Market News from FxPro

[FxPro_2022]

Bitcoin lags against altcoins
Market picture

Alex Kuptsikevich, a senior analyst from FxPro reported that Bitcoin is trading at $20.6K, adding 1.5% in the last 24 hours and almost as much in the 7- and 30-day intervals - a clear illustration of the exhausting sideways market that has engulfed the crypto. However, looking under a magnifying glass, there is an optimistic shift with a positive close on Thursday despite a sell-off in traditional markets.
Right now, traditional markets are now pulling Bitcoin and Ether down rather than helping them grow. Over the past month, cryptocurrency market capitalisation has increased by 8% - noticeably outperforming the first cryptocurrency. We've previously noted how the altcoins in the top 20 have shot up one by one. One outcome is that Bitcoin's share has fallen from 40% a month ago and 46.5% at its peak in June to 38.5%, usually during FOMO rally periods. And one should remember that its share was above 80% before 2017 and above 60% before 2021.
Active projects are gradually eating away at the share of the first cryptocurrency. It would not be surprising if bitcoin's percentage drops another notch during the next crypto rally, ceasing to be the dominant market force.

News background

According to CryptoQuant, the Chinese government has become one of the major bitcoin whales, with its BTC holdings nearly one and a half times the size of MicroStrategy's reserves. Chinese authorities handed over to the national treasury 194,000 BTC seized from the cryptocurrency pyramid scheme PlusToken in 2019, giving them extreme leverage and control over the crypto market.
According to Santiment, crypto whales have recently sold off more than $110 million worth of Dogecoin.
Meta is testing a new feature to create and sell NFTs on Instagram. The option will initially be available on the Polygon blockchain.
Meanwhile, investment giant Fidelity Investments will allow retail clients to invest in bitcoin and Ethereum.

 

[FxPro_2022]

The FOMC gave dollar a boost, but hardly for long

Alex Kuptsikevich, a senior analyst from FxPro reported that the market reaction to Powell's comments on Wednesday has shattered the nice technical picture that has been forming in EURUSD for a month since late September. In this environment, the question of whether the dollar could renew the highs made at the end of September is becoming more relevant.
Having lost over 22% since May 2021, EURUSD climbed from 0.9530 in late September to 1.0080 a month later. The current rate was above the previous local highs and the 50-day moving average, giving a double signal to end the downtrend.
During this one-month bounce, local support was formed, and the 50 SMA has been in place for three consecutive days.
However, the market reaction to Powell's comments after the FOMC meeting broke this nice technical picture. With a strong move, EURUSD went under its 50-day average and broke the support. The frustration of the speculators was so intense that the downside movement in the pair continued yesterday, dropping it to the area of 0.9730.

Strictly speaking, the recovery of the dollar momentum of the last ten days created the technical prerequisites for the EURUSD pair to renew multi-year lows, suggesting that by mid-November, it could fall under 0.9500.
At the same time, it would be wrong not to point out the fundamental resistance to dollar growth. ECB officials are becoming increasingly outspoken about their willingness and need to sacrifice economic growth to fight inflation, which means they intend to raise rates despite falling GDP.
Other important actions are the continuing and increasing interventions by Asian countries, which are fighting the fall of their currencies through the sale of USD reserves, thus increasing the supply of USD on the markets.
History also teaches us that while the Fed often leads the monetary cycle, others quickly catch up. The USD, meanwhile, on average, begins its rally six months before the reversal to tightening and six months after it begins. In this context, the current rally looks very ageist.
On the balance sheet, we anticipate great difficulty with the dollar's rise and assume more chances for a sideways formation than a sustained retreat to new EURUSD lows. Moreover, we would not be surprised if EUR buying already strengthens at 0.9700 with a more measured reversal than in October, but still an upside in the pair will follow.

 

[FxPro_2022]

Bitcoin's shy uptrend
Market picture

Alex Kuptsikevich, a senior analyst from FxPro reported that Bitcoin has added 1.5% over the past seven days, trading at $20.7K at the time of writing. Bitcoin showed impressive upside momentum on Friday, which ran out of steam by Saturday morning near $21.4K levels.
There is a little bit for everyone in this move. The bulls record new, higher local highs and higher lows. On the other hand, the bears see that the recovery in Bitcoin is by no means gaining strength, and the rate remains tightly below the 200-week average.
Ethereum added 0.9% over the week to $1610. Other leading altcoins from the top 10 rose from 3.1% (Cardano) to 11.9% (BNB). Total cryptocurrency market capitalisation, according to CoinMarketCap, rose 2.8% for the week, to $1.05 trillion, but by Monday, had rolled back 1.9% to $1.03. The Cryptocurrency Fear and Greed Index rose 6 points for the week, to 40 and remains in "fear" mode.

