As expected, October this year is still the month with the highest yield, with the median BTC investment return exceeding 20%. Now it is the end of the month again. According to the old rule of "preparedness is forewarned", we make a basic judgment on the crypto market situation in November.
Judging from the current BTC data, the increase in October exceeded 27%. We wrote in the article at the end of September that the median investment return in October was 21.5%. Now it has directly raised the median, which can be said to be beyond expectations. The median increase in November is currently around 9%, and the average increase is 51.6%. This is because the BTC increase in 2013 was 453%. At that time, the BTC market was not sound and the market value was low. Therefore, the median of 9% can reduce the impact of extreme values and better reflect the overall market sentiment.
That is to say, the return on investment of BTC in November is also likely to be positive, and the market performance may be a consolidation or continuation after the increase in October, but the possibility of continued violent rise is low. In addition, it is noted that the investment returns in November after 2018 are not very good, which also means that November may have high volatility, so our operation is best to focus on band trading, which is suitable for grid trading.
OK, let’s take a look at the situation of ETH:
The median investment return of ETH in November over the years is -11%, which deepens our judgment that the market will fluctuate in November, but we note that Ethereum's investment return was around 50% in 2017 and 2020. The fourth quarter of these two years was also a bull market in the crypto market, when the quarterly increases of BTC and ETH were around 100%.
BTC weekly data
In the next few weeks, the sentiment of BTC may turn from good to bad, especially starting from the 45th week, there will generally be a drop of more than 10%, which also means that the possibility of volatility in November will deepen. The final yield of 44 weeks is worth paying attention to.
ETH weekly data
The next few weeks look even worse for Ethereum, with little green to be seen.
ETH/BTC
The exchange rate of ETH to BTC shows that since June this year, ETH/BTC has clearly fallen below the ichimoku cloud and is in a weak position, which means that the Ethereum ecosystem is weak and ETH's market performance is not as good as BTC, which may be related to the market's view that the Ethereum upgrade is a failure. We saw that after the buy signal appeared in 2020, Ethereum started the DEFI summer boom, and many people also used this exchange rate to represent the altcoin index. Obviously, after the downward trend this year, most altcoins did not outperform BTC.
Looking at the weekly exchange rate, BTC/ETH is testing the previous low, which may form support, but whether it can turn the disadvantage around remains to be seen. In the next two weeks, we can drop to the daily level to observe the reversal. If there is a reversal, it may strengthen the market sentiment towards ETH and Ethereum ecosystem projects.
Nasdaq 100 & BTC Divergence
For a long time, the Nasdaq Technology Index has been highly correlated with the market of BTC. Both are defined as risk markets by the market and are highly negatively correlated with the US dollar index. However, there was a divergence in October. BTC rose and broke through the previous high, but the Nasdaq 100 index was near the new low since June. At the same time, stocks and ETFs related to the cryptocurrency industry also performed poorly, especially the crypto mining industry, which fell sharply. NDX100 is approaching the support position, but it is difficult to reverse the downward trend in the short term after creating consecutive lows. It is necessary to observe the turning point.
Gold & BTC
In addition to the sharp rise in BTC in October, gold also rose by more than 7% in October, which may be related to the war in the Middle East. In my opinion, the subsequent rise in BTC may mean that the safe-haven property of BTC is strengthened by the market. Another possibility is the market's expectation that several BTC spot ETFs will be approved in the next few months. The news about Grayscale, ARK, and BlackRock ETFs is worth paying attention to.
US Dollar Index
The US dollar index has returned to above 106.5, and there is no bearish signal for the time being. Eurozone economic activity is still sluggish and the risk of recession is imminent, which may be one of the reasons for the high US dollar. Another point is that the market expects that interest rates will remain high for a long period of time. As the main trading pair of BTC, the high US dollar is not conducive to the BTC market.
Cryptocurrency-related ETFs
The article at the end of September judged that "the main decline of ETFs has been completed, and the probability of fluctuations or declines is relatively high, which is beneficial to the crypto spot market." This is indeed the case. Most ETFs fluctuated in October, and the market was full of true and false news about the launch of ETFs. We believe that the ETF market may not have a clear bullish trend in November, which will not interfere with the previous judgment on BTC.
BTC Market Analysis
At present, BTC is still performing strongly, setting a new high in 2023. The price is still far from the baseline and conversion line. RSI remains at 89.27, and there is no decline for the time being. The next market may deviate from RSI, but the price may rise slowly. In the short term, focus on the resistance at 38,000, and the support level is near the previous high of 31,500. If you consider a reversal, you need to wait until the conversion line approaches the K line, and the baseline will continue to rise. Combined with previous historical data, BTC's performance in November is more likely to fluctuate or fluctuate upward, and it is unlikely to return to below 30,000.
Altcoin situation
TOTAL3 (blue line) shows the total market value of altcoins excluding BTC and ETH, and TOTADEFI (orange line) shows the total market value of DEFI tokens, and the overall situation of altcoins of both tokens. Last week, BTC rose by 14.7%, while TOTAL3 and TOTALDEFI rose by 6.14% and 8.47% respectively, indicating that the overall increase of altcoins was less than that of BTC. In fact, with the huge increase of BTC in January, March and June this year, the overall increase of altcoins was not as good as that of BTC. This situation is more typical in bear markets, and people prefer more stable investment products. I judge that under the current circumstances, altcoins may not make up for the increase unless BTC can create an amazing bull market to drive market sentiment.
Money supply M2 of the world's four major central banks
M2 supply is one of the most important macroeconomic factors. It may be more intuitive to judge whether the world is in a state of loosening or shrinking. We can see that when the four major central banks start to print money crazily, it will always bring a big bull market to BTC. This has been the case for the past three BTC bull markets. The latest M2 growth was 3.33%, and the previous value was 1.79%. This may also be a factor leading to the rise of BTC this time. In fact, the M2 of the four major central banks in the world has been growing in the past year, and so is BTC. But don’t forget that the annual growth rate of M2 was also positive during the March 2020 crash, which is not suitable for short-term trading.
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.
