Macro Monthly Outlook (October)

Bitcoin Breaks Key Levels in 'Uptober' Surge

Following our previous report, "From Recession Fears to Risk-on Cheers," October has indeed brought bullish momentum to the crypto market in what many are calling "Uptober." Bitcoin surged to $73,000, breaking through multiple key technical levels, once $300 below its all-time high last reached in March before closing the month at $70,300. After multiple retests of the $70,000 to $72,000 key resistant levels in the past 6 months, Bitcoin has once again stood above $70,000. From a price action perspective, Bitcoin has closed above the key weekly resistance level of $68,500 on a daily timeframe, reflecting an encouraging indicator of potential continuation to the upside.

Looking ahead, several scenarios could play out from this key level:

Ideal Case: A price retest of the previous range highs would allow more participants to enter positions.

Painful Scenario: However, markets might tend to take the painful path for traders; Bitcoin may surge directly upward, leaving under-positioned investors on the sidelines.

Bearish Possibility: The Daily Fair Value Gap (DFVP) near the $65,000 level could also be a potential retest level. 

From a risk-on sentiment perspective, open interest for Bitcoin futures had climbed to a record high of over $24 billion by the end of October, highlighting an influx of leverage entering the market. While the rise in open interest suggests strong market positioning, the relatively subdued futures volumes, especially compared to the peaks witnessed in March 2024, imply a more measured pace of trading. This dynamic could indicate that the market retains a ‘healthier’ momentum, with potential upside still available as leverage growth hasn’t yet reached overheated levels."

Bitcoin could Ride the Trump Trade to New Highs

The backdrop of Bitcoin’s ascent increasingly aligns with narratives surrounding the U.S. election. Increasingly viewed as a “Trump Trade,” Bitcoin has gained favor as Trump’s pro-crypto stance reinforces positive sentiment around digital assets. In our debut premarket trading product, PRE_TRUMP, Trump’s odds stand at 66% for a potential win, heightening speculative interest.

Additionally, a globally favorable interest rate environment is expected to bolster liquidity, positioning Bitcoin as a beneficiary of renewed capital flows. Spot Bitcoin ETFs recorded robust net inflows of approximately $1.2 billion in September and a staggering $5.4 billion in October, signaling consistent institutional interest.

This strong price trajectory, coupled with a supportive macro environment, amplifies our bullish view that Bitcoin has the potential to achieve a six-figure valuation in the not too distant future.

SOL Reaches New Highs vs. ETH

On October 27, the SOL/ETH exchange rate surged to a record high of 0.07115, underscoring Solana's recent growth momentum relative to Ethereum. According to on-chain data, Solana has experienced a substantial uptick in daily transactions and active addresses over the past year, now outpacing Ethereum's mainnet by a significant margin. Additionally, trading volumes on Solana’s decentralized exchanges (DEXs) have reached comparable levels to Ethereum’s, vastly exceeding those of Ethereum’s Layer 2 ecosystems.

The resurgence of Solana’s ecosystem can be attributed to a rapidly expanding developer base, propelled by regular hackathon events and a supportive development environment. Furthermore, Solana has capitalized on emerging trends, with the popularity of Meme tokens and innovations in Decentralized Physical Infrastructure Networks (DePIN) and AI projects drawing more users to the platform. This engagement has established a virtuous cycle, reinforcing Solana’s ecosystem growth and setting it apart in the competitive Layer 1 landscape.

A New Narrative of AI Meme

October saw meme tokens once again dominate the crypto landscape, with the month’s spotlight shifting from earlier trends toward a fresh narrative: AI-themed memes. Following the buzz around Cult memes, particularly $SPX, and the popular TikTok-inspired animal meme $MOODENG, AI Meme tokens captured significant market attention. Leading the pack, $GOAT briefly surpassed a $900 million market cap, igniting a wave of new AI-themed meme projects and sustained market excitement around this novel concept. The success of $GOAT has paved the way for more AI Meme tokens to enter the space, drawing investor interest with the combination of AI and meme culture.

The Buzz of KRC20

The KRC20 token protocol, much like the BRC20 standard, operates on a foundation of pre-set rules designed to ensure compatibility and seamless interoperability across diverse applications within the Kaspa network. The KRC20 protocol is part of Kasplex, a broader solution on the Kaspa network that includes token protocols, indexers, and APIs. The public beta of KRC20 was launched in June, with the mainnet going live in mid-September. For an in-depth analysis, refer to our latest article, “KRC20: Innovative Token Protocol Driving Kaspa Ecosystem Development.”

KRC20’s launch has further accelerated Kaspa’s already robust growth trajectory. Since its rollout, daily active addresses on the network have surged from under 20,000 to a peak surpassing 90,000, while daily transaction volume has skyrocketed from fewer than 150,000 transactions to over 8 million. Additionally, cumulative gas payments have approached 40 million KAS, with more than 30 million KRC20 transactions processed and over 1,000 tokens being deployed. These metrics underscore KRC20's pivotal role in driving network activity and accelerating Kaspa’s ecosystem development.

CoinEx: Home to KRC20

With the ecosystem’s strong development momentum, CoinEx has listed 12 KRC20 tokens since the protocol’s launch, quickly positioning itself as a home base for KRC20 tokens and underscoring its commitment to supporting the growth of this emerging sector.

Stablecoins Experience Slight Net Outflow as Funds Remain Cautious Ahead of Election

After 12 consecutive months of net inflows, stablecoins saw their first monthly net outflow, with $314 million leaving in October. Although the amount is relatively small, it suggests a cautious market sentiment following October's rally. Coupled with the upcoming U.S. election in November, more funds have chosen to stay on the sidelines, while some in-market capital has taken profits from October gains, resulting in partial exits. Overall, despite the unusual net outflow, we remain optimistic about the outlook. Compared to the net outflows at the onset of the bear market in April 2022, this outflow is relatively minor. The inflow and outflow patterns post-election in November will be crucial.

Economic Data & Events to Watch in November 2024

Disclaimer

The content provided in this report is for illustrative purposes only and is intended to offer insights into the cryptocurrency market. It is not, and should not be interpreted as, investment advice or recommendations. The information contained herein is based on sources believed to be reliable; however, we do not guarantee its accuracy, completeness, or suitability for any purpose, and it should not be relied upon as such. Any opinions expressed reflect a judgment at the date of publication and are subject to change without notice. Readers are advised to conduct their own research and due diligence and, where appropriate, seek professional advice before making any investment decisions. The authors and publishers of this report accept no liability for any loss or damage arising from the use of the information provided.

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