Bitcoin price whipsaws on Fed rate decision, reclaims support above $34,600

The broader crypto market experienced a slight uptrend in trading on Wednesday after the Federal Reserve announced that it would be holding interest rates steady in a range of 5.25%-5.5%, the highest level in 22 years.

While rates remain unchanged for the time being, the central bank left the door open for future increases as they work to bring inflation back to their 2% target. Fed Chair Jerome Powell said the committee “is proceeding carefully” and will continue to make decisions “meeting by meeting.”

Stocks climbed higher following the announcement as traders saw the pause as evidence that the risk-on environment has returned. At the close of markets, the S&P, Dow, and Nasdaq finished in the green, up 1.05%, 0.65%, and 1.43%, respectively. Treasury yields sank lower, with the 10-year yield trading around 4.755%

Data provided by TradingView shows that Bitcoin’s (BTC) price whipsawed near midday, spiking to a high of $35,200 before dipping to $34,080. The top crypto has since climbed back above support at $34,600.

BTC/USD Chart by TradingView

Senior Kitco technical analyst Jim Wyckoff noted that “November Bitcoin futures prices [were] a bit weaker in early U.S. trading Wednesday,” and said, “Recent price action has formed a bullish pennant pattern on the daily bar chart.”

Bitcoin futures 1-day chart. Source: Kitco

“However, prices need to see a bullish upside breakout this week, or the bullish pennant will be negated,” Wyckoff warned. “The BTC bulls still have the solid near-term technical advantage as a price uptrend is in place on the daily bar chart.”

MN Trading analyst Gunter Lackmann said the daily chart for Bitcoin shows its price is “in a bullish consolidation resembling an ascending triangle chart pattern as the 8EMA, a reliable source to look for relative strength, is catching up with price.”

BTC/USD 1-day chart. Source: MN Trading

“Currently, the most obvious invalidation of this pattern would be daily candle closes under $34k, but we should also be ready for an intraday retest of the 8EMA, which last got tagged on October 23,” he said. “Upside resistance is at around $34.8k.”

Zooming in on the 1-hour chart, Lackmann said there is a “clear consolidation pattern, especially focused between $34,240 – 34,760.”

BTC/USD 1-hour chart. Source: MN Trading

He said the “most preferable entry into long exposure here probably would be a raid of the range low ($32.2k) followed by a reclaim of the range.”

“Most conservative traders wait until after the move to the upside (often divided into two – three legs up) completes” to reenter the market, he said. “My targets for those potential legs up from here are the areas of $36 – 38k and $40 – 42k. From there, it will become more likely that we get a retest of the previous HTF range high of around $31.5k, just when the market gets excited for more upside.”

For traders waiting for a significant pullback before opening a position in Bitcoin, market analyst Rekt Captial warned that there are only 100 days left when such an opportunity could present itself.

Altcoins in an uptrend

A majority of tokens in the top 200 recorded gains on Wednesday, while only nine coins saw losses greater than 3%.

Daily cryptocurrency market performance. Source: Coin360

SushiSwap (SUSHI) was the top performer, with an increase of 46.4%, followed by a gain of 26.8% for Just (JUST), and 16.3% for Uniswap (UNI). Polymesh (POLYX) led the losers with a decline of 11.64%, while MobileCoin (MOB) lost 10.5%, and Centrifuge (CFG) fell by 9%.

The overall cryptocurrency market cap now stands at $1.29 trillion, and Bitcoin’s dominance rate is 52.4%.

By

Jordan Finneseth

For Kitco News

Time to Buy Gold and Silver

David

UK to implement first set of crypto regulations in 2024, Spain to implement MiCA in 2025

The government of the U.K. has completed its review of comments received from the public regarding its proposed regulatory regime for crypto assets and has decided to move forward with implementing the first set of rules to regulate the crypto sector, including a requirement that all market participants be authorized before they can offer services to customers.

HM Treasury released the government’s responses to the comments received from the public on Monday, saying, “The government’s ambition to make the UK a global hub for cryptoasset technologies remains steadfast.”

“To realize this ambition, we must make the UK a place where cryptoasset firms have the clarity needed to invest and innovate, and where customers have the protections necessary for confidently using these technologies,” said Andrew Griffith, economic secretary to the Treasury.

“The learnings gathered from our engagement have been invaluable for further informing our approach,” he added. “While most aspects of our proposals were well received by the large majority of respondents, we have modified certain features of our future framework to take onboard the evidence presented.”