News background

Decentralised application tracking platform DappRadar reported that the number of active cryptocurrency wallets increased by 7% in October compared to the previous month, which may indicate the end of the crypto winter.
According to ForkLog, trading volume on leading cryptocurrency exchanges fell 25% in October to its lowest level since December 2020. Bitcoin miners' total revenue in October was up 7% compared to the previous month. The share of public miners in the BTC hashtag reached 25%.
The European Parliament has postponed until February next year a final vote on the MiCA cryptocurrency regulation bill. The extensive and technically complex document must be translated into 24 official languages.
Goldman Sachs is partnering with Coin Metrics and MSCI to introduce a tool called Datonomy that allows investors to track cryptocurrency market movements and quickly analyse the digital asset ecosystem.

 

[FxPro_2022]

China's weak trade surplus is no cause for disappointment

Alex Kuptsikevich, a senior analyst from FxPro reported that China's exports contracted by 0.4% YoY in October, while imports lost 0.7% YoY in dollar terms. The foreign trade surplus rose to $85.7bn, lower than expected at $96bn.

Most observers saw these figures as a signal of a slowdown in the second-world economy. At the same time, it is worth bearing in mind that the dollar has appreciated by 18% against the DXY index (a basket of the six popular currencies) over the past year and by more than 12% against the CNY.

The renminbi has weakened in two waves this year: in April-May and from August until the end of October. In the first wave, we saw the USDCNY gain 5%; in the second wave, the renminbi weakened by around 7.5%. The second wave of weakening has a chance to reinvigorate foreign trade.

China is facing a relatively indirect impact from the energy crisis. It is more affected by the slump in the global economy than by the energy price hikes that Europe and Japan are facing. A relatively measured weakening of the national currency would probably work to maintain the competitiveness of Chinese goods on global markets.

If we are correct, the Chinese economy is now close to its lows for a coming couple of quarters, as production and consumer activity will pick up further. Added to this is the recovery in the Chinese markets, which has been evident since the start of the month. At current levels, global investors may be taking a closer look at Chinese assets, which would also help the renminbi in addition to the work that the PBC is doing to contain the weakening of its currency.

 

[FxPro_2022]

Friday’s Dollar drop - wind of change?

Alex Kuptsikevich, a senior analyst from FxPro reported that the dollar index lost over 1.9% on Friday, one of the ten most significant daily declines in the last 20 years. Given that the pressure on the dollar was throughout Friday and remained in place on Monday, dollar bulls are clearly capitulating, unable to push the US currency up.
We last saw more significant intraday volatility in the dollar index in 2015 and all other times in 2008-2009. And the more remarkable thing is that there was no disruptive data or historical moves by governments or central bankers behind such dramatic fluctuations.
The hard data showed us a comparatively strong employment report in the USA (an argument for a rate hike). An increase in the unemployment rate from 3.5% to 3.7% does not count, as traders are much more focused on the absolute change in the number of employed people and wages.
Market participants paid more attention to the clarifying remarks of the FOMC members. On Friday and later in the weekend, Fed commentators indicated a willingness to lower the rate hike - repeating the message we heard on Wednesday evening in the official FOMC commentary and the press conference that followed.

On Friday, however, the major central banks also had hardly any active play. The Chinese yuan rose against the dollar throughout Friday, rising more than 2.2%. The hand of the Swiss National Bank is also likely, with the USDCHF losing 2.4% from the beginning of the day on Friday until now, repeating the moves we saw precisely a fortnight ago from the same levels.

A more interesting play can be seen in the USDJPY. After the decisive assault on October 21, the pair reversed to the downside from increasingly lower levels: 149.3-148.7-148.3. While this still doesn't look like a break of the uptrend (previous lows remain intact), it’s an impressive bid for a trend change.
EURUSD, the key currency market pair, is storming back to parity and the area above the 50-day moving average. Despite the breakdown of the brisk October uptrend, the uptrend as a sequence of rising local lows and highs has been maintained.
The Dollar index is down to 110.2, trading below its 50-day average. The dollar rally triggered by Fed policy has aged too much, and both Fed officials and market reaction on Friday indicate that the dollar is entering a new phase of the global cycle.

