Bitcoin Could Reach $165K Based on Gold's Record Run: JPMorgan

Commodity

Cryptocurrency

Summary:

Banking giant JPMorgan says bitcoin BTC$119,429.05 could climb to around $165,000 on a volatility-adjusted basis relative to gold, highlighting what the bank sees as significant upside if the so-called “debasement trade” continues to gain momentum.

The Wall Street lender’s models suggest that bitcoin would need to rise about 40% from current levels to match the scale of private gold holdings once risk is accounted for.

The world's largest cryptocurrency was trading around $119,000 at publication time.

The debasement trade involves buying assets such as gold or bitcoin to hedge against the devaluation of fiat currencies.

The bank's projection comes as retail investors accelerated their embrace of the debasement trade, pouring into both bitcoin and gold exchange-traded funds over the past quarter.

Analysts led by Nikolaos Panigirtzoglou noted that flows into these products have surged since late 2024, a trend that picked up ahead of the U.S. presidential election.

The analysts framed the trade as a response to long-term inflation concerns, ballooning government deficits, questions about Federal Reserve independence, waning trust in fiat currencies in some emerging markets, and a broader move to diversify away from the U.S. dollar.

Cumulative flows into spot bitcoin and gold ETFs have risen sharply, JPMorgan said, with retail buyers driving much of the activity. Bitcoin exchange-traded fund (ETFs) initially outpaced gold earlier in the year, particularly after “Liberation Day,” but gold ETF inflows have been catching up since August, narrowing the gap.

Institutional investors have also been participating, according to JPMorgan, though mainly via Chicago Mercantile Exchange (CME) bitcoin and gold futures rather than ETFs. The bank’s proxy based on open interest shows institutions have been net buyers since 2024, but their momentum has recently lagged retail demand.

The steep rise in gold prices over the past month has also bolstered bitcoin’s relative appeal, as the bitcoin-to-gold volatility ratio has drifted below 2.0. That shift underscores the bank’s view that bitcoin remains undervalued relative to gold, with its current price about $50,000 below where JPMorgan’s model suggests it should be.

Source: CoinDesk

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Adam

Economic

The Global Market Index (GMI) is expected to earn a 7%-plus annualized total return in today’s update for the long-run outlook, based on data through September. The estimate is unchanged from the previous month’s analysis.

GMI is a market-value weighted mix of the major asset classes (excluding cash) via ETF proxies. The return forecast is based on the average via three models (defined below). The current 7.1% annualized estimate remains well below the trailing 10-year return for GMI, a market-value weighted mix of the major asset classes (excluding cash).

Most of GMI’s components are expected to generate returns above the pace for trailing 10-year results, with five exceptions: US equities, foreign stocks in developed markets, commodities, US high-yield bonds, and GMI. For example, GMI’s projected 7.1% annualized total return is forecast to deliver a materially softer performance vs. its trailing 9.5% gain for the past decade.

Why the Global Market Index Projects Lower Gains Than Its Past Decade_1

GMI represents a theoretical benchmark for the “optimal” portfolio that’s suited for the average investor with an infinite time horizon. Accordingly, GMI is useful as a starting point for customizing asset allocation and portfolio design to match an investor’s expectations, objectives, risk tolerance, etc. GMI’s history suggests that this passive benchmark’s performance is competitive with most active asset-allocation strategies, especially after adjusting for risk, trading costs and taxes.

It’s likely that some, most or possibly all of the forecasts above will be wide of the mark in some degree. GMI’s projections, however, are expected to be somewhat more reliable vs. the estimates for the components. Predictions for the specific markets (US stocks, commodities, etc.) are subject to greater volatility and tracking error compared with aggregating the forecasts into the GMI estimate, a process that may reduce some of the errors through time.

Another way to view the projections above is to use the estimates as a baseline for refining expectations. For instance, the point forecasts above can be adjusted with additional modeling that accounts for other factors not used here. Customizing portfolios for a specfic investor, to reflect risk tolerance, time horizon, and so on, is also recommended.

