The US stock earnings season is approaching, and the crypto market shows significant recovery in October.

In October, the U.S. economy demonstrated a stable operating trend, alleviating market concerns about the macro economy. The U.S. election gradually became the core logic driving market transactions. Tech stocks experienced a significant decline at the end of the month, while the crypto market became a safe haven to avoid the uncertainties of the election, with Bitcoin prices approaching historical highs, and a new round of rising trends in encryption assets seems to have begun.

The economic data for the U.S. in September showed steady performance, with non-farm employment increasing by 254,000, exceeding expectations; the unemployment rate fell to 4.1%; both manufacturing and services PMIs reached two-month highs. However, inflationary pressures remain: the September CPI rose by 2.4% year-on-year, while the core CPI increased by 3.3% year-on-year, both slightly above expectations. This data has led the market to generally anticipate that the Federal Reserve will cut interest rates by 25 basis points in November, with expectations for a 50 basis point cut having disappeared.

The Federal Reserve's beige book released in October paints a moderate economic picture of "steady economic performance, easing inflation, and some economic indicators pending improvement," essentially characterizing the U.S. economy as heading towards a soft landing. However, the report also repeatedly mentions the uncertainties brought about by the U.S. elections in November, suggesting that this may lead consumers and businesses to postpone their investment, hiring, and procurement decisions.

As the impact of the economy on the market gradually weakens, political factors have become the main variable determining the short-term market direction. Attention should be paid to the trading risks that may arise from political changes. However, on the last trading day of October, the US stock market unexpectedly suffered a significant setback.

All three major stock indexes fell collectively, with technology stocks generally declining. The Dow Jones fell by 0.90%, the Nasdaq dropped by 2.76%, and the S&P 500 index declined by 1.86%. Shares of technology giants such as Apple, Nvidia, Microsoft, Google, Amazon, Meta, and Tesla all experienced varying degrees of decline. Both the S&P and Nasdaq recorded their largest single-day drop since September 4, erasing gains made in October.

Nevertheless, according to the latest financial reports from the "Seven Sisters" of the US stock market, Tesla's performance is quite impressive. The financial report shows that Tesla's revenue in the third quarter grew nearly 8% year-on-year, although it was below expectations, the profit performance exceeded expectations, with a gross margin increase of 195 basis points year-on-year to 19.8%. Tesla's investment in the field of artificial intelligence has also become one of the important factors driving its stock price.

It is noteworthy that this month, the U.S. stock market has seen an interesting shift: political factors have surpassed macroeconomic ones to become the core logic of trading. Trump Media & Technology (DJT) surged nearly 250% this month, seemingly reflecting traders' bets on Trump's victory. Trump's policy inclinations, such as increasing tariffs on imported products to protect domestic manufacturing, have led traders to be more optimistic about U.S. companies, which has also become one of the logics for the continuous rise in the stock prices of domestic tech giants.

October coincides with the earnings season for U.S. stocks, and coupled with the upcoming elections, this combination of factors has further intensified market volatility. In contrast, the stock markets in Japan, France, Germany, and other countries have remained relatively calm, seemingly waiting for the uncertainties brought about by the U.S. elections.

After a long seven months of sideways consolidation, Bitcoin has finally welcomed a significant upward trend, with prices approaching historical highs. The U.S. Bitcoin ETF experienced a surge in capital inflow in October.

Regardless of the outcome of the upcoming U.S. election, cryptocurrencies are expected to usher in a new wave of development opportunities. Therefore, cryptocurrencies have become the preferred choice for capital preservation ahead of the election, which is almost an obvious logic. Historical experience shows that the market often undergoes a phase of increased volatility before elections, with investors' risk-averse sentiments and uncertainties regarding policies triggering frequent fluctuations in crypto market prices.

Despite the lack of a clear on-chain narrative, political factors have become the main driving force behind the crypto market. The integration of Bitcoin with the traditional world has expanded from the financial sector to the political arena, officially becoming an indispensable part of the world order.

In contrast, Ethereum's performance has been relatively weak, remaining in a sideways trend for the past two months. ETF data shows that there has been little fluctuation in its capital inflows and outflows. One of the important reasons for Ethereum's current weakness is the competition from other public chains like Solana. Currently, the "meme trading" trend is prevalent in the crypto community, and Ethereum is not the main trading platform for meme tokens. The U.S. election has also led to the emergence of numerous Trump-themed meme coins on the Solana chain, which has diverted some funds away from Ethereum. However, these short-term community factors cannot determine Ethereum's long-term trend. It is expected that after the U.S. election, the hype surrounding meme token speculation may gradually dissipate, at which point Ethereum is likely to emerge from the gloom and attract funds back.

As economic concerns fade, the market is refocusing on the AI theme. Although the U.S. election has led many investors to adopt a wait-and-see attitude, the crypto market has unexpectedly become the preferred option for current investments. This may reflect Bitcoin’s recognition as a higher quality investment asset, with its safe-haven properties increasingly acknowledged by more investors. As the U.S. election approaches and concludes, the global macro situation is becoming clearer, and the market may again focus on the AI narrative, with the crypto market expected to remain active, potentially leading to a resurgence of the "dual rise of stocks and cryptocurrencies" seen in the first half of the year.