CFT Update Monday, Apr 17th 2023
BTC and ETH soared last week, with both cryptocurrencies reaching their highest of the year, briefly surpassing $31,000 and $2,130. BTC and ETH were trading near $30,500 and $2,100 on Friday, up +9.2% and +12.7% from their level a week ago. US Equities managed to edge higher last week as well with S&P and Nasdaq closing the week near 4,138 and 12,123 on Friday – from 4,105 and 12,087 the previous week – as markets digested the latest company earnings and the CPI and PPI inflation data, showing a drop in annual inflation to 5% in March – from 6% in February, despite a steady core inflation – 5.6% in March against 5.5% in February.
US Treasuries yields also edged higher over the week as earnings season heated up and confirmed the robustness of the economy, which could give further room to the Fed’s tightening program. The yields on the 10Y and 2Y Treasury closed near 3.52% and 4.10% on Friday, from 3.41% and 3.99% the week before, with markets currently pricing in a 98% chance the Fed will raise interest rates by 25 bps during its next meeting in May, bringing the Fed rate range to 5%-5.25%.
DXY lost some ground last week, closing near 101.59 from 102.09 the week before and Oil prices edged higher, driven by the optimism about the recovering demand in China. The WTI exchanged nearly $83 on Friday from $79 the previous week.
US Equities ended the day flat whereas Cryptos are retracing today with BTC down and nearing $29,500 as investors await the next batch of companies set to report this week – Bank of America, Morgan Stanley, Netflix, and Tesla among others – as well as the latest housing market data for March – housing starts and building permits on Tuesday and home sales on Wednesday. On Friday, the flash PMI for services and manufacturing will be made available.
Client Profits
We added to our existing short position on BTC when BTC neared $30,100 last week. We also added to our existing short position on ETH when ETH neared $2,010. The exposure to the market is now 12% of the AUM, the rest being in cash.
BTC
BTC soared last week, trading near $30,500 on Friday, up +9.2% from its level from a week ago and reached its highest of the year, over $31,000. BTC’s 30-day Historical Volatility – HV- dropped over last week and is now nearing 40%, from 60% a week ago.
BTC continuously moved higher throughout the past week with price action surpassing the $31,000 on Friday as markets digested the latest CPI data, coming out lower than expected and showing progress in the Fed’s efforts to tame inflation, which could signal a halt to the rate hike.
The month-to-date performance for April is now +3.6% with the YTD performance for 2023 of +78%. BTC is evolving near the $29,500 mark with the $30,000 / $31,000 region acting as the next major resistance while the next minor supports to watch on the downside are the $28,700 and the $26,700 levels and major support near $21,300 further below.
ETH
Like BTC, ETH soared last week, reaching its highest level of the year near $2,130 and printing +12.7% over the week – from $1,940 the week before, the crypto benefitting from the smooth execution of the Shanghai Upgrade and the current market optimism driven by signs of cooling inflation.
Price action started last week up, confirming the upper line of our parallel channel of $1,870 before soaring during Thursday and Friday’s sessions, printing daily performances of more than +4% during both sessions and settling near the $2,100 mark on Friday, piercing through its $2,015 resistance. ETH reached its highest level of the year of $2,140 on Sunday. ETH is down today, trading near $2,080 as price action is inching closer to the $2,160 resistance and confirming above the $2,030 level acting as new support. Further to the downside the upper band of our upward-sloping channel acts as the next support, currently near $1,900 with major support near $1,500.
The MTD performance for April is now +13.9%, with the YTD performance for 2023 of +73%.
Other markets
US Equities managed to edge higher last week as well with S&P and Nasdaq closing the week near 4,138 and 12,123 on Friday – from 4,105 and 12,087 the previous week – as markets digested the latest company earnings and the CPI and PPI inflation data, showing a drop in annual inflation to 5% in March – from 6% in February, despite steady core inflation – of 5.6% in March against 5.5% in February.
S&P and Nasdaq’s MTD performances for April are +1% and -0.1% and the YTD performances +8% and +16% respectively.
DXY
DXY moved lower last week, closing near 102.09 from 102.59 the week before and breaking below its 2023 low, dropping to 100.78 on Friday.
Price action broke below our upward-sloping trendline on Tuesday and confirmed below for the remainder of the week, drifting towards the 100 level and reaching a new 2023 low on Friday of 100.78 before regaining over the weekend.
DXY is trading flat today, near 101.8 and still evolving below our upward-sloping trendline currently at 102.3 acting as resistance. On the downside, the 100.7 level acts as support.
US Treasuries
US Treasuries yields edged higher over the past week as earnings season heated up and investors welcome the solid earnings of the banking sector in the wake of the recent banking turmoil. The yields on the 10Y and 2Y Treasury closed near 3.52% and 4.10% on Friday, from 3.41% and 3.99% the week before with markets currently pricing in a 98% chance the Fed will raise interest rates by 25 bps during its next meeting in May, bringing the Fed rate range to 5%- 5.25%.
The 2-year Treasury yield regained the 4% level on Friday even though CPI inflation data came out lower than expected, adding to last week’s cooling PPI data. The 10Y yield and the policy-sensitive 2Y yield are gaining today, currently near 3.60% and 4.20% from 3.41% and 4.01% last Monday.
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