Last week, the cryptocurrency market experienced a significant surge, marked by BTC breaking the $70,000 threshold and reaching a new all-time high of $70,485 on perpetual futures. Optimism persisted, particularly in anticipation of the upcoming ETH Dencum upgrade scheduled for March 13. Strong net inflows from Spot BTC ETFs also contributed to the market’s positive momentum, with a collective total net inflow of $2.7 billion recorded over the week. According to the CoinShares report ‘Digital Asset Fund Flows,’ this influx brought the year-to-date total to US$10.3 billion, with the assets’ value reaching $28 billion, driven by ongoing institutional demand. BTC and ETH both continued their rally into March after posting impressive gains of +44% and +46%, respectively, in February. As of Friday, BTC was trading near $68,300, representing a weekly performance increase of +9.4%, while ETH was trading around $3,900, marking a weekly gain of +13.3%.
US Equities retraced last week and snapped a streak of two consecutive weekly gains as investors digested the pullback in Tech stocks and the latest job data, coming out higher than expected. In a similar fashion to December and January’s data -216,000 and 375,000 respectively, February’s NFP data rose by 275,000, surpassing market expectations of 200,000. However, market sentiment was mixed as the unemployment rate rose to 3.9%, higher than the expected 3.7%. S&P and Nasdaq closed out the week lower on Friday near 5,124 and 16,085, respectively shedding -0.3% and -1.2% while the VIX index increased to about 15.5%, confirming above its 100-Day MA currently near 14.3%.
US Treasury yields pulled back this past week amidst mixed signals from the latest job market data and J. Powell’s comments reiterating the Fed’s cautious approach to a cut in interest rates during its testimony about monetary policy to Congress. The 10Y and 2Y yields closed at 4.08% and 4.48%, from 4.18% and 4.54% the previous week. Odds of the Fed maintaining rates in March 2024 are 97%, from 84% a month ago while chances of a 25bps rate cut later in June are now 55%, per the CME FedWatch Tool.
DXY extended the decline last week following its rejection from the 104 level. The index dropped below 103 and hit a low of 102.79. The index closed the week near 102.8 and is currently trading below its 200-day and 100-day MAs, within a descending channel formation.
Oil prices edged lower last week despite the OPEC+ agreement to extend voluntary output cuts throughout the second quarter. The easing of tensions in the Middle East between the US and Iran, along with lingering concerns about slowing demand and Federal Reserve Chair J. Powell cautioning against rate cuts, drove prices down. WTI closed the week at $77.8, down from $79.6 the previous week, and is now trading near $77.6.
BTC and ETH are trading upward today, with BTC evolving at its highest near $72,600 and ETH exchanging near $4,080. Investors will look ahead to key inflation and retail sales data this week, starting with Feb CPI data on Tuesday expected at +0.4% over the month – Core CPI at +0.3% – and +3.1% over the year, which should take center stage this week. On Thursday, markets will shift focus to retail sales data and the latest update on the Producer Price Index along with weekly jobless claims followed by a preliminary estimate of the consumer sentiment on Friday. Investors will also keep an eye on the latest batch of corporate earnings with Adobe, Dollar Tree, and Kohl’s set to report among others. In the rest of the world, China’s rate decision will be closely watched on Friday.
Client Profits
We maintained our trading strategy, taking long positions on major Altcoins as a hedge against our short-swing trades on BTC and ETH. This strategy was particularly relevant when BTC and ETH hit the $68,000 and $3,900 marks, respectively, which were our target DCA (Dollar- Cost Averaging) levels for these shorts.
Simultaneously, we pursued our day trading, capturing profits on large-cap cryptocurrencies— specifically, we realized gains on our shorts in INJ and IMX when BTC dropped last week— to offset our short positions in BTC and ETH. Currently, our market exposure is 40%, with the remaining 60% held in cash.
BTC
The cryptocurrency market surged last week, with BTC breaking the $70,000 mark and hitting a new all-time high of $70,485 on perpetual futures. Optimism continued to prevail with strong net inflows from Spot BTC ETFs, which collectively registered a total net inflow of $2.7 billion over the week, bringing total inflow year-to-date to US$10.3bn according to CoinShares report Digital Asset Fund Flows, for an assets value of $28 billion as institutional demand continued to drive the cryptocurrency upward. After concluding the month of February up +44%, BTC extended the rally into March as the cryptocurrency was trading near $68,300 on Friday, respectively printing a +9.4% gain over the week.
