BTC opened the week near USD 67,500, after briefly testing USD 65,600 over the weekend. During the Asia session on Tuesday morning, it surged past USD 70,000. The bullish momentum is mainly fuelled around a potential Republican win in the upcoming US elections, which could lead to more favourable crypto regulations. This break above USD 70,000, along with strong Spot ETF inflows, triggered FOMO-driven buying and forced short liquidations, pushing BTC slightly above USD 73,600 – just 300 points below its all-time high.
By Wednesday, BTC consolidated around USD 71,500 but struggled to breach USD 73,000. Disappointing large-cap tech earnings weighed on both BTC and equities, leading BTC to retreat to its previous range and touch lows of USD 68,800, now trading just above USD 69,000.
This week saw robust spot BTC ETF inflows, with Wednesday marking the second-highest daily inflow since inception at approximately USD 890 million, pushing total weekly inflows above USD 2.27 billion. Despite these inflows, BTC’s price remained steady during Wednesday’s US session, suggesting either significant selling pressure around the USD 72,000 level outside ETFs or that much of the ETF flows were delta-neutral or basis trades, as BTC CME Futures Open Interest reached a record USD 12.5 billion with basis exceeding 12%.
With the recent push above USD 73,000, there is significant trapped liquidity around this level. Without a major catalyst – like a Trump election win, strong NFP data or positive global liquidity news – it may be challenging to break through this level in the short term.
On the altcoin side, I believe there may be some standout performers, but altcoins may struggle to gain momentum until BTC breaks above its all-time high.
BTC’s 30-day at-the-money (ATM) implied volatility is around 58% (+3% WoW), while ETH increased slightly less, from 60% to 62% (+2% WoW). The 25-delta skew is negative for BTC over the next 0-7 days and for ETH over 0-30 days before turning positive, suggesting short-term volatility ahead of the election, but a generally bullish outlook in the medium to long term.
On Tuesday, US consumer confidence rose sharply in October, with the CB index reaching 108.7, well above expectations of 99.5. Meanwhile, job openings dropped significantly, as indicated by the JOLTS report for September, with openings falling to 7.443 million versus expectations of around 7.98 million.
On Wednesday, US Q3 GDP growth decelerated slightly to 2.8%, missing the 3.0% forecast, while consumer spending remained a key growth driver. Yesterday, Core PCE data slightly exceeded expectations at 2.7% (vs. 2.6% forecast), while Initial Jobless Claims came in lower than anticipated.
All eyes turn to Nonfarm Payrolls this afternoon, the final key data release before next week’s Presidential Election and FOMC Meeting. A stronger-than-expected report could prompt dip-buying in equities and cryptocurrencies after yesterday’s sharp decline.
Next week’s key macro events include the following:
- Tuesday, 5 November 2024: US Presidential Election, ISM Non-Manufacturing & Services PMI data
- Thursday, 7 November 2024: BoE Interest Rate Decision, FOMC Statement & Fed Interest Rate Decision
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