BTC and ETH wrapped up the month of May with gains of +11% and +25. ETH registered its second-biggest monthly increase in 2024, while Crypto ETF fund inflows hit a record $15 billion year-to-date, fuelled by the enthusiasm stemming from the recent approval of spot ETH ETFs by the SEC. BTC and ETH started in June in mixed order. BTC hit a high near $72,072 this past week, while ETH marginally decreased. The two cryptocurrencies were trading near $69,350 and $3,680 on Friday, respectively up +2.7% and down -2.2% over the week, bringing their year-to-date performances to +64% and +62%. Positive weekly inflows of $2 billion into Digital Investment Products brought the year-to-date total to a record high of $17 billion, according to CoinShares’ report ‘Digital Asset Fund Flows’.
US equities also closed out May up, gaining +5% and +7% for the month. The rally resumed in early June, fuelled by a hotter-than-expected Non-Farm Payrolls (NFP) report, which dashed any remaining hopes of a rate cut during the upcoming FOMC meeting this week. The US economy added 272,000 jobs in May, up from 165,000 in April and well above the expected 190,000. On the flip side, the unemployment rate rose to 4%, its highest level since January 2022, and hourly earnings increased by +4.1% year-over-year, surpassing expectations. The S&P and Nasdaq closed higher this past Friday, near 5,346 and 17,133 respectively, edging up +1.3% and +2.4%. Meanwhile, the VIX index steadied near 12.2.
U.S. Treasury yields had an eventful week, progressively declining in the first half of the week as anticipation of rate cuts in September increased in the wake of the BoC and ECB’s decisions to cut interest rates last week. However, Treasury yields bounced back on Friday with the surprisingly strong job data – job creation and hourly wages both on the rise, inferring a potential shift towards a stricter stance on Fed rate cuts. The yield on the 10Y note spiked to 4.44% while the 2-year note climbed to 4.89%, pushing further the timing of a rate cut with odds of a 25bps rate cut in June and July down to 2.2% and 8.1%, according to the CME FedWatch Tool.
In a similar fashion to yields, DXY surged on Friday to finish higher over the week, hitting a high of 104.95 and closing slightly below, near 104.93. The index broke above its 100-day and 200-day MAs, both about 104.44, and is currently trading near 105.33 early this week.
Oil prices dropped last week in the wake of the OPEC+ meeting as Saudi Arabia and Russia agreed to phase out voluntary production output cuts beginning in October, which may drive the price down. However, the price should find support in the short term amidst lingering tensions in the Middle East and the beginning of the U.S. summer driving season. The WTI closed the week near $75.35 down from $77.12 last week.
BTC and ETH are trading lower today as markets look ahead to this week’s major agenda where Wednesday’s CPI inflation report and FOMC meeting are set to take center stage this week. Headline and Core inflation are expected at +3.4% and +3.5% yearly while the Fed’s guidance will be closely watched, in the wake of the BoC and ECB’s decisions to cut rates last week for the first time in this rate cycle. Investors will also look forward to Apple’s developer conference on Monday as well as the latest PPI number for May on Thursday. On Friday, a preliminary estimate of the US Consumer Sentiment will be available.
Client Profits
We continued to execute our trading strategy effectively, taking profits on most of our trades over the last month. Currently, our exposure to the market stands at 30% of the AUM with the rest held in cash as we expect some volatility this week with the latest CPI data and the FOMC meeting.
BTC
BTC wrapped up the month of May with gains of +11% as BTC ETF fund inflows hit a record $15 billion year-to-date, fuelled by enthusiasm from the recent approval of spot ETH ETFs by the SEC. BTC resumed its rally in June, hitting a high near $72,072 this past week and trading near $69,340 on Friday, clinching +2.7% gains over the week and bringing the year-to-date performance to +64%. Positive weekly inflows of $2 billion into Digital Investment Products brought the year-to-date total to a record high of $17 billion, according to CoinShares’ report ‘Digital Asset Fund Flows’.
On the daily chart, the price broke above the neckline on May 15 and confirmed the formation of a reverse Head And Shoulders pattern, which was followed by a bullish breakout as indicated in our last reports. BTC has been rallying since then, retesting $72,000 and facing some resistance on June 6 before settling near $69,000.
