Good morning Readers! Welcome to TBL Weekly #117 — grab a coffee, and let’s dive in. With today’s macro landscape, many people are worried about whether they’re saving enough for retirement. Now you can grow your retirement savings using tax-advantaged bitcoin in an Unchained IRA! The Unchained IRA is the only solution that allows you to hold the keys to real bitcoin in a standard IRA. Right now, get started with no setup fees and no account fee for the first year. You can roll over old IRAs or 401(k)s into traditional or Roth bitcoin IRAs while keeping control of keys. With Unchained, you get the power of key control combined with the long-term potential of Bitcoin, making it the ideal choice for those looking to protect and grow their retirement savings.
Weekly MonitorWeekly AnalysisRates are up over 0.75% since the Fed cut rates in September—formally known as a rate shock. The reason could be:
We can’t know for sure today, but this coming week’s results should provide us with at least part of the answer. What we do know is that Treasury markets have seen a tremendous temporary readjustment, one that should have implications on others, including stocks and bitcoin. Even looking only at bitcoin, the price action over the past few days has us all a little dizzy. Our dominant theme here at The Bitcoin Layer has been bond volatility—our studies tell us that its variance is the primary motivator for the direction of stocks, which most of the time matters a lot for bitcoin. In short, elevated bond volatility suppresses money creation, which dampens the appetite for financial assets. Here is the shock: Treasury 10-year yields are now approaching 4.4% as bond volatility continues to surge. We are experiencing the largest increases of the year: October has seen the highest monthly growth rates in bond volatility, from a minimum value of 90 in late September to 133 today. Given higher volatility, our TBL liquidity measure experienced a huge drop starting October, which is now, barely, being reflected in the S&P 500. We have achieved a near 50% correlation with our measurement, which is why it has become a foundation for our framework: Interestingly, bitcoin outperformed amongst its risk peers, closing the week higher, but succumbing to volatile weekend price action. Don’t forget the Fed meets on ThursdayIn tradition with a history of the Fed altering its schedule to accommodate for elections, the FOMC will release its decision on Thursday this week. It will cut rates by another 25 basis points, bringing this cycle’s total cut to 0.75%. The Fed is likely to signal that the labor market remains a concern and that appropriate recalibration of the policy rate is necessary, but that inflation remains a risk; so, further decreases will need to be balanced with the upside risk to inflation. We will look for a strong signal on whether another cut is imminent, but the rates market suggests that might not be the case. Data is all over the place, and frankly, nobody knows what to think until the noise around January’s balance of power in Washington quiets down. Why, one might ask, is the election so important for rates? Thirty-six trillion dollars in public debt and a bipartisan voracious appetite for deficits mean any outcome might bring more Treasury-money creation. How exactly spending will happen does depend on who wins. The Fed is waiting, just like the rest of the market is, to measure the fiscal impact on the economy, which should partially dictate monetary policy, a phenomenon known as fiscal dominance. It feels strange to admit that the FOMC meeting this coming week almost fails to register on important market events, but here we are. A suspect labor market, which we’ll cover below, is enough to justify a 25 basis-point cut. Perhaps we’ll finally get some long-awaited information on QT, something we’ve long awaited at TBL. A flurry of dislocation in the relative yields between Treasuries and interest rate swaps (swaps), known as “swap spreads” indicate to some professionals that there is strain in the Treasury market that will bring the Fed back into play. This is certainly some inside baseball (go Dodgers!) on the Fed’s balance sheet, but a blowout in swap spreads that precludes an end to QT is exactly the type of development that we aim to bring you. Fed balance sheet expansion is bullish for bitcoin because it supports the liquidity of the system, when liquidity is measured by the asset base of banks and central banks. Shaky at best labor market:In July and August, we had our two highest unemployment prints of the year, which pushed Treasury yields to yearly lows. By the time September came around, the Fed followed bond market sentiment and adjusted its unemployment projection upward to 4.4%, alongside a 50 basis-point cut. Friday’s unemployment rate stayed flat on a rounded basis, but the internals of the jobs report were poor. They justify the weakening labor market approach at the Fed, and we are also seeing weakness confirmed in other places, such as JOLTS. Openings and quits continue to plunge. This is unhealthy for the job seeker: We had a large drop in job openings to 7.44M from the previous month’s print of 7.86M. At TBL, an important metric that we look at is Job Quits, which continue to fall precipitously from their 2022 highs of 4.52M. To us, this showcases a lack of willingness from employees to switch jobs given market conditions. Another interesting print this week was NFP: The final job print came in at 12K, not to mention downward revisions to previous months’ prints…which makes you wonder whether October’s print will remain positive or if it will be revised down to negative territory. We are now facing negative job growth, which would confirm data we are seeing at the ISM subindex level. Here, it is worth noting how recent prints are massively skewed by recent hurricane events, but the overall pattern of downward revisions is not new. Let’s now do a surface-level check on inflation:Another interesting number to note was the Average Hourly Earnings print: Wage growth remains solid, at 0.4% on a rounded basis. Interestingly, this higher AHE was accompanied