CFT Update Monday, November 14th, 2022
Crypto markets tumbled throughout a tumultuous week marked by the FTX Collapse whereas US Equities rallied as last Thursday’s CPI for the month of October rose lower than expected, spurring bets of a Fed rate slowdown or pivot in the future.
Earlier in the week the outcome of the US midterm election also boosted Equity markets as investors saw in the political gridlock less legislative action for the economy.
BTC and ETH plummeted over the week piercing briefly below $15,650 and $1,100 as the FTX storyline unwrapped and sent the crypto market spiralling, despite the good CPI numbers released on Thursday. Inflation for October increased 0.4% from a year ago to 7.7% – Core 6.3%, coming lower than estimated – 7.9% and 6.5%
This week, markets will have an eye on the last batch of Q3 corporate earnings – including big US retailers – along with the latest US housing market data and Wednesday’s retail sales numbers for October to assess US consumer spending ahead of the holiday season.
Investors will also continue to digest CPI inflation data and monitor closely the FTX situation and its aftermath.
BTC and ETH are trading flat today trying to move away from the FTX fatigue and to look to the brighter side with last week’s encouraging inflation data, currently trading near $16,400 and $1,220 respectively while FTT is trading near $1.2 from $22 last week.
Equities are retracing with Nasdaq and S&P, trading at 11,196 (-0.9%) and 3,957 (-1.1%) as of writing. DXY is also trading flat near 106.8 as of writing.
Following the profits made on SOL mentioned in last week’s report, we opened a position on a Large Cap coin this past week, bringing the exposure to the market to 35%, the rest being in cash. We still have our positions in BTC and a few altcoins. We currently prefer to stay around 35% exposure and monitor the situation to get more exposure to the market.
BTC fell last week as the FTX storyline unwrapped, tumbling on Tuesday (-9.9%) and Wednesday (-14.4%) towards the $15,600 before recovering moderately on Thursday near $17,600 and ending the week with a performance of -16.8%.
BTC continued to decline over the weekend as price action moved along our descending trendline, now trading close to flat near $16,400 bringing the MTD performance for November to -20%.
Bear pressure is prevailing in the short term as FTX hurdles and it’s yet to know aftermath keep swinging crypto markets. In the medium term, the scenario of a slowdown or pivot from the Fed combined with a stalling DXY could fuel a rebound.
On the downside, the next support to watch is the $12,000 /$13,000 level and then the next support would be near $9,000. On the upside, the $ 18,500 mark acts as resistance.
In a similar fashion to BTC, ETH tumbled last week, losing more than 15% consecutively on Tuesday and Wednesday, breaking below major supports as price action was sliding towards the $1,070 mark on Thursday. It recovered some of the lost ground on Friday, reducing the loss for the week to -18% but lost ground again over the weekend as investors remain worried about the FTX situation’s aftermath.
ETH is regaining moderately today, up +0.3% as of writing, trading near the $1,230 mark, which brings the MTD performance for November to -20.4%
Given the turnaround of last week’s events, we don’t see the bearish pressure fading any time soon while the uncertainty regarding FTX customers remain, despite the encouraging inflation data that could signal a Fed slowdown or Pivot.
Price action is trading along the lower band of our descending parallel channel with a recent low of $1,070 acting as the main support and then the $900 mark – the lowest of the year.
On the upside, the $1,250 mark acts as resistance.
FTX token – FTT – plunged last week and is down to $2 from $22 last Monday as the crypto exchange filed for bankruptcy and its CEO Sam Bankman-Fried stepped down from his role. The token is currently trading near $1.28 as of writing.
Traditional US Equity Markets experienced a strong week with the S&P and Nasdaq Comp printing +5.9% and +8.1% respectively with CPI data boosting investors’ bets for a Fed cool down or Pivot combined with the US midterm fiscal Gridlock situation sending a positive sentiment on the markets.
Today, US Equities are retracing slightly close to flat with S&P and Nasdaq down -0.9% and -1.1% respectively, bringing the month-to-date performance to +2.2%and +1.9%.
DXY pulled back last week as CPI data rose less than expected in October, indicating that while inflation is still a threat to the U.S. economy, pressures to raise rates could be starting to cool down.
DXY pierced below our bearish channel last Thursday touching a low of 107.7 and followed through on Friday to close at 106.4. It is now settling near 106.9 with the next support at 104.92, also where its current 200 MA is. On the upside, the lower band of our ascending channel acts as the main resistance, currently at 110.2.
Understandably, the 10Y yield lost ground, losing close to 7% down to 3.82% – from 4.1% – on Thursday, breaking through our ascending trendline with the release of the CPI data as markets readjusted their fed pivot bets.
It recovered slightly on Friday and is now trading near 3.86% with last September’s high of 4.02% acting as the nearest resistance. On the downside, last Thursday’s low of 3.80% acts as support.