CFT Update Monday, January 23rd
BTC and ETH continued to recover this past week, closing near $22,700 and $1,700 on Friday, gaining +13.8% and +14.3%. Equities ended the week mixed, although relatively flat with S&P and Nasdaq printing -0.1% and +0.1% for the week with the earnings season in full swing and comments by some Fed officials reviving fears of further tightening policy moves.
US treasuries remained stable with the 10Y yield trading near 3.52% while DXY fell below 102 last week. Oil price continued its steady rally with the WTI closing near $82 on Friday.
Cryptos are relatively flat today, with BTC and ETH near $22,890, and $1,620, while S&P and Nasdaq are trading their way up near 4,020 and 11,360 respectively.
This week, investors will keep their focus on the earning season with major companies set to report – among others AT&T, Boeing, IBM, Johnson & Johnson, Mastercard, Microsoft, Tesla, Verizon, and Visa.
Investors will also keep an eye on Tuesday’s Manufacturing and Services PMI data for the month of January and Thursday’s preliminary GDP data from the Bureau of Economic Analysis for Q4 2022. Lastly, the latest housing sales data and the Personal Consumption Expenditure – PCE and Core PCE – data for December will become available on Friday.
Client Profits
We added to our existing short position in ETH this past week while maintaining our other short and long positions from last week – ETH, SOL, BTC, and DOT.
The exposure to the market is now 25%, the rest being in cash.
BTC
BTC closed the past week near $22,680, up 13.8% and settled over the weekend near this level. Price action was relatively stable over the week before jumping +7.5% on Friday ahead of celebrations for the Lunar New Year holiday in Asia.
BTC’s 30-day – Historical Volatility – HV- has regained and is near 39% – last week’s level was below 32%.
BTC is relatively flat today, trading near $22,850, up +0.6%, confirming above its pre-FTX levels from early November – $21,300, bringing the performance for the month up to 38%.
As mentioned last week, our approach remains the same as some potential for a Fed slowdown or pivot combined with a stalling DXY seems to have materialized further these past weeks with the release of the lower than expected CPI data, which triggered a bullish momentum on the markets. However, we remain cautious and believe more clarity brought by the US regulatory framework later in 2023 may be essential to continue to fuel a rebound in the longer term. On the upside, the $22,500 and $24,500 regions act as resistances while the next support to watch on the downside is near the $19,000 level.
ETH
Like BTC, ETH continued its streak of positive weekly gains in 2023, closing last Friday near $1,660, up +14.4% on the week.
ETH retraced slightly over the weekend and is now settling near $1,620, bringing the performance for the month up to +35%.
Price action has been testing the $1,650 resistance over the past week and is currently trading below this mark, with support near $1,450.
Other markets
US Equities had a mixed week with S&P and Nasdaq printing -0.1% and +0.1% for the week with the earnings season being in full swing and comments by some Fed officials reviving fears of further tightening policy moves.
Price action recovered on Friday some of the week’s losses with most of the rally stemming from the tech sector and some dovish comments from Fed Governor C. Waller, moderating the hawkish tone employed by Philadelphia Fed President P. Harker earlier in the week.
S&P and Nasdaq are gaining today, up +1.2% and +2% and breaking out their respective downsloping resistances, bringing the performance for the month to 4.7% and +8% respectively.
DXY
DXY continued to retrace moderately over last week, near 101.9 on Friday, from 102.2 last week.
Price action kept trading downwards, still within our descending parallel channel and inching towards a seven-month low at 101.60. According to the CME FedWatch tool, the chances of raising interest rates to 4.50-4.75% by hiking interest rates with a 25 bps rate hike have scaled above 98% – from 94% last week.
DXY is trading close to flat, exchanging near 102.1 (+0.13%) with the 7-month low of 101.6 acting as support and the upper line of our parallel channel acting as resistance – currently at 103.7.
US Treasuries
Bond yields declined slightly this past week, with the 10Y yield falling near 3.48% on Friday – from 3.50% the previous week, deepening further the inversion of the yield curve with the 2Y note, still yielding close to 4.2%
The 10Y yield is regaining early this week and is now trading near 3.53% – ie slightly down from last Monday at 3.54%, and the 2Y yield at 4.2% – from 4.2% last Monday.