​Macroeconomic Analysis

Consumer interest payments

Interest payments as a percentage of total payroll have surged to over 4.2% in recent weeks. This level is now at its highest level since the financial crisis and consistent with prior recessionary levels. While rising interest rates continue to weigh on the U.S. economy and consumers, the market is pricing in a high probability of higher rates in the future.

         

         

Industrial and commercial credit needs

The outlook for bank demand for commercial and industrial credit has now fallen to its lowest level since 2009. As seen in 2001 and 2008, recessions are preceded by sharp declines in demand for loans.

         

ISM Services Purchasing Managers Index

The August PMI report showed that the services sector PMI unexpectedly jumped to 54.5 from 52.7 in the previous month. This indicated that the services sector performed stronger than expected and provided the Fed with more evidence that the economy is overheating. The market has currently priced in a strong possibility of another rate hike in November.

      

Nasdaq Composite Index

Despite the pullback in stocks this week, the Nasdaq has shown some signs of underlying strength over the past few days. On Thursday, the index gapped down below its short-term moving average, but managed to turn higher after the open. Heading into the weekend, keep an eye on the 50-day moving average hanging above $13,872.

   

Coinbase

There are a few companies that have shown some strength this week following the FASB ruling (more on that below). COIN is a great example of a name that could be at the beginning stages of building a rounded foundation. The FASB ruling favors Bitcoin-related stocks, some of which have performed well this week, as valuation indicators for the next bull run could see an uptick, driving more capital into the space.

         

Bitcoin Technical Analysis

As has been the case for the past few weeks, Bitcoin price continues to attract buyers around its year-to-date VWAP anchor. We would certainly like to see this level hold, but a break below it could quickly lead BTC down to the $21,500 range. Keep an eye on the $25,300 level this weekend.

         

Short Term Holder Realized Price (STH RP)

STH RPz is the total cost basis of BTC that has moved over the past 155 days, and the previous support level has now turned into resistance. This level could be resistance as short-term traders may look to sell at the cost basis as this would make their trade "break even". This is an important level to watch when trying to gauge near-term price action

         

Bitcoin Circulating Supply

Bitcoin’s circulating supply hit an all-time low of 5.4% in the past month. This means that those who trade Bitcoin back and forth drive short-term price action. As supply-side illiquidity continues, as indicated by the decreasing number of supply swaps, any catalyst for demand will cause prices to surge.

         

Perpetual contract holdings/market value

Perpetual open interest relative to market cap has not changed, and futures traders appear to be taking a more cautious approach going forward after the sharp reduction in leverage at the end of August. These leverage eliminations are good things as it can set the stage for healthy price appreciation.

Note: All content represents the author's personal views only, is not investment advice, and should not be construed in any way as tax, accounting, legal, business, financial or regulatory advice. Before making any investment decision, you should seek independent legal and financial advice, including advice on tax consequences.