What Awaits Us?
US Non-Farm Payrolls and Unemployment Rates (November 1)
Before the FED interest rate decision, eyes will be on the US Non-Farm Payrolls and Unemployment rates, which are among the macroeconomic data to be announced on November 1st.
US Elections (November 5)
The countdown for the United States (US) presidential election continues. In the US presidential elections, which take place every 4 years, this year the Republican opponent of Kamala Harris, who took over the nomination from Democratic Party President Joe Biden, will be Donald Trump.
FED Interest Rate Decision (November 7)
The November interest rate decision of the FED, which cut interest rates by 50 basis points in September, has become one of the most curious topics for investors. The FED meeting will take place on November 6-7 and the interest rate decision will be announced on November 7.
China Standing Committee Meeting (November 4-8)
The committee meeting, which financial markets are eagerly awaiting and where important decisions on China’s monetary easing policies can be made, will be held between November 4-8.
Crypto Insight
| Market Overview | Current Value | Change (30d) |
|---|---|---|
| Bitcoin Price | $71,884 | +9.67% 📈 |
| Ethereum Price | $2,683 | +1.33% 📈 |
| Bitcoin Dominance | 58.60% | +4.15% 📈 |
| Ethereum Dominance | 13.34% | -4.21% 📉 |
| Total Market Cap | $2.42 Trillion | +5.52% 📈 |
| Fear and Greed Index | 77 (Greed) | 57 (Neutral) |
| Crypto ETFs Net Flow | + $834,600,000 | |
| Open Interest – Perpetuals | $283.28 Million | |
| Open Interest – Futures | $3.85 Billion | |
*Prepared on 10.30.2024 at 04:30 P.M. (UTC)
Bitcoin Metrics – Summarize of the October
Bitcoin Spot ETF
In October, Spot Bitcoin ETFs saw net positive inflows for three consecutive weeks. While there were outflows of $ 301.54 million in the first week of the month, positive inflows, which started in the week of October 11, reached $ 2.13 billion in the week of October 18, the highest level since March 15, 2024.
Bitcoin Options Breakdown
A total of $7.594 billion worth of BTC options expired in October, with the heaviest trading volume coming on October 2 at $2.86 billion. The maximum pain point for BTC was $63,250, while the put-call ratio was 0.61. This ratio showed that call options were more preferred than put options.
Bitcoin Liquidation
With the decline in early October, long positions in the $59,400-60,200 range were liquidated. With the mid-month rise, short positions at 64,500-65,000 and 69,200-70,200 were liquidated. In total, short positions worth $591.85 million and long positions worth $602.42 million were liquidated.
Bitcoin Supply Breakdown
Small and medium-sized addresses (0.1-10 BTC) were stagnant, while large addresses (1k-10k and 10k-100k BTC ranges) were selling. On the other hand, there was significant buying among investors in the 100-1k BTC range. While some of the larger investors are selling, investors in this particular segment tend to accumulate BTC.
Expectations of the Next Month
As we approach the end of October, in this month known as “Uptober”, Bitcoin is preparing to close the month with an increase of 11.42%. We observe that Bitcoin, which has underperformed compared to previous years, has not yet approached the 22.15% rise average. Although October is generally associated with positive returns for Bitcoin, historical data confirms that strong price movements were also experienced in November.
Source: Darkex Research Department
In November, we will witness very important developments that will affect Bitcoin and the crypto market. US unemployment and non-farm payrolls data, US elections and the FED interest rate meeting, which are some of the developments we discuss in detail in the rest of our report, stand out as developments that will seriously affect the market.
Another important development for Bitcoin and the crypto market will be the Chinese standing committee meeting that will take place between November 4-8. Last month, we have seen hot developments on the Asian side, especially in China. The meeting, where the details of the Chinese additional financial package, which is expected to be announced earlier, will be announced, is very important for the crypto market. According to Reuters, China is considering approving an additional financial package of over $ 1.4 trillion to stimulate the economy next week. In addition, in China, where crypto trading is currently prohibited, the support of the statements made by the authorities to lift the ban with a concrete step will expand the Bitcoin and crypto market.
We expect institutional investors to increase their demand for Bitcoin spot ETFs following the developments that will shape the crypto market in November. In the options market, it is noteworthy that the increase in transactions towards the $ 80,000 level towards the end of November with the weight of call positions is quite remarkable. As a matter of fact, Bloomberg news drew attention to the increasing bets of option traders on this level.
In the crypto market in general and Bitcoin in particular, an optimistic atmosphere is expected in November. However, the extent to which this optimism will continue will be shaped by the data and developments to be announced.