BTC is potentially in a bullish consolidation pattern which could lead to a retest of $73,000 and its ATH. On the downside, the $66,000 acts as the next support – see chart.
In the short to medium term, the recent approval of Spot ETH ETFs may pave the way for some upside potential, despite geopolitical uncertainties and stricter monetary outlooks that could drive prices for the remainder of the year.
BTC’s 30-day Historical Volatility – HV- cooled to around 44% this week, from 47% last week.
After rounding up 2023 performance to +155%, BTC closed out January up +0.7%, February up +43.7%, and March +16.6%, BTC closed April down -15% and May +11%. As of June, the MTD is currently +2.7% with the YTD for 2024 being +64%.
ETH
ETH wrapped up the month of May with gains of +25% and registered its second-biggest monthly increase in 2024. The cryptocurrency took a breath transitioning into June as it was trading near $3,678 on Friday, down -2.2% over the week, bringing its year-to-date performances to +62%.
On the daily timeframe, the price broke above the upper trendline of its 8-month ascending range on May 20, near $3,520, achieving a staggering daily performance of 20%, and continued to trade higher thereafter. ETH reached a high of $3,975 on May 27 before consolidating near $3,700. ETH is currently trading near $3,670, with the $3,500 and $3,700 zones serving as the closest support and resistance levels.
ETH saw significant gains earlier this year, closing January up +0.05%, February up +46%, and March up +9.2%, but April experienced a notable decline of -17.4%. In May ETH gained +25%. As of June, the month-to-date performance stands at -2.0%, with a year-to-date increase of +61.6%.
Other markets
US equities also closed out May up, gaining +5% and +7% for the month. The rally resumed in early June, fuelled by a hotter-than-expected Non-Farm Payrolls (NFP) report, which dashed any remaining hopes of a rate cut during the upcoming FOMC meeting this week. The US economy added 272,000 jobs in May, up from 165,000 in April and well above the expected 190,000. However, the unemployment rate rose to 4%, its highest level since January 2022, and hourly earnings increased by +4.1% year-over-year, surpassing expectations. The S&P and Nasdaq closed higher this past Friday, near 5,346 and 17,133 respectively, edging up +1.3% and +2.4%. Meanwhile, the VIX index steadied near 12.2.
After ending 2023 up +17% and +29.6%, S&P and Nasdaq closed out January up +1.6% and +1.0%, February up +5.2% and +6.1%, March up +3.1% and +1.2%, April down -4.2% and – 4.4%, and May +3.5 and +6.9%, the MTD performances for June are currently of +1.3% and +2.1% with YTD performances of +12.1% and +13.8%.
DXY
In a similar fashion to yields, DXY surged on Friday to finish higher over the week, hitting a high of 104.95 and closing slightly below, near 104.93. The index broke above its 100-day and 200-day MAs, both about 104.44, and is currently trading near 105.33 early this week.
The index has been finding support near 103.95 while the recent and strong job data sparked a new momentum, pushing the price to surpass the 105 mark and confirm above its 100-day and 200-day MAs acting as closest supports to the downside, near 104.5.
DXY has been benefitting lately from robust inflation and job data along with hawkish comments from Fed officials raising the prospect of a higher for longer rates scenario and validating the Fed’s intention to push back on potential rate cuts. Next week’s PCI and Fed’s meeting could act as a catalyst for the index although the outlook for the index remains challenging as inflation pressure is still expected to cool down later in the year.
US Treasuries
U.S. Treasury yields had an eventful week, progressively declining in the first half of the week as anticipation of rate cuts in September increased in the wake of the BoC and ECB’s decisions to cut interest rates this past week. However, Treasury yields bounced back on Friday with the surprisingly strong job data – job creation and hourly wages both on the rise, inferring a potential shift towards a stricter stance on Fed rate cuts. The yield on the 10Y note spiked to 4.44% while the 2-year note climbed to 4.89%, pushing further the timing of a rate cut with odds of a 25bps rate cut in June and July down to 2.2% and 8.1%, according to the CME FedWatch Tool. The 10-year yield broke below its year-long ascending parallel range a second time on May 31, finding support near 4.28%. It then began a recovery phase, now reaching approximately 4.46%, approaching the lower band of the channel, currently at 4.56%.
The 10Y is currently trading near 4.56% while the 2Y yield is evolving near 4.87%, setting the inversion of the yield curve to 31 bps.