Market News from FxPro

[FxPro_2022]

Bitcoin is calmly forming a bottom
Market picture

Alex Kuptsikevich, a senior analyst from FxPro reported that the crypto market remains detached from movements in traditional financial markets. Bitcoin continues to hover around $17K, despite the S&P 500 is down 1.5% and the Nasdaq down 2%. The capitalisation of the entire crypto market is unchanged overnight, remaining at $853bn.
Cryptocurrency enthusiasts are waiting for ideas and news that could move the market forward. And the very fact that stocks are falling without dragging crypto down points to the technical nature of the latest correction after an impressive rally.
Glassnode recorded a weakening pace of bitcoin investor capitulation. The trend in realised losses after the FTX collapse has subsided, while there has been a positive shift in on-chain activity.
On weekly timeframes, the current lull forms a bullish divergence between the price and RSI chart, with lower local lows corresponding to higher index levels. This is a signal of bottom formation, often followed by a reversal to the upside. It is usually relatively slow and fragile at the first stage. At the end of 2018, we saw almost four months of near-zero momentum before a rally began that tripled the price.
News background.

Bitcoin's mining difficulty fell 7.2% to 34.24 terahash amid a shutdown of outdated, unprofitable ASIC miners. This is the most significant drop since July 2021, when China banned mining.
Goldman Sachs plans to spend "tens of millions of dollars" to buy or invest in cryptocurrencies whose valuations have fallen due to the FTX collapse.
Texas Senator Ted Cruz said cryptocurrency mining is essential to the US energy system. He said he invests in bitcoin because the government does not control it and only buys BTC every week.
Mad Money show host Jim Cramer believes the cryptocurrency market will collapse in 2023, so he urged investors to sell all their crypto assets.
Renowned cryptocurrency sceptic Peter Schiff has again predicted a massive collapse of the entire cryptocurrency market. He believes the BTC exchange rate could fall as low as $5000.
Former trader Jordan Belfort, known as "The Wolf of Wall Street" and who previously predicted the collapse of the FTX exchange, urged investors to stay away from all cryptocurrencies except Bitcoin and Ethereum.

 

[FxPro_2022]

Covid lockdowns hinders China's trade

Alex Kuptsikevich, a senior analyst from FxPro reported that last month, China's harsh lockdown measures negatively impacted foreign trade. Exports fell by 8.7% YoY; imports lost 10.6% YoY. Economists, on average, were expecting half the rate of decline. Trade surplus shrank to $69.84B in November from $85.15B a month earlier and is much weaker than the forecasted $79B.
Overall, the figures are far from disastrous. Cumulatively, over 11 months, exports are up 9.1%, and imports are up 2%, marking a slowdown but not yet a decline. This is the high price of tight travel restrictions, easing gently in recent weeks. The loosening of these restrictions looks more like a concern for the economy but not a concession to protesters.

China's foreign trade decrease in November should also be seen as a sign of how monetary tightening and the severity of energy prices in Europe are hurting the economy. For markets, such data is a new reason to reduce risk appetite, which we see early on Wednesday. Also, since the beginning of the week, the offshore renminbi has stabilised just below 7.0 to the dollar after an impressive 5.5% increase during November.
The released batch of data may be followed by further easing the zero- covid policy to avoid unnecessarily restraining of the economy. Still, it is also possible that we will see further monetary policy easing (good for the stocks and bad for the renminbi).

 

[FxPro_2022]

Oil seems to be heading for $62

Alex Kuptsikevich, a senior analyst from FxPro reported that WTI crude is down to $73, while Brent is approaching $78, losing 2% since the start of the day and almost 10% since the beginning of the month. Despite rumours about possible quotas cut, OPEC+ keep them for another two months, leading the price to drop. We expect pressure on prices to persist soon, with prices likely to plunge into the $62-65 area.
Despite Russia's warnings that the imposition of price caps on its oil from G7 and Australia will cause an uncontrollable price spike, the market reaction is quite the opposite. Oil always looks like a leveraged bet on the economic cycle, dropping sharply during the economic slowdown. In addition, the price cap did not cause an immediate supply shock while demand prospects have worsened due to the threat of recessions in the eurozone, the UK and the US in coming months.
Oil traders are not yet frightened by the risks of reducing the global oil supply. Experience with Russian gas substitution has been better than initially feared. For oil, there is also an expectation that the decline in Russian production will be smooth enough, allowing other producers to ramp up supply to increase their market share.

