October’s end brings a delayed fuse
Views expressed in this article are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.
Just as faith in Uptober had all but evaporated, the month’s final week has finally provided some much-needed upside volatility.
Monday saw BTC sweep $19,1k lows, before beginning an aggressive rally that now sees the leading digital asset attempting to overcome staunch resistance at $21k. Before we get too carried away, however, let’s keep in mind that October opened at $19,4k – and Bitcoin remains firmly within the trading range that’s dominated this year’s price action. Ethereum, however, has stolen the limelight, with a mammoth ~14,8% surge this week alone, printing a monthly gain of nearly 17% at the time of writing. The premier smart contract network now sits above $1,5k, to the immense relief of bulls everywhere.
Macros
Crypto’s current relief rally can be ascribed to a number of contributing factors. Most visibly, this week’s gains could be the result of weeks of compressing volatility near range lows, prompting a move back to topside resistance.
However, crypto has not been alone in enjoying this rare, green week. Increasingly optimistic sentiment from the US Federal Reserve, coupled with a 2.6% gain for the country’s GDP in Q3, has afforded investors silver linings in the current climate.
The easing being discussed at present – the US Treasury initiating bond buybacks – does not necessarily mean that the economy is seeing a healthy recovery. Rather, in much the same vein as the UK’s recent measures, the move marks a need to relieve some of the pressure of ever-raising interest rates. In contrast to the UK’s situation, however, such action in the US could bode well for risk assets and emerging markets, given that the US Dollar remains the world’s reserve currency. A weakening dollar bodes well for risk in the short term, as we learned during 2020-2021’s nonstop printing. In the long term, however, not so much – as we’ve discovered this year.
Forward Focus
There have been a slew of significant earnings reports this week. Tech monoliths Alphabet (GOOGL) and Meta (META) both missed earnings expectations by significant margins, prompting declines for both industry leaders – a searing reminder that we’re far from the evergreen pastures of uponly.
After weathering ten months of drawdowns and increasingly arduous news, however, it’s refreshing to have a momentary pause as policymakers juggle the complexities of reining in inflation without destroying entire economies.
While those at the helm continue to play hot potato with accountability and direction, we can simply enjoy the appearance of some real volatility — however long it lasts.
Pls ser, can we have some more?
