BTC and major altcoins reclaim key levels amid dollar rally

As the macro landscape evolves, investors are closely monitoring both traditional and crypto markets, anticipating potential movements ahead of these major economic announcements.

In this report:

• The data over the coming weeks
• Corporate Earnings this week
• Stronger data and, therefore, Dollar
• BTC & Totals
• Cryptonary's Take

Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

---

The data over the coming weeks

From a macroeconomic data point of view, there is nothing in focus this week that is similar to last week. The focus this week is on other areas, which we'll get into in the rest of this report. But, in terms of the data, this week is quiet, and we don't heat up again until next week.

However, the back end of next week and the following week are bangers from a data point of view. It all gets going from the 29th; this is what we have to look forward to.

• Tuesday 29th Oct: JOLT's Job openings.
• Wednesday 30th Oct: GDP Growth Rate.
• Thursday 31st Oct: Core PCE Price Index.
• Thursday 31st Oct: Personal Income MoM.
• Thursday 31st Oct: Personal Spending MoM.
• Thursday 31st Oct: Initial Jobless Claims.
• Friday 1st Nov: Non-Farm Payrolls.
• Friday 1st Nov: Unemployment Rate.
• Tuesday 5th Nov: US Presidential Election.
• Thursday 7th Nov: FED Meeting and Press Conference.

The next week is quiet, but from the 29th onwards, we have approximately 10 days of fireworks.

Corporate earnings this week

The focus of markets this week will be on Corporate Earnings, with significant Earnings coming in on the 24th (this Thursday).

Currently, the Earnings bar (in terms of expectations) is relatively low, so it's possible we do see corporations across the board beat expectations. If we're to get this, this should act as a tailwind for equities to go higher.

Strong data, therefore, leads to a stronger dollar

Over the last month, we've increasingly begun to see the economic data in the US come in stronger whilst the data in Europe has come in weaker. This has led to the US Bond Yields rising as the market prices the need for fewer Interest Rate cuts than what had initially been forecasted and, therefore, priced in.

However, due to the data in Europe coming in worse than expected, more Interest Rate cuts are likely needed and have therefore begun to be priced in. So, there will be fewer rate cuts in the US (because growth is holding up, so there is no need to cut rates by as much) and more rate cuts in Europe (as growth deteriorates). This has resulted in a higher rampage of the dollar due to widening rate differentials.

$DXY (dollar index) 1D chart:

Historically, an aggressively rising Dollar (Dollar Index) would have been bearish for risk assets, yet the S&P is at all-time highs, and $BTC is up 8% since the Dollar has risen 3.40% from its lows. However, this is due to growth remaining positive, and therefore, risk, in general, has a bid.

However, US 2Y Bond Yields have now moved back to the 4.00% level, and are now significantly more attractive Yielding 4.00% than they were a month ago when they were Yielding 3.50%. This may mean we some some rotation out of Stocks and in to Bonds as investors look to lock in the higher Yields now being offered again.

US 2Y bond yield:

BTC & totals

Last week was a great week on the ETF front. We saw substantial overall inflows. We're estimating that this is likely due to the 'Trump trade' - as Trump's Presidential election odds improve, assets positively associated with a Trump victory get a bid.

BTC ETF flows:

If we now look at BTC's price action, overall it has also been really positive on the back of these inflows. We've seen price move up to the top resistance at $68,900, and actually surpass this level in the night. However, we have rejected from this level and price has pulled back. It wouldn't now be a major surprise to see price pullback slightly further, and the reason being is this.

We have seen assets linked to a Trump win, move very positively as betting markets have begun to price Trumps odds of winning higher. However, this may be a local top considering polling suggests that the election is much closer than betting markets are suggesting, and there is still 2 weeks until the election date.

Therefore, we wouldn't be surprised to see more of a pullback here. We have drawn arrows for potential pull-back areas.

BTC 1D chart:

We do remain very constructive and positioned Long, we just see there being the potential for caution on the short-term up until the election.

When we look at key Index's, TOTAL3 (Crypto MCap excluding BTC and ETH) is one we like. Chart wise this looks very bullish if we look beyond the very immediate term. TOTAL3 has broken out of a major downtrend line and has now tested the horizontal resistance of $640b a number of times. A breakout would likely send this chart to $700b swiftly.

TOTAL 3 3D chart:

Cryptonary's take

Whilst we remain very constructive on the market overall, we are wary that we're just a week away from moving in to what is likely to be a very volatile period with a lot of macro events and the US Presidential Election. Over the last two weeks, we've also seen the 'Trump trades' catch a more meaningful bid as Trumps odds have substantially improved in betting markets.

However, this may be a local top for this trade as polling remains very 50/50, meaning there is now a substantial divergence between the polling odds and the betting market odds. We might therefore see some risking off on these positions (which have performed well over the past few weeks) as we move in to the election. We do expect to see full risk on again upon a Trump win though of course.

For now, we remain positioned Long, but we're somewhat wary of going into the next week or two as we expect volatility to occur. But, we are also pleased with the recent price action where we have seen the majors reclaim some key levels:

• BTC is in the high $ 60k.
• ETH back above $ 2,550.
• SOL back above the key horizontal resistance of $162.

The setup looks great over the coming months; we're just slightly more cautious in the immediate term.