Bitcoin has the highest weekly close since Jan. 2018. Bitcoin's exposure will grow exponentially thanks to PayPal. Why the market may _not_ crash after the elections or BigTech earnings this week.

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The Bitcoin Economic Calendar:

Week of Monday October 26th to Sunday November 1st.

Market Commentary:

Bitcoin:  Bitcoin had its highest weekly close since January 26th, 2018 at $13,045 and up +13.29%. Although there was no stimulus vote, the news that PayPal would roll out support for Bitcoin purchases to its 346 million active account holders pushed Bitcoin beyond the $12k mark - breaking trends with equity markets which were down for the week, and soaking the air out of the room from a lot of other sectors in crypto - namely DeFi, which we have been covering for weeks here on the BEC. Lots of implications and some fascinating data here - we'll be diving in more detail in our Market Trends section today.

S&P 500:  With no new stimulus agreement in the U.S. the markets sold off slightly this week closing down -0.53% for the week. There is a very slim chance that an agreement will be reached before the U.S. election on November 3rd, so markets will likely enter "wait and see" mode until a new president is elected and there is more clarity about a transition and a renewed conversation around stimulus.

While some of the most widely held stocks report this coming week, (Google, Facebook, Amazon, Microsoft, Visa), and we have the U.S. Elections scheduled in 8 days, it is unlikely that the market will become wildly volatile - because a lot of volatility has already been priced in - according to the options markets. This may sound counterintuitive, but we'll explain. 

"Volatility being high" means that a lot of people are paying for price insurance on their stocks, and the sellers of that "insurance" are pricing it higher to hedge that market risk. The implications of this is that market participants that are purchasing that insurance already feel hedged and will not have to rush to sell their stocks in a down market - which is what typically causes a waterfall and a sequential leg down. So, when the market sees a potentially known shock, it can hedge for it, and it becomes much harder for volatility to spike _after_ the event. This is reflected in the inverted volatility curve structure - which was beautifully described in a recent OddLots podcast - link here.

Gold & DeFi: Gold had a muted week, up +0.14% at $1,901/Oz as no real market catalyst was able to push it in either direction. Like most other markets, it is likely waiting direction after the U.S. election and renewed conversation on stimulus.  

Moving on to the FTX DeFi index, we see that - as we anticipated, last week the Index has a _another_ really bad week closing down -6.96% as it continues under pressure. With Bitcoin poised to keep performing well over the near term, it is likely that DeFi tokens continue under selling pressure. While the index has come down about 50% from its highs over the last 8 weeks, there is still a very long way down.  

The PayPal Effect
There's been a lot of attention to the news out of PayPal this week advising that they'll start supporting Bitcoin purchases through the platform's users. To put things in perspective, according to data from GlassNode - as of September this year there were 31.2 million Bitcoin addresses with a non-zero balance. PayPal's user base is 346 million accounts. You don't have to be a math genius to see why this is a huge deal. Bitcoin was up strongly on the news - and so was Microstrategy stock.

There are a plethora of macro tailwinds forming that will likely continue holding bitcoin up and can continue pushing it higher in the coming months. On Thursday, Paul Tudor Jones, one of the most renowned investors in the world, went on CNBC and said that "Bitcoin has a large contingent of really really smart, sophisticated people" and went on to call it "the best inflation hedge". That's a powerful narrative to be said on U.S. Business television - and when inflation is on everyone's minds. The fact is that in the last month:

• Renowned macro investors have disclosed portfolio allocations for Bitcoin and are recommending it on national TV and to their followers/subscribers.
• Publicly traded companies are announcing purchases (Microstrategy), as well as announcements to purchase in the future (Mode). 
• The United States approved the first Cryptobank charter. 
• And, one of the largest FinTech companies in the world is about to expose bitcoin to over 300 million account holders,

This is powerful. While the markets in general have some uncertainty ahead - it is likely that Bitcoin outperforms both equity markets and gold in the near term given the broad set of tailwinds.

I'll close this section by reminding you that you can earn up to 6.5% APY on your Bitcoin with our Bitcoin Savings Accounts ;) - and if you need liquidity and don't want to sell, you can always use our Bitcoin-backed loans instead of selling your precious bitcoin. 

Difficulty Commentary
Lastly, not much has changed on the difficulty front since last week - we are still at 19.97 TH which is our historic all-time high. Hashrate has cooled down somewhat since last week with the current difficulty adjustment expected to come in at 19.63 TH as of now, which represents a slight decrease of where we are now. The next adjustment is not expected until Friday the 30th and as always we will update you on the next BEC.

What’s ahead for the week:
With the U.S. elections 8 days away and no stimulus deal in sight - most action this week will be focused on the earnings of the most widely held stocks in the U.S. As we mentioned earlier, Microsoft, Visa, Google, Amazon and Facebook all report this week. Most interesting will be their guidance, and how they address global demand concerns because of COVID. On the Bitcoin front, it is likely that Bitcoin continues to outperform both gold and the equity markets given the magnitude of the PayPal tailwind over the coming week - further, once the volatility shock of the election is over, the attention will likely shift back to the U.S. stimulus - another big tailwind for Bitcoin. As always, we will share any relevant information throughout the week through our twitter account @hodlwithLedn. We'll also be on DataDash tomorrow showcasing our B2X loans!

Last Week’s Content:
[Last Week’s Issue] Last Week’s Economic Calendar - Click here

[English] Datadash Interview & B2X product demo - Click here

[Portuguese] Criptomaniacos Ledn Savings Accounts - Click here 

Market-Moving Stats:
Bitcoin Hashrate and Network Difficulty:
Current Difficulty: 19.97 TH
Estimated Next Adjustment: 19.63 TH -1.83%
Time to next Difficulty Update: 6 days (Friday October 30th, 2020)
Difficulty All-time-high: 19.97 TH

Canadian Central Banking Updates:
Current Target Interest Rate: 0.00 - 0.25%
Current Overnight Money Market Rate: 0.23%
Source: https://www.bankofcanada.ca/rates/

U.S. Central Banking Updates:
Current Fed Interest Target Rate: 0.00 - 0.25%
Current Effective Federal Funds Rate: 0.09%
Source: https://apps.newyorkfed.org/markets/autorates/fed%20funds

Tuesday:
Microsoft reports after the bell

Wednesday:
Visa reports after the bell

Thursday:
Google (Alphabet), Amazon, and Facebook report after the bell