 

[FxPro_2022]

Crypto market stumbles, losing 5%
Market picture

Alex Kuptsikevich, a senior analyst from FxPro reported that the crypto market has lost over 5% in the last 24 hours, pushing capitalisation back below $1 trillion. The steep fall in FTT affected Bitcoin and Ether and has pulled a significant market spectrum.
Bitcoin is now trading at $19.8K, with the most substantial losses coming in the Asian session, filled with algorithmic traders, pushing the price back to $19.4K at one point. It is noteworthy that a sell-off did not follow the sell-off in the first and second cryptocurrencies in the markets. Once again, we are forced to guess whether crypto reflects the internal risk attitude of the financial markets or whether we have seen a short-term technical sell-off. In the former case, market sentiment will worsen during the day. In the second, BTCUSD will redeem during the day and further confirm the market's reversal to growth.
According to CoinShares, investments in crypto funds declined last week after a slight increase the previous week. Outflows amounted to $16m compared to inflows of $6m a week earlier. Bitcoin investments fell by $13 million, and Ethereum rose by $3 million. Investments in funds that allow shorts on bitcoin fell by $7 million. Investors have shown a lack of enthusiasm over the past eight weeks, CoinShares noted.

News background

Former MicroStrategy head Michael Saylor called bitcoin a "hope" for Lebanon, whose national currency has fallen 96% against the dollar, and inflation has reached triple digits. The Middle Eastern country has been in a deep financial crisis since 2019.
Twitter's new owner, Elon Musk, plans to postpone temporarily or entirely shut down the development of some of the projects announced by the previous administration, including, reportedly, work on a cryptocurrency wallet. The news has hurt Dogecoin, which has been growing in hopes of becoming the social network's digital currency.
According to Reuters, UK bank Santander will block transactions on cryptocurrency exchanges in 2023 to protect consumers from fraud.
Mining companies are being forced to sell off cryptocurrency mining equipment at a massive discount to cover losses from a falling market, The Wall Street Journal reported.

 

[FxPro_2022]

Things go wild in crypto
Market picture

Alex Kuptsikevich, a senior analyst from FxPro reported that the cryptocurrency market lost another 7.7% to $900B over the past 24 hours, returning capitalisation to the area of September-October lows; at the peak of the decline, it was approaching the current market cycle lows set in June. Leading altcoins in the top 10 fell from 5.5% (BNB) to 22.9% (Dogecoin).

At its worst moment of market capitulation on Tuesday night, Bitcoin was down to $17.1K, renewing 2-year lows. Many potential long-term investors in cryptocurrencies are now trying to assess whether we saw a final surrender yesterday, followed by a reversal. So far, we have doubts that the most worrisome part is behind us.

BTC's sharp decline earlier in the day came amid an abrupt collapse in one of the largest crypto exchanges FTX's own FTT token, which now trades at $4.6, having lost over 80% from $25.6 on Saturday. And all this on high trading volumes.

Another victim of the latest crypto chaos was Solana coin, which had lost 55% since Saturday before the crypto market went wild.

News background

On Tuesday evening, it was reported that Binance had agreed to acquire cryptocurrency exchange FTX amid investor panic and a liquidity crisis at what was once the third-largest cryptocurrency exchange. The news failed to stem capital outflows, and the cryptocurrency sell-off continued, albeit calmer.
Despite some resolution, the news did not trigger a market recovery. Some experts say what has happened threatens the crypto market with significant disruption.

Other observers point out that the collapse of the crypto market occurred on the day of the US congressional elections, which could have triggered selling in an environment of uncertainty, which is always bad for risky assets such as cryptocurrencies.

 

[FxPro_2022]

Gold's new glow

Alex Kuptsikevich, a senior analyst from FxPro reported that investor interest in precious metals is shining with renewed vigour as some investors see them as a safe haven amid the storm of the crypto market. Having broken above $1700, gold is showing the first signs of breaking the downtrend that has been in place since March this year.
Intraday on Tuesday, gold was up 3%, spurred by rising volatility in cryptocurrencies and overall positive dynamics in traditional financial markets.
But to be precise, gold showed an impressive jump as early as Friday, as the bulls managed to push the price out once again of the area of the lows of the last six weeks, and further, a whirlwind of events picked up and lifted it higher.
The powerful rally in gold on Friday and Tuesday stands out, for there was no rally in the stock indices on that day, and the collapse in the dollar only happened on Friday. This could be the first signal that we are seeing the beginning of a rebound in gold, and investors, who have been cautious in putting large amounts of capital into gold since late September, are now taking an active bullish stance.

