CFT Update Monday, February 6th
BTC and ETH gained last week, with BTC and ETH closing last Friday near $23,430 and $1,660, up +1.6% +4.2%. Most of the rally came early in the week as markets awaited the Fed’s meeting decision. Crypto markets reversed towards the end of the week as the US jobs report came out stronger than expected – Nonfarm payroll increased by 517,000 in January vs 187,000 expected – which raised the prospect of more rate hikes to come from the Federal Reserve.
US Equities also gained this past week with S&P and Nasdaq closing near 4,130 and 12,006, up +1.6% and +3.3% respectively on Friday, maintaining their momentum throughout an eventful week marked with the FOMC meeting, earnings results, China’s recent economy reopening and unexpectedly strong US jobs data.
US Treasuries had a tumultuous week, although ending the week relatively flat over the week with the 10Y yield closing just above 3.52% on Friday – 2bps above from the past week – while DXY rallied, ending the week near 102.99. Oil price slipped last week with last Wednesday’s OPEC decision to maintain current production levels, the WTI closing near $73 on Friday – from $79 the previous week.
Cryptos kept retracing over the weekend with BTC dipping below the $23,000 mark on Sunday as the concern over the US-China geopolitical tensions dampened investors’ sentiment. Cryptos are regaining today, with BTC and ETH near $23,000 and $1,645 whereas S&P and Nasdaq are halting their rally, trading downwards near 4,110 and 11,900 respectively.
This week should be a calmer week with investors turning their focus to the remaining of the earnings season, still in full swing with many US companies set to report – Activision Blizzard, PepsiCo, PayPal, The Walt Disney Company, Uber and automakers Honda and Toyota among others. On Friday, the University of Michigan will publish its preliminary Consumer Sentiment Index -MCSI- which could help gauge the confidence in the US economy.
Lastly, investors will keep an eye on Tuesday’s Fed Chair Jerome Powell’s speech at the Economic Club of Washington in the wake of last week FOMC’s meeting.
Client Profits
No trades were made this past week. We kept our existing short positions in SOL, AVAX and ETH and long positions in BTC and DOT.
The exposure to the market is now 28.5%, the rest being in cash.
BTC
BTC closed the past week near $23,430, up +1.6% despite negative performances on Thursday and Friday. Price action increased early in the week in anticipation of the FOMC meeting but reversed sharply towards the end of the week as NFP data came out much stronger than expected, raising concerns over possible future rate hikes.
BTC’s 30-day – Historical Volatility – HV- is now of 44% – from 40% a week ago. BTC 30-day volatility.
BTC decreased further over the weekend, dipping below the $23,000 mark on Sunday but has reversed the trend today and is now exchanging near $23,000. BTC closed the month of January with a performance of +39.8% and its month-to-date performance for February is currently – 0.7%.
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 and more recently the PCE data, which fuelled a bullish momentum on the markets. However, we remain cautious – as per the latest NFP data, more rate hikes could still be considered – 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 $24,500 region acts as resistance while the next support to watch on the downside is near the $22,400 level.
ETH
Like BTC, ETH ended the week with gains closing near $1,660 on Friday, +4.2% over the week from its $1,598 level the week before. ETH closed the month of January with a performance of +32.6%.
ETH also dipped over the weekend, reaching a low of $1,610 on Sunday but is regaining today, trading closer to its level from Friday near $1,650, bringing the performance for the month of February to +3.7%.
Price action keeps testing the $1,650 resistance like it has been doing over the past week and is currently trading near this mark, with support near $1,530 and $1,450.
Other markets
US Equities closed the past week with gains, with S&P and Nasdaq printing +1.6 and +3.3%, maintaining their momentum throughout an eventful week marked by the FOMC meeting, earnings results, China’s recent economy reopening and unexpectedly strong US jobs data. Nasdaq broke and confirmed above its 11,500 resistance and is now testing the 12,000 resistance.
S&P and Nasdaq are retracing today, down -0.6% and -0.9% near 4,110 and 11,900.
Both indices ended the month of January with gains, printing +6.2% and +10.6% for January respectively. The performance for the month of February is now of +2.6% and +4.6% respectively.
DXY
DXY rallied over last week, ending near 102.99 on Friday from 101.92 the previous week.
Price action started the first half of the week trading downwards in anticipation of the Fed’s decision to raise rates by 25bps to the 4.50-4.75% range. DXY hit a low of 100.82 during Thursday’s session before reversing the trend and rallying on Friday as NFP figures showed a surge in payrolls and unemployment at a 53-year low – 3.4%, highlighting the persistent inflation and raising the prospect of further rate hikes to come. The state of the employment sector is a significant factor in the Federal Reserve’s decision-making process.
DXY is up today, trading near 103.60 today, breaking above its downward sloping parallel channel and retesting the 103.5 resistance with the 7-month low of 101.6 acting as support.
US Treasuries
US Treasuries had a tumultuous week, although ending the week relatively flat over the week with the 10Y yield closing just above 3.52% on Friday – 2bps above from the past week, deepening further the inversion of the yield curve with the 2Y note, yielding close to 4.29% on Friday – from 4.20% the previous week. The 10Y is rallying early this week, now trading near 3.63%, and the 2Y yield at 4.45% – from 4.26% last Monday.