Market News from FxPro

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Market picture

Bitcoin has been down 1.2% over the past seven days, trading at $23,600. These are tiny moves by crypto market standards. Indeed, the first cryptocurrency has been dealing with little amplitude over the past week.



Ethereum has added the same amount of 2.6% to $1720 in the last 24 hours and seven days. The top altcoins' 7-days performance ranges from -0.11% (Solana) to +19% (Avalanche).



The total capitalisation of the crypto market, according to CoinMarketCap, rose 2.5% for the week to $1.1 trillion. The Bitcoin Dominance Index slipped 0.6 percentage points to 40.4% over the same period. The Cryptocurrency Fear and Greed Index fell 3 points for the week to 30 and remains in a state of "fear".

Last week Bitcoin made its fourth reversal from decline to rise within a moderately rising range. Investors were probably inspired by the positive dynamics of the stock markets amid recovering risk demand there. Buying forces reversed the trend even before the price reached the lower boundary of the corridor and the 50-day average.



The 200-week moving average, in this case, acted as a support line, which we see as a confirmation that the downtrend in cryptocurrencies is over. However, it is worth remembering that a rally rarely follows this. Typically, the market goes through a long period of uncertain and vulnerable growth. Only global events like halving or extreme liquidity injections from central banks or governments into the financial system can kick-start a rally.

Background

That said, Americans are investing in cryptocurrencies despite the market downturn. According to The Balance's financial website, 39% of US investors have become more invested in cryptocurrencies.



American investor and Shark Tank star Kevin O'Leary said he had bought high market capitalisation cryptocurrencies such as Bitcoin and Ethereum despite the slump in his investment portfolio.



According to a Cumberland survey of institutional investors, most respondents expect bitcoin to rise to $32K as soon as this year. Before that, however, BTC could fall to $16K.



Tesla CEO Elon Musk again spoke out in support of Dogecoin. According to him, the "dogecoin" cryptocurrency network can handle significantly more transactions than the bitcoin network.



CME Group, one of the world's leading derivatives players, will launch BTC and ETH futures in euros.

 

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Markets were confused by Friday's US labour market data, not knowing how to react to solid job growth. This is a negative for equities, as it makes us expect a third consecutive 75-point Fed rate hike at the next meeting on 21 September. But job growth and the continued pace of wage increases is a positive signal from the economy, where companies continue to hire, and people continue to spend. In our view, there are more positives here, encouraging long-term buying in sagging stocks, despite the risks of local corrections due to short-term overbuying.

In July, according to Alex Kuptsikevich, a senior analyst of FxPro, the US labour market added over half a million jobs and maintained a 5.2% y/y growth in hourly earnings. The Fed on Friday also reported consumer credit growth of $40.2bn in June, up from $23.8bn in May and $25bn expected. This is a very high reading, as we only saw higher in March, excluding two spikes caused by one-off programmes.



People are rushing to borrow before rates get even higher. This promises to heat consumer inflation even more, so there will be pressure on the Fed to conduct policy tightening more quickly. But Americans are no longer as indebted as they were at the start of the financial crisis, so we can't say yet that the situation will end in a global financial crisis - 2.0.



Debt markets, the so-called "smart money", have eased their bets that on July 2023 the rates will be much higher. This trend broke in August but, as we can see, has not stopped stock buyers. Strong employment growth in July, credit data and durable goods orders confirm that the economy is coping with the Fed's tightening. So far, rate hikes and rising inflation have only been a stimulus to accelerate consumption.

A caveat is worthwhile here too. In the next two quarters, the Fed will likely step on the brake pedal too much. In that case, the sell-off could return to the stock market. But this is just causing future turmoil. The current data, for now, sets the stage for continued careful stock buying.



The nearest technical target for the Nasdaq100 looks to be the 200 SMA, which coincides with the round level of 14,000. If the markets opt for a swing-back before a new ascending impulse to clear the local oversold area, it is worth looking at 13,000. This area concentrates on the local highs of June and the lows of April, March, February, and May 2021.

 

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According to Alex Kuptsikevich, a senior analyst of FxPro, the precious metals are recapturing critical levels one after another, claiming a reversal to the upside after a two-year bearish trend. Silver made quite a move up on Monday, gaining over 4%. Palladium closed the day up 5.3%, and at one point, it was up 6%.



