Weekly Report CFT Thursday, April 18, 2024
BTC and ETH continued to drop further this week, with BTC falling below $60,000 with a low of $59,618, 19% away from its March 14 ATH of $73,794, while ETH slid and hit a low of $2,845 this week. The two cryptocurrencies are presently trading near $63,400 and $3,070, shedding -5.6% and -5.4% over the week respectively, and set to extend the decline to three consecutive weekly losses. The drop was accentuated as escalating tensions and risks of war in the Middle East picked up some steam over the weekend and fuelled the pullback this week along with hawkish interest rate comments.
Minor outflows of -$126m from Spot BTC ETFs brought the year-to-date total to US$13.7 billion, according to the CoinShares report ‘Digital Asset Fund Flows’, which reflects the hesitancy among investors as positive momentum has waned down despite Hong Kong’s approval of the first BTC and ETH spot ETFs on Monday 15 and the nearing BTC halving set for this Friday 19.
US Equities retraced this week, notching their fifth consecutive day of losses amidst geopolitical worries in the Middle East weighing on prices and markets digesting mixed earnings from banks and technology stocks. Additionally, the hotter-than-expected March inflation data and the hawkish comments from J.Powell added fuel to the drop. Both headline and core CPI came in at +3.5% and +3.8% year-over-year last week, higher than the +3.4% and +3.7% expected, confirming the robustness of inflation which has stayed over 3% for the past 10 months. S&P and Nasdaq closed out this Thursday lower, near 5,011 and 15,601, respectively losing -2.2% and -3.5% while the VIX index spiked to 19.5%, well above its 100-Day MA and 200-Day MA currently near 13.7% and 14.8%.
US Treasury yields continued their move higher benefitting from the momentum sparked by the hotter-than-expected CPI data, and further backed by hawkish comments from J. Powell this week, which added to the stronger-than-expected March NFP data of +303,000 and a slowing unemployment rate of +3.8%, dashing hopes of rate cut by this summer and inferring a potential shift towards a stricter stance on Fed rate cuts. While the scenario of no rate cuts in 2024 has been gaining weight, the market now expects a rate cut in September as the odds of a 25bps rate cut in September 2024 are now 47%, from 30% a month ago per the CME FedWatch Tool.
The 10Y yield hit a high of 4.70% on Tuesday, nearing the upper limit of its year-long range, before retracing from that resistance and is currently trading near 4.65% while the 2Y yields are evolving near 4.99%, both yields being up from 4.40% and 4.75% the previous week.
DXY also benefitted from the robust inflation data and hawkish comments. After finding support near the 104 mark last week, the index hit a high of 106.52 this Tuesday and closed near 106.1 this Thursday.
Oil prices dropped this week as markets adjusted their anticipation of a stronger dollar and reevaluated the war scenario in the Middle East as tensions softened between Iran and Israel, which eased concerns over global supply disruptions. The WTI ended Thursday near $82.26, down from 85.40 last Friday.
BTC and ETH are trading up today as markets continue to digest the latest job market data and corporate earnings and look ahead to the remainder of this week’s agenda where Bitcoin’s much anticipated halving and evolutions around the Middle East conflict will be in the spotlight along with some housing market and economic data. Today, the April Philadelphia Fed manufacturing survey jumped to 15.5 and beat expectations of 1.5, March Existing home sales dropped -4.3%, and the April U.S. leading economic indicators pulled back by -0.3%. Investors will also look forward to more corporate earnings with Netflix, and Procter & Gamble completing this week’s list – JNJ BAM, MS, PNC, UAL among others – while keeping an eye on BTC halving set to happen by this Saturday.
Client Profits
We pursued our trading strategy, taking positions on Altcoins and outperforming the market as we navigated the market downturn.
Currently, we have 100% of our portfolio held in cash. This decision aligns with our strategy to wait for directional trends and confirmation from the market before taking any positions.
BTC
BTC and ETH continued to drop further this week, with BTC falling below $60,000 with a low of $59,618, 19% away from its March 14 ATH of $73,794, as escalating tensions and risks of war in the Middle East picked up some steam over the weekend and fuelled the pullback this week along with hawkish interest rate comments.
Minor outflows of -$126m from Spot BTC ETFs brought the year-to-date total to US$13.7 billion, according to the CoinShares report ‘Digital Asset Fund Flows’, which reflects the hesitancy among investors as positive momentum has waned down despite Hong Kong’s approval of the first BTC and ETH spot ETFs on Monday 15 and the nearing BTC halving set for this Friday 19.