The Treasury said it would move ahead as proposed in a February public consultation, requiring firms undertaking cryptoasset activities to be authorized by the Financial Conduct Authority (FCA), although it gave no start date.

“By and large, the government intends to implement the territorial scope of the future regulatory regime as proposed in the Consultation,” they said. “This means a person (whether legal or natural) will generally be required to be authorized by the FCA under Part 4A of FSMA if they are undertaking one of the regulated activities or are providing a service in or to the UK.”

The rules that the Treasury intends to enforce focus on crypto assets like Bitcoin (BTC), the underlying blockchain technology that underpins the sector, and providers that are looking to offer crypto asset services to the U.K. public.

Regulated activities include offering a cryptoasset, operating a trading platform, swapping cryptoassets for currencies such as sterling, arranging investments and lending in cryptoassets, and safekeeping or custody.

“The government’s position is that firms dealing directly with UK retail consumers should be required to be authorized irrespective of where they are located,” they said.

The ministry said the new rules will be brought under established market law rather than exist as a standalone regime.

"It’s unlikely that crypto regulation will be easily shoe-horned into the existing regulatory framework," said Jonathan Cavill, a lawyer at Pinsent Masons. "The reality is that as the market develops at pace, the UK runs the risk of being left behind if it fails to attract crypto businesses."

The ministry said it plans to accelerate the implementation of these rules to provide the sector with greater clarity and will present secondary legislation to parliament in 2024. They also released a separate document outlining their approach to regulating stablecoins and will propose legislation in 2024 to give the FCA powers to oversee them.

The decision to move forward with establishing regulations around digital assets comes on the heels of the June passage of the Markets in Crypto Assets (MiCA) legislation in the European Union, which is the world’s first set of comprehensive rules specifically for cryptoasset markets.

  Singapore, Japan, Switzerland, and the U.K. partner on digital asset pilot programs

Spain to implement MiCA ahead of schedule

The Spanish Ministry of Economy and Digital Transformation has announced that it will begin implementing MiCA at the national level in December 2025, six months before the July 2026 general deadline for implementing the crypto framework for all 27 member states of the E.U.

The Ministry made the announcement via a press release on Thursday, and the first vice president of Spain, Nadia Calviño, has since met with the president of the European Securities and Market Authority, Verena Ross, to discuss the government’s intention to advance the implementation of MiCA.

While MiCA was approved in June, E.U. countries have been given a 36-month transition period from the time the bill was published in the Official Journal of the European Union. Spain previously stated they wanted to shorten that transition period to 18 months.

"The government will shorten the transitional period of application … with the aim of creating a predictable and stable regulatory and supervisory framework," the release from the Ministry said. “[This] will provide legal certainty and greater protection for Spanish investors in this type of assets.”

But they are not waiting until 2025 to start their preparations, as multiple large international crypto exchanges in Spain have been granted local licenses. In June, Crypto.com announced that they had been granted a Virtual Asset Service Provider (VASP) registration from the Banco de España that allows the exchange to operate in the country.

In September, Coinbase secured an anti-money laundering compliance registration from Spain’s central bank, and Kraken attained a VASP registration similar to Crypto.com.

Earlier this month, Banco de España issued a note to Spanish citizens preparing them for the potential introduction of a digital euro and explaining the basics of how the European Union’s central bank digital currency (CBDC) would operate.

“These preparations are multiple and complex in nature, not only for the Eurosystem but also for legislators,” they said. “The objective is clear: to be able to complement the range of payment solutions available to citizens, including cash. The digital euro would be an additional option that would ensure access to public money with all its guarantees, also in an increasingly digital environment.”

“The infrastructure that allows us to make electronic payments (machines, connections, protocols …) is a key part of our financial system and the Eurosystem ensures its soundness and availability,” the central bank said. “The digital euro would be based on a public and European infrastructure that would strengthen the European financial system and make it more independent of foreign alternatives.”

By

Jordan Finneseth

For Kitco News

Time to Buy Gold and Silver

David

China's gold output, consumption rise in 2023, gold ETFs add 9.53 tonnes in Q3

China’s gold production and consumption both increased over the first nine months of 2023, while the country’s gold ETFs also saw significant inflows in the third quarter, according to a report from Xinhua.