Silver managed to break above the 50-day moving average, which used to be an effective resistance since the beginning of the month, and made a six-week high. More positive vibes for investors are likely to come from a quick return above $20.



At current levels near $20.60, silver has approached the support area of May, which could now move into resistance. If the bulls don't fight back sufficiently here, the price could jump quite quickly to $22, the area of the rebound highs of June. This is already the critical turning point in the last eight years, where a battle between long-term investors with opposing views is about to occur.

Palladium rose on Monday to 2250, the high since May, developing the uptrend of the last two months. Confident buying pushed palladium above the 200-day average yesterday, although sellers have stepped near it over the past four months. This looks like a fundamental change for long-term investors in confirmation of the upward trend since June.



So far, silver and palladium are now showing more bullish signals, while gold remains anchored at the 50-day moving average and below the local lows of May and June. However, gold is often in slightly earlier stages of market cycles as a more liquid instrument.



Other positive leading signals for the precious metals market in general and gold include a 15% increase in VanEck Junior Miners fund price since the middle of last month and a 10% jump in Barrick Gold since the end of July with a 4% accord on Monday.



The performance of silver, palladium and gold miners points to a reversal of the two-year negative market trend. However, while it occurs in relatively narrow sections of the market, gold still should prove too steady growth of investors' demand.



A necessary confirmation of the trend reversal in gold will be a return to the area above $1800 and a continuation of bullish momentum at these levels.

 

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Market picture

According to Alex Kuptsikevich, a senior analyst of FxPro, Bitcoin rose 3.5% to $24,100 on Monday and retreated slightly from the highs to 23900 on Tuesday morning. Ethereum is trading near $1780, adding 3.5% in the last 24 hours. Top altcoins have gained between 0.2% (BNB) and 5% (Polkadot).



The total capitalisation of the crypto market, according to CoinMarketCap, rose 1.9% to $1.13 trillion overnight.



Bitcoin on Monday tested the area of the previous month's highs in the area of $24K, from where it had previously rolled back twice. Sellers' pressure increased somewhat near the earlier highs following a moderate correction in stock indices, but the general consolidation trend with an upward bias persists for now.

News background

Ethereum co-founder Vitalik Buterin said the network's impending move to PoS in September could boost the popularity of cryptocurrencies for everyday payments. According to him, the popularity of payments has fallen since 2018 due to high transaction fees.



Last week, BlackRock entered into a partnership with Coinbase, under which BlackRock customers will be able to trade cryptocurrencies. Famous online analyst InvestAnswers believes the inflow of cryptocurrency funds from this investment company's clients could push the BTC price to $773K.



According to Messari, investments in the crypto industry reached $30.3bn in the first half of 2022, more than the entire year 2021. According to Coin ATM Radar, around 15 cryptocurrencies are set up worldwide daily, with the total number exceeding 39K.



Singapore-based cryptocurrency lending platform Hodlnaut suspended withdrawals and other crypto-asset transactions, saying it needed to "focus on stabilising liquidity".



The World Gold Council said integrating blockchain into the gold industry's production processes could increase transaction transparency and consumer confidence.

 

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Market picture

According to Alex Kuptsikevich, a senior analyst of FxPro, Bitcoin lost 3.8% on Tuesday, ending it at around $23.2K, and is developing a decline to $22.9 by Wednesday morning. Ethereum has lost 5.6% in the last 24 hours, to $1680. Top altcoins are down 2.5% (BNB) to 7.2% (Solana).



Total crypto market capitalisation, according to CoinMarketCap, fell 3.9% overnight to $1.08 trillion.



The recovery in stock indices has choked, but even earlier and more dramatically, these changes have affected Bitcoin and the whole crypto market. Should the decline develop, investors and traders should pay close attention to the 21500 area, where the previous local lows are concentrated. A dip below that and a decisive return below the 50-day average could well be the start of a new wave of decline that could take the crypto market to new lows. At least, there might be a test of the June-July lows.

News background

According to CoinShares, net capital inflows into crypto funds slowed to $3m last week, with Ethereum accounting for the most investments at $16m. Funds investing in bitcoin lost $8.5m; those allowing shorting it faced $7.5m in outflows.



Michael Novogratz, CEO of investment firm Galaxy Digital, expects bitcoin to consolidate in the $20,000-$30,000 range for a while.



