MARKETS week ahead: October 30 – November 5
Last week in the news
The US stock market continued with its correction cycle, losing 10% from its peak in July this year. The ECB left rates unchanged, as expected, but it did not help EU stocks to gain during the previous week. At the same time, Bitcoin reached its resistance level at $35K, amid news on a potential approval of the first ETF. For the second week in a row Gold lost its correlation with USD, and was traded higher, due to geopolitical risks. In short, it was the second week in a row on financial markets with challenging earning aspects.
After straight ten consecutive rate hikes, the ECB left its benchmark interest rates on hold during the previous week. Its key rate remained at 4%, the level at which ECB hopes the inflation will slowly return back to its 2% target. The ECB Council members have confirmed their expectations for mid-term inflation expectations of 2.1%. Although there has been no news with respect to the future economic moves, rhetoric of the ECB modestly differed from their colleagues in the US. Namely, as the Fed narrative for interest rates is “higher for longer”, the ECB is speaking the same narrative, but for inflation. On the opposite side, the ECB did not make comments regarding potential for rate cuts in the future period, considering that the inflation forecast for this year still stands at 5.6% and 3.2% during the course of the next year. At the same time, economists are concerned over EU economic growth, where rate cuts might come sooner, in order to support an economy which is on the downturn.
Fed`s favorite inflation gauge, PCE Index was left unchanged in September at 3.4% and core PCE at 3.7%. Posted figures for GDP growth in Q3 surprised markets, by reaching 4.9%, higher from market expectation of 4.3%. Although the US economy looks in good shape at the first sight, still, there have been several discussions during the previous week concerning deterioration in consumer spending. Namely, analysts are warning that consumer figures look strong, but at the same time, the household savings ratio has decreased, while during the last three months, the real income of the US households has been negative. There is an increasing number of both economists and analysts who are actually concerned about the real outlook for the US economy in the coming year.
The Bank of England is preparing for introduction of the central bank digital currency in the future period. It was the reason why they left the CBDC consultation paper on public discussion, after which, they received more than 50.000 responses. Still the majority of responses were related to concerns regarding safety of the digital currencies, following its programmability while a significant majority of participants were concerned over the decline in cash. The BoE did not bring a formal decision over introduction of the CBDC, nor did they have defined a deadline for such a move.
Crypto market cap
To be or not to be an ETF is the major topic on the crypto market during the last two weeks. Regardless of any other economic or political developments, the crypto market is currently following its own story. During the previous week capital inflow into the crypto market continued, however, strong push to the upside was supported by significant levels of both margin calls on derivative markets, as well as re-positioning on the options market. The odds for the approval of the first BTC ETF are increased by market participants; however, it should be considered that the last word will be by the SEC. Although the SEC postponed the decision on the approval of ETF filings from several big names in the financial industry for the end of October, it should be acknowledged that SEC might do this again or, in the final case, reject all these filings. Risks for the crypto market are still very high. Still market sentiment or speculation is hard to avoid in situations like this, so the price of the crypto assets might continue with high volatility in the coming week(s). Total crypto market capitalization was increased by 11.5% during the previous week, adding $127B to its cap. Most of these funds are coming from BTC and ETH. Daily trading volumes were also increased compared to the week before, ranging around $60B on a daily basis, from $55B traded a week before. Total crypto market capitalization increase since the beginning of this year currently stands at 63%, where it has added total $477B to the market cap.
Another week ended in green for the majority of crypto coins. BTC continues to be the most traded coin, which added $85.6B to the total market cap of the crypto market, increasing its value by more than 14% on a weekly basis. BTC was followed by ETH, which managed to gain market optimism and increase its market cap by additional $22B or more than 11% on a weekly basis. During the previous week BNB managed to get back in the crypto game, adding $2.15B to its market cap, increasing it by 6.6%. XRP also had another positive week, with a surge in the market cap by $1.7B or more than 6%. Other coins with good performance during the week were LINK, with an increase in cap by $1.7B or 38.4%, DOGE gained additional $1.2B or 13.8%, ADA was up by $1.28B or more than 14%, while Solana gained $1.3B or 11% on a weekly basis. Another coin that should be mentioned in relation to its performance was NEO, with an increase in value of 35%, OMG Network surged by 17%, while Filecoin was up by almost 13%. Majority of other altcoins gained during the week.
Considering coins in circulation, the highest weekly inflow had Solana, with an increase of 0.6%. Tether is also gradually building its circulating coins, adding another 0.5% to it during the previous week. Polkadot and Filecoin also added 0.3%, while several other altcoins have increased their circulating coins by 0.1% w/w.
Crypto futures market
Based solely on crypto derivative markets, it seems that investors' positive sentiment for crypto currencies is back on the market. During the previous week both BTC and ETH futures gained significantly compared to prices from the end of the previous week. BTC futures maturing in December this year were traded higher by 13.8%, reaching the price of $34.360. At the same time, longer term futures were traded above 18% higher from the week before, where December 2024 ended the week at level of $37.240. This was a huge move for BTC, as the market was struggling for a long time to sustain the price of $30K for this maturity.
ETH futures also managed to finish the week with a positive investor sentiment. ETH futures maturing in December this year were last traded higher by 11.7% on a weekly basis, ending the week at level of $1.811. At the same time, futures maturing in December next year finished the week at level of $1.918 or more than 14% higher from the week before. It should be noted that futures maturing in March 2025 ended the week at price $1.945, which indicates current market sentiment with expectation for the price of ETH to continue to move to the higher ground in the years to come.