On the daily chart, BTC price experienced a strong rally since Jan 23, consecutively surpassing the $50,000 and $60,000 thresholds to score a new ATH of $70,485 on Mar 8. BTC is hovering just below that level near $69,500 while $63,000 acts as the main support zone on the downside.
In the short to medium term, the growing ETF inflow continues to act as a strong catalyst to sustain the positive momentum into 2024. Other drivers to consider in 2024 include the ETH update slated for March along with BTC’s anticipated halving in April and the Federal Reserve’s monetary policy with its guidance for 2024, which could remain influential in steering the markets in the upcoming weeks.
BTC’s 30-day Historical Volatility – HV- picked up to around 57% this week, its highest level since April 2023, from 40% last week.
After rounding up 2023 performance to +155%, BTC closed out January up +0.7% and February up +43.7 and the MTD performance for March is currently +18.5% with the YTD for 2024 being +71.6%.
ETH
ETH rose last week and extended the winning streak to 6 consecutive weakly gains, briefly surpassing the $4,000 mark on Friday as price benefitted from a growing optimism driven by the anticipation of the upcoming ETH Dencum upgrade slated for March 13, alongside speculations surrounding the potential introduction of a Spot ETH ETF. The cryptocurrency was settling near $3,900 on Friday printing a performance of +13.3% over the week.
ETH steadied over the weekend and is resuming the rally today, with the price currently trading at a high near $4,070 and above its $3,570 and $3,100 support zones. On the upside, the 4,800 zone acts as a major resistance zone.
After rounding up 2023 up +90.6%, ETH closed out January up +0.05% and February up +46%, the MTD for March is currently at +21.8% with the YTD for 2024 of +78.4% as well.
Other markets
US Equities retraced last week and snapped a streak of two consecutive weekly gains as investors digested the pullback in Tech stocks and the latest job data, coming out higher than expected. In a similar fashion to December and January’s data -216,000 and 375,000 respectively, February’s NFP data rose by 275,000, surpassing market expectations of 200,000. However, market sentiment was mixed as the unemployment rate rose to 3.9%, higher than the expected 3.7%. S&P and Nasdaq closed out the week lower on Friday near 5,124 and 16,085, respectively shedding -0.3% and -1.2% while the VIX index increased to about 15.5%, confirming above its 100-Day MA currently near 14.3%.
After ending 2023 up +17% and +29.6%, S&P and Nasdaq closed out January up +1.6% and +1.0% and February up +5.2% and +6.1%. The MTD performances for March are now +0.4% and -0.4% with YTD performances of +7.3% and +6.7%.
DXY
DXY extended the decline last week following its rejection from the 104 level. The index dropped below 103 and hit a low of 102.79. The index closed the week near 102.8 and is currently trading below its 200-day and 100-day MAs, within a descending channel formation.
The index is now edging lower near 102.82, confirming below its 200-Day MA near 103.7 acting as resistance and the 102-level acting as support before the 100-mark that could act as a psychological level and the 200-week ie 1000-Day MA further below currently near 99.2.
Despite strong economic data and record corporate earnings pushing the Fed to push back on potential rate cuts, the outlook for the index remains challenging. The momentum observed in yields and the robust economic data in recent weeks have raised the prospect of a ‘no landing’ or Goldilocks scenario. This presents a different narrative compared to the anticipated slowdown of the US economy.
US Treasuries
US Treasury yields pulled back this past week amidst mixed signals from the latest job market data and J. Powell’s comments reiterating the Fed’s cautious approach to a cut in interest rates during its testimony about monetary policy to Congress. The 10Y and 2Y yields closed at 4.08% and 4.48%, from 4.18% and 4.54% the previous week. Odds of the Fed maintaining rates in March 2024 are 97%, from 84% a month ago while chances of a 25bps rate cut later in June are now 55%, per the CME FedWatch Tool.
The 10Y yield and the policy-sensitive 2Y yield are currently exchanging near 4.09% and 4.54% from 4.22% and 4.61% last week, moderately increasing the inversion of the yield curve to 45 bps, from 39 bps last week. The slight increase of the inverted 2yr -10yr curve reflects the recent adjustment in investors’ expectations following the hawkish comments and strong job data, postponing the potential timing of a Fed rate cut further into 2024.