Monday September 12th, 2022:
This past week saw Equities as well as Bitcoin and Ethereum register important gains with BTC taking its biggest gain in 6 months as investors seemed to discount the scenario of a long-term monetary tightening with hopes of a rates cut occurring as soon as 2023, despite both Fed and ECB continuing the monetary tightening in 2022. Besides, the retracement of the dollar index also fuelled the upside move seen on the crypto markets.
This week, markets will have a close eye on the release of the August consumer-price index, which will show whether inflation is slowing down and provide further guidance for future rate hikes.
We currently have our portfolio position breakdown around 32% exposure to the market and the rest in cash. We took profits on a SOL position, realizing a decent average trade return.
We still hold some risk exposure to BTC and a few large-cap coins.
In the short term, the max upside for BTC might be around the 24,500 area where if we go there, we might start taking profits and initiate some shorts positions.
BTCUSD is now up 10% this month as last week’s performance reached 12%, partly due to Friday’s session which saw BTC posting its largest daily gain in six months, + 10.6%. In the absence of a specific driver, BTC’s upward price movement appears to reflect the possibility that the Fed will slow its pace of rate hikes in 2023.
We could see price action keep trading in a 19,300 – 24,500 range as BTC is now consolidating and trading above the $20,000 level that acted as a support in recent months. Beyond 24,500, we could start selling our long positions and initiate short positions.
The probability for price action to re-join the upward channel and reach the 27,000 -mark is quite low given the current macro conditions and the Fed’s commitment to bring down inflation. We still see long term support in the $17,500 area – then next support would be 12K/13K.
ETH has been trending upward within the 1,420 – 1,990 channel we mentioned last week and is up 8% from last week, bringing the MTD performance to 12.5%.
ETH is now trading in the 1720s levels, fuelled by Equities and BTC momentum and the bullish sentiment around the merge due to occur in the coming days.
We believe ETH could continue on this bullish trend on the short term reaching back up to $1,950 levels, but the equity market should keep on this positive push to continue the fuel the upward trend. However, we don’t expect catalysts to remain as positive as they are with the macro headwinds and energy tensions around the corner.
Stocks ended last week higher, with S&P 500 SPX closing +1.53% and Nasdaq COMP, +2.11% on Friday. S&P notched a weekly gain of 2.7%, NASDAQ 3.4% – both indices ending a two-week series of weekly losses.
Has been retracing from its last week’s high and is now trading in a 108-109 range as investors are looking forward to the release of the US Consumer Price Index (CPI) on Tuesday. Catalysts remain the same and still make for strong trading levels – namely tightening monetary policy and weakening EURUSD with the energy crisis unfolding in Europe.