For perspective on how GMI’s realized total return has evolved through time, consider the benchmark’s track record on a rolling 10-year annualized basis. The chart below compares GMI’s performance vs. the equivalent for US stocks and US bonds through last month. GMI’s current return for the past ten years is 9.5%, a robust performance that exceeds the previous peak.

Why the Global Market Index Projects Lower Gains Than Its Past Decade_2

Here’s a brief summary of how the forecasts are generated and definitions of the other metrics in the table above:

BB: The Building Block model uses historical returns as a proxy for estimating the future. The sample period used starts in January 1998 (the earliest available date for all the asset classes listed above). The procedure is to calculate the risk premium for each asset class, compute the annualized return and then add an expected risk-free rate to generate a total return forecast. For the expected risk-free rate, we’re using the latest yield on the 10-year Treasury Inflation Protected Security (TIPS). This yield is considered a market estimate of a risk-free, real (inflation-adjusted) return for a “safe” asset — this “risk-free” rate is also used for all the models outlined below. Note that the BB model used here is (loosely) based on a methodology originally outlined by Ibbotson Associates (a division of Morningstar).

EQ: The Equilibrium model reverse engineers expected return by way of risk. Rather than trying to predict return directly, this model relies on the somewhat more reliable framework of using risk metrics to estimate future performance. The process is relatively robust in the sense that forecasting risk is slightly easier than projecting return. The three inputs:

* An estimate of the overall portfolio’s expected market price of risk, defined as the Sharpe ratio, which is the ratio of risk premia to volatility (standard deviation). Note: the “portfolio” here and throughout is defined as GMI

* The expected volatility (standard deviation) of each asset (GMI’s market components)

* The expected correlation for each asset relative to the portfolio (GMI)

This model for estimating equilibrium returns was initially outlined in a 1974 paper by Professor Bill Sharpe. For a summary, see Gary Brinson’s explanation in Chapter 3 of The Portable MBA in Investment. I also review the model in my book Dynamic Asset Allocation. Note that this methodology initially estimates a risk premium and then adds an expected risk-free rate to arrive at total return forecasts. The expected risk-free rate is outlined in BB above.

ADJ: This methodology is identical to the Equilibrium model (EQ) outlined above with one exception: the forecasts are adjusted based on short-term momentum and longer-term mean reversion factors. Momentum is defined as the current price relative to the trailing 12-month moving average. The mean reversion factor is estimated as the current price relative to the trailing 60-month (5-year) moving average. The equilibrium forecasts are adjusted based on current prices relative to the 12-month and 60-month moving averages. If current prices are above (below) the moving averages, the unadjusted risk premia estimates are decreased (increased). The formula for adjustment is simply taking the inverse of the average of the current price to the two moving averages. For example: if an asset class’s current price is 10% above its 12-month moving average and 20% over its 60-month moving average, the unadjusted forecast is reduced by 15% (the average of 10% and 20%). The logic here is that when prices are relatively high vs. recent history, the equilibrium forecasts are reduced. On the flip side, when prices are relatively low vs. recent history, the equilibrium forecasts are increased.

Avg: This column is a simple average of the three forecasts for each row (asset class)

10yr Ret: For perspective on actual returns, this column shows the trailing 10-year annualized total return for the asset classes through the current target month.

Spread: Average-model forecast less trailing 10-year return.

Source: investing

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Samantha Luan

Economic

Forex

Political

Earlier this week Vice President J.D. Vance raised eyebrows amid possible major escalation with Russia in acknowledging that the US administration is "looking at" supplying Ukraine with Tomahawk long range missiles, at the request of the Europeans.Interestingly, the Kremlin has openly voiced that it is highly doubtful that President Trump would do such a thing. Russian Foreign Minister Sergey Lavrov in Tuesday remarks that he does not believe the Trump administration has made a final decision, but that ultimately he would be "surprised" if the US went through with it.

