Recurring market commentary on what’s happening in the crypto markets, summarized by the Crypto Broker team at Crypto Finance AG.
Market commentary
Good morning!
At the time of writing Bitcoin (BTC) is currently trading at 19.85k (-2.2% in 7 days), while Ethereum (ETH) is trading 1.65k (+7.2% in 7 days). It is unlikely that this week will see much change, and any volatility move is going to be to the downside. Volatility for risky assets remains, as the USD rally continues.
Macroeconomic developements
Last week, the NFP numbers came in:
- Unemployment rose to 3.7% from 3.5%
- Participation rose to 62.4% from 62.1%
- 315k payroll jobs were added (consider 150k are maintenance)
As rate sensitive sectors, e.g. construction, keep growing, the Fed will continue – no matter what to hike until things break, regardless of if this is inflation or the economy. I do not see any reason why the supply shock should evaporate any time soon (think of EU commodity issues, etc.). Prices will keep rising unless there is a demand crush. Speaking in macro terms, I keep seeing large downside potential in both the short and medium term. Looking ahead, this week’s major events are the following:
- Fed speeches will be held from Wednesday to Friday.
- Powell will speak on Thursday.
- ECB rate decision will be on Thursday (forecast: 75bps).
On the crypto side
Correlation among digital assets continues being high, with high betas outperforming as risk-on appetite from this summer’s lows is still in. I expect this kind of behaviour to remain ongoing as we move closer to the Merge. Also, correlation with TradFi risky assets remains high, as BTC 30d correlation with SPX is 0.56 and 0.58 with NDX.
The narrative is the following: BTC is driven by macros with other cryptocurrencies delivering beta performances. ETH still has its own narrative (the Bellatrix update is scheduled for Sept 6th) and it is still driving the DeFi and L2s space, but it is still difficult to see it surviving the macro scenario. My play remains the same: stay long on alts “financed”/hedged by short BTC. With betas unchanged this still pays off in this low-volatility scenario. Looking at the charts:
- BTC is consolidating at around $20k; this is most likely the resistance, not the support now.
- ETH is approaching the $1,750 resistance. A break will bring us towards $2,000 first and then to $2,400.
- If ETH is unable to hold higher prices, $1,200 is the support.
Happy Trading!
All intellectual property, proprietary and other rights and interests in this publication and the subject matter hereof are owned by Crypto Broker AG including, without limitation, all registered design, copyright, trademark and service mark rights.
Disclaimer
This publication provided by Crypto Broker AG, a corporate entity registered under Swiss law, is published for information purposes only. This publication shall not constitute any investment advice respectively does not constitute an offer, solicitation or recommendation to acquire or dispose of any investment or to engage in any other transaction. This publication is not intended for solicitation purposes but only for use as general information. All descriptions, examples and calculations contained in this publication are for illustrative purposes only. While reasonable care has been taken in the preparation of this publication to provide details that are accurate and not misleading at the time of publication, Crypto Broker AG (a) does not make any representations or warranties regarding the information contained herein, whether express or implied, including without limitation any implied warranty of merchantability or fitness for a particular purpose or any warranty with respect to the accuracy, correctness, quality, completeness or timeliness of such information, and (b) shall not be responsible or liable for any third party’s use of any information contained herein under any circumstances, including, without limitation, in connection with actual trading or otherwise or for any errors or omissions contained in this publication.
Risk disclosure
Investments in virtual currencies are high-risk investments with the risk of total loss of the investment and you should not invest in virtual currencies unless you understand and can bear the risks involved with such investments. No information provided in this publication shall constitute investment advice. Crypto Broker AG excludes its liability for any losses arising from the use of, or reliance on, information provided in this publication.