Market Pulse
Labor Force Statistics
On the first day of the critical month of November, markets will start with the US labor market statistics. These data, which may have an impact on the FED’s interest rate cut course and the dose of interest rate cuts in the coming days, will also be decisive in asset prices. On November 1, we can say that the change in non-farm payrolls (NFP) data stands out among the data set to be released.
Source: Bloomberg
In September, we saw that the US economy added 254 thousand jobs in the non-farm sectors. This was much higher than the forecasts of 147 thousand. It is expected that we will see a more conservative increase in employment again. However, while the FED is so focused on the developments in the labor market, we can say that a surprise data may have harsh effects on the markets. It is difficult to predict the possible impact of the data on the markets ahead of the critical presidential election. In this environment, we analyzed the last two years of data to examine the impact of the monthly US non-farm payroll change data on the BTC price.
Based on the last two years of US NFP data and market expectations, we created two categories: days that exceeded expectations (“Above Expected”) and days that fell below expectations (“Below Expected”). Under these categories, we looked at BTC’s price changes on these days and compared the averages.
We used Welch’s Two-Sample t-test to find out whether BTC price changes are significantly different in these two different cases (above and below expectations). We used the R Studio program for statistical calculation. This statistical test helps to determine whether the means of two groups are significantly different. In particular, Welch’s t-test was preferred as it is a suitable test for groups with different variances. According to the results of the analysis, the difference between the price movements of BTC in these two cases was statistically significant. This suggests that BTC reacts to strong or weak signals from the US economy.
Source: Darkex Research Department
A Closer Look at the Graph
The chart shows the distribution of BTC’s price changes on “Above_Expected” and “Below_Expected” days. We can clearly see that the price changes on the days that exceeded the expectation show a positive trend, while the days that fell below the expectation show a negative trend. There are also outliers that show larger price movements on some days, suggesting that BTC may overreact to employment data on some special days.
Evaluation and Recommendations
This analysis suggests that BTC’s sensitivity to US economic data has increased and that important data, especially non-farm payrolls, could have an impact on BTC price movements. For traders, this suggests that it may be worth keeping a close eye on US labor market data. It may be useful to keep in mind that BTC may show a positive price movement if the non-farm payrolls data exceeds expectations, while declines may be observed when it falls below expectations.
Leaving aside the results we obtained with statistical methods, when we evaluate the pulse and sensitivity of the markets, we can say that the possible impact of the data on the markets will be very difficult to predict before the critical presidential election. Let us remind you that our study takes into account the daily impact. The immediate reaction immediately after the release of the data may be different and other labor statistics should also be considered. We think that a higher-than-expected NFP data may have a negative impact on risky assets by increasing expectations that the FED will not act quickly on interest rate cuts, while in the opposite case, that is, figures that will create expectations of rapid interest rate cuts may create a basis for a moderate rise.
Especially for short-term traders and those interested in intraday trading, paying attention to this data, which is released on the first Friday of every month, can help them be prepared for sudden price changes that may occur in BTC.
And all eyes are on the US Presidential Election…
The US presidential elections stand out as a “game changer” that sets the pulse of not only politics but also global financial markets. From cryptocurrencies to exchange rates, the power of this influence is felt in all areas, and it is especially noteworthy for crypto investors. The results of this election could lead to massive fluctuations in digital currency markets. Throughout 2024, the U.S. elections have attracted a lot of attention and curiosity in the crypto world.
Candidates’ Crypto Strategies: Trump’s Bold, Harris’ Balanced Approach
- President Donald Trump: Trump’s strong run for a second term is generating investor excitement and uncertainty at the same time. Known for his dollar-supportive and aggressive trade policies, Trump could come out with policies that could revitalize the dollar if he wins. For example, tensions in relations with major trading partners such as China and Mexico could trigger price fluctuations in currencies such as the Yuan as well as cryptocurrencies. Increased demand for the dollar could negatively impact the popularity of some digital assets. However, this chaotic environment could also make digital assets seen as “crypto gold” attractive to market players.
- Vice President Kamala Harris: On the other hand, Harris promises a more constructive and stable economic strategy. With tax reforms and social spending policies, she could take an approach that would make the dollar stronger in the long run. Harris’ more balanced policy towards cryptocurrencies could allow these digital assets to become a favorite of investors in the longer term. In the markets, a Harris win would strengthen the prospects for stability in the US dollar and provide a safer environment for crypto assets.
Source: Bloomberg
Fluctuations in Surveys: Market Expectations Are Changing
Recent polls have crypto traders holding their breath. Trump’s surge in popularity has raised expectations of a stronger dollar in the short term, which could put pressure on the value of crypto assets. However, the poll results in favor of Harris increase expectations for the stability of the US dollar. The outcome of the polls could decide the fate of not only a candidate, but also the interest in cryptocurrencies. Investors are ready to turn market volatility into an opportunity.