"I think this is primarily the result of European pressure on Washington, and Washington wants to show that it takes into account the opinions of its allies. I don't think we have seen the final decision," Lavrov told reporters at the Valdai Discussion Club in Moscow."The Americans don’t supply Tomahawks to everyone," he explained. "Among Europeans, if I’m not mistaken, they supply them to Spain and the Netherlands; they’re somewhat wary of the rest."

And he followed with: "If they believe that Ukraine is a responsible nation that will use them responsibly, that would be surprising to me."Instead, the Zelensky government has shown itself ready and willing to mount long-range attacks even on Moscow, and in the past, the Kremlin complex itself, with drones.Drones can only do limited amounts of damage, but a Tomahawk with an immense range of 1,500+ miles - capable of reaching Moscow - could unleash serious destruction.

Still, on Monday Kremlin spokesman Dmitry Peskov had downplayed the Tomahawks as any kind of 'game-changer'. "No magical weapons exist, and Tomahawk or other missiles simply won’t be a game changer," he said.Regardless, if the US does give the greenlight, it would be flirting with WW3, given Ukraine could turn around and begin targeting Moscow's own decision-making centers.Yet some influential officials in the Trump administration are still pushing the idea hard, including Keith Kellogg...Hopefully Trump resists the fanaticism of these hawks on what could prove crucial 'red line' for Putin, and instead does more to pursue de-escalation.

Source: Zero Hedge

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Glendon

Political

Middle East Situation

Israeli tanks blocked the main road to Gaza City on Thursday, preventing those who have left the besieged city from returning, and Defence Minister Israel Katz said it was now the last chance for hundreds of thousands of people still inside to escape.

Israel has told the entire million-strong population of Gaza City to head south as it mounts one of the biggest offensives of the war this month, vowing to root out Hamas fighters in what it says are their last bastions in Gaza's biggest urban area.

Residents told Reuters that tanks had set up sand barriers on the main road south out of Gaza City. People were being allowed out, but those who had left in search of food or temporary shelter were no longer being permitted to return.

"This is the last opportunity for Gaza residents who wish to do so to move south and leave Hamas operatives isolated in Gaza City itself in the face of the IDF’s continuing full-scale operations," Israeli Defense Minister Katz said in a statement.

Those leaving would be subjected to vetting by the military, Katz said.

The military said in a statement on Wednesday it had begun an operation to strengthen and maintain "operational control of the Netzarim Corridor", an area it controls dividing northern and southern Gaza. It did not respond to a request for further comment on Thursday.

'WE ARE NOT LEAVING'

The United Nations estimates that 600,000-700,000 people are still inside Gaza City, after up to 400,000 fled in the past few weeks as Israeli forces have advanced, destroying buildings in their path.

Some residents reached by Reuters said the move to prevent people from returning to Gaza City had increased their determination to stay.

"We are not leaving. Yesterday a drone dropped grenades on the rooftop of our building, but we are not leaving," said Hani, 24, who lives in Gaza City, who asked to be identified only by his first name because of security concerns.

"We are afraid if we leave, we will never see our Gaza City again."

Israeli planes and tanks continued to pound Gaza City. Gaza's healthy ministry said Israeli fire killed at least 77 people in the past 24 hours.

Medics said one of those strikes on Thursday killed nine people, including five from one family, near a community kitchen in Al-Mawasi, a southern coastal area which Israel has designated a "humanitarian zone" for hundreds of thousands of residents forced to flee from other parts of Gaza.

GROUND OFFENSIVE DAMAGES HEALTH FACILITIES

Gaza's health ministry said Israel's intensifying ground assault was crippling the ability to treat the sick and wounded, after four medical facilities were forced to shutter.

Doctors at Gaza City's main hospital, Al Shifa, said they had been forced to scale back services because of constant Israeli bombardment around the facility, as vulnerable patients worried that the hospital would soon have to shut.

"If this department is closed, it will mean the death of the patients. Our lives would end. This department represents life for us," Medhat Elewah, a kidney patient, said in a video filmed inside the hospital, obtained by Reuters.

He said he used to receive four hours of dialysis sessions three times a week, but this had been cut back to two hours.

