Welcome to Ecoinometrics’ Friday edition. Each week, we analyze the three most critical market signals impacting Bitcoin and macro assets, delivering institutional-grade insights through data-driven charts and analysis. Today we’ll cover:
Bitcoin has spent much of October hovering around the low $80K range, still well below its previous all-time high. Meanwhile, financial markets have been dealing with shifting expectations for interest rates, inflation, and economic growth… a lot of volatilty. With Bitcoin’s recovery approaching its fourth month, it’s a good time to put recent market moves into a broader perspective. So let’s look at the data. In case you missed it, here are the other topics we covered this week:
Get these professional-grade insights delivered to your inbox: The Ecoinometrics DecisionBitcoin Is Looking For DirectionBitcoin’s price has been struggling to establish a clear direction and ETF flows are showing the same indecision. So far in October, the longest streak of ETF inflows has lasted just three trading days. For outflows, it is only two days. Compare that with earlier this year, when we saw streaks of seven consecutive inflow days and more than ten consecutive outflow days. Recently, neither buyers nor sellers have managed to maintain the upper hand for very long. Of course, individual inflow days can still be substantial. But those bursts of buying have not developed into a consistent trend. And that’s the key to push this recovery trend further.
Countdown To A RecoveryThe clock keeps ticking on Bitcoin’s recovery. We are now almost four months past the current bottom, yet Bitcoin remains a long way from its previous all-time high. It hasn’t even managed to reclaim the psychological $100K level. But to be fair, 120 days isn’t particularly long for a recovery from a drawdown of this magnitude. Looking at Bitcoin’s historical recoveries, there is a clear relationship between the depth of a drawdown and how long it takes to recover. For a drawdown of roughly 55%, the historical trend points toward a recovery lasting around 230 days. Of course, 230 days is only a historical reference point. There is considerable variation between recoveries and the estimate assumes that the bottom is already behind us. The point is that Bitcoin isn’t running unusually late. There is still plenty of room for setbacks and consolidation along the way. So there is no need to panic or be impatient about the recovery process. Give the recovery time to develop.
Yields Down, Pressure OnThere’s been quite a bit of attention on the decline in long-term Treasury yields over the past couple of weeks. Fair enough. The 10-year has fallen from around 5.3% in early October to just above 5% now. That’s a nice change after months of rising yields. But zoom out a little and the picture is less encouraging. Since February, the monthly average 10-year yield has been climbing almost continuously, with only brief pauses along the way. At these levels, Treasuries remain an attractive alternative for investors and borrowing costs are still high. Both continue to put pressure on demand for risk assets and non-yielding assets, including Bitcoin. It’s also worth remembering that the latest decline in yields came alongside a sharp selloff in technology stocks. Investors seeking safety in Treasuries is hardly a sign that risk appetite is recovering. So we’re not changing our assessment just yet. Long-term interest rates remain a headwind for Bitcoin and we would need to see a more sustained decline, particularly in real yields, before reconsidering that view.
That’s it for today. Thanks for reading. Cheers, Nick You're currently a free subscriber to Ecoinometrics. For the full experience, upgrade your subscription.
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