Macro Overview
This week saw announcements related to UK Consumer Price Index (CPI), US Federal Open Market Committee (FOMC) minutes, US Initial Jobless claims along with Eurozone Consumer Price Index (CPI) for July 2023.
- US FOMC meeting hinted at further rate hikes. Most members are concerned about inflation risks and the potential need for higher interest rates. The staff’s outlook indicates no recession in 2023, but subdued economic growth in 2024-25. Inflation has eased since the middle of the previous year but remains above the 2% target.
- In summary, FOMC officials are closely watching inflation risks and considering rate hikes, while also noting ongoing economic changes and potential impacts on financial conditions.
US Consumer Price Index (CPI) (YoY)
- US Initial jobless claims that measures the number of individuals who filed for unemployment insurance for the first time during the past week came at 239K, less than the estimation of 240K. This is not an encouraging sign for crypto, since the dollar is inversely correlated to crypto.
- The UK CPI for July (YoY) came at 6.8% in line with the expectations and well below the June 7.9%. This is neutral to bullish for crypto
- The Euro CPI for July (YoY) came at 5.3% in line with the expectations and well below the June 5.5%. This is neutral to bullish for crypto.
Next week major callouts include the US Chairman speech and US Initial jobless claims
Crypto Markets Overview
- This week, crypto markets are down by 9% totaling to 1.06 trillion with BTC and ETH down by 10% and 9% respectively. Bitcoin dominance stands at 49.53% with Ethereum at 19.48%.
- Major reason for the market downfall is speculated due to the following reasons
- Elon Musk’s SpaceX is writing off its Bitcoin holdings worth $373 million. This means they have sold their BTC holdings. Although this is not 100% confirmed yet.
- US FOMC have hinted for further interest rate hike to battle ongoing inflation.
- China’s Evergrande Group (The largest property developer) filed for bankruptcy in New York
- More than $1billion worth of Bitcoin liquidations in the past 24 hours
- Shiba Inu’s decentralized blockchain, Shibarium mainnet launched this week with a focus on scalability and sustainability designed to seamlessly interface with Ethereum’s primary Layer 1 blockchain. However, SHIB declined over 12% post shibarium launch due to $1.7 million worth of digital assets getting stuck within the network’s bridge contract.
- Polygon 30-Day NFT sales surpasses Solana for the first time. Polygon network ranks second in net NFT sales volume over the past 30 days with $33 million, ahead of Solana with $32 million and behind Ethereum with $249 million.
- Europe’s First Spot Bitcoin ETF Lists in Amsterdam two years after the company received approval from regulators. The ETF, which is called Jacobi Bitcoin ETF, allows investors to buy and sell Bitcoin in a regulated environment. Europe lists a Bitcoin ETF ahead of the U.S. despite a swathe of applications from issuers like Blackrock and Fidelity.
- Bitcoin’s correlation with U.S. equities and investment-grade bond prices has seen a significant uptick. The correlation with U.S. equities and the iShares Core U.S. Aggregate Bond ETF (AGG) stood at 40% and 33% respectively for the month of August
- U.S. The Securities and Exchange Commission (SEC) has delayed all Bitcoin spot ETF applications to early 2024. With a maximum 240-day window available to the SEC to delay crypto ETF applications, some firms could wait until March 2024 to hear decisions on filings made in July 2023.
- Ethereum futures ETFs are on the verge of getting approval for the first time by the Securities and Exchange Commission (SEC) by October.
- Solana overtook Dogecoin in market Cap claiming the 8th position.
- Stellar Development Foundation (SDF) made a strategic investment in payment firm MoneyGram International.
Bitcoin Technical Analysis
Source: TradingView
Summary:
– Bitcoin (BTC) experienced significant bearish movement during the past week.
– A notable event was the breakdown of an upward trendline in a higher time frame.
– The price dropped to $25,000 before stabilizing .
– Traders are advised to await confirmation to determine whether this is a temporary pullback in a bullish trend or a potential continuation of bearish movement.
– BTC’s position relative to Exponential Moving Averages (EMAs) has shifted: it’s now below the 50, 100, and 200 EMA D.
– A support level, around $25,000, played a crucial role in providing support during the decline. This level aligns with the 200 EMA on the weekly chart.
– Resistance levels are identified at $28,000 and $29,900.
– Due to low weekend trading volume, Bitcoin’s pace is expected to slow down.
– Simultaneously, as BTC dominance declines, there’s a likelihood of short-term upward movement in ALT coins.
Ethereum Technical Analysis
Source: TradingView
Summary:
– Ethereum (ETH) exhibited a similar breakdown of its upward sloping support trendline.
– The price dropped to approximately $1,500 but encountered significant support and bounced back from that level.
– This rejection highlighted the presence of demand and liquidity around the $1,550 .
– The previous support level at $1,711 is expected to transition into a resistance level moving forward.
– Resistance is also anticipated around the $1,794 .
– The Relative Strength Index (RSI) currently stands at its lowest point (21) since June 2022, suggesting potential oversold conditions and a possible upcoming reversal or price correction.
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