Israel began its Gaza offensive after the October 7, 2023, Hamas-led attack on Israel in which some 1,200 people were killed and 251 taken as hostages back to Gaza, according to Israeli tallies.

Israel's two-year-long campaign has killed over 66,000 people in Gaza, according to Gaza health authorities.

Source: Reuters

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Gerik

Economic

AI Drives Unprecedented Gains in Chip Sector

Global semiconductor companies have collectively added over $200 billion in market capitalization during a recent session, reflecting investors’ intense appetite for AI exposure. The rally has been fueled by several developments: OpenAI’s record $500 billion valuation from an employee share sale, strategic agreements with South Korean chipmakers, and reports that Intel is in discussions to bring Advanced Micro Devices (AMD) into its foundry business.

Korean chipmakers led the gains, with SK Hynix rising 10% and Samsung Electronics up 3.5%, propelling the Kospi Index to an all-time high. In Europe, chip equipment manufacturer ASML Holding surged nearly 5%, while peers ASM International and BE Semiconductor Industries also advanced, lifting valuations across the sector.

Momentum, FOMO, and Market Psychology

Analysts attribute the rally to a fear of missing out (FOMO), with investors largely overlooking potential bubble risks in the AI sector. Hebe Chen of Vantage Markets commented that “tech momentum shows no sign of fading…with every AI headline sparking bursts of euphoria.” While the rally has caused forward price-to-earnings multiples to approach record highs—19x for Asia chip stocks and 27x for the SOX Index—investors continue to anticipate further gains ahead of fourth-quarter earnings releases.

Investor Scramble and Global Expansion

The surge reflects a broad scramble for AI-related technology exposure. Major infrastructure players like Nvidia and SK Hynix have seen strong capital inflows, while AI startups including OpenAI and Anthropic attract private investment. OpenAI’s Sam Altman plans to meet with Taiwan Semiconductor Manufacturing Co. and Hon Hai Precision Industry, prompting gains in their shares.

Chinese tech firms are also benefiting from heightened investor enthusiasm and government support. Alibaba’s expansion in AI spending and Huawei’s public roadmap to challenge Nvidia have pushed the Hang Seng Tech Index up approximately 50% year-to-date.

Risks and Valuation Concerns

Despite the bullish sentiment, some observers caution that AI services have not yet fully matured into mainstream revenue generators, raising questions about the sustainability of current valuations. Any shortfall in earnings from major tech firms could trigger a selloff, as demonstrated during the sector-wide decline in April. Nonetheless, many market participants remain confident in continued upside for technology stocks, especially in Asia.

Peter Kim, managing director at KB Securities, noted, “Tech stocks continue to defy gravity…possibly extending into next year,” reflecting widespread optimism among investors about AI’s long-term growth potential.

The global semiconductor market is experiencing an extraordinary rally, driven by AI enthusiasm and strategic partnerships. While valuations have reached historically high levels, investor optimism continues to fuel demand, reinforcing the belief that AI will remain a key driver of technology investment well into 2026.

Source: Bloomberg

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Adam

Commodity

Oil Slides Below Key Technical Support as OPEC+ Output Fears Mount

Light crude oil futures continued their decline Thursday, breaking below multiple technical support levels and extending a four-day losing streak. A bearish technical structure and concerns over rising global supply are pressuring prices lower, with traders watching for a possible test of deeper support zones.

At 10:24 GMT, Light crude oil futures are trading $61.49, down $0.29 or -0.47%.

OPEC+ Output Speculation Fuels Bearish Sentiment

Oil markets are under pressure as traders digest reports that OPEC+ may significantly boost output in November. According to sources familiar with the talks, the group could raise production by up to 500,000 barrels per day—triple the increase scheduled for October. Saudi Arabia is reportedly pushing for the increase in a bid to regain lost market share, adding weight to fears of oversupply.

Strategists warn that expectations of a supply surplus are already seeping into market sentiment. Jorge Montepeque of Onyx Capital noted that some banks, including Macquarie, are forecasting a potential “super glut” in crude markets, further discouraging bullish positions.

