CFT Update Monday, January 9th
BTC and ETH rose this past week, reaching above the $17,000 and $1,270 levels on Friday ending the week up +2.5% and +5.8%.
Equities also gained during this first week of 2023 with most of the surge stemming from last Friday’s Non-Farm Payrolls for December which showed the wage growth slowing down, which confirmed the progress in the Fed’s efforts to tame inflation, despite less concerning headline NFP figure beating estimate – 233k jobs vs 200k expected. S&P and Nasdaq ended the week up +1.5% and +1%.
US Treasuries fell last week with the 10Y yield trading near 3.55% on Friday as markets readjusted their Fed bets. DXY fell moderately last week, closing the week near 103.9. Oil prices also slipped, with the WTI hitting $73 as the warmer winter and China’s recent Covid spike contributed to dampening the demand outlook.
Cryptos and Stocks are prolonging the gains today with BTC and ETH near $17,320 (+1.2%) and $1,330 (+3.2%) while S&P is near 3,920 (+0.7%) and Nasdaq 10,720 (+1.5%).
This week, investors will have their focus on Thursday’s CPI inflation number for the month of December while keeping an eye on J. Powell’s speech on Tuesday. Friday will also kick off the earnings season with major US Financials set to communicate while the University of Michigan will publish early numbers of its consumer sentiment index. Crypto investors will also monitor the outcome of Wednesday’s FTX hearing in the State of Delaware.
We added last week some exposure to one of our large cap coin position and sold today one of our position realising a 20% gain on this trade, which brings the exposure to the market to 45%, the rest being in cash.
We still have our positions in BTC and a few other large cap coins.
BTC ended last week up + 2.5% and increased steadily throughout the weekend, confirming above the $17,000 mark boosted by Friday’s NFP wage figure and hopes of a rate hike slowdown. BTC’s 30-day – Historical Volatility – HV- also fell to its lowest level since July 2020, below 25%.
BTC is up today, trading near $17,320 (+1.2%), bringing the performance for the month up to +4.4%.
We believe the trend in the medium term to remain bearish amid ongoing concerns about the economy and central bank hawkishness that could potentially grow the risk of a recession. Our view for 2023 remains in place with macroeconomic policy and the regulatory outcome to be BTC’s major drivers in the medium term and the next supports to watch in the downside being the $13,900 /$12,090 level and then the next support would be near $9,000.
The potential of a Fed slowdown or pivot combined with a stalling DXY and more clarity brought by the US regulatory framework later in 2023 could also fuel a rebound in the longer term. On the upside, the $17,800 region acts as resistance and then the 18,350 mark.
After ending the month of December with losses of -7.7%. ETH closed the first week of 2023 with gains, up 5.8% and like BTC, steadily increased throughout the weekend, hovering above the $1,200 level.
Price is prolonging the gains today, soaring 3.8% near $1,330 and re-joining our ascending parallel channel it left last Dec 16, bringing the MTD performance to +12%.
There is a key bullish trend line forming with support near $1,250 with the next resistance being near the $1,370 level. Further to the downside, the recent low of $1,070 still acts as support and then $900 mark – the lowest of the year.
US Equities ended the month of December down with S&P and Nasdaq losing -5.9% and – 8.7%. However, US indices started 2023 with gains over this first week, with S&P and Nasdaq Comp gaining over the week +1.5% and +1% respectively, as NFP numbers showed a slowdown in wage growth and thus an uptick in optimism about a Fed rate hike slowdown.
US Equity markets are still rising today, in a similar fashion to cryptocurrencies, bringing the MTD performance to +2.4% and +2.9%.
DXY ended the week relatively flat, up +0.4% near 103.9. Price action was trading upwards on Thursday, breaking above our downward parallel channel but reversed sharply on Friday with the release of the NFP data.
DXY continued to fail today and has now re-joined the channel and broken below the 103.4 support. DXY is now trading near 103.1 (-0.7%) with 101.7 acting as main support in the downside. On the upside, the 103.4 level acts as short-term resistance.
Bond yields lost some ground this past week, with the 10Y yield falling near 3.5%, losing close to 30 bps (from 3.83% to 3.53% over the week) deepening further the inversion of the yield curve with the 2Y note yielding close to 4.2%
The 10Y yield is continuing its retracement near 3.52% today – from 3.83% last Monday, and the 2Y yield at 4.21% – from 4.4% last Monday.