At the time of writing, Bitcoin is currently trading at $28,100 USD while ETH is at $1,585. Since our last update, the market has continued to remain sideways and as a whole and is deep in the apathy phase. Looking at the charts, it’s particularly interesting to see the consistent formation of higher lows and higher highs on shorter time frames, which may be indicative of a recovery from the mid-August downturn. That said, it's essential to be aware that the market is currently characterized by a sense of unease due to uncertain financial conditions and recent events unfolding in the Middle East.
On Friday, Crypto Markets received a major win when news hit the streets that the SEC declined to appeal their ruling on the Grayscale lawsuit, opening the door for the long awaited spot Bitcoin ETF. Although it was not certain that the SEC wouldn’t appeal, signals began to emerge when the SEC delayed all ETF applications unexpectedly ahead of their decision dates in late September. Applicants also began to update their ETF filings ahead of the Friday appeal deadline to address questions and comments raised by the SEC. Most notably, the updates came in regarding custody and GAAP accounting which determines the value of the underlying assets. In the past, the SEC has always remained silent and declined all applications. We should now start to see the GBTC Discount to NAV close and reflect the true underlying value, which should be less of a drag on the market.
Another intriguing development is the spotlight on smart contracts within the Bitcoin ecosystem. What was once considered not possible, is now possible with the BitVM protocol. Essentially, the protocol will allow for complex transactions to occur off chain through a “prover” and “verifier”. The transaction would then settle on chain with reduced network congestion. The White Paper released by Robin Linus generated excitement for Bitcoin Devs and could open the door for Ethereum-like application on the Bitcoin network.
Last week, the United States released its latest inflation data, which met expectations. Year-over-year CPI came in at 3.7% and core inflation at 4.1%. Notably, during that trading session, the US30Y treasury auction went poorly with two failed bids but eventually settled at 4.837%, 4 basis points higher than expected. The auction triggered a sell off in equities, resulting in a 0.63% decline in the S&P within the the hour that followed. Bitcoin managed to maintain it’s resilience amid these market movements. USD liquidity continues to hold at relatively high values with the Reverse Repo Market holding at $1.15 Trillion. However, it is important to note that this figure is down from the $2.55 Trillion observed at the start of the year. Investors should now turn their attention to the mounting cost of US debt, which has surpassed $33.5 Trillion and is expected to increase exponentially with yields at 14 year highs.
Japan has come back into the spotlight, with the 10YR government bond yields soaring to 0.75%, levels not seen since 2014. Back in July, the Bank of Japan announced its willingness to allow the 10YR to approach 1%. While this move doesn’t come as a complete surprise, it’s worth paying attention to, particularly since the USD/JPY exchange rate is hovering around ¥150, prompting potential intervention from the BOJ. Borrowing in Yen and lending in Dollars has been a profitable trade for decades, but as rates in both countries rise, a potential unwind of the trade could pose risk to financial stability.
On a global scale, investors are no longer exclusively looking to interest rates and inflation. They are also closely monitoring escalating conflicts in the Middle East. The world will be watching closely as the US has expressed support for Israel and will be expected to send financial aid and equipment to bolster the war effort.
Last Friday witnessed a series of earnings reports from leading U.S. Banks, including JPMorgan Chase, Citigroup, Wells Fargo, PNC Financial. The results exceeded expectations, sparking an initial boost in major financial markets. However, as the week drew to a close these gains had larger been erased. The S&P index saw a moderate decrease throughout the week , but saw a small push friday that was continued into Monday morning with its current trading value standing at $4,382. Similarly the Dow Jones has seen a relatively flat week and down roughly 2.5% on the month. In recent commentary we had discussed IPOs that had seen success at launch (Klaviyo, Arm holdings, Instacart), however they have all been unable to sustain valuations. Birkenstock was the latest to enter the 2023 IPO market, seeing similar results since inception down 7% to date.
USDCAD: open: 1.3670-74, range 1.3660-1.36695, with CAD gaining slight momentum to start Monday hovering around 1.3625 at the time of writing. Meanwhile, Crude prices underwent some late-week momentum, up over 4% on Friday and currently trading at $87.07 USD per barrel. Early last week, Canadians had seen the lowest prices at the pump since March, thanks to a sharp decline from the late September highs. In the realm of precious metals, Gold is trading at $1,919 USD per ounce after a notable rally last week of 5.45%
BitVM: Compute Anything on Bitcoin
The White Paper highlights how smart contracts may be compatible on the Bitcoin network. - link - @Robin Linus
Crypto token ether could rise five-fold by end-2026, StanChart says
As Eth becomes more widely used, analysts think that prices could reach $8,000 over the next 2 years - link - @Reuters
Paul Tudor Jones says it’s hard to like stocks given geopolitical risks, weak U.S. fiscal position
In an interview with CNBC, well-known investor Paul Tudor Jones commented on Equities, crypto and the conflict in the Middle East -link - @CNBC
30-Year Treasuries Had an Ugly Auction. What’s Behind the Weak Demand
The weak bid for 30-Year Treasuries triggered a mid-day sell off in equities. The weak demand reflects the added premium investors are asking for to hold long term bonds- link - @Barrons
Live Updates: The Trial of FTX Founder Sam Bankman-Fried
Caroline Ellisons testimony has seemed to confirm what most believed to be true following the collapse of FTX. Some of which included conspiring to suppress the price of Bitcoin and using customer funds without consent. - link -@Wired