“China produced 271.248 tonnes of gold in the first nine months of 2023, up 1.261 tonnes or 0.47 percent compared with the same period last year,” the report said, citing data released by the China Gold Association (CGA). “In the January-September period, gold consumption in China totaled 835.07 tonnes, up 7.32 percent year on year.”

The CGA data also revealed a rise in the consumption of gold jewelry and gold bars and coins in the Chinese market. “Consumption of gold jewelry in the Chinese market rose 5.72 percent year on year to 552.04 tonnes, while that of gold bars and coins surged 15.98 percent from the same period in 2022 to 222.37 tonnes,” they said.

However, not all sectors saw an increase in gold consumption. “During the period, consumption of gold for industrial and other use fell 5.53 percent from a year earlier to 60.66 tonnes,” the report said.

The third quarter also witnessed significant inflows to the holdings of Chinese gold-backed exchange-traded funds. “In the third quarter alone, holdings of gold-backed exchange-traded funds (ETFs) in China added 9.53 tonnes,” the CGA said.

This addition brought the total holdings of gold ETFs in the Chinese market to about 59.69 tonnes by the end of September.

According to a recent report from Vladimir Zernov, Market Analyst at FX Empire, China is selling off massive quantities of its U.S. assets, and has little choice but to reallocate the funds to gold.

Zernov said he believes gold is one of the few viable alternatives to U.S. Treasuries. “In this scenario, China could increase its gold purchases in the upcoming months,” he wrote.

According to recent data from the U.S. Treasury, Chinese investors sold $21.2 billion worth of U.S. assets in the month of August. “While Fed policy outlook was the biggest driver behind the sell-off in Treasuries, it looks that China’s activity contributed to the move that pushed the yield of 30-year Treasuries towards 5.00%,” he wrote.

Zernov said he believes that, contrary to the prevailing market view, high Treasury yields may actually serve as an additional bullish catalyst for gold. “Traders are searching for safe-haven assets due to geopolitical tensions,” he wrote. “Treasuries are considered to be among the safest assets in the world, but their price is falling for months, and some investors may choose to buy gold.”

Chinese investors may be among the first ones to redeploy their funds to gold markets, he said.

Recent gold purchase data supports the theory that China is moving heavily into gold as they move to liquidate U.S. debt, with the People’s Bank of China (PBoC) buying gold at a torrid pace.

According to updated foreign reserve data, China’s central bank bought 29 tonnes of gold in August, lifting year-to-date purchases to 155 tonnes. It was also the central bank's biggest purchase since December.

And it’s not just the Chinese state that’s shown a voracious appetite for the yellow metal. Recent months have seen China’s domestic gold prices spike well above international spot prices as the country’s wealthy and middle class have clamored to secure the value of their own savings.

The population’s desire for gold was so great that the PBoC intervened in the market by banning banks from importing gold, which pushed the spread between the spot price of gold in Shanghai and in London to a record $121 per ounce in mid-September.

By

Ernest Hoffman

For Kitco News

Time to Buy Gold and Silver

David

This is why the fiat system 'ruins everything' and 'must be destroyed' – Jimmy Song

The fiat system is responsible for not only bad financial practices and mountains of debt but also distorted incentives on personal and professional levels, according to Jimmy Song, Bitcoin Developer, Author, Educator and Entrepreneur.

In his new book, 'Fiat Ruins Everything: How Our Financial System Is Rigged and How Bitcoin Fixes It,' Song dives into the fiat system and its pitfalls.

Song makes the case that the debasement of our money is the root of many of our problems and that the system of central banking has, in a way, “enslaved” us.

Song writes, “Like a zombie master, central banks have turned every organization into its slave, and much of civilization now lives a zombie-like existence. This is the debasement you’ve been feeling your whole life, the reason why everything seems to be slowly deteriorating.”

Song maintains that fiat has ruined everything from the economy to policies to relationships to family to art.

"Fiat money and the system of central banking is allowed to put new money into existence," Song told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News, on the sidelines of the Pacific Bitcoin Festival. "And the existence of somebody that can do that changes the incentives all over the place. In our personal lives, we don't have savings vehicles anymore, so that changes our behavior."

Song broke down his argument, starting with governments being in charge of printing money to prolong their stay in power.

"Governments can print money to buy votes to essentially prolong their power. That leads to a lot of distorted incentives. And at the global level, the U.S. has the ability to print the world's reserve currency. And that means it is dominant in foreign affairs," he said.