by an increase in the Fed’s favorite measure of inflation: Inflation, including wage inflation specifically, don’t appear to be slowing at all. Let’s now look at the Economy:We also got GDP this week, which came in lower-than-expected at 2.8% QoQ (Annualized). ISM manufacturing remains in recessionary territory: Most importantly, we see the divergence of the labor market and the inflation situation within ISM manufacturing—spiking prices, but people are losing their jobs: A weak labor situation keeps the Fed cutting cycle in play, while higher prices allows for higher bond yields to restrict financial markets. All of this indecisiveness within the data itself is causing volatility and uncertainty, but we must say that with a full understanding that bitcoin, stocks, and gold are all basically at their all-time highs despite a rate shock. Next week, we’ll likely find out the next US President, some indication on the path of monetary policy, and almost certainly large market moves one way or the other. We promise to be documenting and analyzing every step of the way. While we’ve made our prediction and even demonstrated some bias over the past weeks, what is most important to us as Americans is the civic process outlined in our great Constitution. In case you missed it: TBL on YouTubeBeyond the Headlines: How to Really Understand Financial Markets. In this video, Nik shares his journey from a confused college student to a professional analyst, revealing how discovering Zero Hedge in 2010 transformed his approach to financial information. As a money market practitioner, Nik discusses his use of primary sources with tools like Macrobond as his foundation, while also relying on trusted outlets like The Wall Street Journal, Bloomberg, and Zero Hedge for stories. Through the methods and insights that shape his research at The Bitcoin Layer, Nik aims to helps viewers and readers cut through mainstream narratives to find real market signals. Here are some of the key insights:
Bitcoin Hits $73,000: The Hidden Money Printer Fueling All-Time HighsIn this episode, Nik examines the powerful forces pushing Bitcoin toward new highs, revealing how government spending sets off new money creation that flows directly into assets. Starting with a breakdown of Bitcoin’s recent breakout and technical setup, he then explores the global backdrop, including China’s $1 trillion stimulus and shifts in U.S. fiscal policy. Using a balance sheet approach, Nik illustrates how Treasury issuance, bank purchases, and government payments lead to new deposits and net worth expansion — a process fueling assets without Fed involvement. This analysis reveals why Bitcoin, as a finite asset, stands to benefit in a world of accelerating government-driven liquidity. Here are some of the key insights:
Countdown to Election: Treasury Moves and Rising Rates Poised to Shape 2024 MarketsIn this episode, Nik Bhatia and Matt Dines unveil the high-stakes dynamics of U.S. Treasury issuance and its immediate ripple effects on markets, set against the backdrop of the upcoming election. They examine the latest borrowing projections, the strategic role of short-term bill issuance, and how rising bond volatility could signal market risks. Comparing the U.S. and UK debt strategies, they analyze the debt ceiling’s potential to disrupt credit markets and consider how a Trump return or GOP Congress could reshape Treasury strategies. Closing with insights on the Federal Reserve’s stance, they chart the course for an economy on the brink of transformation. Here are some of the key insights:
❌ DON’T WRITE YOUR SEED ON PAPER 📝 It’s estimated that ~30% of Bitcoin is lost forever. Poor seed phrase security is a big reason why. This is why we use Stamp Seed, a DIY kit that enables you to hammer your seed words into a durable plate of titanium using professional stamping tools.
Take 15% off with code TBL. Get your Stamp Seed today! TBL on SubstackEvery week, we bring you our global events recap TBL Thinks. This week we discussed US trade policy with China and what the IMF thinks about it (especially given the strong emphasis on tariffs by a Trump re-election). We also looked at the continued struggles in commercial real estate. Check out TBL Thinks here: What TBL Pro Is ReadingMean, Median, Mode—a weekly quantitative report summarizing bitcoin price analysis and global macro narratives to position investors and bitcoin watchers with the data that matters. Read more by going TBL Pro.
Our videos are on major podcast platforms—take us with you on the go! Keep up with The Bitcoin Layer by following our social media! With today’s macro landscape, many people are worried about whether they’re saving enough for retirement. Now you can grow your retirement savings using tax-advantaged bitcoin in an Unchained IRA! The Unchained IRA is the only solution that allows you to hold the keys to real bitcoin in a standard IRA. Right now, get started with no setup fees and no account fee for the first year. You can roll over old IRAs or 401(k)s into traditional or Roth bitcoin IRAs while keeping control of keys. With Unchained, you get the power of key control combined with the long-term potential of Bitcoin, making it the ideal choice for those looking to protect and grow their retirement savings.
Thanks for reading The Bitcoin Layer — for access to all content, upgrade to paid! |
Sunday, November 3, 2024
Rate Shock, Election Fever, & Bitcoin Whipsaw: TBL Weekly #117
Subscribe to:
Post Comments (Atom)
Popular Posts
-
During a crypto cycle where few communities are feeling their best, Hyperliquid is continuing to make its fans happy with major new upgrade...
-
Good opsec can't protect you from every attack vector in crypto, but our resident DeFi explorer has some tips to help you keep your fun...
-
The best thing right now is to find protocols with great fundamentals that you can hold for 6-12 months. Since mar...
-
Weekly Recap: Circle reportedly entertaining buyers, Sui deals with DEX exploit. ...
-
Also Bitcoin Is Getting Closer To Test Its Long-Term Trend & Inflation Is Rising Again ͏ ͏ ͏ ͏ ͏ ͏ ͏...



















No comments:
Post a Comment