looking PMI’s from across the world paint a picture of a slow manufacturing recovery. 

In the US, PCE inflation came in on target, but employment continues to be a conundrum (‘hot mess’ in colloquial speak). GDP was also very good. 

In Europe; the UK’s Labour government is planning to crank up taxes while Germany managed to narrowly skirt a recession.  European CPI actually ticked up too. 

In APAC, China continues to battle for growth, India continues to grow and Japan held interest rates.  

Regionally, Australia’s federal subsidies meant CPI was better than expected.  Predictably the RBA decided to hold rates at 4.25% as all those subsidies flow through.  

In New Zealand, more data supporting what we all know, we’re in a recession. Liquidations are up, so is the deficit.

However all eyes were on the employment data which was seen as the last major datapoint for the RBNZ decision later in the month. This surprised most coming in lower than expected.  

Market sentiment remains steady, continuing to sit in greed territory.

Highlights this week: 

• Following macro trends and general unease about the US election, all assets in the top 30 have retracted ~5-10% this week. 
• Volumes also ticked up with most of the action on the buy side. 
• At the time of writing (Wednesday morning)  BTC, XRP and BNB are down 6%, while ETH and SOL have pulled back a little more to be down 9%.  We know how that ended
• Origin (OGN) was the top performer this week, up 11%. 
• THORChain (RUNE) was the worst performing asset, down 25% this week. 

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

Highlights from the crypto space

Kaiko did a piece of research on the impact of the US election on crypto and in particular its ability to do 24×7 trading. TLDR;  no one knows what’s gonna happen.  Prepare accordingly. 

BTC ETF inflows are back!!!! 

The State of Michigan became a top 5 holder in the ETH ETFs.  

Microstrategy announced a plan to raise $42B to buy more Bitcoin. Ah… just a little bit excited by that. 

UK pension specialist, Cartwright, has introduced a 3% BTC allocation to its portfolio. It’s happening!!!

Consensys, the developer of Metamask, is laying off 20% of its staff. 

Coinbase has added Visa Direct as a payment option for US based customers. Coinbase posted a good profit in Q3 too. 

Empire put out some research saying it is perfectly normal for major Alts like ETH and SOL to lag BTC in achieving their All Time High. Here is a gem for you;   “How you tell the end of a bull run is when the major assets converge at all-time highs.”

Other notable highlights from around the crypto space:

• Robinhood’s crypto trading volumes have doubled year on year. 
• DEX aggregator 1inch was compromised, but apparently it will make victims whole. 
• Rabby wallet has made some big improvements to its cross chain abstraction. 
• This week in SEC enforcement, Immutable received a Wells notice. 
• Ethereum’s next big upgrade, Pectra, which is scheduled for Q1 next year, looks like it can deliver some pretty useful features like allowing wallets to temporarily function as smart contracts.
• Banking giant UBS is launching tokenised investment products, running on Ethereum.  
• Mt Gox creditors caused a stir by moving $2.2B of Bitcoin to other wallets
• Singapore’s MAS is scaling up its asset tokenisation trials.

🌎 Macro news TLDR: …All eyes on the US

U.S. economic news

The PCE inflation measure came in as expected at 2.1% annualised or 0.2% for September. US GDP for Q3 came in at 2.8%, this was slightly below the 3% expected. Employment was very weak, with just 12,000 jobs added in October, the target was 223k.

Hurricanes were largely to blame, so the result is being seen as an outlier. The ISM manufacturing PMI fell to 46.5, the S&P version rose but was still in contraction at 48.5. In short, manufacturing is contracting.  

Over in Europe….

The UK’s Chancellor signalled some large tax increases will be coming in from April. 

And the EU’s GDP was up 0.4%. EU CPI ticked up to 2% as well. Eurozone PMI is still in contraction, but at least it’s not getting worse, up to 46.  

German CPI surged to 2.4% in October, enabling them to skirt a recession. The ruling coalition in Germany looks like it might collapse leaving a political vacuum. 

And in Asia Pacific…

China’s official PMI came in at 50.1, breaking a trend of 5 months of contraction. Chinese banks are being hit by a wave of mortgage foreclosures as their tepid property market struggles on. The BoJ kept rates unchanged at 0.25%. India’s manufacturing PMI rose in September to 57.5. 

Australia’s CPI for September came in at 2.1%, much lower than the 2.4% expected. Annualised CPI is 2.7%. A big piece of the fall was from the Federal government’s energy rebate. House prices are falling in Sydney and Melbourne. 

Producer prices were up as well.  Manufacturing PMI for October rose to 47.3.  The RBA predictably held rates at 4.25%, they said a rate rise was still a possibility and have been surprised by the rise and scale of Federal government spending. 

New Zealand seasonally adjusted employment figures show a steady decline. Our balance of trade shows a continued deficit in September. 

ANZ reports that business optimism continues to rise.  Stats NZ’s Household Cost of Living index increased 3.8% in the year to September, down from 5.4% in June.

A lagging indicator, company liquidations, are running at the highest rate in a decade according to Centrix, construction and retail are the worst affected.  Supporting that, building consents are down 17% on September 2023, but up in August. 

The big news for the RBNZ and economists was the quarterly unemployment rate. This rose less than expected to 4.8%, many were calling 5%.  The underutilisation rate actually decreased. 

That’s a wrap for this week. 

Stay tuned for the next update.

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