3 November 2021: Happy November! Today the US Federal Reserve announced that it will be tapering its purchase of bonds, set to end the program by June 2022. Inflation has been rising around the world, helping to add to the positive spotlight set on cryptocurrencies. With the Fed setting up to take on inflation, all eyes should be on the reaction of world markets.
Weekly Markets 1.12
Consistent with the last several months, the main topic flooding markets right now is still inflation. The ideal of inflation being transitory has been all but abandoned as prices continue to rise globally. This has led to higher demand for Bitcoin and other altcoins.
Crypto Economy
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Multiple coins sit at or just below all time highs (CoinGecko)
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Bitcoin whales hold record 2021 amount of Bitcoin amid inflation fears (CoinDesk)
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Investors call scam after collapse of new cryptocurrency Squid (NBC)
World News
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US Fed announces plan to end bond-buyback program (Reuters, US Fed)
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Covid-19: Researcher blows the whistle on data integrity issues in Pfizer’s vaccine trial (British Medical Journal)
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China urges citizens to stockpile supplies ahead of winter (Bloomberg)
Crypto Markets
In the past week, the total cryptocurrency market cap has risen about 11%, up around $270 billion usd. This places the total crypto economy at a value of $2.7 trillion usd. This rise in value has mostly been led by Ethereum, Binance Coin, Solana, Polkadot, and Shiba Inu.
Bitcoin
After hitting a new all time high of $67,276 usd two weeks ago, Bitcoin has gone into more of a slumber. Over the past week Bitcoin is up 2% and has been hanging on above $60,000 usd. It has been trending just below resistance set at nearly $63,000.
Analysis
While there is some downward pressure on Bitcoin, there has been no confirmed direction for over a week now. Growing inflation within the world economy is a net positive for Bitcoin as it is considered one of the greatest hedges against inflation avaialble. Bitcoin has support at $55,500 usd in the event of a pullback.
A pullback grows more likely as the cryptocurrency market enters, once again, into a period of greedy sentiment. This may create an additional buying opportunity on Bitcoin as we near the end of the year. Bitcoin is still in a trend that could see it hit an $80,000 usd valuation by the end of the year.
Alt Coins
Ethereum, Solana, and Polkadot have been on fantastic runs over the past week - and the past month. Ethereum is poised to break through for a new all time high possibly even today. Solana is also very close to its all time high.
Polkadot, riding recent bullish news about its development, has officially minted a new all time high today at over $54 usd per DOT.
The 1y DOT chart is here below:
Analysis
Even though many altcoins are near or at all time highs, the entire altcoin market has plenty of more room to potentially sprout until the end of the year. Of course, those of you that have Ethereum, Polkadot, or other well-performing altcoins in their portfolios should be expecting minor pullbacks from current valuations.
Well established projects are now beginning to take the spotlight. You should have high confidence holding these projects over the long term. Specific analysis on top performing coins will be available Friday (11/5) in the monthly RekTimes top coin release.
World Markets
The world as a whole has seen a 5.9% increase in GDP since 2020. This has largely been a recovery from the shutdowns due to the Covid-19 pandemic. G7 economies such as the United States are actually trailing the world in economic growth. In fact, the increase in world economic growth is being heaviliy led by emerging markets.
The topic emerging markets are considered to be:
- China
- India
- Russia
- Brazil
- South Africa
- Indonesia
The following map represents annual GDP growth for the world:
Developed Markets
The S&P 500 has continued to climb despite the Federal Reserve announcing its plan to taper quantitative easing. After exploding back into an uptrend following the bear trap at the beginning of October, the S&P appears set to continue its astonishing growth through the end of the year.
Although the Fed is indeed beginning to reduce their asset purchases, this is not expected to be completely reduced to zero until the summer of 2021. Therefore, markets could theoretically continue to rise with inflation unbothered. Of course, like the cryptocurrency market, the stock market is also experiencing a greedy sentiment.
Emerging Markets
Both China and India have continued to experience rapid growth in recent months. Russia has also been able to cash in on its energy holdings as both Asia and Europe have experienced shortages. Projections of emerging markets outpacing the largest advanced economies should come as no surprise.
China is still expected to overtake the United States this decade in economic strength.
Commodities
Many commodities have cooled off after exploding earlier in the year due to supply chain problems and rising inflation. The reduction in upward price pressure has helped to alleviate some growing pains for sectors across the world economy.
The latest commodity price data is available for November, per World Bank.
Summary
Despite slowdowns being projected throughout the world economy, the cryptocurrency market looks poised to cash in on inflation as the digital revolution continues.
Bitcoin and alts like Ethereum should be expected to outperform other asset classes as they have all year long. Keep an eye on market direction changes however as news of the US Fed's plans to taper grip the market. Greedy sentiment is dominant currently, so combined with the tapering news, a pullback is due soon.
Overall, crypto looks set up to have another good week as we push into November and towards the end of the year. RekTimes will be back with the next release of Weekly Markets on Friday, November 12th.
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