Circle has blocked 75K USDC on Tornado Cash mixer wallets, which have come under sanctions from the US Treasury. According to the agency, attackers have laundered cryptocurrency worth more than $7 billion since its inception in 2019, with about $0.5 billion linked to the North Korean hackers Lazarus Group.



The Reserve Bank of Australia is working with the Digital Finance Corporate Research Centre (DFCRC) to launch a pilot project to explore options for the practical use of CBDC digital currency.



El Salvador President Nayib Bukele said the legalisation of bitcoin last year contributed to significant growth in the country's tourism.



Iran conducted its first import transaction worth $10 million paid in cryptocurrency, bypassing the global financial system restricted by US sanctions.

 

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According to Alex Kuptsikevich, a senior analyst of FxPro, it is definitely inflation day today. China, Germany and Italy have released their consumer inflation data, while the US will release theirs before the New York session begins. Historically, inflation data has rarely deviated from expectations without triggering a market reaction, but in recent months the release of data from the USA has the potential to set trends.

China is showing the world that this year's inflation problem is not theirs. The Chinese data release was surprised by its weakness. CPI accelerated from 2.5% y/y in June to 2.7% in July vs 2.9% expected. The producer price index slowed from 6.1% to 4.2% (4.9% anticipated).

It may take up to three quarters before producer prices end their pro-inflationary push. Nevertheless, the second world economy is not contributing to global inflation.



By comparison, Japan's Domestic Corporate Goods Price, also out today, showed a slowdown to 8.6% y/y from 9.4% a month earlier and a peak of 9.7% in February - a very gradual cooling.



Germany confirmed preliminary estimates for July inflation at 7.5% y/y for CPI and 8.5% for Harmonised CPI. The latter continues accelerating, putting additional pressure on the ECB to tighten policy.

From the data from the USA, it is expected that consumer inflation has passed its peak. Prices are assumed to have risen by 0.2% last month, which is the historical norm, and the year-over-year rate has slowed from 9.1% to 8.7%. In the previous 11 months, US data has methodically exceeded expectations, pulling the Fed's increasingly hawkish approach.



We must be prepared that the investors will scrutinise how fact correlates with expectations. If prices for July are down or unchanged, it could return the markets to bullishness as it spurs speculation that the Fed may not need to step on the brake pedal so sharply.



Fed rate futures continue to lay down a 68% chance of a 75-point hike in September. A sharp change in this sentiment in the debt markets could set all other related sectors in motion. Thus, if expectations soften, pressure on the dollar would increase. Conversely, a further increase in the chance of a 75-point tightening would return strength to the dollar bulls and stock market bears.

 

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Bitcoin has added 7.4% to $24.6K in the last 24 hours. It's not the magnitude of the move that draws attention but rather the ability to rewrite previous local highs. Ethereum has gained 13% to $1900 in the same time frame. Top altcoins add between 4.7% (BNB) and 13.4% (Solana).



The total capitalisation of the crypto market, according to CoinMarketCap, rose 7.4% to $1.16 trillion overnight.



Bitcoin jumped on Wednesday, and stock indices on US inflation data showed a more robust cooling, fuelling speculation that the Fed will soon soften its tone.

On Thursday morning, BTCUSD, after three weeks of unsuccessful attempts, managed to gain ground above $24K and quickly moved into the $24.5K area. These are the highest levels since mid-June when bitcoin literally crashed. Now up to $30K, there are no significant technical obstacles.



On the other hand, the benchmark crypto pair is still moving within a moderate upward trend, with the upper boundary now at $25.5K. Moving within this range, BTCUSD will be at 30K only by October.



Ethereum is showing much more resurgence right now. Expectations of an imminent switch to proof-of-stake are a significant market driver. As a result, ETHUSD has already recouped all losses since June, recovering to previous consolidation levels.



Ether's dominance has recovered to 19.9%. The second most popular cryptocurrency has not had a sustainable share since 2017, but last year we saw a steady climb towards these levels due to the increased use of Ether in other projects. The next significant milestone for ETHUSD looks to be the $2300 area, where the 200-day moving average and the lows of the dips earlier in the year are concentrated.



We also note the drop in the bitcoin dominance index to 40%. For the past five years, a dip under this mark has often been followed by aggressive profit-taking in altcoins, whether we are in bull or bear markets. In our case, it may not mean the impending collapse of altcoins but rather an acceleration of BTC's growth.

