LAST WEEK, BTC and ETH continued their retracement for a third consecutive week last week, with BTC briefly nearing $28,570 last Tuesday before finding support near the $29,000. The two cryptocurrencies were trading near $29,320 and $1,875 on Friday, ending the week down – 3.8% and -3% respectively with crypto markets digesting the mixed July jobs report while navigating the significant developments around Defi platform Curve Finance’s hack and SEC’s latest lawsuit against internet marketer Richard Heart.
US Equities also fell with S&P and Nasdaq closing near 4,478 and 13,909, down -2.3% and – 2.8% over the week as investors dealt with Fitch’s downgrade of the US long term note as well as mixed results from tech giant Apple while readjusting their interest rate outlook for 2023 after the ISM Manufacturing numbers and the mixed jobs data from Friday: US Nonfarm Payrolls -NFP- rose 187,000 in July. This reading came in below the market expectation of 200,000 and follows June’s increase of 209,000 which got revised lower to 185,000.
US Treasury yields were mixed last week, with the 10Y yield rallying for most of the week following Fitch’s downgrade of the US long-term note, before conceding some gains during Friday’s session with the disappointing job market data. However, the policy-sensitive 2Y yield dipped over the week as the lower than expected NFP job data confirmed the Fed’s progress to tame inflation and revived bets of a Fed Pivot later this year. The 10Y and 2Y yields ending near 4.04% and 4.77% on Friday – from 3.95% and 4.88% the week before.
DXY carried on its positive momentum and edged higher, piercing through the 102-mark, despite a consolidation session on Friday with a low near 101.7. The index rose from this month’s low of 99.58 to a new high of 102.84 last Thursday and closed the week near 102.
The oil price rallied to clinch its sixth-straight week of gains against a backdrop of global demand tightening with Saudi Arabia and Russia’s voluntary production cut extensions, spurring the market price upwards, adding to the increasing demand from India and China and lingering tensions between Russia-Ukraine. The WTI was trading near $82.6 on Friday, from $80 last week.
BTC and ETH are trading close to flat today near $29,075 and $1,820 as markets look forward to this week’s inflation numbers with CPI and PPI set to release on Thursday and Friday. Investors will also monitor the next wave of corporate earnings with Alibaba, Honda Motor Company, Palantir, Rivian, The Walt Disney Company, UPS set report among others while keeping an eye on Fed officials P.T. Harker and R. Bostic’s allocutions on Tuesday and Thursday as well as the Friday’s preliminary University of Michigan Sentiment report which should provide inflation expectations – headline inflation expected to rise towards the mid-3% range and core inflation to remain steady at 4.8% from a year ago, its lowest level since 2021.
CLIENT PROFIT
We kept our short positions on BTC and ETH
The exposure to the market is 14% of the AUM, the rest being in cash.
BTC
BTC continued its retracement for a third consecutive week last week, briefly nearing $28,570 last Tuesday before finding support near the $29,000. BTC was trading near $29,320 on Friday, ending the week down -3.8% with crypto markets navigating the mixed July jobs report while being stirred by significant developments around Defi platform Curve Finance’s hack and SEC’s latest lawsuit against internet marketer Richard Heart.
BTC carried on consolidating in a tight range below $30,000, confirming its MA-50 over the past week near $29,850. As explained in our previous reports, the US$30,000 acted as a major support, and keeping BTC above this level could play a key role in the bullish continuation. It is also a psychological level, whereas confirming below this level could pave the way to more selling pressure in the market, especially if the bearish divergence we mentioned in our last reports this month between money supply and US Equities starts to affect Stocks and subsequently BTC prices.
We remain bullish on the very long term but remain however bearish on the medium and short term. There is a risk of a drop back if BTC doesn’t find the momentum to break through to the upside with major supports near $27,000, $25,000, and $24,000 further below.
BTC’s 30-day Historical Volatility – HV- edged lower over the past week near 23% from 25% the week before.
After ending June up +11.9%, BTC ended the month of July down -4.1%. The performance for August is currently -0.1% with the YTD performance for 2023 being +75.4%.
ETH
ETH also retraced this past week, edging lower -3% over the week to settle near $1,875 on Friday.
ETH continuously retraced in every session but Tuesday, with price action falling from a high of $1,878 down to a low of $1,812, breaking below its 50-day MA – currently near $1,875. ETH is still evolving near the $1,820 level, testing the 200 MA currently near $1,805 and acting as a major support. The 200 MA is a strong indicator of the overall trend, if ETH breached below that level, the price could move downwards towards its next support near $1,760 and $1,370 further below.
After ending June up +3.2%, ETH ended the month of July down -4%. The performance for August is currently of -1.7% with the YTD performance for 2023 being +52.4%.
OTHER MARKETS
US Equities also fell with S&P and Nasdaq closing near 4,478 and 13,909, down -2.3% and – 2.8% over the week as investors dealt with Fitch’s downgrade of the US long-term note as well as mixed results from tech giant Apple while readjusting their interest rate outlook for 2023 after the ISM Manufacturing numbers and the mixed jobs data from Friday: US Nonfarm Payrolls -NFP- rose 187,000 in July. This reading came in below the market expectation of 200,000 and follows June’s increase of 209,000 which got revised lower to 185,000.
S&P and Nasdaq’s performances for July are now -1.5% and -2.5% and the YTD performances are +17.7% and +33.6% – from +19% and +37% respectively as of last week.
As mentioned in our previous reports this month, the comparison between the rallying US Equities and the contracting Monetary supply M2 could put in perspective the timing of a possible correction in stock markets considering the divergence currently occurring in 2023 as we can see in the graphs below. The divergence widened over the past week with the latest inflation data and corporate earnings propelling prices upwards.
DXY
DXY carried on its positive momentum and edged higher, piercing through the 102-mark, despite a consolidation session on Friday in reaction to the mixed July jobs report, the index hit a low near 101.7. The index rose from this month’s low of 99.58 to a new high of 102.84 last Thursday and closed the week near 102.
DXY is currently near 102.1 with the 102 level still acting as nearest resistance and the 50-day MA and 200-day MA above next, currently both near 102.5. On the downside, the 100.7 acts as support before the 100-mark that could act as a psychological level before the 200-week ie 1000-Day MA further below currently near 98.1. The index rebounded this past week but is expected to remain volatile as other central banks could adjust their policies later in the year.
US TREASURIES
US Treasury yields were mixed last week, with the 10Y yield rallying for most of the week following Fitch’s downgrade of the long-term note, before conceding some gains during Friday’s session with the disappointing job market data. However, the policy-sensitive 2Y yield dipped over the week as the lower-than-expected NFP job data confirmed the Fed’s progress to tame inflation and revived bets of a Fed Pivot later this year. The 10Y and 2Y yields ended near 4.04% and 4.77% on Friday – from 3.95% and 4.88% the week before.
The 10Y yield and the policy-sensitive 2Y are currently exchanging near 4.10% and 4.78% from 3.96% and 4.88% last Monday, reducing the inversion of the yield curve to 68bps, from 92 bps last week.
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