Song makes a compelling argument on how the fiat system impacts and distorts our daily lives. Watch the video above for details.

Money debasement

Inflation and currency debasement create a population that is focused on consumerism versus sound money spending, Song pointed out.

"The debasement of money causes you to want to spend it rather than save it because saving it is a lot of work. In order to keep the value that you have, you have to put a lot of time and energy into investments, savings vehicles, and maintaining those investments," he explained. "That's a lot of time, effort, and energy taken away from pursuing something more fruitful, like providing value to other people through the market process of providing goods and services."

This is how society ends up preferring short-term consumption versus long-term goals. The consequences of this could be dire, especially when it comes to civilizational progress. Watch the video above to get the full take.

Prior to the modern-day fiat currency, there was a gold standard, which served people better. However, one of its downfalls was centralization, Song added. For more details on what worked and what didn't under the gold standard, watch the video above.

Song argues for the sound money standard, noting that if Bitcoin is adopted on a large scale, it could fix the global issues the fiat system created.

"What fiat money lets you do is suspend reality. You can certainly see that with some of the zombie companies that exist today. The more money you inject, the longer they can live, even though they really should be dead," Song said. "Fiat must be destroyed to preserve civilization."

Coverage of the Pacific Bitcoin Festival is brought to you by Swan Bitcoin – Swan.com

  When the Fed starts c

Time to Buy Gold and Silver

David

Gold continues to shine as rising debt could cause bond yields to become unanchored – Sprott's McIntyre

There is no question that geopolitical uncertainty caused by chaos in the Middle East was the spark that ignited safe-have demand for gold and drove prices up from their seven-month lows; however, there is another factor at play in the marketplace that is helping to support prices at $2,000 an ounce, according to one portfolio manager.

In an interview with Kitco News, Ryan McIntyre, managing partner at Sprott Inc., said that the potential for a credit risk event is also providing solid safe-haven demand for gold and could help propel prices well above $2,000 an ounce.

McIntyre's bullish outlook on gold comes as the precious metal has held its ground, holding initial support this week above $1,950 an ounce even as bond yields remain in striking distance to 5%, their highest level in 16 years.

McIntyre said that one of the reasons why gold's negative correlation to bond yields is breaking down is because more and more investors are becoming worried about the U.S. government's fiscal outlook and the growing debt, which has surpassed $33 trillion.

However, McIntyre added that this is more than just the size of U.S. government debt.

"The most frightening thing for me is the deficit. I am more focused on the trajectory of where things are going," he said. "The rising deficit means the U.S. is not getting its finances in check."

McIntyre also noted that elevated gold prices reflect the growing risk that the U.S. economy faces a potential debt spiral as higher interest rates reflect higher borrowing costs, which precipitates the need for more capital.

He said that he thinks the U.S. is experiencing a slower version of what happened last October when the U.K. bond market was roiled after then-Prime Minster Elizabeth Truss proposed substantial tax cuts to be paid for with higher deficits. The turmoil in British financial markets cost Trust her job as Prime Minister.

One reason why markets are now focusing on the U.S.' growing debt is because of the sharp rise in interest rates. With the Fed Funds rates between 5.25% and 5.50%, the U.S. government is now spending more money servicing its $33 trillion debt than it spends on national defense.

At the same time, McIntyre also noted that along with the Fed's aggressive rate hikes, it has reduced its balance sheet, significantly reducing M2 money supply, the amount of money held by the public.

  Traders wait to see if gold can break $2,000 after the Fed holds rates steady

"Because the supply of money is decreasing, asset values are inherently decreasing. You now need more assets to support your credit requirements at higher levels. This is the last thing you absolutely want because it can quickly spiral out of control," he said. "I think this is why investors are turning to gold because they see a stable asset. There is only one safe-haven asset out there if you don't just want U.S. government bonds: that is gold."

While the Federal Reserve remains primarily focused on inflation, McIntyre said they need to be aware of the potential risk that bond yields could become unanchored to monetary policy.

While it may be a little early, the scenario that McIntyre is looking for is where the Federal Reserve maintains its hawkish stance but starts buying bonds, to keep yields in line. He added that the same time, increasing M2 money supply would also help ease market tensions.

However, McIntyre added that the Fed is in a difficult position. Because of rising deficits, the Fed can be seen increasing its balance sheet too much.

