CFT Update Monday, February 13th
BTC and ETH retraced last week, with BTC and ETH closing last Friday near $21,640 and $1,515 down – 7.7% and -9% from their level a week ago – $23,430 and $1,660 – amid an earnings season in full swing, hawkish Fed speaker comments leading investors reassess how US interest rates will rise this year, with inflation and jobs data likely to remain hot, and fears of a regulatory crackdown on crypto staking.
US Equities also dropped this past week, with S&P and Nasdaq closing near 4,090 and 11,718, down -1.1% and -2.4% respectively on Friday, halting the positive momentum from 2023 with Nasdaq recording its first weekly loss of 2023.
US Treasuries rose with the 10Y and 2Y yields closing near 3.74% and 4.52% on Friday – from 3.52% and 4.29% the week before, deepening further the inversion of the yield curve to levels not seen since the 1980s. DXY rallied last week closing near 103.58 on Friday. Oil prices gained as well, driven by Russia’s decision to cut production levels, concerns over supply shortages following the shutdown of a major export terminal after an earthquake in Turkey and optimism about the recovering demand in China; the WTI closing near $79 on Friday – from $73 the previous week.
Cryptos are retracing whereas US Equities gaining today as investors braced for the latest CPI data to release this Tuesday, which could be the main driver this week. Investors will also closely watch the earnings season with major companies set to report – Airbnb, Cisco, Coca-Cola, and Doordash among others. Retail sales for January will be made available on Wednesday along with the latest housing market data on Thursday.
Crypto investors will also keep an eye on Tuesday’s hearing on cryptocurrencies and digital assets, where the regulation of the industry and the safeguard of the investors will be discussed.
Client Profits
We opened a short position last week on a large-cap coin (MATIC).
We also took profits on two shorts (large cap coins) positions on Sunday, realizing gains of 15% and 9.5%, respectively.
The exposure to the market is now 27%, the rest being in cash.
BTC
BTC closed the past week near $21,640, down +-7.7% with most of the loss stemming from Thursday’s session with price action dropping 5% and breaking below the $22,400 support as rumours about a potential crypto crackdown in the US emerged.
BTC’s 30-day Historical Volatility – HV- is now settling above the 40% mark, pretty much in line with its level from a week ago.
BTC steadied over the weekend, with price action trading near $21,600 and is now exchanging near $21,400, bringing the MTD performance for February to -6%.
As mentioned last week, the potential for a bearish sentiment seems to have materialized further this week through strong inflation and jobs data combined with hawkish Fed speaker comments and fears of a regulatory crackdown on crypto that had investors worry and reassess how US interest rates will rise this year.
On the upside, the $24,500 region acts as resistance while the next support to watch in the downside near the $21,300 level and then the ATH from Dec 2017 just under $20,000 and the $18,500 level further below.
ETH
Like BTC, ETH ended the week with losses closing near $1,515 on Friday, -9.0% over the week from its $1,660 level the week before with ETH sliding more than 6% on Thursday and breaking below its $1,530 support amid fears of SEC crypto crackdown on staking.
ETH also remained stable over the weekend around the $1,520 mark and is now slipping further, trading near $1,480, bringing the performance for the month of February to -6.1%.
Price action is now testing the upper line of our upward parallel channel acting as support, currently at $1,480 with the MA 200 as next support near $1,440 and then our upward-sloping trendline currently at $1,350. On the upside, the $1,530 and $1,650 zones act as resistance.
Other markets
US Equities closed the past week with losses, with S&P and Nasdaq down -1.1% and -2.4%, halting their momentum throughout a week marked with earnings results, Google share price collapse – down -10% in a week following its AI demo Bard, and concerns about future rate hikes.
S&P and Nasdaq are rebounding today, up +0.5% and +0.8% near 4,110 and 11,800. The performance for the month of February is now +0.8% and +2.1% respectively.
DXY
DXY increased moderately over the week, ending near 103.58 on Friday from 102.99 the week before.
DXY is trading relatively flat today at 103.4, still testing the 103.5 resistance with the 7-month low of 101.6 acting as support.
US Treasuries
US Treasuries rallied last week, with the 10Y yield closing just above 3.74% on Friday – 21bps above its level from the past week, deepening further the inversion of the yield curve with the 2Y note, yielding close to 4.52% on Friday – from 4.29% the previous week. The difference between the 10Y and 2Y yield turned the widest since 1980, which had investors worried about a potential recession.
With the strong US job market and last Friday’s MICS data confirming the stubborn inflation outlook, investors have been reassessing their peak rate expectations for this year – the peak rate is now expected to reach 5.2% by July with comments by Minneapolis Fed President suggesting it could go up to 5.4% compared to 5% last month.
The 10Y is losing moderately early this week, now trading near 3.73%, and the 2Y yield is at 4.54% – from 4.48% last Monday.