U.S. equity index futures slightly red: Dow off ~0.2%
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U.S. initial jobless claims 219k vs 203k estimate
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Euro STOXX 600 index slips ~0.2%
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Dollar rises; gold, bitcoin ~flat; crude edges up
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U.S. 10-Year Treasury yield edges up to ~3.77%
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BITCOIN: RUMBLE, STUMBLE, OR CONTINUE TO BUMBLE? (0900 EDT/1300 GMT)
Since collapsing into its June lows, bitcoin has essentially been range trading, making no progress for more than three months.
However, given what are now especially compressed daily historical volatility readings, and strong positive correlations with U.S. equity indexes, a bitcoin breakout may coincide with either a surprising risk-on charge, or another market panic:
Since bottoming on June 18, one trading day after the S&P 500's intraday low, and down 72% from its Nov. 8, 2021 record close, bitcoin has struggled to make progress. Its summer rally stalled with its August-15 intraday high, one day prior to the intraday highs in the main equity indexes. Both bitcoin, and stocks, were then whacked.
However, bitcoin bottomed on Sept. 21, or nine trading days ahead the stock indexes' Sept. 30 troughs.
Meanwhile, on Oct. 3, bitcoin's daily Bollinger Band (BB) width fell to 0.087. Of note, over the past several years or so, major bitcoin moves have come in the wake of sub-0.2 daily BB width readings. Low BB width does not in itself predict direction, but it can indicate a market especially ripe for much more spirited action, or its next significant trend.
The recent BB width low was its tightest since October 10, 2020. In the wake of the Oct. 9, 2020 BB width trough, bitcoin enjoyed an upside breakout leading to a massive bull-run.
Bitcoin, now around $20,200, could continue to range trade, however, given especially compressed daily historical volatility, traders are on alert for a next big move.
A forthright thrust, and close, above the upper daily BB, now just over $20,400, will have potential to spark a sharp band-width rise, and an upside breakout.
A close below the 20-day moving average, now around $19,400, can flip pressure back toward a downside range break.
Violating the lower daily BB, now around $18,400, can also spark a sharp band-width rise, and lead to a slide to new lows.
Of note, bitcoin's Nov. 8 record close coincided with the record close in the small-cap Russell 2000, and came just nine trading days ahead of the Nasdaq Composite's Nov. 19 record finish.
Bitcoin's rolling 50-day correlations with the RUT, and IXIC, now stand at a robust 0.77 (+1.00 is a perfect positive correlation). Thus, if bitcoin resolves its range, one way or the other, U.S. equity indexes will likely be coming along for the ride.
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