A Week of Economic Optimism and Inflation Expectations

Macro Strategy

The Fed's Impact: A Boost in Investor Confidence

The past week has been relatively light on news and macroeconomic statistics. However, the Federal Reserve's decision, announced on November 1, has instilled a sense of confidence among investors. The Fed's apparent decision to slow down on rate hikes has been a significant factor in bolstering this optimism.

Inflation Expectations: Slightly Above Forecasts but Not Alarming

On Friday, data on inflation expectations were released, showing figures slightly above predictions. However, these numbers were not alarmingly high for the markets. There is a growing anticipation for the upcoming sales season and the Christmas rally, with reports on these expected soon.

The Fed's Strategy: A Cautious Approach to Rate Hikes

Regarding the Federal Reserve and interest rates, the central bank has decided to reserve its monetary policy tightening tools. This approach aims to avoid pushing the economy into stricter constraints, maintaining flexibility in case of rising inflation.

U.S. Fiscal Health and Policy: Navigating Through Challenges

Legislative Measures to Prevent Government Shutdown

In U.S. budget news, financial stability and the debt ceiling are once again in the spotlight. The Speaker of the U.S. House of Representatives, Johnson, has introduced a bill to avert a government shutdown. The lower house is scheduled to vote on this bill on November 14.

Moody’s Alters Outlook on U.S. Rating

Moody's has revised the outlook for the U.S. rating from 'stable' to 'negative', pointing to increasing risks to the nation's financial stability, though the 'Aaa' rating remains intact. The agency has indicated a potential downgrade due to a widening budget deficit and political polarization.

The country's budget deficit is expected to stay substantial amid higher interest rates, without measures to cut expenditures or boost revenues. This situation significantly weakens debt affordability, as noted by Moody's. The new negative outlook also considers risks related to another potential government shutdown.The U.S. had successfully prevented a government shutdown earlier, with a compromise law passed that allows the government to function until November 17.

Investment implication

Given the strong growth of digital assets in recent weeks, we anticipate a temporary slowdown in growth until new data emerges. The risk of a rate hike currently appears to be approaching a zero probability, and inflation seems to be under control. Additionally, there is a renewed interest among investors in U.S. Treasuries, which could rectify the previous imbalance in demand and supply.

Market View

Cryptocurrency Insights: Onchain Data Reveals Trends

Significant Increase in High-Value BTC Addresses.

Onchain data indicates a noteworthy trend in the cryptocurrency domain. The number of addresses holding Bitcoin (BTC) worth over $1 million has surged by +237% since the beginning of the year, according to Glassnode.

Record Highs in BTC Mining Difficulty and Miner Earnings

The difficulty of mining Bitcoin has reached a record high of 64.68 T. Moreover, on November 12, miners earned over $44 million in block rewards and transaction fees, marking a new maximum for the year. This data underscores the growing activity and interest in the Bitcoin mining sector.

A Calm Weekend in Finance and Politics with a Steady Bitcoin

Bitcoin's Steady Hold Amidst a Quiet Weekend

Over the weekend, the financial and political scenes remained shock-free. Bitcoin has been trading around the $37,000 mark, showing some fluctuations but maintaining a generally positive sentiment. This stability in Bitcoin's price is also reflected in the futures rates, indicating a continued investor confidence in the cryptocurrency.

Altcoins Gain Ground as Bitcoin's Dominance Dips

While Bitcoin's growth has temporarily plateaued, altcoins have started to catch up, leading to a decrease in Bitcoin's market dominance from 55% to 52% over the past week. Simultaneously, many small and medium-cap altcoins have exhibited significant growth. This shift suggests a broadening interest and investment in the wider cryptocurrency market beyond the leading Bitcoin.

ETF Speculations Continue Without Major Updates

There have been no significant updates regarding the much-discussed topic of cryptocurrency Exchange-Traded Funds (ETFs). The market continues to speculate that the U.S. Securities and Exchange Commission (SEC) will approve several ETFs soon, as there seem to be no substantial reasons for further delays. Meanwhile, investment giants Blackrock and Vanguard are fueling interest among retail clients. They are actively discussing the benefits and prospects of the industry, making amendments to their applications, and registering names for future ETFs with the Depository Trust & Clearing Corporation (DTCC).

This ongoing interest from major financial institutions in cryptocurrency ETFs, despite the lack of new developments, underscores the growing mainstream acceptance of digital assets. Investors and market watchers remain keenly attentive to any progress in this area, which could significantly impact the cryptocurrency market dynamics.

MARKETS IN REVIEW

Correlation matrix between top 10 digital assets

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