Bitcoin Competing for Space in Diversified Portfolios — Market Talk

1129 GMT - Bitcoin is increasingly competing with other asset classes for a place in diversified long-term portfolios, which changes how its recent decline should be interpreted, says Maksym Sakharov of WeFi. "This represents a different way of valuing the asset than in previous cycles because the discussion gradually shifts from whether bitcoin belongs in a portfolio to how much exposure it deserves relative to every other asset competing for long-term capital," he says. Sakharov adds bitcoin's mainstreaming doesn't make it immune to macroeconomic conditions or changes in investor sentiment, however. Bitcoin is down 1.2% at $82,422. ([email protected])1059 GMT - The crypto-friendly Clarity Act is unlikely to pass into law in the U.S. this year, JPMorgan analysts write. "With both chambers of Congress now out of session ahead of the 2026 midterms, we think passage of crypto legislation in this Congress through December 31 is unlikely," they say. Even Democrats who had been active in crafting the bill voted against it in the Senate, they note. ([email protected])1045 GMT - The market capitalization of the crypto ecosystem rose to around $2.84 trillion in September, its highest level since January this year, JPMorgan analysts say. Prices moved more quickly and dramatically in September, raising investor activity, they say. September trading volumes increased on-month, though short-term momentum wasn't enough for average daily volumes to reach highs from the second quarter of 2026. Ether outperformed bitcoin over the month, while alt coins outpaced both, they note. Bitcoin falls 0.9% to $82,669.99, while ether drops 0.85% to $2,552.21.([email protected])1024 GMT - Eurozone inflation beat expectations in September but this likely won't be enough to sway the European Central Bank into raising rates just yet, Ebury's Matthew Ryan says in a note. A hike in December remains in the cards, however. Policymakers are becoming increasingly vocal that higher yields should limit the need for central bank hikes, he says. The selloff in bonds acts to tighten financial conditions by pushing up mortgage rates and corporate borrowing costs. "[ECB President Christine] Lagarde said as much last week, arguing that the notable rise in long-term rates since the September meeting will slow growth and ease the pass-through of energy costs to inflation," Ryan says. Investors rank about an 80% chance of an ECB hike in December, LSEG data shows. ([email protected])1021 GMT - The cost of default protection for French government bonds is steady but remains high as investors become more cautious amid political and fiscal uncertainty. High levels of public debt have raised fears about France's fiscal sustainability. Investors wait to see whether the French government will be able to secure enough votes in the National Assembly to pass the proposed 2027 budget, which includes spending cuts, XM's Raffi Boyadjian says in a note. The French five-year sovereign credit default swaps are unchanged at 80 basis points, staying close to the multi-year high of 84 bps hit last week, S&P Global Market Intelligence data show. ([email protected])1021 GMT - The cost of insuring euro credit against default rises as risk appetite falls due to high oil prices and increased inflation concerns. "With the prospect of an Iran peace deal on the backburner, it is natural that risk tolerance will fall," XTB's Kathleen Brooks says in a note. The iTraxx Europe Crossover index of euro high-yield credit default swaps rises 10 basis points to 316bps, a six-month high, S&P Global Market Intelligence data show. ([email protected])1003 GMT - The U.S. dollar rises in midday European trade as Treasury yields rose across the curve, keeping near recent multiyear highs, with inflation risks seen tilted to the upside, according to the Federal Reserve's minutes. Markets assign a probability of just 19% of another Fed rate hike on Oct. 28, but an increase is fully priced by year-end, with further tightening expected in 2027. "That pricing continues to support yields even as some recent Fed comments were less hawkish following softer PCE inflation and labour-market data," Kudo.com's Konstantinos Chrysikos says in a note. The 10-year Treasury yield rises 6.4 basis points to 5.341%, according to Tradeweb. The DXY dollar index rises 0.2% to 102.413. ([email protected])0957 GMT - Negative developments in the eurozone have boosted the appeal of sterling against the euro, MUFG Bank's Lee Hardman says in a note. "While fiscal concerns are also in focus in the UK with 10-year gilt yields hitting their highest levels since prior to the global financial crisis in 2007, they are not as acute as in France currently." Media reports suggest the U.K. government will try to limit the risk a negative market reaction in the October 28 budget given challenging global bond market conditions, which would be positive for sterling, he says. The euro rises 0.1% to 0.8476 pounds but remains near the 16-month low of 0.8445 reached Wednesday, LSEG data show. ([email protected])0953 GMT - Expectations that the Federal Reserve will raise interest further have strengthened the dollar but the currency hasn't risen as sharply as it did following the 2022 energy price shock, MUFG Bank analysts say in a note. "On this occasion, dollar gains have been constrained by the resilience of global growth, particularly in Asia and Europe, where economic activity has held up better than expected," they say. "In addition, the Fed has been slower to tighten policy and has remained cautious about the extent of further tightening that may be required." The DXY dollar index rises 0.1% to 102.342, having reached a near 18-month high of 102.535 Monday. ([email protected])0925 GMT - Strength in the German economy and artificial intelligence are driving a solid performance in the country's venture-capital market, Dirk Schumacher at KfW says in a note. German startups raised 4.5 billion euros in the third quarter, the strongest quarterly total since late 2021, with AI companies attracting 3.1 billion euros. AI investment has reached 6.3 billion euros so far this year, almost double the full-year total for 2025. "The current economic upturn in Germany is also helping the venture-capital market and can provide it with support," Schumacher says. Still, he notes that strength in the market is concentrated in a small number of companies, suggesting the recovery is a positive signal for investment and innovation but is not yet broad-based across Germany's economy. ([email protected])0923 GMT - Spain's snap election underscores the country's political and fiscal policy challenges, Fitch Ratings says. The outcome may not resolve uncertainty over fiscal consolidation, while potential changes in a future government's stance on migration could affect economic growth, its analysts say. Prime Minister Pedro Sanchez's minority government repeatedly failed to secure budget approval and has rolled over the 2023 budget for a third consecutive year, freezing the budget ceiling at 2023 levels. "While strong tax revenue collection has supported a reduction of the deficit to 2.4% of GDP in 2025, we expect it will rise to 2.8% by 2028 on a normalization of growth and higher spending pressures," the analysts say. Fitch rates Spain at A/Stable. ([email protected])0915 GMT - European stocks will be able to withstand heightened bond volatility as revenues on the continent improve, UBS Wealth Management's Mark Haefele says. Eurozone government bond yields have risen sharply in recent days amid higher oil prices and concerns around France's budget deficit. However, improving revenues, structural investment demand and resilient earnings growth will all support the continent's stocks. An uptick in manufacturing activity on the continent will drive revenue growth, in turn boosting earnings, Haefele says. "Improving profit momentum should help cushion the effect of moderately higher yields on equity valuations." The Europe-wide Stoxx 600 falls 0.85%, down 3% over the last month. ([email protected])