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!
The consolidation continues. Bitcoin (BTC) is trading at $23.3k (+0.44% in 7 days), Ethereum (ETH) is trading at $1.72k (+5.54% in 7 days), and the ETH/BTC spread is trading at 0.0735 (+5.07% in 7 days).
Macro environment
Let's begin by looking at this week’s macro figures:
- Wednesday 10: US CPI (expected: 8.7% YoY, previous: 9.1% YoY) and German CPI (expected: 7.5% YoY, previous: 7.5% YoY)
- Thursday 11: US PPI (expected: 0.2% MoM, previous: 1.1% MoM) and US Initial Jobless Claims (expected: 263K, previous: 260k)
- Friday 12: GBP GDP (expected: -0.2% QoQ, previous: 0.8% QoQ) and GBP Manufacturing Production (expected: -1.8% MoM, previous: 1.4% MoM)
Everyone's attention is focussed on the US CPI numbers. NFP numbers on Friday largely beat expectations: +528k vs. the expected +258k. Therefore, a high inflation number might push the Fed to move more aggressively than currently expected (current FOMC target rate probabilities for September 21: 63.3% 300-325bps).
In my opinion, market participants are already too protected against downside risk, and I am not expecting a spike in volatility before or after the press release. Also, as a consequence, I see risky assets inching higher. Then again, geo-political tensions coupled with the released earnings might weigh on equities - and, consequently, on crypto.
All eyes on the Ethereum merge
The ETH basis moved lower with September Futures on FTX trading at a $10 discount, and December at a $40 discount. This is the consequence of many stories and rumours about the possibility of having a forked proof of work ETH and a proof of stake coin. Traders are buying the Spot ETH and selling the Longer-term Future to take advantage of this possibility. Therefore, holding ETH will let you receive the forked asset that might be quite valuable.
I still think that high-betas (e.g. ALTs) will outperform BTC. This is because of the current risk-on market and also the fact that there is a potential for positive news (e.g. new projects) coming in September/October. On the derivatives side: the ETH-BTC ATM IV spread is getting wider and wider (average premium for all maturities: 30 vols vs. 20 vols 1 wk ago) meaning that market participants are enthusiastically pricing a move up in ETH.
Ether ETH (1d)
We are still in an upside channel and testing the $1,800 - $2,000 resistance. RSI is almost overbought, which means that a short-term reversal is reasonable. Overall, if it breaks the yellow band, $2,500 is the next target; otherwise, we will return to the $1,000 - $1,200 support.
Happy Trading!
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