CFT Update Monday, May 8th
BTC and ETH gained last week, trading near $29,530 and $2,000 on Friday, up + 0.7% and +5.4% as markets digested the anticipated and possibly last 25bps rate hike from the Fed as well as the latest job data with Non-Farm payrolls for the month of April coming out higher than expected at +253,000 – 156,000 expected. ETH also benefits from an increase in transaction-based gas fees with the growing popularity of some meme coins.
US Equities ended the week mixed despite last Friday’s rally fuelled by the strong corporate earnings – AAPL among others – and hotter-than-expected job data. S&P and Nasdaq closed the week near 4,136 and 12,235 down -0.8% and up +0.07% from their level a week ago – 4,169 and 12,226.
US Treasury yields ended the week mixed as markets adjusted their rate anticipations for the rest of the year following the FOMC meeting and the hotter-than-expected NFP data. The yields on the 10Y and 2Y Treasury notes closed near 3.44% and 3.92% on Friday – from 3.43% and 4.01% the week before. Markets are now eyeing a possible Fed pivot and currently pricing in a 66% chance of a rate cut later in September this year according to the CME FedWatch tool.
DXY continued its streak of weekly losses, drifting lower this past week near 101.28 on Friday. The effect of tighter rates could slow economic growth with a risk of a recession looming in the background and eventually pushing the Fed to cut rates in the future.
Oil price dropped last week, trading near $71 on Friday and has recovered some of its losses today, currently nearing $73 as sentiment is benefitting from the good economic travel data in China over the Golden Week holiday period and OPEC+ confirmation of its next meeting in June will be an in-person meeting, which is interpreted as a hint the cartel could announce future output cuts to support oil prices.
BTC and ETH are moving lower today as network congestions led Binance to briefly halt withdrawals on its platform, spurring concerns among investors. This week will come with fresh volatility as investors turn their focus to the latest inflation data with Wednesday’s Consumer Price Index – CPI – and Thursday’s Producer Price Index – PPI – while keeping an eye on the remaining of the earnings season with major companies set to report – Airbnb, PayPal, The Walt Disney Company, Honda and Toyota among others.
Client Profits
No changes were made last week.
We kept our short positions on BTC and ETH, with our last short positions opening when BTC and ETH neared the $30,100 and $2,010 levels, which currently represent strong unrealised profits.
The exposure to the market is still 12% of the AUM, the rest being in cash.
BTC
BTC gained last week, trading near $29,530 on Friday, up + 0.7% as markets digested the anticipated and possibly last 25bps rate hike from the Fed as well as the latest job data with Non-Farm payrolls for the month of April coming out higher than expected at +253,000 – 156,000 expected.
BTC’s 30-day Historical Volatility – HV- is nearing 45%, slightly higher than its level from a week ago near 42%.
BTC initially dropped early last week, nearing $27,600 but then moved upwards throughout the rest of the week with price action reaching $29,700 on Friday before retracing over the weekend towards $28,500 on Sunday.
BTC’s performance for May is down -5.7%. with the YTD performance for 2023 being +67%.
BTC is continuing the drop today, evolving near $27,500 with next support close to $27,000, the $25,000 major support next and another major support near $21,900 further below. As an indication, if BTC manages to break above the $28,700 mark, we may see its price heading towards $30,000 and above – which is unlikely in our opinion.
ETH
ETH soared last week, trading near $2,000 on Friday, up +5.4% as the increase in meme coin-based transaction gas fees benefitted ETH price. ETH however retraced over the weekend, touching the $1,870 mark on Sunday.
ETH is retracing today, trading near $1,840 and inching towards the lower band of our upward-sloping channel acting as the next support, currently near $1,760 with major support near $1,500.
The MTD performance for the month of May is now -2.3% and the YTD performance for 2023 of +53%.
Other markets
US Equities ended the week mixed despite last Friday’s rally fuelled by strong corporate earnings – AAPL among others – and the hotter-than-expected job data. S&P and Nasdaq closed the week mixed near 4,136 and 12,235 down -0.8% and up +0.07% from their level a week ago – 4,169 and 12,226.
S&P and Nasdaq’s MTD performances for May are now -0.1% and +8.7% and the YTD performances are +8% and +27% respectively.
DXY
DXY continued its streak of weekly losses, drifting lower this past week near 101.28 on Friday. The effect of tighter rates could slow economic growth with a risk of a recession looming in the background and eventually pushing the Fed to cut rates in the future.
The index is currently near the 101.4 mark and evolving below our upward-sloping trendline currently at 102.7 and acting as resistance. Further below the 100.7 level acts as support in the downside.
DXY
US Treasuries
US Treasury yields ended the week mixed as markets adjusted their rate anticipations for the rest of the year following the FOMC meeting and the hotter-than-expected NFP data. The yields on the 10Y and 2Y Treasury notes closed near 3.44% and 3.92% on Friday – from 3.43% and 4.01% the week before. Markets are now eyeing a possible Fed pivot and currently pricing in a 66% chance of a rate cut later in September this year.
The 10Y yield and the policy-sensitive 2Y are currently near 3.51% and 4% from 3.57% and 4.15% last Monday, reducing the inversion of the yield curve to 49bps.