Bitcoin's Race to Reclaim $40K Accelerates as Milei Advances
Bitcoin's Race to Reclaim $40K Accelerates as Milei Advances
Digital Asset Market: Bitcoin saw a significant rise in price, crossing the $31,000 resistance level, and investors considered it ‘highly likely’ at this point that SEC will approve a Bitcoin ETF. At one point, the price touched $35,000. Market analysts predict further growth, with bitcoin potentially reaching $75,000. BlackRock listing their ETF on the Depository Trust & Clearing Corporation database (with a BTC ticker) has fueled speculation of an ETF approval by the SEC. This is seen as a major development, as bitcoin is becoming a refuge for investors during uncertain times. BlackRock CEO Larry Fink and other experts have expressed positive sentiments towards Bitcoin, potentially signaling an upcoming approval of the ETF.
Meme coins, which rely on social hype rather than technology, are experiencing a resurgence in trading as the market recovers. Prices of tokens like PEPE, BITCOIN and SPX are surging, leading to a rise in Ethereum gas fees. These tokens mimic mainstream symbols and have a combined market cap of $120 million.
Macro Economics: The Chinese government has formalized a process which will allow local governments to borrow funds for the next year ahead to help stabilize fiscal policy. This will last for four years, ending in 2027. The move aims to support economic growth, which has been affected by weaknesses in the real estate sector and pressures on debt repayments, home sales, and investment. In addition, China is issuing 1 trillion yuan in government bonds for natural disaster relief, which will increase the deficit to 3.8% from 3%. The surprise policy changes and government personnel replacements have led to a boost in China's stock futures. This could potentially provide more support for the economy and help accelerate the recovery from macroeconomic headwinds and uncertainties.
Equities: Stocks gained ground on Tuesday as the 10-year Treasury yield revived after a volatile day on Monday. Investors are awaiting earnings reports from major companies, including tech giants. GM withdrew its 2023 profit guidance due to labor strike uncertainty, while Spotify surprised by turning a profit in the third quarter. Manufacturing data came in higher than expected. Stocks rose at the open, with GM, 3M, GE, and Spotify leading the premarket trading. Focus is now on the earnings deluge and results from Microsoft and Alphabet.
In other news, the United Auto Workers (UAW) has launched a surprise 5,000-worker strike at General Motors' (GM) largest SUV plant in Arlington, Virginia, following news of a similar strike at Stellantis' RAM 1500 plant in Michigan. This comes as UAW is demanding a fair share of the record profits earned by these companies, which have exceeded expectations, but GM's latest offer falls short compared to Ford's. The total number of striking UAW members has reached 45,000, or about 30% of the union's total membership.
The Fed and the Banks: JPMorgan Chase CEO Jamie Dimon warned about the dangers of making predictions about the economy, citing the poor track record of central banks like the Federal Reserve. He cautioned against locking in a specific outlook, given the current uncertain factors at play. Dimon also criticized the Fed's misdiagnosis of inflation and their belief in being able to manage economic challenges. He warned that the world may be facing a dangerous time and stressed the need for a cohesive strategy in addressing ESG principles. “You can’t build pipelines to reduce coal emissions. You can’t get the permits to build solar and wind and things like that,” he said. “So we better get our act together.
Geopolitical: In the lead-up to Argentina's presidential elections on October 22, libertarian candidate Javier Milei emerged as a notable figure, leading in some polls, although it remained a closely contested race among the top candidates. Milei's victory in the presidential primary not only stirred the national political arena but also sent shockwaves globally, reflecting the significant attention his political stance garnered. The election dynamics indicated that for Milei to secure a victory in the general elections, there was a need to increase his share of the national votes by 15%. The electoral system in Argentina requires a candidate to obtain 45% of the votes or at least 40% with a 10-point lead over the nearest rival to win outrightly, otherwise, a runoff is necessitated. In the primary elections, with about 90% of ballots counted, Milei secured 30.5% of the votes, a figure higher than what was initially predicted, showcasing a level of support that potentially challenged the traditional political narrative in Argentina
View from our desk
Yesterday's cryptocurrency market showed signs of emerging from its prolonged winter, fueled by last week's SEC decision to drop the Grayscale case and rumors of an impending ETF approval. These developments pushed Bitcoin (BTC) prices to hover around the $30,000 mark, with substantial trading volumes. While the ETF rumor ultimately proved to be unfounded, we believe that the likelihood of such an approval is much higher than the 75% probability cited by some media outlets. Given this outlook, Bitcoin presents a compelling "BUY" opportunity at its current price, offering more probability-adjusted upside than downside.
In contrast, the traditional financial markets have been relatively quiet. One notable exception was the recent retail sales report, which initially appeared surprising. However, a closer look at the details reveals that the uptick in sales was primarily driven by a few sectors, most notably the automotive industry. This isolated boost suggests that the broader economic landscape remains stable, without any significant shifts that might otherwise impact investment strategies.
Looking ahead, all eyes will be on Federal Reserve Chair Jerome Powell, who is scheduled to speak before the Economic Club of New York on October 19th. While we don't anticipate any groundbreaking announcements, his remarks will be closely monitored for any subtle hints or shifts in policy that could influence both traditional and crypto markets. Given the current stability in traditional markets and the potential for positive regulatory changes in the crypto space, investors would do well to stay alert to opportunities in both arenas.
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The 1Konto Team
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