Welcome to the Forward Guidance newsletter, brought to you by Ben Strack and Casey Wagner. Here’s what you’ll find in today’s edition:

• Is Uptober, at last, upon us? Ben breaks down the latest market moves. 

• There is finally a development in the EU’s DLT Pilot Regime, with the first approved player. 

• With inflation week in the rearview mirror, growth data could signal if a soft landing is realistic.

On the up and up?

Bitcoin breached $66,000 on Monday, while ETH recently hit a two-week high. It seems Blockworks’ Permissionless conference in Salt Lake City last week got everyone excited. 

Jokes aside, there are a few potential catalysts at play — and updates to catch up on, as the Forward Guidance team was a bit busier than usual last week. 

You probably know by now (especially if you’re a regular Forward Guidance/Blockworks reader) that bitcoin typically sees above-average gains in October. 

Seasonal trend analysis continues to point to this so-called “Uptober” narrative and strong Q4 performance despite the month’s “patchy” first couple of weeks, according to LMAX Group market strategist Joel Kruger.

After eclipsing $66k, BTC had settled around $65,580 by 2 pm ET — up 4.4% from 24 hours prior.

“Bitcoin and crypto assets overall have actually held up quite well of late when considering a wave of broad-based demand for the US dollar in recent weeks on the back of a repricing of Fed expectations,” Kruger told Blockworks.

Bitcoin has pushed back toward its recent resistance level at roughly $66,550, he said, adding: “A break back above this level should open the door for a more direct retest of the record high from earlier this year.”

The factors at play

First, it’s worth noting China’s latest fiscal announcement: Finance Minister Lan Foan said Saturday that the government plans to ramp up debt issuance to revive economic activity. 

“Whilst no details were provided on the exact size, strong commitments to ‘significantly increase’ debt to support the economy boosted local equity markets,” Wintermute OTC trader Jake Ostrovskis said in an email. 

Stimulus is typically good for risk assets like BTC, though we’ll have to keep an eye on this.   

There was also the biggest asset manager’s chief executive — BlackRock’s Larry Fink — saying Friday that “the utilization of digital assets [is] going to become more and more of a reality worldwide.”

We know about BlackRock’s belief in the crypto segment given its launch of spot bitcoin and ether ETFs this year. But Fink commenting on crypto assets is always bullish because, well, he runs a financial giant with more than $11 trillion assets under management. 

“If we can create more acceptability, more transparency, more analytics related to these assets, then it will be expanded,” he said of the crypto asset class during an earnings call last week.

Fink also questioned how the US could look to digitize the dollar, noting “all of that is going to be under discussion.”

The CEO added: “We believe the technology of these blockchains are going to become very additive, and then it will overlay AI and [have] better data analytics. The applicability and the broadening of these markets will occur.”

Because we mentioned BlackRock, ETF flows are worth noting as well. US spot bitcoin ETFs tallied $349 million of net inflows from Oct. 7 to Oct. 11, Farside Investors data shows.

Investor decisions have likely been more influenced by the upcoming US elections than by monetary policy outlooks, CoinShares research head James Butterfill said in a blog post.  

“This trend is evident in the fact that stronger-than-expected economic data had little impact on stemming outflows, whereas the recent US vice presidential debate and a subsequent shift in polling towards the Republicans, perceived as more supportive of digital assets, led to an immediate boost in inflows and prices,” he added.

Further, the current lack of clarity around the US election outcome and global liquidity conditions are “preventing the market from establishing a clearer directional trend,” notes FalconX’s David Lawant. 

“As uncertainty surrounding these factors diminishes, ETF flows may re-emerge as a more significant driver of price action,” he explained in a research note.

One other thing is that a portion of expected selling pressure looks to be off the table for now given the one-year deadline extension for Mt. Gox repayments — from Oct. 31, 2024 to Oct. 31, 2025. 

A belief in recent months has been that Mt. Gox creditors who have long awaited the return of their funds could opt to sell their crypto and drive prices down. So such potential negative impacts of these repayments are abated in the short term. 

Price predictions

Given the latest crypto price rise, let’s conclude with some predictions from two Dans with a long track record in this space. 

Dan Tapiero, founder of 1RoundTable Partners and 10T Holdings, said during a panel discussion last week that he expects BTC to hit between $150,000 and $180,000 in two years or so. 

The upper end of that would be a 3x gain from the $60,000 level bitcoin has hovered around for a while now, he said, noting BTC’s similar rise in early 2021.

Fellow panelist Pantera Capital CEO Dan Morehead gave a more exact price and timeline, projecting BTC could hit $117,000 by August 2025. This, he said, is based on previous post-halving price patterns. 

