Cryptocurrency analytics firm QCP Capital has released its latest market analysis, which includes insights into recent economic data and its impact on crypto and traditional financial markets.
According to QCP Capital, Thursday’s Core PCE (Personal Consumption Expenditures) data came in slightly ahead of expectations at 2.7% YoY, compared to a 2.6% estimate. Meanwhile, Friday’s Nonfarm Payrolls (NFP) data surprised to the downside, with just 12,000 jobs added, compared to expectations of 110,000. This led to a recovery in the US Dollar Index (DXY), pushing it to 104.
Despite the weak jobs data, the US unemployment rate remained steady at 4.1% and market expectations for a 25 basis point rate cut in November rose to a 96.4% probability.
Stocks responded positively, closing in the green on Friday on strong earnings from Amazon. U.S. Treasury yields initially fell after the NFP data but then rose to a four-month high as investors remained cautious ahead of Election Week. Meanwhile, Brent and WTI crude oil rose slightly on reports that Iran could launch a retaliatory strike on Israel.
Bitcoin (BTC) reached new all-time highs at the start of the week, reaching $73,600 on Tuesday night in anticipation of Election Week. While BTC put in a strong performance, Ethereum (ETH) fell behind, struggling to break above the $2,700 level.
QCP Capital noted significant inflows into Bitcoin ETFs, with net inflows exceeding $2.1 billion for the week. BlackRock’s IBIT fund saw a record net inflow of $872 million in a single day, the highest since its launch in January.
Despite Bitcoin falling below $69,000 yesterday, market interest remained strong, with open interest (OI) for BTC futures and options remaining at $40.65 billion and $25.3 billion, respectively. Short-term implied volatility for both BTC and ETH remained high, rising above 72 vols as traders prepared for Election Week and loaded up on downside protection, as evidenced by higher sell curves.
Looking forward, QCP Capital notes that while former President Donald Trump is favored as the potential winner, his odds on Polymarket have recently fallen from 66% to 57%, with Vice President Kamala Harris holding 43%. The firm predicts that regardless of the outcome of the election, the market could witness a “sell the news” reaction similar to that observed during the Nashville Bitcoin conference.
*This is not investment advice.