Cristian Palusci
Bitcoin consolidates around $25.000 as traders await signs of a soft landing
Both NVDA earnings and Jackson Hole, potential bearish catalysts, passed without too much damage. The implied policy rate has remained fairly stable following Powell's performance, with the market pricing in a latest Fed hike in November, while the rest of the curve is broadly unchanged. From a macro point of view, not much has changed either. The USD shows good relative strength and gold is stabilising, perhaps anticipating a yield reversal that bond markets are not pricing in yet. And many are betting that the Chinese government's stimulus will eventually help the internal and global recovery. The weak US (and European) PMI reading is not in line with third-quarter US GDP estimates, with the Atlanta Fed even forecasting +5.9%. Turning to equity markets, it's hard to stay bearish after two potential catalysts have passed without much shock. The only thing the bears can still bet on is some kind of regional banking crisis 2.0, March 2023 style. Even though the Fed's BTFP has proven extremely effective in containing potential credit events. In this context, investors are looking for signs confirming the soft landing of the economy and this could be fuel for a new rally. We also add that the last year of US presidential cycles tends to be bullish, as no president wants to run for office in a recession/bear market. On the crypto side, the macro situation will certainly have a direct impact on Bitcoin as well, given the recent increasing correlation between stock indices and BTC. If we take a closer look at the market, we see that both estimated leverage ratio and general sentiment have plummeted drastically. Therefore, it is reasonable to expect that at the end of the current consolidation phase, if we see a Q4 rally in the equity markets, then Bitcoin will also resume its upward march in an attempt to update the highs of 2023.