The cryptocurrency market soared in the past 48 hours. Bitcoin has increased for about 8% trading currently at around $20,750 Leading the way was Ethereum which is up more than 15% and currently trades at $1550. Interesting to note that ETH is now on it’s highest level since the merge. One reason for that, is the ETH has became last week deflationary for the first time since the Ethereum blockchain switched to proof-of-stake. It means that more ether was burned verifying transactions than was created in the same period.

It is still all about macro

In recent days, we see a reversal of the dollar index trend as it is sliding down in anticipation for a potential slowdown in the pace of Fed interest rate hiking.

The Dollar Index (DXY)

According to Arthur Hayes , CEO and co-founder of BitMax, the main reason for the recent pump is that the US Treasury is thinking about supplying the market with more short term T-bills to alleviate a shortage. “Money in T-bills can be leveraged to pump risky financial assets”. However he also notes that these buy backs and re-issues of new on-the-run T-bills have not actually happened yet. “If this is just a trial balloon and it pops and prices may go down again”

For the coming months, the market is expected to remiain volatile and we can easily test back the lows ($20,000) before possibly continuing upwards. Overall, I don’t expect any significant bullish move till the inflation in the US slows down and the fed will reverse its current hawkish approach and stop or at least slows down the interest rate increase.

Regarding our strategies’s performance, we have seen that active strategies such as Duroc and Pennywell which contain SYNAPSE™ bots that are tailored to perform in sideways market conditions are up while Jinhua which is tailored predominantly to protect from downtrend market condition, has been lagging a bit behind in the last month.

For the coming weeks, the most important events to watch out are
upcoming Federal reserve meeting on the 1st of November as well as the US CPI data expected to be released on the 10th of November.