BTC and ETH showed mixed performance last week as BTC surged above the $73,000 mark, setting a new all-time high of $73,915 on perpetual futures, while ETH experienced a decline despite the smooth processing of the ETH Dencum upgrade. Strong net inflows from Spot BTC ETFs continued to drive positive momentum in the market, with a collective total net inflow of $2.9 billion recorded over the week, according to the CoinShares report ‘Digital Asset Fund Flows. This influx brought the year-to-date total to US$13.2 billion. On Friday, BTC was trading near $69,403, extending its rally to three consecutive weekly gains and marking a weekly gain of +1.6%. Meanwhile, ETH was trading near $3,735, experiencing a weekly loss of -4.0% and ending a streak of six consecutive weekly gains.
Over the weekend, cryptocurrencies experienced a momentary dip, with BTC and ETH reaching a low of $64,576 and $3,411, respectively, on Sunday before paring their losses and recovering the $68,000 and $3,600 marks.
US Equities retraced moderately last week as investors pored over the most recent batch of producer and consumer price data, representing the latest inflation figures available before the Fed’s March meeting, thus holding significant sway over the Federal Reserve’s prospective interest rate decisions. Both headline and Core CPI inflation in February came in higher than expected, at +3.2% and +3.8%, confirming the robustness of inflation which has stayed over 3% for the past 9 months. S&P and Nasdaq closed out the week lower on Friday near 5,117 and 15,973, respectively shedding -0.1% and -0.7% while the VIX index steadied near 14.5%, in between its 100-Day MA and 200-Day MA currently near 14% and 14.7%.
US Treasury yields surged as investors adjusted their rate cut expectations in the wake of the hotter-than-expected CPI data, dashing hopes of a rate cut in March and validating the Fed’s cautious approach to a cut in interest rates. The 10Y and 2Y yields closed at 4.31% and 4.73%, from 4.08% and 4.48% the previous week. Odds of the Fed maintaining rates in March 2024 have shifted up to 99%, from 90% a month ago while chances of a 25bps rate cut later in June dropped to 50%, per the CME FedWatch Tool.
DXY also rallied after finding support near the 102.5 mark. The index surpassed the 103 level and closed near 103.42 on Friday. DXY is currently trading toward its 200-Day and 100-Day MAs both near 103.7 the 102.5 and 100.6 act as supports in the downside.
Oil prices rose last week on the back of decreasing U.S. inventories and revised market outlook for 2024 from the International Energy Agency, raising its view on global demand while tensions in Eastern Europe resurfaced with Ukrainian drone strikes against Russian oil refineries raising concerns over the global supply.
BTC and ETH are trading down today as markets look ahead to this week’s agenda where the Fed interest decision should take center stage on Wednesday, followed by the March U.S. services and manufacturing PMI on Thursday. Investors will also look forward to the latest batch of corporate earnings with Nvidia, Nike, and FedEx set to report among others while keeping a close eye on Friday’s deadline to pass the spending legislation as risks of a government shutdown are resurfacing.
Client Profits
We pursued our trading strategy, taking long positions on major Altcoins when BTC dropped to $65,000 and closed our short swing trades on BTC and ETH.
Currently, our market exposure stands at 20%, with the remaining 80% held in cash.
BTC
BTC had an eventful week, initially breaking the $73,000 mark and reaching a new all-time high of $73,915 on perpetual futures as strong net inflows from Spot BTC ETFs continued to fuel the market’s positive momentum, with a collective total net inflow of $2.9 billion recorded over the week. According to the CoinShares report ‘Digital Asset Fund Flows,’ this influx brought the year-to-date total to US$13.2. BTC was trading on Friday near $69,403, extending its rally to a streak of 3 consecutive weekly gains and clinching +1.6% gains over the week.
However, the cryptocurrency market took a downturn over the weekend, with prices momentarily dipping, BTC hitting a low of $64,576 before paring its losses and recovering the $68,000 mark on Sunday.
