U.S. stocks finally rebounded last night, with the Nasdaq up 0.83% and the S&P 500 up 0.36%. Nvidia rose 2.3%, while Microsoft and Amazon also recovered noticeably. But I don't think we can say risk appetite has recovered just yet. Investors buying the dip in tech stocks doesn't mean the crypto market can rebound in tandem, especially after spot BTC ETFs saw large outflows for several consecutive days.
① The U.S. midterm elections may matter more than last night's rebound in U.S. stocks. The elections will be held on November 3, and markets are waiting for the results. Different configurations of control in Congress could affect future government spending, crypto regulatory legislation, and the pace at which the Trump administration advances its policies. If policy uncertainty eases, risk assets could benefit; but if political gridlock emerges, investors may stay on the sidelines. It's too early to treat any election outcome as positive for markets.
② The U.S. labor market is more resilient than expected. The JOLTS report released last night showed 7.5 million job openings in September, up from the revised 7.19 million in August, with hiring increasing and layoffs decreasing. A stable labor market is certainly a good thing, but it may not be entirely positive for crypto. If an overheated labor market leads the Fed to maintain tight policy, the dollar and Treasury yields could weigh on BTC and ETH. On the other hand, if employment remains stable while inflation cools, markets may once again price in a soft landing.
③ ETF flows still need to be watched. On October 30 and November 2, spot BTC ETFs saw combined net outflows of about $1.042 billion. Some funds have yet to fully report their November 3 data, so it’s too early to conclude that institutional money has returned. To me, the tech stock rebound is merely a sign of improving sentiment; whether ETFs return to net inflows will better indicate how much capital is flowing into BTC itself.
④ Two important data releases are due tonight. At 8:15 p.m. Beijing time, U.S. ADP employment data for October will be released, followed at 11:00 p.m. by the ISM Services PMI. The former will show whether employment remains strong, while the prices component of the latter is especially worth watching. If both employment and services prices come in hot, expectations for monetary easing may come under further pressure. If the data show a moderate cooldown, BTC and ETH may get some breathing room.
Today, I’m watching three key areas: the results of the U.S. midterm elections and policy expectations; the ADP employment data at 8:15 p.m. and the ISM Services PMI at 11:00 p.m.; and the full flow data for spot BTC ETFs.
What I’m more focused on now is whether any real new capital is flowing into crypto after the rebound in U.S. stocks.
What do you think BTC needs more for its next rally: a shift in Fed policy, or a substantive breakthrough in U.S. crypto regulation?