Macro Market Update, 31 October 2022

Last Week Recap

• Elon Musk closed Twitter deal, which helps improves the sentiment in crypto as well, especially Dogecoin.
• The U.S. release 3rd quarter GDP growth of 2.6%, after two consecutive quarters of negative growth
• Alphabet, Amazon, Meta and Microsoft tanked after concerns about revenue forecasts, only Apple rose after beating expectations.
• Binance released its own oracle service to first start on BNB chain.
• Huobi abandons HUSD and starts using Justin Sun’s USDD.

Legacy Markets

• VIX continue fading as the majoring of big tech earnings disappointed investors, the economy slowdown is in progress
• The VIX range generally shows a tighten trend as market liquidity went down except for major economic events such as Fed hike or job data.

Open Interest & Funding Rates

Although BTC price continue staying at 20K level, but investor are expecting large directional move soon and we can see the OI is piled up.

BTC Weekly View

• With the sentiment improvement in crypto market, BTC has successfully defended its 18K support line
• The short term news driven rally is expected to fade away as BTC still cannot break the 21K resistance
• The price movement has been muted since weekend to wait for more color from Fed decision

ETH Weekly View

• ETH movement has been stronger due to the deflation on chain. Although this piece is priced in the market before the merge, it can further help the rally sentiment sparked by Twitter deal
• Similar as BTC, ETH cannot break a 1.6K resistance either, so the rally is expected to be short-term as well, next movement will be dependent on upcoming Fed decision and job data.

ETH/BTC

• Since market started pricing in the merge narrative in July, ETh has been enjoying stronger movement and more trading activities, and it outperformed BTC again during this short rally.
• We expect higher vol in ETH than BTC to be continue and ETH/BTC trade will be more aligned with naked ETH trade.

TOTAL2 - USD Market Strength

• TOTAL2 had a nice rally due to Twitter news helped the altcoin especially Dogecoin and the speculation trading increased as well. Once the sentiment starts fading, we expect TOTAL2 to continue its downtrend and alt coins likely to fall more in still rising rate environment.

SH*TPERP/ALTPERP

• Over the weekend, as the sentiment and speculation fading gradually, the SH*TPERP/ALTPERP indicator quickly dropped as well, this further indicate that the speculation based rally is not a large wide rally and the fade can come pretty soon as well.

Summary

• Fed will announce next rate decision on this Wed and the probability of raising interest rates by 75 bps is currently 81%. While Nov’s hike likely won’t cause more market volatility, but the indication on Dec’s hike will be the investors’ focus.
• The U.S. unemployment rate for October will be released on November 4. With big tech now slowing down, it will be crucial to see if the trend is already reflected in job data or it takes more time to see a lower job number, this will also be a key factor for Dec’s rate decision.
• Besides macro environment, crypto market has been pretty sensitive to various narratives related to ETH merge, Elon Musk and Twitter deal etc., with less new narratives expected in the remaining two months, crypto is likely to follow more with legacy market.

DISCLAIMERThe information in this report is for information purposes only and is not to be construed as investment or financial advice. All information contained herein is not a solicitation or recommendation to buy or sell digital assets or other financial products.