BTC and ETH rose last week, extending the rally to two consecutive weekly gains with BTC hitting a high of $72,080 on the Perpetual Futures market as enthusiasm spiked amidst the SEC approval of several exchange applications to list spot ETH ETFs. BTC and ETH were trading near $68,500 and $3,730 on Friday, respectively up +2.2% and +20.5% over the week, bringing the YTD performances to +64% and +64.4%. Positive weekly outflows of +$36m from Spot BTC ETFs brought the year-to-date total to a record high of US$14.9 billion, according to CoinSharesâs report âDigital Asset Fund Flowsâ.
US Equities edged marginally higher over the week, with the S&P and Nasdaq extending their winning streak to 5 consecutive weekly gains ahead of the Memorial Day break as markets welcomed Nvidiaâs earnings early in the week before tumbling later on Thursday as the manufacturing PMI survey came in hotter than expected at 54.8 in May from 51.3 expected, inferring a potential shift towards a stricter stance on Fed rate cuts. S&P and Nasdaq closed out this Friday higher, near 5,305 and 16,920, respectively edging +0.003% and +1.4% while the VIX index settled lower near 11.93%.
U.S. Treasury yields had their strongest week in a month, driven by signs that interest rates may remain elevated for an extended period to combat persistent inflation. The 10-year yield peaked at 4.47% and closed the week near that level, while the 2-year yield settled around 4.95%. The likelihood of a 25-basis points rate reduction in September 2024 is now 45%, down from 50% a week ago according to the CME FedWatch Tool.
The 10-year yield broke below its year-long ascending parallel range on May 15, finding support near 4.31%. It then began a recovery phase, now reaching approximately 4.46%, approaching the lower band of the channel, currently at 4.49%.
Like yields, DXY rallied, hitting a high of 105.11, and closed out the week near 104.74. However, the index has been trading lower this week in anticipation of key inflation figures as PCE Headline and Core data are expected at +2.7% and +2.8%.
Oil prices dropped last week but gained this week on the prospect that OPEC+ will maintain output cuts at its June 2 meeting. Lingering tensions in the Middle East and the beginning of the U.S. summer driving season also contributed to the increase. The WTI closed the week near $77.75 and was trading around $80.15 today.
BTC and ETH are trading lower today as markets look ahead to this holiday-shortened weekâs agenda where the Fed preferred gauge of inflation, the PCE data for May, should take the spotlight this week with Headline and Core data expected at +2.7% and +2.8% this Friday. Investors will also look forward to an update on the housing market â April Pending Home Sales – on Tuesday and the revised Q1 US GDP number on Thursday while monitoring the latest corporate earnings with Costco, Dell, Salesforce, and Abercrombie & Fitch set to report among others. In the rest of the world, Chinaâs PMI manufacturing data will be available on Friday.
Client Profits
We continued to execute our trading strategy effectively, with most of our trades notching a 20% to 35% performance gain over the last two weeks. Currently, our exposure to the market stands at 50% of the AUM with the rest held in cash.
BTC
BTC rose last week, extending the rally to two consecutive weekly gains and hitting a high of $72,080 on the Perpetual Futures market as enthusiasm spiked amidst the SEC approval of several exchange applications to list spot ETH ETFs. BTC was trading near $68,500 on Friday, notching +2.2% over the week and bringing the YTD performance to +64%. Positive weekly outflows of +$36m from Spot BTC ETFs brought the year-to-date total to a record high of US$14.9 billion, according to CoinSharesâs report âDigital Asset Fund Flowsâ.
On the daily chart, the price broke above the neckline on May 15 and confirmed the formation of a reverse Head And Shoulders pattern, and was followed by a bullish breakout as indicated in our last report â see graph. BTC has been rallying, hitting a high of $72,080 before settling near $68,500.
In the short to medium term, the recent approval of Spot ETH may pave the way for some upside potential, despite geopolitical uncertainties and stricter monetary outlooks that could act as catalysts for the remainder of the year.
BTCâs 30-day Historical Volatility â HV- consolidated to around 56% this week, from 51% 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%, and the MTD for May is currently of +12.6 with the YTD for 2024 being +62%.
ETH
ETH outperformed BTC last week, extending its rally to two consecutive weekly gains and hitting a high above $3,940, driven by enthusiasm over the SEC’s approval of several exchange applications to list spot ETH ETFs. ETH was trading near $3,730 on Friday, marking a gain of +20.5% over the week and bringing its YTD performance in line with BTC at +64.4%.
The price broke above the upper trendline of its 8-month ascending range on May 20, near $3,520, achieving a staggering daily performance of 20%, and continued to trade higher thereafter. ETH is currently trading near $3,820, with the $3,590 and $4,093 zones serving as major support and resistance levels.
ETH saw significant gains earlier this year, closing January up +0.05%, February up +46%, and March up +9.2%, but April experienced a notable decline of -17.4%. As of May, the month-to-date performance stands at +26.8%, with a year-to-date increase of +67.4%.
Other markets
US Equities edged marginally higher over the week, with the S&P and Nasdaq extending their winning streak to 5 consecutive weekly gains ahead of the Memorial Day break as markets welcomed Nvidiaâs earnings early in the week before tumbling later on Thursday as the manufacturing PMI survey came in hotter than expected at 54.8 in May from 51.3 expected, inferring a potential shift towards a stricter stance on Fed rate cuts. S&P and Nasdaq closed out this Friday higher, near 5,305 and 16,920, respectively edging +0.003% and +1.4% while the VIX index settled lower near 11.93%.
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% and April down -4.2% and -4.4%, the MTD performances for May are currently of +5.4% and +8.7% with YTD performances of +11.2% and +13.4%.
DXY
Like yields, DXY rallied, hitting a high of 105.11, and closed out the week near 104.74. However, the index has been trading lower this week in anticipation of key inflation figures as PCE Headline and Core data are expected at +2.7% and +2.8%.
Following its peak of 106.5 on April 16, the index has been lacking momentum, finding support and consolidating near the 105-mark, and is currently trading just above its 100-day and 200-day MAs acting as closest supports to the downside, near 104.4 and 104.3.
DXY has been benefitting lately from robust inflation data and hawkish comments from Fed officials raising the prospect of a higher for longer rates scenario and validating the Fedâs intention to push back on potential rate cuts. Next weekâs PCE data could act as a catalyst for the index although the outlook for the index remains challenging as inflation pressure is expected to cool down later in the year.
US Treasuries
U.S. Treasury yields had their strongest week in a month, driven by signs that interest rates may remain elevated for an extended period to combat persistent inflation. The 10-year yield peaked at 4.47% and closed the week near that level, while the 2-year yield settled around 4.95%. The likelihood of a 25-basis points rate reduction in September 2024 is now 45%, down from 50% a week ago according to the CME FedWatch Tool.
The 10-year yield broke below its year-long ascending parallel range on May 15, finding support near 4.31%. It then began a recovery phase, now reaching approximately 4.46%, approaching the lower band of the channel, currently at 4.49%.
The 10Y is currently trading near 4.55% while the 2Y yield is evolving near 4.98%, both yields up from the previous week, setting the inversion of the yield curve to 43 bps.