Markets Start to Feel the Pressure from US Government Shutdown

Initially when the US Government shutdown began, investors were not fazed. Markets continued to push higher and several indices hit fresh all time highs. Bitcoin eventually joined them and printed a marginal new all time high too.

But a deeper issue is now becoming apparent. The shutdown has entered its ninth day and we are heading into quarterly earnings season in traditional markets without any economic data. There are growing concerns over the quality of data once the Government does reopen, especially considering the issues we have already seen with data releases throughout the year.

As a result, risk on markets are beginning to teeter. Both the S&P 500 and Nasdaq closed red on the day but remain within touching distance of their all time highs. However, much of the pain was felt in the crypto market. Bitcoin saw a volatile 24 hours, with a range of nearly 3.5% from daily high to low. It was less than 2% from a new all time high before falling below $120K. Around $700 million in leveraged positions were wiped out, with the majority being long. Bitcoin has since recovered slightly and is down just 1.5% on the day. Altcoins were hit harder, most falling 3% to 4% or more.

We have been reiterating that a pullback is healthy. Yes, we did not get the breakout to new highs we were hoping for yesterday and short term control has shifted to the bears. But even a retest of $118K would not be a concern within the broader structure.

While risk off sentiment is creeping back in, yesterday saw an unusual divergence in the metals. Gold retraced 2% from its all time high, but silver continued higher and broke through $51, printing its first new all time high since 2011. A strong result for those with silver exposure in their portfolio.

Stormrake Spotlight: Hyperliquid (HYPE) ($44.04)

HYPE has been one of the bigger underperformers recently but remains a top tier project for those looking to accumulate undervalued altcoins. It dropped over 5% in the past 24 hours and is now sitting in a demand zone with a bullish order book that is holding up for the time being.

Bears are still in control of the short term structure. This would flip if HYPE can break its trendline and print a higher high above $47. While it remains below $50, HYPE continues to present a compelling long term opportunity.

BTC/USD Key Levels and Price Action:

As mentioned above, short term momentum is with the bears. Bitcoin confirmed a bearish structure yesterday after forming a lower low and lower high. However, the bigger picture remains bullish. The most likely next move is a retest of the $118K support zone. Bulls will need to reclaim the moving averages to make a real attempt at a new all time high. Despite the pullback, they still have strength and are not out of the game.

BTC Total ETF Flows for 9 Oct: $ + 51.1 million

*All prices are denominated in USD unless stated otherwise*

Written by Alexandar Artis

Create a brokerage account today

No Advice Warning

The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.

Stormrake is not a financial adviser and does not provide financial product advice. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances. Stormrake is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by this newsletter.

Disclaimer

All statements made in this newsletter are made in good faith and we believe they are accurate and reliable. Stormrake does not give any warranty as to the accuracy, reliability or completeness of information that is contained here, except insofar as any liability under statute cannot be excluded. Stormrake, its directors, employees and their representatives do not accept any liability for any error or omission in this newsletter or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise specified, copyright of information provided in this newsletter is owned by Stormrake. You may not alter or modify this information in any way, including the removal of this copyright notice.