Technical Breakdown Points to More Downside

Daily Light Crude Oil Futures

From a technical perspective, WTI crude is trading below the 200-day moving average ($63.06), the 50-day moving average ($63.56), and a long-term pivot at $64.21. This alignment underscores the bearish tone in the market. Prices have already broken below key swing bottoms at $61.61 and $61.34, exposing the September 5 low at $61.10 and the August 13 bottom at $60.77.

A confirmed break under $60.77 could trigger an acceleration toward the late May bottom at $55.74. That level would likely act as a major downside target for traders managing risk or building short-side exposure.

Geopolitical Tensions Offer Limited Support

While geopolitical risks are rising, they have yet to materially impact supply. The U.S. is now supporting Ukraine with intelligence for long-range missile strikes on Russian energy infrastructure, according to U.S. officials. This could eventually lead to disruptions in Russian crude flows, but analysts like UBS’s Giovanni Staunovo caution that absent real-time supply impacts, price support will be limited.

The Group of Seven’s latest vow to tighten restrictions on Russian oil purchases adds to the geopolitical backdrop, but traders remain focused on near-term fundamentals—namely, supply-demand balances and inventories.

U.S. Inventory Builds Reinforce Oversupply Narrative

U.S. Energy Information Administration data (EIA) showed crude inventories rose by 1.8 million barrels to 416.5 million barrels last week—well above consensus expectations. Gasoline and distillate stocks also rose, highlighting weaker refinery activity and softening demand.

Oil Prices Forecast: Bearish Bias Dominates as Support Breaks

The combination of rising inventories, OPEC+ supply risk, and technical weakness points to a bearish near-term outlook for crude oil. Unless geopolitical tensions translate into real supply disruptions, traders should expect further downside toward $60.77, and potentially $55.74 if that support fails to hold.

Source: fxempire

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Gerik

Economic

AI-Powered Fraud Prevention for the Digital Euro

The European Central Bank (ECB) announced it has awarded a contract to Portuguese startup Feedzai to develop artificial intelligence systems aimed at detecting and preventing fraud in the digital euro. The agreement, valued at up to €237.3 million ($278.7 million), includes a four-year framework for scoring digital euro payments based on deviations from typical customer behavior, interactions, and transaction history.

Feedzai and its subcontractor PwC will provide this AI-based risk assessment to help payment service providers approve or flag transactions between electronic wallets backed by the central bank.

Significance for Eurozone Financial Autonomy

This initiative is part of the ECB’s broader effort to reduce reliance on U.S.-based payment networks such as Visa and Mastercard, while responding to increasing interest in digital stablecoins. By leveraging AI for real-time fraud detection, the ECB aims to bolster the security and integrity of its upcoming digital currency, ensuring that it functions as a reliable alternative within the eurozone’s financial ecosystem.

The agreement with Feedzai has an initial estimated value of €79.1 million, with a maximum cap of €237.3 million, contingent on project milestones. In addition to Feedzai, the ECB awarded four other contracts, ranging from €27.6 million to €220.7 million, to companies including French IT consulting firm Capgemini. ECB board member Piero Cipollone noted that payments under these framework agreements will only begin once the project officially starts.

Timeline and Regulatory Outlook

Legislative approval for the digital euro is still pending, with the ECB aiming to secure authorization around mid-2026. The central bank plans to launch the digital euro by 2029, positioning it as a strategic tool for modernizing payments and strengthening European financial sovereignty.

Founded in Coimbra, Portugal, Feedzai processes approximately $8 trillion in payments annually for clients worldwide, including Novobanco in Portugal and Wio Bank in Abu Dhabi. Its expertise in AI-driven fraud detection positions it as a key partner in ensuring the security of the digital euro from the outset.

The ECB’s collaboration with Feedzai represents a significant step in preparing the digital euro for secure, resilient operation. By integrating AI-powered fraud detection early in the project, the central bank aims to protect consumers, reinforce financial stability, and enhance the eurozone’s independence in the global payments landscape.