BTC Hits $94K and Rising: Is $100K Bitcoin by Thanksgiving Possible?
Digital Asset Market: Ethereum's ether (ETH) has only risen 36% this year, significantly trailing behind BTC's impressive 109% surge. This is due to investor aversion towards ETH and weak fundamentals. A new proposal to overhaul the blockchain may help mitigate the supply issue, but it could take years to see the results. Regardless, if BTC's uptrend continues, it could eventually drag ETH above $4,000, but it is still expected to underperform relative to BTC. The price of Bitcoin is predicted to reach $100,000 soon due to favorable political and institutional conditions and the current bull run. Companies and analysts are increasingly bullish on Bitcoin, with some predicting it could reach $200,000. However, there are concerns about potential volatility and a potential blow-off top. The slowing down of upside volatility and a potential hawkish stance from the US Federal Reserve could also affect Bitcoin's attractiveness.
El Salvador is seeing its first offering of tokenized U.S. Treasuries, thanks to a collaboration between digital asset issuer NexBridge and Bitfinex Securities. The product will allow individuals and organizations in the country to invest in T-Bills through stablecoins and, potentially, bitcoin. The offering aims to attract at least $30 million in deposits and will trade on Bitfinex Securities' secondary market. Tokenization of real-world assets is a growing sector within the intersection of digital assets and traditional finance. Including U.S. Treasury tokens in investment portfolios can provide a new level of diversification and reduce overall portfolio risk.
Macro Economics: Russia plans to build a new pipeline to transport natural gas to China through Kazakhstan, aiming to deliver up to 35 bcm annually. This comes as Moscow focuses on its energy partnership with Beijing, currently its top customer. China's gas demand is expected to continue increasing. However, coal remains its primary source of energy. Kazakhstan also sees potential for growth in gas exports to China. This new pipeline would benefit Russia's economy, but China will likely use competition to negotiate prices. The two countries are playing a long game in their energy relationship.
In other news, Oil prices dropped on a UN report stating that Iran has agreed to halt production of uranium enriched at near nuclear bomb-grade levels. This move comes amid concerns and tensions surrounding Iran's nuclear capabilities. The report states that Iran has already taken steps to cap its output, possibly in response to the incoming Trump administration's stance on Iran. This could be seen as an attempt by Iran to show a willingness to de-escalate tensions with Israel and the United States.
Equities: The Nasdaq turned positive on Tuesday with gains driven by Nvidia shares, while the S&P 500 cut losses tied to rising geopolitical tensions between Ukraine and Russia. The Dow Jones Industrial Average dipped 200 points, driven by concerns over a potential conflict between the two countries. The market pressure began overnight after Russian President Vladimir Putin warned the U.S. about the use of nuclear weapons. At the same time, losses accelerated on news that Ukraine hit a Russian border region with U.S.-made missiles. This led investors to move into safe havens such as treasuries and gold, causing yields to be lower. One bright spot was Nvidia, which gained 2% ahead of its earnings report tomorrow. Walmart also rose after posting better-than-expected earnings. Tesla also saw gains, posting its best month since January 2023. The market ended the day mixed, with the Nasdaq and S&P 500 seeing gains and the Dow falling slightly.
The Fed and US Treasury: Wholesale prices increased 0.2% in October, which aligns with expectations and indicates that the Fed may cut interest rates again in December. The producer price index, which measures producer profits, rose 2.4% over the past year, slightly above the Fed's 2% inflation goal. However, this increase is primarily due to isolated factors and the moderating overall inflation. Services were the main driver of the rise, while food and energy prices fell. Additionally, layoffs continue to decrease, with initial claims for unemployment benefits dropping to 217,000 and continuing claims at 1.873 million. Market reactions were minimal, with stock futures staying mixed and Treasury yields remaining higher. This data supports the expectation for another rate cut in December, but the market expects the Fed to slow down its easing pace in the future.Â
Geopolitical: Ukraine launched a strike on a border region in Russia using US-supplied ATACMS missiles, marking the first time they have carried out such an attack with American weapons. This has escalated the conflict with Russia, leading to increased volatility in financial markets and concerns for a clear resolution. In response, Russia shot down five of the six missiles and has now given President Putin authorization to use nuclear weapons if their sovereignty is threatened. This retaliation and heightened risk of nuclear conflict are further increased by the Russian view that the attack was supported by atomic power, as well as their updated nuclear doctrine allowing for a nuclear response to aggression from non-nuclear states. Some question the effectiveness of the US missiles, but Russia's recent developments, such as the mass production of mobile bomb shelters, suggest they are taking the possibility of a nuclear confrontation seriously, particularly as tensions remain high before the inauguration of President-elect Donald Trump.Â
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President-elect Donald Trump has announced his intent to nominate former SEC Chair Jay Clayton as U.S. Attorney for the Southern District of New York. Clayton, known for his critical stance on the crypto industry, notably oversaw the SEC's lawsuit against Ripple Labs and currently serves as a senior policy advisor at a law firm. Attention is now focused on the anticipated new SEC Chairman nomination and Gary Gensler's potential replacement. While Clayton's nomination raises eyebrows, he is broadly viewed as pro-Wall Street, leading many to withhold judgment.
Bitcoin continues to perform strongly, reaching new highs above $94K. The next major milestone, potentially achievable before Thanksgiving, could see Bitcoin hitting the $100K level. At our desk, we observe strong flows into cryptocurrencies, mainly through USDT buying, reflecting robust demand and investor interest.
Financial markets are also showing strength today, with Nvidia leading the charge. Investors who previously stepped back following the election-related rally are expected to return for the next wave. While Trump's cabinet picks receive mixed reviews, his determination to shape a lasting legacy is becoming increasingly evident.
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