On the daily chart, BTC price experienced a profit-taking phase which is reminiscent of last week’s phase where price dropped after reaching a new ATH. The corrective phases could be seen as a necessary consolidation after the strong rally since Jan 23, consecutively surpassing the $60,000 and $70,000 thresholds to score a new ATH of $73,915 on Mar 14. BTC is hovering near $67,000 while the $64,000-$65,000 range represents a strong support zone on the downside. If it breaks below, BTC could drop further down to $58,000.
In the short to medium term, the growing ETF inflow continues to act as a strong catalyst to sustain the positive momentum into 2024. Other drivers to consider in 2024 include BTC’s anticipated halving in April and the Federal Reserve’s monetary policy with its guidance for 2024, which could remain influential in steering the markets in the upcoming weeks.
BTC’s 30-day Historical Volatility – HV- picked up to around 65% this week, its highest level since April 2023, from 57% last week.
After rounding up 2023 performance to +155%, BTC closed out January up +0.7% and February up +43.7% and the MTD performance for March is currently +9.5% with the YTD for 2024 being +58.5%.
ETH
Unlike BTC, ETH fell by –4% near $3,735 over last week and snapped a streak of 6 consecutive weekly gains, as price hit a low of $3,562 on Friday and further extended the decline over the weekend with a low of $3,411 on Sunday before settling near $3,650.
ETH is dropping further today, currently exchanging near $3,520 with the price currently trading at the $3,570 level while the $3,100 acts as a support zone. On the upside, the $ 4,000 mark acts as a major resistance zone.
After rounding up 2023 up +90.6%, ETH closed out January up +0.05% and February up +46%, the MTD for March is currently at +6.8% with the YTD for 2024 of +56.5% as well.
Other markets
US Equities retraced moderately last week as investors pored over the most recent batch of producer and consumer price data, representing the latest inflation figures available before the Fed’s March meeting, thus holding significant sway over the Federal Reserve’s prospective interest rate decisions. Both headline and Core CPI inflation in February came out higher than expected at +3.2% and +3.8% confirming the robustness of inflation which has stayed over 3% for the past 9 months. S&P and Nasdaq closed out the week lower on Friday near 5,117 and 15,973, respectively shedding -0.1% and -0.7% while the VIX index steadied near 14.5%, in between its 100-Day MA and 200-Day MA currently near 14% and 14.7%.
After ending 2023 up +17% and +29.6%, S&P and Nasdaq closed out January up +1.6% and +1.0% and February up +5.2% and +6.1%. The MTD performances for March are now +1.03% and 0.06% with YTD performances of +7.9% and +7.3%.
DXY
DXY also rallied after finding support near the 102.5 mark. The index surpassed the 103 level and closed near 103.42 on Friday. DXY is currently trading toward its 200-Day and 100-Day MAs both near 103.7 while 102.5 and 100.6 act as supports in the downside.
The index is now edging higher near 103.6, currently retesting its 200-Day MA and 100-Day MA, both near 103.6 while the 102-level acts as support before the 100-mark that could act as a psychological level and the 200-week ie 1000-Day MA further below currently near 99.2.
Despite strong economic data, robust inflation pressures, and record corporate earnings raising the prospect of a ‘no landing’ or Goldilocks scenario and validating the Fed’s intention to push back on potential rate cuts, the outlook for the index remains challenging as inflation pressure is are expected to cool down later in the year.
US Treasuries
US Treasury yields surged as investors adjusted their rate cut expectations in the wake of the hotter-than-expected CPI data, dashing hopes of a rate cut in March and validating the Fed’s cautious approach to a cut in interest rates. The 10Y and 2Y yields closed at 4.31% and 4.73%, from 4.08% and 4.48% the previous week. Odds of the Fed maintaining rates in March 2024 have shifted up to 99%, from 90% a month ago while chances of a 25bps rate cut later in June dropped to 50%, per the CME FedWatch Tool.
The 10Y yield and the policy-sensitive 2Y yield are currently exchanging near 4.33% and 4.74% from 4.09% and 4.54% last week, moderately decreasing the inversion of the yield curve to 41 bps, from 45 bps last week.