Daily Briefing

MARKET OVERVIEW

Markets saw a sharp reversal today as falling US Treasury yields fueled a recovery in equities and a significant pullback in the US dollar. The mood shifted from last week's caution to cautious optimism, with investors reacting to new signals on the future of US fiscal policy.

The S&P 500 (SPX) staged a strong comeback, fighting to reclaim the 6,700 level after dipping to 6,520 last week. The rally was driven by a sharp drop in government bond yields, which eased concerns about borrowing costs. This dynamic also played out dramatically in the currency market, where USDJPY tumbled from near 157.00 to below 156.00. The catalyst for the move was President-elect Trump’s nomination of Scott Bessent for Treasury Secretary, a pick viewed by markets as a fiscally conservative choice that could temper inflation fears.

Elsewhere, Gold benefited from the lower-yield environment, pushing through resistance to new highs around $4,160 in a technically-driven breakout. Digital assets had a far more volatile session. BTC experienced a violent flush-out, with a "capitulation wick" plunging the price to $81,000 amid over $1B in liquidations. However, buyers stepped in aggressively, sparking a V-shaped recovery. For now, BTC is consolidating, with traders watching the $85,000 level as a key pivot for stability.

Looking ahead, US Treasury yields remain the central driver for cross-asset moves. With equity markets heading into a holiday week, thinner trading volumes could exaggerate price action, while headlines related to a potential government shutdown remain a key variable for near-term sentiment.

Asset Analysis

1. The Drivers: Why the Violent Move?

The chart shows a "capitulation wick" followed by a V-shape recovery. This structure usually happens when technical stops cascade into a macro void.

  • The Trigger (Macro & News): Markets are reacting to a mix of Fed uncertainty (recent comments from officials like John Williams) and lingering weakness from the October jobs data. The market is nervous that the "easy money" phase is pausing, which spooks risk assets.
  • The Accelerant (Liquidation Cascade): The drop below $90k likely triggered a massive chain of stop-losses. Data suggests over $1B in crypto liquidations hit the market, forcing price down vertically to $81k until it hit a wall of limit buy orders.
  • The Underlying Weakness: Spot ETF inflows and corporate treasury buying have slowed significantly compared to earlier in the year. Without that constant passive bid, the market has "air pockets" underneath, allowing price to fall 10-15% very quickly.
2. Technical Analysis

The chart captures the anatomy of a liquidity grab:

  • The Flush (Bear Trap): The deep red wick down to ~$81k cleared out late longs. The fact that price didn't stay there is bullish in the short term—it implies strong value buyers stepped in at the low $80ks.
  • The Reclaim: Price has V-shaped back above $85k-$86k. Reclaiming this level (and the moving averages, the blue/orange lines) is the first step in stabilizing.
  • Current Consolidation: We are now flagging around $87k. This is a "decision zone." The market is trying to decide if the low is in, or if this is just a "dead cat bounce."
3. Key Levels to Watch

For the next 24-48 hours, focus on these zones rather than exact prices:

  • Resistance (The Ceiling): $88,500 – $90,000
    • This was previous support. It is now the main resistance. Bulls need to push and close above $90k to confirm the correction is over. Until then, rallies here may get sold.
  • Pivot Zone (The Floor): $85,000 – $86,000
    • Ideally, BTC should hold this level on any pullback. If we lose $85k again, the probability of retesting the $81k lows increases significantly.
  • The "Line in the Sand": $81,000
    • This is your critical support. A break below this wick would signal a much deeper correction (potentially toward $75k).

Summary: The market just flushed out excess leverage. The response to the news was exaggerated by positioning. As long as price holds above $85k, the immediate bias is stabilization/neutral. Watch for spot ETF flow numbers tomorrow—if buyers return at these prices, the bottom is likely in.