MARKETS week ahead: November 20 – 26Last week in the news
Inflation data was driving the markets during the previous week. US equities finished the week slightly higher from the week before, while Treasury yields continue to slow down. While the US Dollar weakened slightly, the price of Gold reverted once again toward the $2K as markets are betting on further Fed`s pause on monetary tightening. The crypto market is still driven by the ETF hype, with BTC reaching $38K resistance during the week.
The wholesale prices in the US recorded the biggest drop on a monthly basis since April 2020. As per published data the producer price index in the US was down by 0.5% in October, beating market expectation of an increase of 0.1%. Inflation rate in the US in October fell to the level of 3.2% on a yearly basis, modestly below market estimate of 3.3%. Core inflation remained at a bit higher levels, reaching 4.0% in October, while expected was 4.1%. These figures are showing to investors that inflation is certainly on the road of further easing and that the Fed will not further increase interest rates. The market's attention is now switched toward the question when the Fed will start decreasing its rates, the so-called “pivoting”, a slang widely used by market participants. Equity markets reacted positively on a potential for Fed`s pivoting during the course of the next year, bringing main US indices to the higher grounds.
There has been discussions in the news during the previous week, related to soaring US credit card debt. As per official data US citizens increased use of the debt on their credit cards to the level of $1.08 trillion in the Q3 this year. Economists are for now sure that it will not lead to the next financial crisis and that the level of debt does not represent the systemic risk for the US economy. On the other hand, there are some analysts as well as market participants who perceive it as a risk for a recession in the coming year, along with a looming housing and car market. On the other side are investors such as Ray Dalio, who in an interview with CNBC pointed to a rising US government debt which might pose a systemic risk for the US economy.
The race within the tech industry influenced Germany to make some significant changes in its capital markets framework. The reforms are expected to be enforced as of the beginning of the next year, and include changes in the listings and taxation of companies for stock-based compensations at start-ups. The main aim of these reforms is to support the tech start up industry in Germany, which will now become more competitive to Silicon Valley in the US. Another goal which should be addressed with law reforms is a “brain drain”, where for several years now, the best people from Germany were switching their country for the US largest tech giants.
The largest Swiss bank, UBS Group AG will allow its clients to trade exchange traded funds which are linked to crypto currencies on the Hong Kong platform. This option will be allowed to clients with minimum $2 million in funds. Hong Kong has officially announced its intention to become a “global crypto hub”, supporting a regulated trading of crypto products on its exchanges. Hong Kong's Securities and Futures Commission provided authorisations for three crypto ETF`s in this country, which are backed by both BTC and ETH.
Crypto market cap
The hype about the first crypto ETF in the US is still quite strong on markets, where any news on this topic is moving the crypto market to the upside. Same was during the previous week, when once again news related to BlackRock`s ETH ETF pushed the price of BTC up to the level of $38K resistance line. Still, as of the week end, the hype eased, after officially published data on the US inflation and potential for Fed`s so-called “pivotal” point during the next year. This was one of the main reasons why the focus of the market was switched to the US equities, leading to a modest decline in the total crypto market capitalization. Regardless of the hype from the beginning of the week, the crypto market is ending the week 2.4% lower from the week before, losing a total $33B. Daily trading volumes were modestly decreased to the level of $92B on a daily basis, from over $100B two weeks ago. Total crypto market capitalization increase since the beginning of this year currently stands at 80%, where it has added total $604B to the market cap.
Although the previous week started in a positive manner for the majority of crypto coins, still, the weekend brought a short reversal point for the crypto market. Ether was leading the market toward the downside will total loss of $13.1B or 5.2% on a weekly basis. Bitcoin took the second place, with a total loss of almost $ 9B or 1.2%. Other major coins followed the path, with Ripple decreasing its market cap by $3.4B or 9.4%, LINK was down by $1.5B or 16.2%, and BNB lost $1.4B or 3.6% in value. Other altcoins with significant loss in relative terms during the week were NEO, which was down by 15.3%, Theta lost 12.5% in value, DASH was down by more than 8%, same as Polkadot. There were only a few coins which managed to increase their market cap, such as Maker, which was up by 4.7% on a weekly basis, Polygon was up by 0.4%, while Tether increased its value by 1.2%, by increasing its coins in circulation by this percentage.
In line with higher volatility on the crypto market, there has been further increased developments with circulating coins. As previously mentioned, Tether managed to increase its coins in circulation by 1.2%, not recently seen on the market. While Miota and Filecoin increased the number of their coins by 0.6% both, Polkadot had a decrease of 4.0% compared to the week before. Several other altcoins had an increase in coins which are circulating on the market by 0.1%.
Crypto futures market
After a strong shift of the crypto futures during the last four weeks, the previous week brought some relaxation in prices of the crypto futures. Short term correction from the spot market was reflected also in both BTC and ETH derivatives. BTC short term futures ended the week by more than 2% lower from the week before, with December this year ending the week at a price of $37.075 or 2.4% lower on a weekly basis. Longer term futures ended the week at some lower pace, around 1.8%. Futures maturing in December next year were last traded at price $39.135 or 1.88% lower from the week before. March 2025 was closed at $39.850 and slipped from $40K level, traded two weeks before.
ETH short term futures had a higher drop of more than 7% on a weekly basis. Futures maturing in December this year ended the week at the level of $1.973, slipping from the $2K psychological level. At the same time, longer term futures were traded more than 4% lower, where December 2024 ended the week at price $2.087 and managed still to hold above the $2K line.