The US stock market continued with its correction cycle, losing 10% from its peak in July this year. The ECB left rates unchanged, as expected, but it did not help EU stocks to gain during the previous week. At the same time, Bitcoin reached its resistance level at $35K, amid news on a potential approval of the first ETF. For the second week in a row Gold lost its correlation with USD, and was traded higher, due to geopolitical risks. In short, it was the second week in a row on financial markets with challenging earning aspects.
After straight ten consecutive rate hikes, the ECB left its benchmark interest rates on hold during the previous week. Its key rate remained at 4%, the level at which ECB hopes the inflation will slowly return back to its 2% target. The ECB Council members have confirmed their expectations for mid-term inflation expectations of 2.1%. Although there has been no news with respect to the future economic moves, rhetoric of the ECB modestly differed from their colleagues in the US. Namely, as the Fed narrative for interest rates is “higher for longer”, the ECB is speaking the same narrative, but for inflation. On the opposite side, the ECB did not make comments regarding potential for rate cuts in the future period, considering that the inflation forecast for this year still stands at 5.6% and 3.2% during the course of the next year. At the same time, economists are concerned over EU economic growth, where rate cuts might come sooner, in order to support an economy which is on the downturn.
Fed`s favorite inflation gauge, PCE Index was left unchanged in September at 3.4% and core PCE at 3.7%. Posted figures for GDP growth in Q3 surprised markets, by reaching 4.9%, higher from market expectation of 4.3%. Although the US economy looks in good shape at the first sight, still, there have been several discussions during the previous week concerning deterioration in consumer spending. Namely, analysts are warning that consumer figures look strong, but at the same time, the household savings ratio has decreased, while during the last three months, the real income of the US households has been negative. There is an increasing number of both economists and analysts who are actually concerned about the real outlook for the US economy in the coming year.
The Bank of England is preparing for introduction of the central bank digital currency in the future period. It was the reason why they left the CBDC consultation paper on public discussion, after which, they received more than 50.000 responses. Still the majority of responses were related to concerns regarding safety of the digital currencies, following its programmability while a significant majority of participants were concerned over the decline in cash. The BoE did not bring a formal decision over introduction of the CBDC, nor did they have defined a deadline for such a move.
Crypto market cap
To be or not to be an ETF is the major topic on the crypto market during the last two weeks. Regardless of any other economic or political developments, the crypto market is currently following its own story. During the previous week capital inflow into the crypto market continued, however, strong push to the upside was supported by significant levels of both margin calls on derivative markets, as well as re-positioning on the options market. The odds for the approval of the first BTC ETF are increased by market participants; however, it should be considered that the last word will be by the SEC. Although the SEC postponed the decision on the approval of ETF filings from several big names in the financial industry for the end of October, it should be acknowledged that SEC might do this again or, in the final case, reject all these filings. Risks for the crypto market are still very high. Still market sentiment or speculation is hard to avoid in situations like this, so the price of the crypto assets might continue with high volatility in the coming week(s). Total crypto market capitalization was increased by 11.5% during the previous week, adding $127B to its cap. Most of these funds are coming from BTC and ETH. Daily trading volumes were also increased compared to the week before, ranging around $60B on a daily basis, from $55B traded a week before. Total crypto market capitalization increase since the beginning of this year currently stands at 63%, where it has added total $477B to the market cap.
Another week ended in green for the majority of crypto coins. BTC continues to be the most traded coin, which added $85.6B to the total market cap of the crypto market, increasing its value by more than 14% on a weekly basis. BTC was followed by ETH, which managed to gain market optimism and increase its market cap by additional $22B or more than 11% on a weekly basis. During the previous week BNB managed to get back in the crypto game, adding $2.15B to its market cap, increasing it by 6.6%. XRP also had another positive week, with a surge in the market cap by $1.7B or more than 6%. Other coins with good performance during the week were LINK, with an increase in cap by $1.7B or 38.4%, DOGE gained additional $1.2B or 13.8%, ADA was up by $1.28B or more than 14%, while Solana gained $1.3B or 11% on a weekly basis. Another coin that should be mentioned in relation to its performance was NEO, with an increase in value of 35%, OMG Network surged by 17%, while Filecoin was up by almost 13%. Majority of other altcoins gained during the week.
Considering coins in circulation, the highest weekly inflow had Solana, with an increase of 0.6%. Tether is also gradually building its circulating coins, adding another 0.5% to it during the previous week. Polkadot and Filecoin also added 0.3%, while several other altcoins have increased their circulating coins by 0.1% w/w.
Crypto futures market
Based solely on crypto derivative markets, it seems that investors' positive sentiment for crypto currencies is back on the market. During the previous week both BTC and ETH futures gained significantly compared to prices from the end of the previous week. BTC futures maturing in December this year were traded higher by 13.8%, reaching the price of $34.360. At the same time, longer term futures were traded above 18% higher from the week before, where December 2024 ended the week at level of $37.240. This was a huge move for BTC, as the market was struggling for a long time to sustain the price of $30K for this maturity.
ETH futures also managed to finish the week with a positive investor sentiment. ETH futures maturing in December this year were last traded higher by 11.7% on a weekly basis, ending the week at level of $1.811. At the same time, futures maturing in December next year finished the week at level of $1.918 or more than 14% higher from the week before. It should be noted that futures maturing in March 2025 ended the week at price $1.945, which indicates current market sentiment with expectation for the price of ETH to continue to move to the higher ground in the years to come.
