CFT Update Monday, October 17th, 2022
BTC, ETH and US Equity markets were trading flat early last week but then experienced a turbulent second half of the week as Thursday’s strong US Consumer Price Index had investors worry about the next Fed move in November.
CPI for September hit a 40-year record high for this month, increasing 8.2%, and core CPI increasing 6.6%, both higher than expected – respectively 8.1% and 6.5%.
Markets responded to inflation data in a roller-coaster manner before settling down and ending the week with moderate losses.
This week, the macroeconomic calendar is lighter and investors will turn their focus to the corporate earnings season while keeping an eye on Wednesday’s release of the latest housing market data, namely housing starts and building permits, to better assess the state of the economy as the Fed keeps tightening its monetary policy.
BTC and ETH are now gaining today, trading near the $ 19,500 and $ 1,300 mark respectively, like US main Equity Markets, also gaining, whereas DXY is trading with a slightly negative bias.
Client Profits
We increased our existing positions in SOL, ADA and AVAX, bringing the portfolio exposure to the market to 41%, the rest being in cash. We still hold our positions in BTC.
The short-term view remains the same as last week: should BTC test the $17,500 levels, we could consider adding funds to our existing long positions in BTC and Alts as we have 59% of the AUM in cash.
We keep monitoring ETH price action as we could consider a trade if ETH declines further towards $1,000.
BTC
BTC has been experiencing a tumultuous week, starting last week trading close to flat around the $ 19,250 mark, then sharply declining, hitting below the $18,200 on Thursday as CPI data came out higher but reversed course completely to end the day positively and settled down on Friday, still ending the week negatively -1.8%.
Price action has been regaining moderately over the weekend and today BTC is trading upwards, just around the $19,500 mark, bringing the performance for the month down to 0.3%.
The prospects are still bearish as strong inflation data keep fuelling concerns for further rate hikes, without mentioning the recently agreed oil production cut by OPEC countries by up to 2 million barrels per day, which may compound further the inflation data.
BTC – 2 month view – See the graph
BTC – 1 year view – See the graph
ETH
ETH traded in a similar fashion to BTC, declining sharply in Thursday’s early session towards the $1,150 level before reversing towards the $ 1,300 later in the day and settling down on Friday, ending the week relatively flat with -0.2%.
Like BTC, we believe ETH to still be on this bearish trend given the still strong inflation and US job market prospects. It will be interesting to see if price action confirms below the $1,250 mark. If the price continues its decline towards the $ 1,000 mark, we could enter a swing trade- with the next support would be the lowest of the year – $900 level.
Other markets
US Equities’ performance over the week was mixed with S&P 500 and Nasdaq COMP declining by -1.5% and -3% respectively. Price action was rather similar to BTC and ETH, characterized by last Thursday’s turnaround. On the other side, the Dow Jones advanced by +1.5%.
Today, Equities are regaining, while investors await earnings releases and turn their focus to the situation in the UK as more of UK Truss’s unfunded tax cuts are to be revised.
S&P – See the graph
NASDAQ – See the graph
DXY
DXY has had a volatile week as well, trading sideways around the 113 mark. Despite the recent inflation data favouring Hawkish Fed expectations, DXY is declining today towards the 112 level. Part of the decline can stem from the rise in the British Pound against the dollar as UK U-turn on tax cuts program boosted the Sterling.
The 114.8-high level still acts as a resistance for the coming weeks. If price action breaks above this level, the next level could be 120. On the downside, the 110- high level still acts as support.
US Treasuries
US Treasuries had a volatile week, with the 10Y yield breaking above the 4% on Thursday as CPI data came out higher. The yield is still trading in that range today around 3.99%, just below the high of 4.019% which serves as resistance for price action.
Thank you!
CFT Team.