On the daily chart, BTC price has been experiencing a pullback phase after hitting a new ATH of $73,915 on Mar 14. This week, BTC found support along its ascending trendline nearn$59,800 and is currently exchanging near $63,500 with price evolving in between its two ascending trendlines near $67,950 and $59,800 acting as the closest resistance and support. On the downside, the next support zone would be $58,000.
In the short to medium term, geopolitical uncertainties and hawkish monetary outlooks seem to have prevailed on the positive momentum fuelled by the growing ETF inflow in 2024, casting concerns over the strength of the economy to sustain higher for longer rates and avoid a stagflation cycle. Other drivers to consider in 2024 include BTC’s anticipated halving this Friday and the evolution of the Federal Reserve’s monetary outlook, which could remain influential in steering the markets in the upcoming weeks.
Following a peak of 82% in late March, BTC’s 30-day Historical Volatility – HV- edged lower to around 65% this week, from 70% last week.
After rounding up 2023 performance to +155%, BTC closed out January up +0.7%, February up +43.7%, and March +16.6%, the MTD performance for April is currently -11.0% with the YTD for 2024 being +50.2%.
ETH
BTC and ETH continued to drop further this week, with BTC falling below $60,000 with a low of $59,618, 19% away from its March 14 ATH of $73,794, while ETH slid and hit a low of $2,845 this week. The two cryptocurrencies are presently trading near $63,400 and $3,070, shedding -5.6% and -5.4% over the week respectively, and set to extend the decline to three consecutive weekly losses. The drop was accentuated as escalating tensions and risks of war in the Middle East picked up some steam over the weekend and fuelled the pullback this week along with hawkish interest rate comments.
Like BTC, ETH is down–5.4% this Thursday, near $3,070, and set for a third consecutive week of losses. Price has been breaking its ascending support trendline near $3,175 and is currently hovering near its 100-Day MA, presently near $3,040 before the $2,750 mark acting as resistance.
After rounding up 2023 up +90.6%, ETH closed out January up +0.05%, February up +46%, and March up +9.2%, the MTD for April is currently -15.8% with the YTD for 2024 of +34.6%.
Other markets
US Equities retraced this week, notching their fifth consecutive day of losses amidst geopolitical worries in the Middle East weighing on prices and markets digesting mixed earnings from banks and technology stocks. Additionally, the hotter-than-expected March inflation data and the hawkish comments from J.Powell added fuel to the drop. Both headline and core CPI came in at +3.5% and +3.8% year-over-year last week, higher than the +3.4% and +3.7% expected, confirming the robustness of inflation which has stayed over 3% for the past 10 months. S&P and Nasdaq closed out this Thursday lower, near 5,011 and 15,601, respectively losing -2.2% and -3.5% while the VIX index spiked to 19.5%, well above its 100- Day MA and 200-Day MA currently near 13.7% and 14.8%.
After ending 2023 up +17% and +29.6%, S&P, and Nasdaq closed out January up +1.6% and +1.0%, February is up +5.2% and +6.1%, and March is up +3.1% and +1.2%, the performances for April are currently -4.6% and -4.7%. The MTD performances for March are now +1.03% and 0.06% with YTD performances of +5.1% and +4.0%.
DXY
DXY also benefitted from the robust inflation data and hawkish comments. After finding support near the 104 mark last week, the index hit a high of 106.52 this Tuesday and closed near 106.1 this Thursday.
The index has been trading away from its 100-Day and 200-Day MAs and is now consolidating near 106 while the 105 level acts as the closest support.
DXY has been benefitting lately from robust inflation pressures and hawkish comments from Fed officials raising the prospect of a higher for longer rates 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 expected to cool down later in the year.
US Treasuries
US Treasury yields continued their move higher benefitting from the momentum sparked by the hotter-than-expected CPI data, and further backed by hawkish comments from J. Powell this week, which added to the stronger-than-expected March NFP data of +303,000 and a slowing unemployment rate of +3.8%, dashing hopes of rate cut by this summer and inferring a potential shift towards a stricter stance on Fed rate cuts. While the scenario of no rate cuts in 2024 has been gaining weight, the market now expects a rate cut in September as the odds of a 25bps rate cut in September 2024 are now 47%, from 30% a month ago per the CME FedWatch Tool.
The 10Y yield hit a high of 4.70% on Tuesday, nearing the upper limit of its year-long range, before retracing from that resistance and is currently trading near 4.65% while the 2Y yields are evolving near 4.99%, both yields being up from 4.40% and 4.75% the previous week. Despite a strong job market, stagflation concerns could arise if payrolls weaken and inflation persists, posing a challenge to the Federal Reserve.
The 10Y yield and the policy-sensitive 2Y yield are currently exchanging near 4.64% and 4.99% from 4.53% and 4.90% last week, moderately increasing the inversion of the yield curve to 37 bps, from 35 bps last week.