BTC and ETH ended their negative performance streaks, with BTC halting a three-week decline and ETH breaking a four-week losing streak. Both cryptocurrencies wrapped up the past week with gains, buoyed by the positive market sentiment surrounding last Friday’s Federal Reserve Jackson Hole Economic Symposium where J. Powell hinted at a potential rate cut next month, citing a cooling labor market and inflation nearing the Fed’s 2% annual target. By Friday, BTC was trading near $64,095 with a high near $65,000 and ETH around $2,765, with BTC up 8.8% and ETH up 6.6% over the week, bringing their year-to-date performances to 60.7% and 43.5%, respectively. However, as of August, their performances stand at -1.4% for BTC and -14% for ETH. Meanwhile, digital asset investment products saw a total net inflow of $533 million, marking the largest inflow in five weeks and bringing the year-to-date total to $22.7 billion, according to CoinShares’ report, Digital Asset Fund Flows.
U.S. equities rose last week, securing a second consecutive week of gains, supported by anticipation of a possible rate cut as soon as September. Meanwhile, the small-cap Russell 2000 index continued to progress, further maintaining signs of a possible sectorial rotation. The S&P and Nasdaq closed higher for the week, near 5,632 and 17,877, respectively, gaining 1.4% and 1.6%. Meanwhile, the VIX index returned to the 16 range after peaking at 65 on August 5th. Several factors are expected to drive the market this coming week, including NVIDIA’s corporate earnings and the PCE inflation figure for July.
U.S. Treasury yields continued to decline, with the 10-year yield hitting a low of 3.76% and the 2-year yield falling to 3.90%, as the likelihood of a rate cut in September increased following J. Powell’s comments. This sentiment was further reinforced by recent data, including a weaker-than-expected July NFP report (114,000 vs. 175,000 expected) and cooling July CPI inflation at 2.9% year-over-year, the smallest annual increase since March 2021. The 10-year yield eventually closed at 3.80%, while the 2-year yield settled near 3.92%, narrowing the yield curve inversion to just 12 basis points. Market expectations for a September rate cut have strengthened considerably, with the CME FedWatch Tool indicating a 32.5% probability of a 50-basis point cut and a 67.5% likelihood of a 25-basis point cut.
In a similar fashion to yields, DXY pursued its steep decline, hitting a low of 100.60 and closing just above that level near 100.68 on Friday. The index is still testing the 100-mark today while the 200-week MA near 100.2 serves as the next support. On the upside, the 102.2 acts as the next resistance to watch.
Oil prices experienced volatility, dipping to a low of $71.71 early in the week before rebounding to close near $74.91 on Friday. The rebound has continued into this week as the WTI is currently trading near $77.50, fuelled by escalating tensions in the Middle East and Eastern Europe over the weekend, raising further concerns about global supply. This comes amid additional disruptions as Libya’s government halted oil production.
BTC and ETH are trading lower today, with BTC pulling back to $63,670 after testing its ascending trendline near $64,500, while ETH is hovering around $2,700. Markets are looking ahead to a busy week, with NVIDIA earnings and Friday’s PCE data, the Fed’s preferred inflation gauge, expected to take center stage. Headline and Core yearly inflation numbers are expected at 2.5% and 2.7%, respectively.
Investors will also be looking forward to Thursday’s second Q2 GDP revision and a batch of corporate earnings reports, including Dell, Salesforce, CrowdStrike, Abercrombie & Fitch, and Dollar General. Additionally, the final estimate of Consumer Sentiment for August will be released on Friday.
Client Profits
Since March, the Altcoins market has faced significant losses, with prices remaining low. Despite this, our trading strategy has consistently capitalized on price movements, allowing us to outperform the broader Altcoins market.
On August 5th, Bitcoin dipped below $50K, where we opened several long positions. We’ve already taken profits on some of these trades and are monitoring the remainder, as we see further upside potential.
Additionally, we’ve initiated short positions on AVAX and TRX following the recent price increases in BTC and Altcoins. Currently, 20% of our AUM is market-exposed, with the rest held in cash to manage risk effectively.
We will continue to assess market conditions and adjust our strategy as needed to maximize returns. While it goes without saying we are bullish in the long-term, Bitcoin’s medium-term trend appears to be closely tied to monetary policy decisions and, to a lesser extent, the outcome of the U.S. presidential election in November 2024, which could bring new initiatives and regulations. We expect BTC to benefit from a more accommodative financial environment, with rate cuts anticipated as early as next month. However, this momentum could be tempered by institutional selloff pressure as some institutional investors may look to book profits.
