CFT Monday, November 7th, 2022
BTC, ETH and Equities had an eventful week, declining for most of the week as central banks took measures to fight inflation further – Fed and BoE raising rate 75bps further in a Hawkish tone – but then rebounded on Friday with the release of robust job report for October – Nonfarm payrolls grew by 261,000 in October, better than the 205,000 estimated.
BTC and ETH registered some gains over the week with BTC +2.7% and ETH +5.8%. BTC hovered over $21,000 but the crypto market lost some ground over the weekend as Binance announced its intention to sell its holding in FTX token – FTT, which had investors worry about the solvability of FTX and its Quant Trading department Alameda Research.
Nasdaq and S&P ended the week with negative performances of -3.3% and -5.6% respectively.
Following last week Fed’s meeting, this week will come with fresh volatility as markets will turn their focus to Tuesday’s U.S. midterm elections as well as Thursday’s CPI numbers for October, which will help investors assess the state of inflation in the US and anticipate the next Fed’s decision. Investors will also keep an eye on China as rumours of a stop to the zero covid policy could restore some investors’ confidence.
BTC is prolonging its retracement today whereas ETH is gaining, trading around the $ 20,650 and $ 1,560 marks respectively with FTT nearing $22 whereas Nasdaq and S&P are gaining moderately, trading at 10,560 and 3,806. DXY is also trading flat near 110 as of writing.
Client Profits
We took profits on a SOL trade and a few alt coins positions, averaging a trade return of 15% for the week. We still have some open positions in BTC and a few alt coins, bringing the portfolio exposure to the market to 30%, the rest being in cash.
Regarding the short-term view, we believe BTC could go reach the 22,400 level. If BTC was to confirm above that level, we would consider selling some of our positions.
BTC
BTC was declining towards the $ 20,000 level last week with central banks taking measures to fight inflation further but price action then soared on Friday, surpassing the $ 21,000, with the release of the strong Non-farm payroll data, printing a weekly performance of 2.7%.
BTC retraced over the weekend as Binance announced its intention to sell its holding in FTX token – FTT, raising some doubt about FTX’s solvability, tumbling towards 20,800 on Sunday. BTC is prolonging its decline today and is now trading below the 20,700 mark, bringing the monthly performance for November down to 1.3%.
In the short term, the scenario of a slowdown or pivot from the Fed combined with a stalling DXY could fuel some momentum despite the recent FTX hurdles.
On the upside, $22,500 and $25,000 still act as resistances.
In the medium term, we still foresee the bearish trend continuing as the Fed keeps tightening its monetary policy.
ETH
In a similar fashion to BTC, ETH was declining in the early part of the week, nearing the $1,500 level, before soaring on Friday towards the $ 1,670 level and recovering the losses from the first part of the week and ending the week with a 7-day performance of 5.7%. Contrary to BTC, ETH is now gaining as of writing, trading below $1,600, bringing the MTD performance to 1.9%.
We believe ETH to continue its rally in the short term. In the medium term, we still see a bearish pressure given the hawkish tone employed by the Fed and the still strong inflation and US job market prospects. Price action is still moving within the descending parallel channel we mentioned last week.
FTT
FTX token – FTT – tumbled over the weekend with Binance’s intention to sell its FTX token holdings.
Price action tumbled from $25.8 down to $21.4 over the weekend and is now trading near $22.
Other markets
Traditional US Equity Markets ended the week with losses with S&P and Nasdaq Comp printing -3.3% and -5.6% respectively as investors were digesting the remainder of the Q3 earnings and the decision from the Fed’s meeting, prompting them to readjust their Fed pivot bets.
Today, US Equities are gaining moderately as of writing while investors await Tuesday’s U.S. midterm elections as well as Thursday’s CPI numbers for October for more guidance.
DXY
DXY was gaining last week, driven by the FOMC meeting but retraced sharply on Friday despite Non-farm payrolls coming out higher than expected, suggesting the Fed could raise interest rates further.
The index is still trading in our downward parallel channel reflecting the bearish pressure on the index if the Fed starts to show signs of a pivot. Price action is also within the upward longer-term channel, around 110.2 with the high of 114.78 still acting as a resistance on the upside.
US Treasuries
The 10Y yield gained over last week, recovering the loss from the previous week. Price action was boosted by the Fed’s Hawkish tone and its decision to hike interest rates by 75bps. 10Y yield has been trading above our ascending trend line this week and is now at 4.21% with the recent high of 4.25% acting as the main resistance.
Thank you!
CFT Team.