Source: Bloomberg
The Role of the Senate: A Critical Threshold for Crypto Regulations
In a scenario where both candidates win, the control in the Senate could also be a major turning point for crypto markets. A Republican majority in the Senate could change the market dynamics by accelerating Trump’s fiscal reforms. Harris and a Democratic Senate majority could create a friendlier regulatory environment for digital assets and increase the appeal of cryptocurrencies to institutional investors. This balance of power could be the trigger for long-term strategic moves in the crypto world.
Source: Bloomberg
Possible Impacts on Cryptocurrency Markets: Short- and Long-Term Scenarios
We can state that our expectations are within a framework that we believe may contain inconsistencies with general market expectations. However, considering pricing behaviours, market perception and some basic concepts, we do not find our equation for possible market reactions unusual.
- Short Term Market Reactions: Trump’s victory could create a wave of dollar strength, leading to a depreciation in currencies such as MXN, CNY and the Euro. This, in turn, could reduce demand for cryptocurrencies in the short term and create a pullback in the prices of digital assets. On the other hand, Harris’s win could provide a sigh of relief to crypto markets by further solidifying the US’s position in the international arena. Crypto traders will look to capitalize on any sudden movements in the markets after the elections and turn them into strategic gains.
- Long-Term Strategic Prospects: If Trump wins, the prospect of a less regulated crypto market could increase, which could create short-term opportunities for investors but increase regulatory risks in the long term. Under a Harris presidency, cryptocurrencies may stand out as a more robust investment vehicle in a regulated environment. Institutional investors are likely to be more attracted to these assets with reduced regulatory uncertainty.
With this analysis, you can get strong clues about how the outcome of the US presidential election will shape the crypto markets. After the election, the crypto world could see a period of opportunity instead of uncertainty, which could be a major turning point for investors. Crypto markets are preparing to write a new destiny with these elections.
FED and Rate Cut… Will the course be redrawn?
The Federal Open Market Committee (FOMC) of the US Federal Reserve (FED) on November 7 will be a decisive development for the markets. The next move of the bank, which started the interest rate cut cycle with 50 basis points in September, is eagerly awaited. Expectations are weighted towards a 25-basis point rate cut this time.
The size of the rate cut, Chairman Powell’s statements and the guidance for the next interest rate level will be the main topics that will shape the markets.
From 50 to 25…
Expectations that the US economy would enter a recession had led to sharp fluctuations in the markets in recent months. Rhetoric that it was too late for the FED to start cutting interest rates also came to the fore during this period. Afterwards, the FED started the interest rate cut cycle in September with a relatively large interest rate cut, described as “Jumbo”. While there was talk that the FED officials would continue to cut interest rates rapidly, successive positive macro indicators and statements caused these expectations to diminish.
When we look at the “dot plot” graph showing the expectations of the FOMC members, which was published together with the September statement, we see that the officials foresee that by the end of 2024, the policy rate will be at 4.25-4.50% from 4.75-5%. This implies a rate cut of 50 basis points by the end of the year, and we agree that this course will be followed in the remaining two meetings of the year, with two cuts of 25 basis points each.
FOMC Dot Plot Chart
Source: Bloomberg
Data releases since September show that the US economy still has a strong labor market and inflation is above the target level. In particular, non-farm payrolls figures released in October showed that the economy is not in a cooling trend, while on the inflation side, the rise in measures such as both CPI and PCE drew attention.
What are the expectations?
When we evaluate the components of the equation, we think that the FOMC will decide for a 25-basis point rate cut in November. In addition, markets also expect another 25-basis point cut at the December meeting, which is in line with our baseline scenario. On the other hand, we think that this route is largely priced in and if the FED delivers a rate cut on November 7 in line with expectations and signals another 25-bps cut for the December meeting, the positive impact on digital assets will be limited.
Implied Overnight Rate for the US – Futures Model – December 2024
Source: Bloomberg
One of the roadmaps that will be a surprise will be the FED’s attitude that is not very favorable to new interest rate cuts. In such a case, we expect this to have a negative impact on digital assets as the probability of a rate cut in December will decrease. We think that it is very unlikely that the FED will decide to cut interest rates by more than 25 basis points or send such a message for the next meeting.
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The investment information, comments and recommendations contained herein do not constitute investment advice. Investment advisory services are provided individually by authorized institutions considering the risk and return preferences of individuals. The comments and recommendations contained herein are of a general nature. These recommendations may not be suitable for your financial situation and risk and return preferences. Therefore, making an investment decision based solely on the information contained herein may not produce results in line with your expectations.
