This week was marked by a mix of optimism and caution, as various macroeconomic events, geopolitical developments, and market shifts influenced both traditional and crypto assets. The start of October, typically a positive month for crypto, saw renewed optimism with Bitcoin breaking through key resistance levels.
Macroeconomic Overview: The focus this week was largely on macroeconomic indicators, central bank policies, and the upcoming US presidential election. The market saw renewed interest in risk assets driven by expectations of increased liquidity as major central banks lean towards rate cuts. The ECB is expected to cut rates by 25bps, and the Fed is anticipated to make two cuts this year with four more in 2025. This dovish sentiment has fueled the ongoing rally in equities and crypto.
US equities hit fresh highs, with the S&P 500 reaching new records. However, the tech sector faced headwinds, particularly in the semiconductor space, following weaker-than-expected earnings from ASML. Meanwhile, geopolitical tensions eased slightly, with reports indicating that Israel may refrain from targeting Iranian oil infrastructure, which led to a decline in oil prices.
Crypto Market Dynamics: In the crypto space, Bitcoin and Ethereum continued to gain momentum throughout the week, with BTC moving from $62,000 to $68,000 and ETH holding steady around $2,600. The rally in Bitcoin was attributed to a combination of factors, including the postponement of Mt. Gox repayments to October 2025, strong inflows into spot BTC ETFs, and growing optimism around a Trump victory in the upcoming election. Trump’s crypto-friendly stance has led to increased speculation that a win could be a major positive catalyst for the market.
Spot Bitcoin ETFs recorded significant inflows, with $1.2 billion over the past three days, marking the largest streak since June. The launch of Monochrome’s Ethereum ETF in Australia and a successful fundraising round by Blockstream added further positive sentiment. The inflow momentum, combined with a general risk-on attitude in crypto, has provided strong support for BTC and ETH, which both managed to hold key levels.
Key Trades and Market Activity:
- BTC Structures:
- Bitcoin options activity this week saw strong demand for long-dated calls, with notable buying of 28 March 2025 120k strike calls. Traders seem to be positioning for a potential breakout above the $100,000 level, with several custom structures indicating optimism.
- Bear risk reversals were also popular, highlighting ongoing demand for downside protection despite the bullish sentiment. There was significant activity in put spreads and put calendars, particularly focused on late 2024 and early 2025 expiries, suggesting hedging against potential pullbacks.
- ETH Structures:
- Ethereum options were characterized by strong buying of calls, particularly for 18 October and 27 December expiries, with strikes between $2,200 and $3,500. The ETH market showed a clear bullish tilt, with traders positioning for a rally going into the end of the year.
- Put calendars and straddles were also prevalent, signaling that while there is optimism, traders are not discounting the possibility of increased volatility as the US election approaches. This is evidenced by the elevated premiums on options expiring near election day.
Outlook: Looking ahead, the market will be closely watching upcoming earnings reports from major US banks, along with macroeconomic data releases, including retail sales and industrial production. The ECB decision on Thursday will be a critical event for assessing the trajectory of global monetary policy.
For crypto, the focus will remain on the US election and its potential impact on regulation and sentiment. The continued strong inflows into spot Bitcoin ETFs are an encouraging sign, suggesting that institutional interest remains robust. With Trump and Kamala Harris both viewed as pro-crypto, the election could serve as a positive catalyst for the market regardless of the outcome.
In summary, the week has been one of cautious optimism, with traders actively positioning for further upside while maintaining a defensive posture against potential volatility. The interplay between macroeconomic policy, election dynamics, and market positioning will be key in shaping the near-term outlook for both BTC and ETH.
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