Hey folks, we've had a fairly interesting week. 👀

With rising tensions in the east and not-so-great performance for BTC, it's time to have a good look at what's coming this "Uptober". ⚖️

We'll keep it as raw as possible, here's this week's analysis. 🐔

This Week’s Juice 🧃

• ⚠️ Rising Tensions in the Middle East: Iran strikes Israel.
• 🪙 The Dangers of Stablecoins: Tether sees potential instability
• 🏦 Economy: Non-Farm Payroll MoM @ 254K (over expected by 114K) 📈
• 🏦 Economy: Unemployment MoM @ 4.2% (as expected) 🔥

Getting up to speed! ⭐

Economic Reports

Powell Speech

On Monday, Powell emphasised that the committee is not in a rush to cut rates.

It seems that the Fed is looking for an optimistic soft landing with its 2% inflation target continuing to narrow.

Let's not stick just to the Fed's opinion here, it does not mean that things are up only from now, but it is a positive sentiment for the US Economy.

Given the following (quite positive) reports, we'd look for a 25bps rate cut next month, and these CME FedWatch readings confirm our view...

Non-Farm Payroll MoM

• Over expected @ 254% (prior 159K) 📈

Unemployment Rate MoM

• As expected @ 4.2% 👍

Rising Tensions in the Middle East 🪖🔥

Due to the recent developments in the Middle East, with Iran striking Israel with missiles, there have been concerns of a full-blown war and potential involvement of the USA.

This definitely shook the market. However, despite the volatility, we believe Bitcoin (not so much altcoins), may have an onset positive reaction.

In the majority of geopolitical "black swans", the initial downside reaction for Bitcoin was short-lived, either stabilising or continuing towards an upside. 🚀

With the US coming close to an election deadline in November, we're likely to see uncertainty all parties plan around political and geopolitical strategy.

In summary, don't worry about it too much, however,than-usual we should expect a higher than usual chance of further escalations.

Tether under fire. Stablecoins: To have or not to have, that is the question! 🍎

Some interesting news came out about Tether, the company that owns the USDT token (the largest stablecoin in the world).

There have been some really interesting conversations about Tether not following US Compliance too by allowing Hamas in the Middle East to use crypto for alleged "terrorist activity". This is of course debatable, and the key value of crypto is decentralisation, however, Tether is as centralised as it gets, and they've not been following the right rules.

What does this mean for Tether?

We talked about Tether a few months ago. There is a risk (however small) that we see a black-swan event where Tether either blows up or shakes the market, similar to the FTX or Terra Luna events.

Introducing... the Stablecoin Wars.

Not only does this create some tension in the crypto market, but it also creates an opportunity for new stablecoins to capture the market.

This year, we've had many stablecoin providers come to the market, and many of them have been incredibly successful. We expect the competition to increase, and rightfully so.

There shouldn't be any one (or two, including USDC) stablecoin that dominates the market.

How can we benefit from this?

1. Competitive Yield. Other Stablecoin providers are likely to give you a higher yield on lending or liquidity provision than the big ones.
2. Governance/Utility Tokens. We're in crypto, we're not just looking for the 40% APR, but the big gains too. Many stablecoin providers function in a decentralised manner via Governance tokens. This is a great way to take advantage of this growing market.

An Opportunity

Speaking of Stablecoin provider governance tokens, we've been keen on one in particular (on Base).

Overnight Finance is one of our favourite providers. Their OVN token allows for decentralised risk handling, as opposed to the centralised provider Tether.

Overnight

Your money should not sleep

Overnight

Note: We are invested in OVN and USD+ tokens. Subject to risk/volatility.

A mini-analysis here. We see OVN breaking new highs within the next 6-12 months. This is because of the confidence in the Base ecosystem, and now the potential for greater competition in the stablecoin space.

Market Analysis ✨

Week Overview

🪁 What a crazy week. It was difficult to carry out our trades due to the geopolitical shocks. Our trade ideas were either invalidated or stopped out.

Just remember, it's not about having every trade a winner, but catching the good, and cutting off the bad.

BTC Analysis

• Remember, our Long-Term-Monthly is the key level which keeps us optimistic in breaking the macro downtrend.
• We're happy that we've seen such a reaction here, but it's for next week to decide whether we can hold this.
• If we close below current lows, we'll be closing the vast majority of our BTC longs currently open.

Looking at the upside 📈 🚀

• 63,500 is our next target, as it's the POC of the medium-term range. If we can break this, we can then look at higher levels.
  • Just for reference, we've also got a few billion in liquidations at this same level.
  • Initially, we'd want a retest of the monthly level (~61.4k) and a continuation from there.
• It seems that the market has taken out a lot of liquidity at these lows and it could be more favourable to head back to the upside.
• Liquidation Magnet Levels 🧲 63400, 67000
• Primary Targets: 63400, 64600, 67000

Looking at the downside 📉 👀 

• Again, if we lose our current low around the Monthly Level (~60k), we'll be looking for a correction to the downside
• The next target lower would be 57,000, a significant pocket of liquidity and confluence with key levels.
  • You could look to short a breakdown scenario here but it won't be very good risk to reward and you may be stopped out quite easily.
• Primary Targets: 59.2k, 58.2k, 57k

Ethereum Analysis

• ETH has not performed so well during this market shock, further confirming the idea that altcoins don't follow well during geopolitical shocks.
  • Not to fear, we're still holding on to our idea of a 0.043 ETH/BTC level in the future, although we may continue to range for a while.
• Similar to BTC retracing above its critical "line in the sand", ETH has also had a good Friday allowing it to push above its key level to hold.
  • While many would take a raw approach and invalidate this uptrend towards April highs, we see this week as being an unusual exception to price action as investors seek liquidity amidst tensions.
• To the upside: 2470, 2580, 2650
• To the downside @ 2225, 2120

Altcoin Analysis

Altcoin performanceAltcoin's against BTC continues to range/hold.

We'll update you when there's something more significant to action from.

Investment Strategy 📈

We're still waiting for...

• A confirmed altcoin outperformance breakout
• A change of macrostructure in Bitcoin (towards the upside)

We're aiming to...

• Fill our 2% Hedging budget as we expect a higher "black-swan" risk from geopolitical events (war etc.)

There have been no key changes to our allocations.