Among the fundamental factors supporting the rise in the gold price is the increased buying of gold by central banks, which last quarter bought the maximum amount of gold since the 1980s. It is tactically difficult to persuade central bankers to buy bonds when prices are falling, and central banks of developed countries one by one say they are not finished with a rate hike, suggesting further pressure on bond prices. Meanwhile, overall risk appetite has risen in anticipation of a minor step up of hikes later, drawing attention to the cheaper gold.
This week, the price broke through its 50-day moving average at the end of the previous week, and on Monday and Tuesday, this line was already in active support. In addition, gold immediately managed to move above the former support line of July and September.
To be sure of breaking the trend, one should wait until the price crosses above the area of the previous highs near $1725. If that happens, the price might end the correction rather quickly and go to $1790-1800, which includes the 61.8% Fibonacci retracement levels of the declines since March, the local highs of August, and the 200-day MA.

 

[FxPro_2022]

China is spreading deflation again

Alex Kuptsikevich, a senior analyst from FxPro reported that a slowdown in economic activity in China and beyond is putting pressure on consumer and producer inflation.
The consumer price index slowed from 2.8% to 2.1% y/y in October, the lowest level since May. The producer price index was 1.3% lower than in October 2021, when its annual growth rate reached a maximum of 13.5% y/y in this cycle.
Remarkably, the fall in the renminbi has failed to reverse the price trend. Although the weakness in domestic prices can easily be put down to a tight 0-covid policy and a stronger-than-expected economic slowdown, the pace of price growth in China is still much closer to the notion of normal than in the USA and major European countries. For example, the latest data noted a PPI growth of 45.8% y/y in Germany, 41.9% in the eurozone average, 15.9% in the UK and 8.5% in the USA.
Once again, China may return to the deflationary supplier label it had after 2012. With the difference that back then this status carried negative connotations for the developed world, which tried to push up prices. Now the pressure on prices can be interpreted as an aggressive attempt to fight for market share.

 

[FxPro_2022]

Time to buy Crypto after capitulation?
Market picture

Alex Kuptsikevich, a senior analyst from FxPro reported that Bitcoin rewrote two-year lows on Thursday morning near $15,550, losing more than 27% from Saturday's local highs. CoinMarketCap estimates the total capitalisation of the crypto market to be at 839bn, down 6.7% from levels 24 hours ago and 21% below Saturday's peaks.
Ethereum is now a third cheaper than levels at the end of last week, and its sell-off started noticeably from the 200-day moving average, which had previously acted as resistance in April. Near the $1070 mark, there is a noticeable strengthening of buying, as in July.
The crypto market is now in a panic liquidation phase, occurring amid a raid on cryptocurrencies, which can be compared to the bank run in the early 20th century. The fundamental difference is that banking was already an established business back then, although regulation was in its infancy. The current crisis may be the catalyst for crypto regulation.
If we look at the situation from a market speculator's perspective, we are in the process of capitulation. Such moments often precede long-term reversals. But it is worth realising that despite Bitcoin's 5% rebound from the start of the day and the double-digit rise in yesterday's casualties, the sell-off may not yet be over.
In our view, the crypto market is now in the same phase where it was in late 2018 when the bulk of the decline was behind it, but the best speculative buying moment was still a year away.

News background

The prolonged, almost 5-month sideways slide has relaxed market participants. The sharp fall in crypto assets took traders by surprise. Investors have been forced to sell off cryptocurrencies to cover losses on loans secured against them due to margin calls. The FTX exchange itself, along with Alameda, may also have been selling off assets.
The most significant drop in the top-100 crypto was Solana, which collapsed by 49%, as one of the largest holders of SOL was Alameda Research, the investment company of FTX exchange head Sam Bankman-Fried.
Marathon Digital CEO Fred Thiel said his mining firm was the second-largest public company in the world (11,300 BTC) in terms of bitcoins stored, thanks to its retention of mined BTC. MicroStrategy remains the leader, with around 130,000 BTC stored in its wallets.
According to a survey by Nickel Digital Asset Management, 92% of professional investors are optimistic about the outlook for the cryptocurrency market, despite its decline.