Bloodgood's Notes #143
Interest in spot ETF rises again as elections are near, Bitcoin makes another another higher high and more
Fundamental Overview
Looking at the macro picture, everything is still well within the Goldilocks zone: major U.S. equity indices are ripping to new ATHs, while new economic releases are taking away the last hopes of those that kept calling for a recession—not much of a recession when retail sales and the Philadelphia Fed Manufacturing Index are both beating (already good) estimates. As long as we don't see any unexpected escalations on the geopolitical plane, it looks more or less like smooth sailing (with the caveat that volatility can spike leading up to the elections).
While equities are doing great, Bitcoin might not be ripping to ATHs, but there's once again an insane amount of interest in the spot ETFs. Since last Friday, there has been a total of $2.1 billion in net inflows into ETF versions of the orange coin, and the data for today is yet to be released. Geopolitical risk is also relevant here, of course, but in the event of further escalation in the Middle East—something that would spike the price of oil and shake up the U.S. economy—there are good reasons to believe that Bitcoin would fare much better than equities. Money printing would only get shifted into an (even) higher gear in that case, and we know what that means for BTC.
Bitcoin
Strong Bitcoin recovery leads to a new higher high.
Last week, BTC traded slightly above the support area, which was tested soon after the previous issue was published. A test on the daily timeframe triggered quite the reaction, which in the next couple of days led to a breakout above the infamous daily resistance at ~$64.6k. More importantly, as I mentioned last week, we are seeing bullish momentum in the bigger picture, and this week we have confirmation as a higher high was once again printed on the weekly timeframe.
At the time of writing, bulls are fighting to break above the long-lasting downtrend line, which is part of a huge weekly bull flag. A confirmed breakout from this channel could lead to a major leg up.
Stay glued to the chart—the party is just starting.
SPX, Gold, and DXY
While crypto is moving up, stocks remain at the high levels seen last week. Not much has changed as the majority is waiting for the upcoming elections, which will give a clearer direction as to where stocks go next. Gold follows crypto as traders bought the retrace and pushed it straight back into all-time highs.
The Dollar Index continues to show its strength and peeks above the major 103 level. Clearing this level is an important move and could negatively impact risk-on assets, but let’s wait and see what happens next week.
Ethereum
Ethereum follows Bitcoin's strength.
While Ether has seen some growth this week, it is still unable to break the bearish structure, as there is a possibility of a third lower high. More importantly, it remains fighting at the $2,600 level, which is crucial to break if bulls want to see $3k soon.
Reminder: We are in a stage where Bitcoin is in charge, so whatever Bitcoin does, Ether will follow, just more slowly.
Concluding notes
There's no avoiding the topic of the U.S. elections when the date is this close, but luckily, there are way more interesting things going on than polling numbers, which are not that informative anyway. Prediction markets, a much better metric than most forms of polling, are currently giving Trump a sizable advantage at over 60% on Polymarket. As for his crypto project, World Liberty Financial, the numbers aren't that great: since the token sale opened on Tuesday, looking to raise $300 million at a $1.5 billion valuation, there has only been a total of $13 million worth of sales. We'll see whether the situation improves in the coming days, but in any case, the less-than-impressive numbers so far aren't doing anything to impede his chances of winning—the scenario that is almost universally considered much more bullish for equities and (especially) crypto than a Harris administration.