While there was plenty of talk at Permissionless about how much the election (now nearly three weeks away) will impact crypto’s trajectory one way or another, Tapiero seems to prefer looking at the grander picture.

The 10T founder said: “This move toward putting all value on a blockchain is bigger than one election.”

— Ben Strack

The growth in prediction markets during the third quarter, according to a CoinGecko report published Monday. 

Volume on the top three prediction markets rose from roughly $466 million to $3.1 billion quarter over quarter — with Polymarket accounting for 99% of market share in September.

“Some $1.7 billion of bets have been placed on the ‘US Presidential Election Winner’ since the start of 2024, accounting for [about] 46% of Polymarket’s yearly volume,” the report added.

Nineteen months after the European Union launched its DLT Pilot Regime, the first platform has received authorization and is set to debut next month. 

The Central Securities Depository Prague, the Czech Republic’s post-trade services provider, is expected to launch its DLT settlement system on Nov. 18. Prague’s CSD is unique in that it services institutions as well as individuals, and officials said both will have access to the DLT program.

Businesses in Prague can use the service to manage their cap tables (including employee stock ownership plans) and fundraise, Ondřej Dusílek, CEO of CDCP, said in a statement. 

The approval of the first DLT Pilot Regime applicant comes after months of frustration surrounding the program. In April, the European Securities and Market Authority (ESMA) wrote to the European Commission, Parliament and Council to explain challenges they’ve encountered when trying to get the pilot off the ground. 

Most notably, the lack of CBDCs makes cash settlements difficult, ESMA said. Plus, the newly effective MiCA regulations come with implications for custodians and “self-hosted wallets” that are not immediately clear. Regulators need to issue more guidance on how custody providers can operate within DLT infrastructure, ESMA said. 

The commission’s response was brief in detail but enthusiastic in support. They said the pilot regime was an important effort that should continue, noting that applicants should not be deterred from the lengthy process as the program has “no expiration date.” 

So that brings us here, to the Central Securities Depository Prague’s approval. The first green light being given to a TradFi institution is not surprising, and I’d say it’s even encouraging that an incumbent is interested in exploring this technology. 

We’ll have to wait and see how Prague’s program plays out, and if they encounter the challenges ESMA feared (mostly if they find they need CBDCs to meet cash settlement demands), but I’d label myself as cautiously optimistic, for now.

— Casey Wagner

Welcome back to another Monday edition of the Forward Guidance newsletter! With the major jobs and inflation reports now behind us, we have a relatively quiet week ahead in terms of economic data. Here’s what we will be watching: 

• Initial jobless claims on Thursday are slated to show a slight decrease after last week’s unexpected jump. Claims for the week ended Oct. 5 came in at 258,000 — a 33,000 increase from the week prior. Analysts attributed the surge to Hurricane Helene, but the impact of the storm is likely to be felt for several weeks. For the week ended Oct. 12, economists expect 245,000 initial claims. Another factor impacting employment numbers is the ongoing Boeing strike. While striking workers are not eligible for unemployment benefits, those furloughed and facing temporary layoffs are. 

• Also on Thursday, the US Retail Sales report will be released. As Sevens Report Research founder Tom Essaye said Monday, investors being confident in a soft landing is the single most important support for the current market, so these consumer-spending metrics will be telling. Economists are calling for a 0.3% monthly increase in September, up from the 0.1% increase notched between July and August. After relatively flat retail sales data throughout 2024, a boost would be a welcome sign that growth is not too stagnant. 

• Lastly, the Empire State and Philadelphia Fed manufacturing surveys, to be released on Tuesday and Thursday, respectively, will give us the first look into economic activity for October. Both reports indicated that growth was on the rise last month, so continued momentum here will also support the soft-landing narrative. The Philly index, which turned positive last month, is expected to come in at 2.9, up from 1.7 in September. New York’s figure last month showed an increase in the state’s manufacturing activity for the month of September — the first such instance since November 2023.

— Casey Wagner

• We talked about bitcoin, but ETH’s price rose above $2,600 for the first time since Oct. 1. It was at $2,625 at 2 pm ET — a more than 6% gain in the past 24 hours. 

• As part of an “opportunity agenda” for Black men, Vice President Kamala Harris is set to support on Monday “a regulatory framework for cryptocurrency and other digital assets so Black men who invest in and own these assets are protected,” according to a campaign release.

• US ETFs that hold ether directly saw relatively flat net flows last week, even as the country’s spot bitcoin ETFs posted $349 million of inflows over the five-day span. Bloomberg Intelligence’s James Seyffart acknowledged at Permissionless last week that his flow projection for these ETH products appears to have been “way too bullish.” The funds have so far been hurt by launching during the summer “doldrums,” ETH’s price trajectory around that time and the need for more education around the asset, industry watchers have said.