"Maybe in the short term, it will have the desired effect. But I think it will make people more nervous. And that's the problem when you lose control," he said. "With all this uncertainty, I think gold will continue to do well and remain in an uptrend until the government can get its spending under control, which isn't likely to happen anytime soon."

By

Neils Christensen

For Kitco News

Time to Buy Gold and Silver

David

Gold bulls on parade, S&P setup for a black Monday?

Monday, I wrote that my base case for the S&P is that prices are headed to the 200-week average. The breach of the trendline is turning out to be significant; we can’t tell the future, but we can let the trendline be a guide.

Even now, prior to prices getting to the 200-week moving average (if they even do), I am anticipating the flip to the long side. My feeling is that time will coincide with despondent sentiment. But I don’t think we are there yet, and the last few days of panic can be brutal (as gold bugs may know).

Beyond the bullish stance I have maintained on stacking gold, on Tuesday, I suggested a trade to short Bitcoin and long gold, citing the XAU/BTC ratio as a basis; that trade is playing out. As I write, gold is hitting the 2k spot, up $35+ from Tuesday morning. Below is a 2-hour chart; regular readers should be more than familiar with triangles breaking to the upside…

Bitcoin trades around $33,500 right now, down from $35,000 Tuesday morning. Still, as I also wrote Tuesday, I remain bullish on Bitcoin in the longer term and would be looking to close the short and add to a stack at around 31800, still as the base case.

By

Jonathan Da Silva

Contributing to kitco.com

Time to Buy Gold and Silver

David

Another one bites the dust: gold price hits a record high against Aussi dollar

The gold market continues to attract attention as prices push back to $2,000 an ounce, with many analysts now saying that the precious metal could be on its way to all-time highs.

However, as a global monetary metal, gold has already hit all-time highs in some currencies this year, with the latest being the Australian dollar, rallying briefly to A$3,159. Reflecting the broader market, gold has been pushing higher against the Aussie dollar as Israel’s war with Hamas continues to create significant chaos in the Middle East.

“The conflict between Israel and Palestine over the Gaza Strip is still deteriorating, prompting the flight to gold,” said Dr. Sandra Close, a director for Melbourne-based gold consultants Surbiton Associates. “Time and again, gold has proved to be an important safe haven during times of international conflict and uncertainty.”

Analysts note that gold’s all-time high will provide solid support for Australia’s gold mining sector. The country is the world’s third top gold producer.

In a report published last month, Surbiton said that Australian miners produced 80 tonnes of gold in the third quarter, an increase of eight tonnes, or 11%, from the second quarter.

“The gold output for the 2022/2023 financial year totaled around 306 tonnes, some 10 tonnes, or nine percent, lower than in the previous financial year,” Surbiton said in the report.

Close noted that better weather through Australia’s winter months allowed gold producers to process higher-grade ore. She added that at current prices, the sector is worth around $30 billion.

The Australian dollar is just the latest currency to lose value against gold.

The precious metal continues to hit fresh new highs against the Japanese yen on a daily basis. One ounce of gold is now worth ¥296,735.90.

Gold is also trading at record highs against the Chinese yuan at CNY14,488.70 an ounce.

Gold has seen significant Asian demand in recent weeks. Analysts note that Japanese investors want to protect their purchasing power as the yen has seen substantial weakness in global currency markets.

At the same time, Chinese investors are turning to the yellow metal to protect themselves from a slowing economy.

In a recent interview with Kitco News, market strategists at the World Gold Council said that global investors should monitor these growing trends in these two Asian Markets.

  Gold prices ending the week around $2,000 as geopolitical uncertainty overshadows rising bond yields

“I think what is driving gold demand in Asia is global geopolitical risks and capital flight being triggered by the prospect of a weak Chinese economy,“ said John Reade, chief market strategist at the WGC.

“Many Chinese investors have built massive real estate positions in their portfolios and now they are looking to diversify and gold is the next logical asset to own,“ added Joseph Cavatoni, North American market strategist.

The two analysts also said that Japan could be a major source of physical demand in the new year.

“This could become a significant trend for the global market as Japanese consumers have a lot of cash savings, which makes sense when you have decades of deflation,“ said Reade.

Although the global gold market is priced in U.S. dollars, both Read and Cavatoni noted the fact that the yellow metal has hit record highs in multiple currencies this past year is a strong signal that global demand remains healthy.

By

Neils Christensen

For Kitco News

Time to Buy Gold and Silver

David