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Market Update: Mon 13th Nov
BTC ETF to get approved this week?
The information in this message does not represent any financial or investment advice. They're just random thoughts in my head.
**MACRO** - Looks like I was wrong about markets being closed on Friday, they weren't lol. Not only were they not closed, but we saw massive equity gains with the SPX and NDQ closing 1.6% and 2.3% higher respectively. Futures this morning are slightly in the red but that doesn't take away the fact that we saw a good overally week for equities last week. Interest rates this morning seem relatively stable as does oil. The big thing this week is CPI and tomorrow we get the numbers. As it stands, inflatoin is predicted to go down to 3.3% from 3.7%, last month, while core inflaiton is expected to stay flat. I think given the last FOMC and payrolls (which came in weak) if we get an inflation print that's in line or lower than 3.3% we are likely to see a big interest rate rally and that could feed into risk assets. If we come in above then it's more concerning, but conspiracy theorists will tell you that the numbers from here on will be fudged to show that the authorities have done a good job on getting inflation lower ahead of next year's elections. BTW that is going to be the dominating theme of next year and something we should start to get smart on re markets.
**CRYPTO** - We failed to see prices meaningfully kick on this weekend with BTC dropping back down to 36.7K and ETH to 2044, while altcoins have also dropped in sympathy. We did see $SOL hit a high of around 63 but that has since backed down, while $AVAX was a strong performer climbing something like 40% this weekend. The thing that is of most concern at the moment and you will see this all across Twitter is the high funding rates and the high open interest in perps at the moment. This means that there are a lot of levered longs in the market (presumably waiting on the ETF approval) and the funding cost of holding these levered longs is actually extremely high. It makes me feel that any approval could well be a "sell the news" event given there are basically no shorts in the market at the moment, and I do believe a decent amount of leverage may likely be taken out before we can resume up only again. There's some thought that there is a possibility that an ETF could be approved this week. The thought is that the SEC will approve all existing applications at the same time as not to appear to be biased to any potential provider, but they basically have until 17th November to do that otherwise it opens up a public comment period which the SEC would have to wait for until it can approve the later applications, that period would be over early January which is very close to Ark's 10th January deadline. Think there is a lot of merit to this argument, the big question is what does crypto do on the announcement; do we sell the news or do we continue to rally. IMO there could be a big dump to wipe out leverage and then we presume up only. Again, I wouldn't even think about selling spot here (would buy more) but am cautious on leverage.
**NFTs** - Mixed price action but it looks like most things are generally in the green which is once again impressive once you take a step back an appreciate that things are up in ETH terms while ETH has rallied this year. Many have been frustrated by ETH's price action but if you've also been long NFTs then I think you've done well actually on a 4-6 week basis. The big talk over the weekend is Orkhan who's most recent Muraqqa drop is a whopping 10x its mint price from 0.5ETH to a 5.75ETH floor. I've collected a lot of Orkhan this year including a couple of his 1/1s so it's nice to see him getting some well-deserved limelight.
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GL this week!