Script CFT Monday, October 31st
BTC and ETH have been rallying last week, surpassing the $20,000 mark and $1,500 mark respectively, ending the week positively – up 7.4% for BTC and 19.7% for ETH – with the earnings season and the recent talks about a slowdown of the monetary tightening driving prices up.
Traditional US Equities also increased as investors noticed encouraging results from a number of major US companies’ third-quarter earnings reports despite some tech companies’ less favourable reports and ECB’s rate hike decision of 75bps last Thursday.
This week, investors will have their eyes on Wednesday’s Fed meeting as well as Friday’s U.S. nonfarm payrolls report for October that will set expectations ahead of the Fed’s December meeting. In the UK, markets will await BoE’s rate decision on Thursday, which looks set to raise interest rates by 75bps.
BTC and ETH are retracing today, trading around $ 20,400 and $ 1,560 respectively while S&P and Nasdaq are also losing some ground trading at 3,884 and 11,424. DXY is regaining, trading above the 111 level as of writing.
Client Profits:
No changes were made this past week to the portfolio.
Our portfolio exposure to the market is still 41%, the rest being in cash.
Regarding the short-term view, should BTC reverse and slide towards the 18,400 level, we think it could then drop further and test the $17,500 levels. In that scenario, we could consider adding funds to our existing long positions in BTC and Alts as we have 59% of the AUM in cash. If ETH declines further towards the $ 1,000, we could consider a trade.
In a bullish scenario, should BTC climb up to the 22,000 – 22,500 range, we could consider selling some of our positions.
BTC
After weeks of sideways trading, BTC soared last week and pierced above $20,500, boosted by the positive momentum coming from US Equity markets digesting the encouraging Q3 earnings reports.
Price action reached $20,000 last Tuesday, and confirmed the rally over the week, printing a weekly performance of 7.4%. BTC also gained over the weekend, reaching a high of 21,078 during Saturday’s session and is now retracing near the $20,400 level, bringing the monthly performance to 4.8%.
We still see a bearish trend in the medium term but as mentioned last week recent talks of a slowdown or pivot from the Fed could fuel some momentum in the short term.
On the upside, $22,500 and $25,000 still act as resistances.
In a bearish scenario, price action could slide towards the red down sloping trend-line, currently near $18,200, touch and rebound. $17,500 and $13,000 would then act as the next supports.
ETH
ETH traded in a similar fashion to BTC, soaring through the $1,500 level, ending the week with a 7-day performance of 19.7%. ETH is now trading around $1,560, bringing the MTD performance to 17.8%.
Like BTC, we believe the short-term rally to be temporary and ETH to still be on a bearish trend in the medium term given the still strong inflation and US job market prospects.
If price action confirms below the $ 1,250 mark and declines towards the $ 1,000 mark, we could enter a swing trade – with the next support being the lowest of the year – $900 level.
Other markets
Traditional US Equity Markets ended the week with gains with S&P and Nasdaq COMP printing performances of +8.2% and +2.2% respectively fuelled by the batch of positive news coming from Q3 earnings and the possibility of a slowdown in inflation data and consequently rate hikes.
Today, US Equities are retracing moderately while investors await further earnings releases and Wednesday Fed’s rate decision for more guidance.
DXY ($ index):
DXY retraced last week, sliding below 110 and our trend-line on Wednesday before rebounding and settling around 111.5 today. DXY could still go reach the recent high of 114.78 which still acts as a resistance, but we can see the shaping of a downward parallel channel within the upward long-term channel, which could signal a bearish pressure on the index if the Fed starts to show signs of a pivot.
US Treasuries
The 10Y yield retraced in the first half of last week from 4.25% down to 3.90%, breaking below the upward support, before reaching back up and settling around 4.09%, just above our trend line with Fed pivot bets getting more weight.
Thank you!
CFT Team.