Iran – Israel Missile

If there was one piece of news that really stirred up the entire market yesterday, it was the Iran-Israel war. There have been some red flags about it since last week, but today Iran actually launched a missile attack on Israel. People often don’t believe it until it happens, but when it’s confirmed, there’s a big reaction. As a result, BTC fell 10% from its high. It feels almost like April, but when this keeps happening, it’s not a good thing, to be honest.

I don’t want to think too much about what’s going on with this war, but it’s possible that it’s not over yet as Israel has said it will retaliate. The worst case scenario is if the missile attack escalates into a larger war, but I think that’s unlikely and I expect it to end in the short term. If it goes in a bad direction, the market will naturally crash. It’s a good idea to keep watching with interest.

China

Last week, the key news in the global economy was probably the Chinese government’s active easing policy. The Chinese economy was actually very bad and the situation was not good. As a reflection of that economic situation, Chinese stocks continued to fall from 2021 to 2024. But eventually, they changed direction.

There have been many opinions that China’s easing policies are not large enough, but I don’t want to interpret this move so negatively. The key is that they have changed the direction of monetary and fiscal policy. China has cut interest rates and even decided to implement a policy of providing money to individuals. They have also said that they will accelerate the adoption of fiscal support policies. I think they are really implementing easing policies and trying to stimulate the economy. As a result, the market has reacted very sensitively and in just one week, the YTD performance has been better than the US stock market…

The world’s second largest and most important country is implementing a easing policy. I think there will be many more interesting situations in China in the future.

Global Liquidity

Almost all central banks around the world are implementing easing policies. As a result, global liquidity continues to rise. The distortion in this data is that the Chinese government is a major contributor to the increase in global liquidity. The US Fed and other countries have entered the easing cycle, but they have not yet contributed as much to the increase in global liquidity as China.

On the positive side, central banks around the world have “started” the easing cycle and there will be “more rate cuts” to come. Why is that possible? It’s simple. The disinflationary trend is clear. Disinflation allows for more easing from central banks. In the US, the labor market is slowing but the economy is growing, albeit slowly. Also, the global real GDP growth rate is 3.2%, which doesn’t look bad.

Obviously, it will take time for the rate cuts to have an impact on the economy, and the market will continue to be sensitive to economic growth going forward. But what is clear is that if there is no recession, the easing cycle will have a positive impact on the economy.

The headline CPI in the Eurozone fell below 2% to 1.8%, solidifying the view that the ECB will cut rates by another 50bp by the end of the year. The global disinflationary trend is very clear.

BTC

BTC reacted sensitively to the Iran-Israel news and fell 10% from its high (66K). It eventually fell to 60K, which was a steeper drop than I expected. I don’t think October Uptober will be as easy money and easy path as people say. TradFi generally interprets October as a very volatile month.

New buy orders worth $80M appeared in the 60-59K range. If it is not fake, it is very good to see this demand. Considering the possibility of the dollar rising and geopolitical issues, it seems likely that the current unstable situation will continue until next week. I still think the most important point is 64-65K and it needs to break above that level to start a bigger rally. If there is further decline, the last level for bulls will be 57-59K. However, I think all this is short-lived and expect to see higher prices by the end of the year.

BTC still lags behind other assets.

NFA DYOR

  • Refer : TXMC, Bob Elliot
  • Source : Bespoke, Investing.com, BofA, Daniel Lacalle, IMF, MacroMicro, Material Indicators, TensorChart

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