CFT Update Monday, January 30th
BTC and ETH ended last week moderately mixed with BTC carrying on with consecutive weekly gains, closing last Friday near $23,100, up +1.7% from the previous week whereas ETH retraced, losing 3.7% over the week.
Equities ended the week up, with S&P and Nasdaq printing +2.5% and +4.3% for the week as investors digested the latest PCE data, showing prices rose at a slower pace in December compared to a year earlier, +5% with Core PCE at +4.4%, its lowest level since October 2021, a week ahead of the next FOMC meeting.
US Treasuries rose moderately over the week with the 10Y yield closing just above 3.50% on Friday – 2bps above from the past week – while DXY remained stable over the week, closing near 101.9. Oil price halted its steady rally as China celebrated the new lunar year, and the WTI closed near $79 on Friday.
Cryptos are retracing today, with BTC and ETH near $23,170 and $1,580. S&P and Nasdaq are also trading their way down near 4,040 and 11,470 respectively.
This week will be an eventful week, as investors will have their focus on Wednesday’s FOMC meeting and other central banks’ rates decisions in Europe and in the UK while keeping an eye on the earnings season as many US companies are set to report – Apple, Alphabet, Amazon, Meta, ExxonMobil, Ford, General Motors Pfizer, McDonald’s, Starbucks among others.
Last but not least, the latest job data will become available with the ADP employment report on Wednesday and the Non-Farm Payroll for January on Friday.
Client Profits
We added to our existing short position in SOL this week, bringing our exposure in SOL to 4% of the AUM.
We also opened a short position on AVAX, while maintaining our other ETH short and long BTC, and DOT positions from last week.
The exposure to the market is now of 28.5%, the rest being in cash.
BTC
BTC closed the past week near $23,080, up 1.8% and rallied over the weekend reaching a high of $23,954 on Sunday. Price action increased steadily over the week, confirming above the $22,500 resistance, before jumping +3% on Sunday benefitting from the accommodating readings of the PCE data from last Friday and ahead of this week’s FOMC meeting.
BTC’s 30-day – Historical Volatility – HV- remained close to its level from a week ago near 40%.
BTC’s rally for January is currently surpassing a 40% gain, which could be its best opening to a year since January 2013 when it performed +51% that month.
BTC is retracing today, trading near $23,170, down -2.4%, but still confirming above its pre- FTX levels from early November – $21,300, bringing the performance for the month up to 40.8%.
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 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
Unlike BTC, ETH retraced last week, closing last Friday near $1,598, down -3.8% from its level the week before – $1,660.
Like BTC, ETH rallied over the weekend, reaching a high of $1,660 on Sunday but is retracing today, trading back to its level from Friday near $1,585, bringing the performance for the month to +31.5%.
Price action has been testing the $1,650 resistance over the past week and is currently trading below 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 +2.5% and +4.3% for the week with the earnings season still in full swing and positive readings of the PCE data boosting the markets ahead of next week’s FOMC meeting.
Price action steadily increased over the week for both S&P and Nasdaq ending the week near 4,070 and 11,620. Nasdaq broke and confirmed above its downsloping trendline and is testing the 11,500 resistance. S&P and Nasdaq are retracing today, down -0.6% and -1.5% near 4,050 and 11,450 with Nasdaq currently testing some resistances. The performance for the month is now of 5.4% and +9.3% respectively.
DXY
DXY curbed the retracing, ending almost flat over last week, near 101.92 on Friday – from 101.99 the previous week.
Price action started the first half of the week trading downwards, still within our descending parallel channel but recovered some of the losses on Friday to end close to flat on the week. According to the CME FedWatch tool, the chances of raising interest rates to 4.50-4.75% by hiking interest rates with a 25 bps rate hike have scaled close to 99% – from 94% 2 weeks ago.
DXY is trading close to flat today, exchanging near 102.7 (+0.15%) with the 7-month low of 101.6 acting as support and the upper line of our parallel channel acting as resistance – currently at 103.3.
US Treasuries
US Treasuries rose moderately over the week with the 10Y yield closing just above 3.50% on Friday – 2bps above from its past week’s level of 3.48%, deepening a bit further the inversion of the yield curve with the 2Y note, yielding close to 4.20% on Friday – from 4.17% the previous week. The 10Y is gaining early this week, now trading near 3.55% – is slightly up from last Monday at 3.52%, and the 2Y yield at 4.26% – from 4.25% last Monday.