Weekly Report CFT – Monday 11, September 2023 – Bitcoin | Stocks | $ Dollar New Update
LAST WEEK
BTC and ETH resumed with gains and edged higher last week amidst a quiet and shortened week – in observance of Labor Day – with markets benefitting from the batch of ETH spot ETF applications from Ark Invest and 21Shares as well followed by VanEck later in the week. BTC reached a high of $26,429 on Friday but the momentum reversed however with two crypto currencies paring losses to finish near $25,900 and $1,630 on that day, up +0.4% and +0.5% over the week.
US Equities declined with S&P and Nasdaq snapping two weeks of gains to end the week near 4,457 and 13,761, down -1.3% and -1.9% as investors adjusted their inflation outlooks following mixed comments from Fed officials, stronger than expected PMI data and falling weekly jobless claims ahead of this week’s awaited CPI numbers for August. Nasdaq also suffered from Apple’s losses following China’s iPhone ban for its government workers, which is now reported to be extended to state companies.
DXY rallied last week and reached 105.16 on Thursday, its highest point since March 10, 2023. The index benefitted from the strong PMI US services numbers in August beating estimates – 54.5 last month, the highest reading since February and up from 52.7 in July VS 52.5 forecasted.
US Treasury yields gained this past week with the US 10Y yield gaining in every session but Thursday’s. Besides the good PMI data, another factor adding fuel to the rally was the Japanese government considering selling long-dated US Treasuries to support the price of the Yen, which had been falling this year. The 10Y and 2Y yields were trading near 4.27% and 4.99% on Friday – from 4.18% and 4.88% the week before. Markets are now pricing in a 93% chance of no rate hike during the next FOMC meeting in September, according to CME’s FedWatchTool, from 78.5% the past week.
Oil price advanced for a second consecutive week as the WTI reached a high of $88.05 on Wednesday and closed the week near $87.18 on Friday, from $85.98 the previous week. The momentum was fuelled by the confirmation of the output cut extensions from Russia and Saudi Arabia at the OPEC+ meeting, prevailing on the ongoing concerns over China’s economy.
BTC and ETH are falling today, with BTC price hitting a low below $25,000 as investors look ahead to this week’s calendar starting with Apple’s September Keynote where its new iPhone 15 line-up is expected. On Wednesday, CPI inflation data for August are set to take center stage this week ahead of next week’s FOMC meeting – Headline and Core CPI are expected at +3.6% and +4.3% year over year. Markets will also keep an eye on Thursday’s PPI data and Friday’s U.S. import prices. In the rest of the world, Thursday’s ECB rates decision will also be closely watched by the markets.
CLIENT PROFITS
We kept our long positions on large-cap coins, including XRP.
The exposure to the market is now 11% of the $AUM, the rest being in cash.
BTC
BTC edged higher last week amidst a quiet and shortened week – in observance of Labor Day – with markets benefitting from the batch of ETH spot ETF applications from Ark Invest and 21Shares followed by VanEck later in the week. BTC reached a high of $26,429 on Friday but the momentum reversed with BTC paring losses to finish near $25,900 on that day, up +0.4% over the week.
BTC fell today, dropping well below the $26,000 level it had been testing on many occasions since August 17, 2023. BTC is now evolving near the $25,100 level within a parallel channel on the weekly timeframe and could potentially drop further in the coming days or next week as we can see in the parallel channel.
We remain bullish on the very long term but remain bearish on the medium and short term. Bitcoin hit a 2023 high near $31,818 on July 13 but has struggled to reclaim its $30,000 level since July 23 and is now retesting the $25,000 level currently. There is a risk of a drop further below if BTC doesn’t find the momentum to bounce back to the upside with major supports near $24,800, $22,500, and $20,000 further below.
BTC’s 30-day Historical Volatility – HV- picked up slightly to 41% this week from 40% the week before.
After ending June up +11.9% and July down -4.1%, BTC ended August down -11.3%. BTC’s performance for September is currently negative: -3.2% with the YTD performance for 2023 shrinking to +51.8% – from 55.3% the week before.
ETH
Like BTC, ETH edged higher this past week, ending the week near $1,630 on Friday, up +0.5% over the week. ETH price remained stable, hovering over $1,630 early in the week, before advancing on Thursday as investors welcomed the batch of spot ETF applications. However, like BTC, the momentum faded and reversed the next day leaving ETH price near $1,630 on Friday.
Price is however dropping today and testing the $1,550 support with $1,370 and $1,100 further below acting as main supports. As mentioned in our previous reports the 200-day MA – near $1,800 currently – is a strong indicator of the overall trend, ETH confirming well below that level could put more downward pressure and fuel a move to the downside, which is currently shaping.
After ending June up +3.2%, and the month of July down -4%, ETH ended the month of August down -11.3% and the performance for September is currently -5.9% and the YTD performance for 2023 shrinking to +29.4% – from+36.3% the week before.
OTHER MARKETS
US Equities declined with S&P and Nasdaq snapping two weeks of gains to end the week near 4,457 and 13,761, down -1.3% and -1.9% as investors adjusted their inflation outlooks following mixed comments from Fed officials, stronger than expected PMI data and falling weekly jobless claims ahead of this week’s awaited CPI numbers for August. Nasdaq also suffered from Apple’s losses following China’s iPhone ban for its government workers, which is now reported to be extended to state companies.
S&P and Nasdaq ended the month of August down -1.8% and -2.2%. The performances for September are currently -0.5% and -0.8% and the YTD performances are +16.7% and +33.0% – from +17.1% and +33.9% 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 have 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 observed over the past weeks seems to have reduced with Stocks correcting this month of August.
DXY
DXY rallied last week and reached 105.16 on Thursday, its highest point since March 10, 2023. The index benefitted from the strong PMI US services numbers in August beating estimates – 54.5 last month, the highest reading since February and up from 52.7 in July VS 52.5 forecasted. The index closed the week up near 105.06.
DXY is currently near 104.55, still evolving comfortably above its 200-day MA – near 103 currently – acting as support and below, the 102 and 100.7 levels, before the 100-mark that could act as a psychological level before the 200-week ie 1000-day MA further below currently near 98.4. On the upside, the 104.7 mark still acts as the nearest resistance and could be retested in the coming days. The index had another good week but is expected to remain volatile as other central banks could adjust their policies later in the year.
US TREASURIES
US Treasury yields gained this past week with the US 10Y yield advancing in every session but Thursday’s. Besides the good PMI data, another factor adding fuel to the rally was the Japanese government considering selling long-dated US Treasuries to support the price of the Yen, which had been falling this year. The 10Y and 2Y yields were trading near 4.27% and 4.99% on Friday – from 4.18% and 4.88% the week before. Markets are now pricing in a 93% chance of no rate hike during the next FOMC meeting in September, according to CME’s FedWatchTool, from 78.5% the past week.
The 10Y yield and the policy-sensitive 2Y yield are currently exchanging near 4.29% and 4.99% from 4.19% and 4.88% last Monday, maintaining the inversion of the yield curve to 70bps, from 69 bps last week. An inverted 2-year -10-year curve is seen by the market as a sign of a possible incoming recession. The inversion remained pretty stable as investors await next week’s FOMC meeting.