BTC
BTC ended its negative performance streak, halting a three-week decline and wrapped up the past week with gains, buoyed by the positive market sentiment surrounding last Friday’s Federal Reserve Jackson Hole Economic Symposium where J. Powell hinted at a potential rate cut next month, citing a cooling labor market and inflation nearing the Fed’s 2% annual target. By Friday, BTC was trading near $64,095 with a high near $65,000, up 8.8% over the week, bringing the year-to-date performance to 60.7%. BTC edged higher over the weekend, hitting a high of $65,175 on Sunday. However, as of August, the performance stands at -1.4%. Meanwhile, digital asset investment products saw a total net inflow of $533 million, marking the largest inflow in five weeks and bringing the year-to-date total to $22.7 billion, according to CoinShares’ report, Digital Asset Fund Flows.
On the daily chart, BTC broke below its pivot line and paved the way to a bearish phase – a possibility we mentioned in our last report. It then found support after retesting its Jan 2024 High near $49,000 on Aug 5. Price managed to claw back and break above a key pivot line near $61,000. BTC is facing the $70,000 as the next resistance while the $61,500 level acts as the pivot line before the $ 53,500 support further below.
BTC’s 30-day Historical Volatility – HV- edged higher to around 42% this week, from 40% last week.
After rounding up 2023 performance to +155%, BTC closed out January up +0.7%, February up +43.7% and March +16.6%, BTC closed April down -15%, May +11%, June -7% and July up +3.1%. As of August, the MTD is currently -1.4% with the YTD for 2024 being +51%.
ETH
ETH also gained last week, ending a four-week losing streak. By Friday, the cryptocurrency was trading near $2,765, up +6.6% for the week, bringing its year-to-date performance to +43.5%. However, as of August, ETH’s performance remains at -14%, as the price is still recovering from the early August drop, when it fell below both its 100-day and 200-day moving averages, hitting a low of $2,100 on August 5.
Since then, ETH has partially recovered and has been consolidating within the $2,500 to $2,800 range over the past week. The $2,850 zone serves as the next resistance level, with further resistance expected at $3,000 and $3,250 – where the 100-day and 200-day MAs currently lie.
Earlier this year, ETH saw significant gains, closing January up 0.05%, February up +46%, and March up +9.2%. However, April experienced a notable decline of -17.4%, followed by a +25% gain in May. June saw a -9% drop, and July recorded a -5.8% decline. As of August, ETH’s month-to-date performance stands at -14.3%, while its year-to-date remains at +43.5%.
Other markets
U.S. equities rose last week, securing a second consecutive week of gains, supported by anticipation of a possible rate cut as soon as September. Meanwhile, the small-cap Russell 2000 index continued to progress, further maintaining signs of a possible sectorial rotation. The S&P and Nasdaq closed higher for the week, near 5,632 and 17,877, respectively, gaining 1.4% and 1.6%. Meanwhile, the VIX index returned to the 16 range after peaking at 65 on August 5th. Several factors are expected to drive the market this coming week, including NVIDIA’s corporate earnings and the PCE inflation figure for July.
After ending 2023 up +17% and +29.6%, S&P and Nasdaq closed out January up +1.6% and +1.0%, February up +5.2% and +6.1%, March up +3.1% and +1.2%, April down -4.2% and -4.4%, May +3.5 and +6.9%, June up +3% and +6% and July +1.1% and -0.7%, the MTD performances for August are currently +1.5% and +0.5% with YTD performances of +17.5% and +17.8%.
DXY
In a similar fashion to yields, DXY pursued its steep decline, hitting a low of 100.60 and closing just above that level near 100.68 on Friday. The index is still testing the 100-mark today while the 200-week MA near 100.2 serves as the next support. On the upside, the 102.2 acts as the next resistance to watch.
Our outlook for DXY remains bearish for the remainder of the year as we expect bearish pressure to prevail as possible rate cuts are increasingly more likely.
US Treasuries
U.S. Treasury yields continued to decline, with the 10-year yield hitting a low of 3.76% and the 2-year yield falling to 3.90%, as the likelihood of a rate cut in September increased following J. Powell’s comments. This sentiment was further reinforced by recent data, including a weaker-than-expected July NFP report (114,000 vs. 175,000 expected) and cooling July CPI inflation at 2.9% year-over-year, the smallest annual increase since March 2021. The 10-year yield eventually closed at 3.80%, while the 2-year yield settled near 3.92%, narrowing the yield curve inversion to just 12 basis points. Market expectations for a September rate cut have strengthened considerably, with the CME FedWatch Tool indicating a 32.5% probability of a 50-basis point cut and a 67.5% likelihood of a 25-basis point cut.
The 10Y is currently trading near 3.82% while the 2Y yield is evolving near 3.94%, setting the inversion of the yield curve to 12 bps.
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