Last week BTC and ETH were little changed last week, trading near $26,720 and $1,830 on Friday, down -0.6% and up +0.9% from their level a week ago. However, both cryptocurrencies rallied over the Memorial weekend with BTC surpassing the $28,200 mark on Sunday. The two cryptocurrencies were trading near $28,000 and $1,900 on Monday evening with markets digesting Friday’s encouraging economic data and the latest developments around the debt ceiling negotiations with the White House announcing a tentative deal that could avoid a default crisis.
US Equities notched some moderate gains last week with Friday’s session making up for most of the losses incurred earlier in the week after some strong economic data: durable goods orders – +1.1% vs +1% expected, personal spending – +0.8% vs +0.4% expected – and consumer sentiment -102.3 vs 99 expected – all coming out higher than expected. The S&P and Nasdaq ended the week near 4,205 and 12,976, up +0.3% and +2.5% from their level a week ago.
US Treasuries yields rose last week as the good economic data increased the chances that the Fed would hike rates in June, with markets currently pricing in a 63% chance of a 25-basis point hike during next week’s FOMC meeting in June, according to CME’s FedWatchTool, which would bring the target rate to 5.25% – 5.50%. The yields on the 10Y and 2Y Treasury notes closed near 3.81% and 4.57% on Friday- from 3.68% and 4.27% the week before.
DXY also gained last week and is currently steady at the start of this week as markets eye the possibility of a debt ceiling deal being passed by Congress this Wednesday. Oil price remained steady over the week, the WTI trading near $72 on Friday amidst conflicting views among OPEC+ members regarding the June meeting and production outputs. Oil prices fell more than 4% this Tuesday as concerns about whether the U.S. Congress will pass the U.S. debt ceiling pact added up to the uncertainty surrounding the OPEC+ meeting next weekend.
BTC and ETH are edging moderately higher as markets digest the news that President J. Biden and Republican House Speaker Kevin McCarthy reached a tentative deal to suspend the debt limit over the weekend and now turn their focus to Wednesday’s vote. Markets will also keep an eye on the latest job data, with Nonfarm Payrolls for May releasing on Thursday along with the PMI and ISM manufacturing data. As for the earnings season, major companies are set to report this week – Dell Technologies, HP, Macy’s, Lululemon Athletica, and Salesforce among others.
Client Profits:
No changes were made last week.
We kept our short positions on BTC and ETH, with our last short positions opened when BTC and ETH neared the $30,100 and $2,010 levels, which currently represent strong unrealized profits. The exposure to the market is still 12% of the AUM, the rest being in cash.
BTC:
BTC was little changed last week, trading near $26,720 on Friday, down -0.6% from its level a week ago. However, BTC rallied over the Memorial weekend, surpassing the $28,200 mark on Sunday. BTC was trading near $28,000 on Monday evening, with markets digesting Friday’s encouraging economic data and the latest developments around the debt ceiling negotiations with the White House announcing a tentative deal that could avoid a default crisis. BTC’s 30-day Historical Volatility – HV- increased slightly and is now nearing 34%, from 32% a week ago. BTC is little changed today, edging moderately higher and testing the $27,800 zone. Price action is still evolving within our ascending parallel channel with the nearest support close to $26,400 – a lower band of our parallel channel currently- and major supports near $25,000, $24,000, and $21,900 further below. As an indication, if BTC manages to break above the $28,700 mark, we may see its price heading toward $30,000 and above – which is unlikely in our opinion. BTC’s performance for May is down -4.9%. with the YTD performance for 2023 being +68%.
ETH:
Like BTC, ETH was little changed and printed a modest +0.3% gain over the past week, trading near $1,830 on Friday. The cryptocurrency also rallied over the Memorial weekend surpassing the $1,920 level on Monday before settling near $1,900. ETH is gaining today, trading near $1,900, confirming above the $1,800 support and major support near $1,500 further below. On the upside, our upward-sloping trendline acts as the next resistance near $1,990 currently. The MTD performance for May is now +1.5% and the YTD performance for 2023 of +59%.
Other Markets: US Equities notched some moderate gains last week with Friday’s session making up for most of the losses incurred earlier in the week after some encouraging economic data: durable goods orders – +1.1% vs +1% expected, personal spending – +0.8% vs +0.4% expected – and consumer sentiment -102.3 vs 99 expected- all coming out higher than expected. The S&P and Nasdaq ended the week near 4,205 and 12,976, up +0.3% and +2.5% from their level a week ago. S&P and Nasdaq’s MTD performances for May are now both in positive territory with +0.9% and +6.5% and the YTD performances +9.5% and +24.4% respectively.
DXY: The index is currently flat, trading near 104.1, confirming above its 103.5 nearest support and our upward-sloping trendline near 103.1 currently, and major support near 101 further below. On the upside, the 105.5 mark acts as major resistance – also where the 200 MA is. DXY also gained last week and was currently steady at the start of this week as markets eye the possibility of a debt ceiling deal being passed by Congress later this Wednesday.
US treasuries: US Treasuries yields rose last week as the good economic data increased the chances that the Fed would hike rates in June, with markets currently pricing in a 63% chance of a 25-basis point hike during next week’s FOMC meeting in June, according to CME’s FedWatchTool, which would bring the target rate to 5.25% – 5.50%. The yields on the 10Y and 2Y Treasury notes closed near 3.81% and 4.57% on Friday- from 3.68% and 4.27% the week before. The 10Y yield and the policy-sensitive 2Y are currently edging higher slightly, exchanging near 3.69% and 4.46% from 3.72% and 4.32% last Monday, extending the inversion of the yield curve to 77bps – 60 bps last week.