 

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According to Alex Kuptsikevich, a senior analyst of FxPro, US consumer inflation slowed to 8.5% in July from 9.1% a month earlier. As we had pointed out, the fact was noticeably lower than the forecasted 8.7%, and this caused an immediate market reaction. FedWatch Tool showed the market's estimate of a 75-point hike in the Fed Funds rate at the end of September fell from 68% to 33%.

The currency market and index futures also saw a momentary reaction. The Dollar Index lost 1% within 15 minutes of publication, confirming its status as the market's most important economic indicator.

The technical picture keeps a close eye on how the day will close. A DXY consolidation below 105.20, where the 50-day moving average and the local August lows are concentrated, could be confirmation of a reversal of a Dollars' bull trend since May 2021. For most of these 14 months, the Fed has been tightening its rhetoric and accelerating rate hikes.

A sharp slowdown in inflation and signs that this move will continue in the coming months set the markets up for a reversal of Fed rhetoric. Right now, a 50-point rate hike is the most likely scenario.

Further prospects are shrouded in uncertainty and tightly linked to inflation data. The Fed may move to a 25-point rate hike in November or December. The key word is "uncertainty" because it determines the degree of market volatility and investor sentiment. We are near the point of a cycle change, which means we are not in danger of a calm market.

 

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Market picture

According to Alex Kuptsikevich, a senior analyst of FxPro, bitcoin rose close to $25K on Thursday but failed to hold on to those heights, pulling back precisely to $24K on Friday morning and losing 2.4% overnight. Ethereum continues to outperform the market, losing 0.2% to $1900. Other top altcoins are losing between 1.5% (XRP, Dogecoin) and 3% (Polkadot).



Total crypto market capitalisation, according to CoinMarketCap, fell 1.4% to $1.15 trillion overnight.



Bitcoin failed to accelerate its rise on Thursday, rewriting two-month highs but failing to hold on to them. This bullish indecision was probably linked to a similar pullback in US stock markets, where buyers are also very timid and unsure.



Investors and traders should prepare themselves that the market will stick to such a pattern in the coming months, and the recovery trend will bear little resemblance to the FOMO-filled rallies rattling the crypto market.



Instead, it will be a period of foundation work, during which the market, stripped of its easy money, will leave the most talented and passionate enthusiasts. They see cryptocurrencies as more than just easy money and hype.

News background

In this regard, many eyes are on Ethereum, where developers have announced the successful migration of the third and largest Goerli test network to the PoS algorithm. The next step will be the merger of the core network, scheduled for September.



The world's largest investment firm, BlackRock, has launched its first bitcoin-based product targeting institutional clients. It sounds encouraging, but so far, it is difficult to isolate any net positive effect in quotes.



At the same time, regulatory pressure on the industry is intensifying. Coinbase has reported that the US Securities and Exchange Commission (SEC) sought through the courts' information on listing the company's crypto-assets and proprietary products.

The UN Conference on Trade and Development (UNCTAD) called on world governments to impose additional taxes on cryptocurrency transactions and restrict their advertising.



The CFTC and SEC have proposed requiring significant cryptocurrency hedge funds with more than $500 million in assets under management to report risks associated with digital assets.

 

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The UK monthly statistics package showed that the economy lost 0.1% in the second quarter (0.2% expected), and the annual growth rate collapsed from 8.7% to 2.9% (2.8% expected). For the month, the decline was 0.6%, half the forecasts.

A similar "better than might have been" is evident in the other indicators released today. Industrial production fell 0.9% against an expected 1.3% and left something from the last month's gain. Construction dipped 1.4%, against a forecasted 2.0%. The service sector lost 0.4% of its volume, the first contraction since last March.

While this data is better than forecast, it is unlikely to inspire buyers of the pound or investors in the stock market. We see more market sensitivity to price data than the economy.



The GBPUSD is now struggling with downtrend resistance in the form of the 50-day moving average, trying to consolidate higher. On Wednesday, it formally succeeded, but the pound failed to develop the offensive, which might be the first worrying signal that the bears retain control of the markets.



Whether GBPUSD closes the day above 1.22 or below that mark may determine next week's performance. An ability to stay near or rewrite the local highs would be a bullish signal, sending the sterling further into the 1.25-1.2650 range. A close on a weak note or a move under 1.2140 would indicate that the recent rebound was only a temporary correction as part of a long-term downtrend. And in this case, GBPUSD could head down with an intermediate target below 1.2000 and a potential next target around 1.1800.