MARKET COMPASS
“Uptober” in Digital Assets
The ongoing government shutdown, unreleased macro indicators, expectations regarding the US Federal Reserve’s interest rate cut course, the rally of AI-based technology companies and the news of a ceasefire in the Middle East… Global markets are closely following these developments and pricing behavior is mainly shaped by these dynamics. In addition, political developments in France and Japan are also under the scrutiny of investors.
The tendency to take positions against the dollar, which has been a working equation for some time, has recently come into question. The dollar index (Dxy), which had hovered around 95 in late September amid growing expectations of a Fed rate cut, hit over 99.50 on October 9, scaring off portfolio allocations of “buy everything against the US currency”. We attribute this to the questioning of expectations for Fed rate cuts and the government shutdown.
We will closely monitor the changes in the dollar and developments in the US as they are important for the digital asset market. On October 6, the Bitcoin price hit a record high, and we see the subsequent pullback as a reflection of unexplained macro indicators casting a shadow on the FED’s course, and as the consequences of the urge to take some money off the table.
Next week, markets will closely monitor the news flow regarding the reopening of the US government. Also, a speech by FED Chair Powell in Philadelphia will be in the spotlight. In addition, we think that the US inflation data, which should be released on October 15th according to the normal calendar, will not be published and we anticipate that the week will again be barren in terms of macro data. Of course, this will depend on whether the compromise between Republicans and Democrats will be achieved. Therefore, we will not include our assessments about the data in our newsletter this week, but those who want to review it can review the details in Darkex Research Department’s monthly newsletter. Click here to access the related report.
In an ecosystem where both the dollar and gold prices are rising, when we take into account the current expectations for interest rate cuts by the FED, we realize that it is not just about future abundant and cheap money. We read this as an equalization that investors may also be wary of different risks. These could be geopolitical risks, concerns that the pace of the Fed’s rate cuts may not be as fast as priced in, preparation for the possibility that confidence in US data or belief in the independence of the Fed may be shaken. In this environment, investors may consider changes in the weightings of some instruments in their portfolios and prepare for possible risks. These risks may or may not materialize… When we examine this universe of variables, we see digital assets as an opportunity for those with relatively high adoption levels and a significant risk for others.
Putting aside our window on this big picture, we feel it’s worth noting that while we may see some lackluster recovery efforts in the cryptocurrency market this week, the risks associated with it are very much alive. A limited upside attempt by Bitcoin, which is leaning on a new record high, has the potential to trigger a sell-off during the week. Therefore, we can say that we expect to see “lackluster bullish attempts with risks that cannot be ignored” in a short projection of one week for major digital assets, where we maintain our bullish expectation for the long term.
October 14 – FED Chair Powell’s Speech
The uncertainty surrounding the lack of critical macro data due to the US government shutdown has also clouded expectations regarding the US Federal Reserve’s rate cut path. Although, according to the CME FedWatch Tool, markets are almost certain to see a rate cut of 25 basis points each in the last two meetings for the rest of the year, the forecasting horizon of the markets has narrowed somewhat with the unreleased data. Therefore, the speech of Fed Chairman Powell, the most authoritative figure on interest rates, will be important as it may shed some light on this outlook.
This time, Powell will participate in a moderated discussion titled “Adam Smith Award Luncheon and Lecture” at the National Association for Business Economics Annual Meeting in Philadelphia and is expected to take questions from the participants. The markets will be looking for clues on the path of the rate cut and we believe that the President will stick to the cautious stance of his recent speeches and therefore may not cause drastic changes in the markets. However, it is worth noting that a speech by a Fed Governor is always important.
Other Key Macro Indicators and Developments
October 15 – The Beige Book is one of the three books of the Federal Open Market Committee (FOMC), along with the Green Book and the Blue Book, and provides information on how interest rate decisions may change. Only the Beige Book is made public. Its impact on markets is usually limited and it is published eight times a year, two weeks before the FOMC meetings. It reflects information provided by the 12 Federal Reserve banks about local economic conditions in the country, and the messages in this book may provide clues for the Federal Reserve’s next interest rate decision.
IMPORTANT ECONOMIC CALENDAR DATA
Click here to view the weekly Darkex Crypto and Economy Calendar.
INFORMATION:
*The calendar is based on UTC (Coordinated Universal Time) time zone. The calendar content on the relevant page is obtained from reliable data providers. The news in the calendar content, the date and time of the announcement of the news, possible changes in the previous, expectations and announced figures are made by the data provider institutions.
Darkex cannot be held responsible for possible changes arising from similar situations. You can also check the Darkex Calendar page or the economic calendar section in the daily reports for possible changes in the content and timing of data releases.
Legal Notice
The investment information, comments and recommendations contained in this document do not constitute investment advisory services. Investment advisory services are provided by authorized institutions on a personal basis, taking into account the risk and return preferences of individuals. The comments and recommendations contained in this document are of a general type. 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 in this document may not result in results that are in line with your expectations.
