Macro Analysis

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Last week could be described as rather anodyne in terms of macro data releases and institutional announcements, with the exception of a new extraordinary intervention by the Bank of Japan. The relevant events for the market took place on Friday, with OPEX (options expiration) and a very important article published by the Wallstreet Journal, where the concern of many members of the FED about the wild stress of the rate curve was made clear, some voices are beginning to be heard proposing a 50 bps hike instead of the 75 bps discounted by the market for the December FED meeting.

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This week is a big week. Results from numerous companies (big tech and consumer sector) are released along with market-sensitive macro data and interest rate and monetary policy decisions from central banks.

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Monday: Manufacturing PMI data release: EUR, UK and USA.

Tuesday: IFO Germany and US consumer confidence.

Wednesday: US new home sales , interest rate decision and Bank of Canada monetary minutes.

Thursday (star day): ECB interest rates and monetary policy, GDP and US employment.

Friday: Bank of Japan interest rate decision and monetary policy, CPI and GDP France, Italy, Spain and Germany.

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Last week, China's GDP data was expected to be published, but was postponed until today, with a higher than expected figure of 3.9% for the third quarter. Many voices are already increasingly suspicious of the official Chinese data and are warning about the slowdown in the Asian giant, with the consequences that this could have for the rest of the world.

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Sovereign yield curve stress is reaching worrisome levels, which could begin to give some validity to the Fed's long-awaited PIVOT, which the market has been craving for weeks now, giving risky assets some short-term lift.

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Cryptoassets

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Bitcoin

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The situation in the big picture remains unchanged, the bearish imbalance is on the table, although we emphasize once again how protected the order book is below, acting as a real wall of support.

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Bitcoin has been generating value in the $17500-24000 range since late June, a narrow price range that has led to a dramatic drop in volatility, which has always been a prelude to big moves.

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The technical situation in the short term continues to show little buying momentum, the marked cumulative structure has presented two bullish continuation failures, with an aggressive return to the value, where demand reacted timidly leading to another bullish failure. As long as the market fails to consolidate above 20500 we are very cautious with any bullish approach. Demand is weak and this is evidenced by the price dynamics around the value areas, however, it is remarkable the lack of aggressive sellers in the face of the notorious weakness and even more so considering the strong turbulence in the rest of the global markets.

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Ethereum

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Like bitcoin, very little price movement this past month, establishing value in the $1300 area. Ether is wedged between the buyer control and seller control zone, showing greater relative strength with respect to bitcoin as the cumulative structure after this year's sell off remains intact and well defended. The first battle to be won by buyers would be to regain and consolidate intermediate control.

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On-chain Metrics

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Throughout our newsletters we will be gradually unraveling the valuable information provided by on-chain metrics, objective and high value-added information that opens up a new dimension of analysis.

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This time we will talk about bitcoin reserves in bitcoin wallets sorted by size:

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Changing the market sentiment will come with the corresponding whales (1,000-10,000 BTC), leaving aside the next step: 10,000 to 100,000 BTC as we assume that these belong to exchanges and Microstrategy.

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From May 2021 to August 2021, when the market found the floor after the fall from historical highs, it was clearly observed how these entities were accumulating at a fast pace, the subsequent result we already know, breaking the previous historical high reaching $69,000.

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As of today, we find no signs of accumulation from these entities, with the exception of the last few days. We need to see a trend change in these metrics to start thinking about any solid and realistic bullish scenario.

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Other on-chain long longs metrics indicate, under comparative exercise, that the floor is in process. The fourth cut between the short-term holder and long-term holder cost basis has occurred, which has been one of the market floor signals previously.

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At the same time, the price remains close to its 200-weighted average and the investor cost basis line.

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Derivatives

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Themarket has been in range ($17,000-$25,000) since mid-June, in recent days there has been a notable increase in open interest, which could indicate some anxiety of market participants in the face of an imminent break out (break point) and that they are looking to leverage with futures. In our opinion, Bitcoin's organic movements have to come from the hand of the spot and not from the hand of derivatives.

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The leverage ratio again shows the anxiety and nervousness mentioned above and makes us cautious about a possible event of liquidations of over-leveraged positions. Organic demand should enter spot and not an overheated derivatives market.  

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The skew is away from extreme fear readings, where the market is requesting OTM puts.

The options market does not seem to demand protection against eventual falls and remains on the sidelines of the turbulence of the rest of the markets. The skew is not in favor of the calls but the fear recedes as they lose positive slope.

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Classic Market

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In the SPY, after the important expiration of options (OPEX) we are entering the weeks where the influence of the flow of derivatives from the options market is less and therefore the market is in a situation to move freely. After the deep shock produced on Friday 10/14/22 by the US inflation data, the market shows clear intentions to test the bullish scenario. In our opinion, the big battle to be won by buyers is to consolidate the 3775-3800 level. It is noteworthy how OPEX has exerted a great influence on the market, dragging it to 3650 throughout the week and releasing it after expiration with a strong rally during last Friday's session.

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