GM. This is Milk Road PRO, your crypto market physician, in newsletter form (we check for signs of life & vitality).
Uptober didn’t deliver.
Instead, the market took a hit. 🫣
And many are now questioning their faith in crypto.
But moments like this are valuable.
They force you to take a hard, honest look at your investment strategy.
👉 The best investors aren’t the ones chasing green candles — they’re the ones who lean in when others are backing out.
And here’s the thing: behind the scenes, the fundamentals have never looked stronger.
There’s real progress happening across the space, and those paying attention now could be well positioned when sentiment finally shifts.
Of course, there are still some ongoing headwinds.
The U.S. government shutdown continues to suck liquidity out of the system, and a rising dollar (DXY) isn’t helping risk assets either.
But if the shutdown ends soon — as many expect — and if a long-awaited crypto regulatory clarity bill makes progress, we could see a real shift in momentum.
That bill aims to give the industry clear rules around what’s a security, what’s a commodity, and how projects can operate in the U.S. — which could be a game-changer for both investors and builders.
We know it’s tough to look past price action when everything’s red, but that’s exactly why this update matters.
We'll walk through the latest trends, share our view on the market, and decide how to allocate the extra $1K added to our portfolio this month.
PS: Oh, and we recorded the Market Pulse meeting we just had. If you want to hear our thoughts, you can check it out here.
Let’s dive in.
The Business Cycle
The business cycle is the foundation of how we understand the trend and direction of markets – if you’re new here, you can learn more about how the business cycle impacts crypto markets here.
The chart below shows the ISM, which gives us a pretty solid clue about where we are in terms of economic activity right now.
The latest ISM numbers for October came in at 48.7 — that’s down from 49.1 last month and also below the expected 49.5.
Not exactly great news, and it suggests the business cycle isn’t picking up speed just yet.
But if you look a bit deeper, there’s a silver lining. New Orders are starting to climb, now at 49.4 compared to 48.9 previously.
That’s encouraging, since New Orders usually point to where the overall ISM is headed next.
So, there’s a chance we’re starting to turn a corner. 🙏
Let’s look at liquidity next.
Global liquidity
Global liquidity tells us how much capital is flowing into the markets. And generally, the more liquidity — or the faster it’s rising — the better it is for risk-on assets like crypto.
However, liquidity is not going up. 😮💨
But the big thing to note on liquidity is that the US Treasury Department has been refilling its General Account. The target for that was around $850B and has been reached.
Unfortunately, due to the government shutdown preventing the executive branch from spending money, the TGA is now over $1T.
This means that a lot of liquidity has been pulled out of the system, and there are now hundreds of billions of dollars of government spending being held back until the shutdown ends and a budget gets passed in Congress.
👉 Once the shutdown ends, spending should resume, and liquidity should expand, which should be bullish!
So if there’s less liquidity, could that also mean less pressure pushing prices up? Let’s have a look.
Truflation
Instead of looking at traditional trailing inflation metrics, we’re turning to Truflation for a real-time view of what’s actually happening on the ground.
Inflation remains something to keep an eye on, but so far not a major concern.
The Fed is much more focused on the weakening labor market, and we at Milk Road don’t see any signs that inflation is rising at the moment.
👉 It is a bit more elevated than The Fed would like, but not out of control by any means.
As long as this remains the case, it gives room for the Fed to continue loosening an already loose financial environment, and keeps the macro picture looking decidedly bullish.
That was just a quick snapshot of the macro picture.
If you’re looking for a deeper dive, check out Tomas’s macro PRO report from last Saturday. He broke it all down with around 60 charts that really show what’s happening behind the scenes.
Alright, let’s jump into the performance section to see what’s been dragging the market down — and what managed to hold up or even show some strength during this sharp downturn.
PERFORMANCE
Let’s see how some major investment classes have been performing.
We saw something pretty unusual.
Stocks and gold are both up around 3%, but crypto is down about 7%.
That tells us investors are generally bullish on the next few months. We are not surprised because all signs point to the economy trending upward.
But it’s a bit concerning to see crypto struggling while everything else is doing well. Something’s not quite lining up.
At a time when crypto is getting more recognition than ever — with major players across the finance sector adopting blockchain — you'd expect the market to be booming.
Add to that the fact that regulatory clarity might finally be just weeks away, and yet… the market is still underperforming.
That disconnect is hard to ignore. It really forces people to rethink their views on crypto.
Maybe the price action isn’t telling the full story and if we look under the hood, we might find more positive signals than the market is showing right now.
But before we dive deeper, let’s take a quick look at the top gainers and losers from the past month.
Uh, Oh… 😧 The rest of this report is exclusive to Crypto PRO or PRO All Access members!
Already a Crypto PRO or PRO All Access member? Log in here.
WHAT’S LEFT INSIDE? 👀
- Top gainers/losers of the past month
- Checking the crypto market’s health using ETF flows
- Why DEX volumes for the past month are surprising us
- Where we’re allocating this month’s $1,000 investment and why
Upgrade your subscription today to unlock access to all of the milky insights above, PLUS:
- Weekly reports to help you manage investments, allocate capital, take profits, and stay ahead in crypto 📊
- Weekly “Where Are We In The Cycle?” indicators to help you spot the bull market top before it’s too late 📈
- Access to the PRO Community, where the Milk Road crew & 1000s of fellow PROs talk crypto. Don’t miss the monthly live events! 🫂
Already a Crypto PRO or PRO All Access member? Log in here.
WHAT CRYPTO PRO MEMBERS SAID LAST WEEK:
