BTC and ETH went through a choppy week where central banks’ allocutions took center stage, with BTC spiking up to $27,480 on Tuesday before losing ground in the following sessions to end the week flat. The two cryptocurrencies were trading near $26,550 and $1,590 on Friday, respectively shedding -0.1% and -3% over the week despite an encouraging rally early in the week which quickly faded as the hawkish tone employed by the Fed during its latest meeting doomed investors’ sentiment, suggesting another rate hike could be on the horizon by the end of the year.
US Equities endured a third straight week of losses, with S&P and Nasdaq notching their biggest weekly losses since March 2023 as markets digested the latest monetary policy updates from the Fed, BoJ and BoE while worryingly monitoring yields in the bond market climbing to 16-year highs – from October 2007. S&P and Nasdaq wrapped up the week near 4,320 and 13,211, down -2.9% and -3.6% respectively.
Understandably, US Treasury yields surged, with the 10Y yield hitting a 16-year high, near 4.5%, as traders continued to adjust their rate expectations in the wake of the Fed’s hawkish “higher for longer” stance.
DXY also rallied this week to close near 105.58 on Friday from 104.42 the week before, notching +1.1% gains. Besides benefiting from the hawkish sentiment around the Fed’s rate decision, DXY also benefited from the weakening of the Yen following the Bank of Japan’s dovish decision to leave interest rates unchanged at a very low level.
Oil price retraced slightly and snapped 3 weeks of gains. The WTI ended the week near $90 from $91 last week as the prospects of higher rates for longer renewed economic concerns, despite Russia’s ban on fuel export supporting prices.
BTC and ETH are retracing today as investors shift focus to this week’s calendar with Friday’s PCE data for August, the Fed’s preferred gauge of inflation, set to take center stage this week. Fed Chair J. Powell’s Town Hall allocution on Thursday will also be in the spotlight while investors keep an eye on the latest weekly jobless claims report and the updated Consumer Sentiment (final) for September. As for corporate earnings, Accenture, Costco and Nike are among the companies to report this week.
Client Profits
We kept our long positions on large-cap coins, including XRP.
The exposure to the market is 11% of the $AUM, the rest being in cash.
BTC
BTC went through a choppy week where central banks’ allocutions took center stage. BTC spiked up to $27,480 on Tuesday before losing ground in the following sessions to end the week flat. The cryptocurrency was trading near $26,550 on Friday, shedding -0.1% over the week despite an encouraging rally early in the week which quickly faded as the hawkish tone employed by the Fed during its latest meeting doomed investors’ sentiment, suggesting another rate hike could be on the horizon by the end of the year.
BTC edged lower over the weekend, piercing below $26,000 with a low near $25,965 before settling near $26,100, a level it had been testing on many occasions since August 17 2023. BTC is regaining early this week, evolving near the $26,350 level.
It goes without saying we remain bullish in the very long term but remain bearish in the medium 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 trading close to $26,400 level with major supports near $24,800, $22,500 and $20,000 further below.
Although BTC has slipped below the $26,500 support, let’s keep in mind a potential catalyst for a rebound for both BTC and ETH could be the approval of spot ETF applications later in October, which could push BTC price up to $30,000 on the short term.
BTC’s 30-day Historical Volatility – HV- increased slightly to 35% this week from 33% 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 +1.7% with the YTD performance for 2023 now of +59.4% – from 61.7% the week before.
ETH
Like BTC, ETH edged lower this past week, snapping a 2-week series of weekly gains, and failed to maintain its rally above $1,600. ETH was trading near $1,590 on Friday, shedding – 3% over the week. After reaching a high of $1,660 last Monday, ETH’s price took a downturn and dipped during Wednesday and Thursday’s sessions to settle near $1,590 over the weekend.
Price is gaining slightly today, on its way to regaining the $1,600 level 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 down, currently of -3.4% and the YTD performance for 2023 now of +32.8% – from+37.3% the week before.
Other markets
US Equities endured a third straight week of losses, with S&P and Nasdaq notching their biggest weekly losses since March 2023 as markets digested the latest monetary policy updates from the Fed, BoJ and BoE while worryingly monitoring yields in the bond market climbing to 16-year highs – from October 2007. S&P and Nasdaq wrapped up the week near 4,320 and 13,211, down -2.9% and -3.6% respectively.
S&P and Nasdaq ended the month of August down -1.8% and -2.2%. The performances for the month of September are currently -4.2% and -5.7% and the YTD performances are +12.5% and +26.5% – from +16.8% and +30.9% respectively as of last Monday.
As mentioned in our previous reports, 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 past month of August.
DXY
DXY also rallied this week to close near 105.58 on Friday from 104.42 the week before, notching +1.1% gains. Besides benefiting from the hawkish sentiment around the Fed’s rate decision, DXY also benefited from the weakening of the Yen following the Bank of Japan’s dovish decision to leave interest rates unchanged at a very low level. DXY is currently near 105.96, testing the 106 level while confirming above the 105.6 mark and 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 98.5. On the upside the 108 mark acts as the nearest resistance. The index had another good week and is expected to remain volatile as other central banks could adjust their policies later in the year.
US Treasuries
Understandably, US Treasury yields surged, with the 10Y yield hitting a 16-year high, near 4.5%, as traders continued to adjust their rate expectations in the wake of the Fed’s hawkish “higher for longer” stance. The 10Y yield and the policy-sensitive 2Y yield are currently exchanging near 4.54% and 5.13% from 4.31% and 5.06% last Monday, reducing the inversion of the yield curve to 59 bps, from 75 bps last week. An inverted 2yr -10yr curve is seen by the market as a sign of a possible incoming recession.