A purely technical view of the price dynamics suggests that the decline is far from over. Oil rewrote the September lows at the end of November and has updated them again today. This looks like a second downside momentum after the corrective pullback from the end of September to 61.8% of the first leg down from June to September. The downside target in this pattern is levelled at 161.8% of the actual move. This is close to $50 per barrel WTI in our case.
However, such an ambitious plan by the oil bears is worth breaking into several intermediate steps. The first support looks to be the $70 area, from which the US government has promised to resume buying oil for reserves. We still need to determine if these purchases will be unlimited, forming a firm 'floor' for the price.
The next, deeper support line appears to be the $62-65 area, where the oil turned from a decline to a rise in August and December last year. This is where prices could fall before the end of the year if the US and eurozone economies stop surprising with economic data and China continues to slow.
A plunge towards $50 is possible if the global economy is on the verge of a downturn and oil producers such as sanctioned Russia, Iran, and Venezuela can hold off cutting their production to supplement their budgets.

 

[FxPro_2022]

Robust eurozone data brought EURUSD back above 1.05

Alex Kuptsikevich, a senior analyst from FxPro reported that the single currency edged against most of its peers on Wednesday and managed to return to territory above 1.05, helped in no small part by published economic data.
In the morning, Germany surprised with a less sharp drop in industrial production, which fell by 0.1% in October against an expected 0.6%. France's trade deficit narrowed to 12.2bn in October from 17.2bn a month earlier.

The final Q3 GDP reading for the Eurozone showed economic growth of 0.3% QoQ and 2.3% YoY (down from 0.2% and 2.1%, respectively). The employment growth estimate was also improved, recording job gains of 0.3% QoQ and 1.8% YoY.
Employment is supported by the recovery of the economy from the coronavirus restrictions. But the fragmentation of the global economy is also likely to be a factor, forcing European companies to increase local production, reducing dependence on global supply chains (energy from Russia, goods from China).
Interestingly, in contrast to the optimistic Q3 employment estimates, Reuters published a selection of large European companies that have announced layoffs or frozen hiring recently. The dynamics in employment may have already turned from growth to decline, but last quarter's robust data buys some more time for the ECB to actively hike interest rates, which is suitable for the single currency.

 

[FxPro_2022]

Bitcoin hits the ceiling

Market picture
Alex Kuptsikevich, a senior analyst from FxPro reported that Crypto market capitalisation rose 2% over the past 24 hours to $858bn. Bitcoin added 2.3% to $17.2K, trading near the top of its range since November 12.
The technical picture remains the same for Bitcoin, and it will need to confirm a move out of its abnormally narrow range, whichever way it moves.
In the event of a further rise, such confirmation would see a consolidation at above $18K, near the 50-day moving average and local support from June through October. A downward move could lead to further decline if it sends the price below $16K.
News background
Amid the collapse of FTX and the crypto market, Coinbase's revenues could be halved by 2022, the company's CEO Brian Armstrong said.
A new CNBC poll shows that Americans' attitudes towards cryptocurrencies have deteriorated significantly amid the collapse of the Terra ecosystem and the bankruptcy of cryptocurrency exchange FTX. Only 8% of US residents have a favourable view of crypto assets.
The Ethereum team has said it plans to activate the Shanghai hardfork n March 2023.
Popular Twitter analyst PlanB, author of the stock-to-flow model, reiterated his confidence in the massive growth of bitcoin in 2023 or at least in 2024. According to him, BTC will be worth between $100K and $1 million after the next halving, with the first cryptocurrency expected to bottom in the next three weeks.

 

[FxPro_2022]

Volatility compression exhaust the crypto market

Market picture
Alex Kuptsikevich, a senior analyst from FxPro reported that volatility in Bitcoin and the crypto market remains as squeezed as possible. Continuing to hover near $17K, the price of the first cryptocurrency loses 1.5% in 24 hours, 2.5% in 7 days and is up 1.1% in 30 days.
Total crypto market capitalisation, according to CoinMarketCap, is down 0.5% for the week, to $854bn. The Crypto Fear & Greed Index was unchanged over the week, remaining at 26 points ('fear').
On intraday time frames, Bitcoin price remains near the upper end of last week’s range, maintaining (in our view) an equal chance of exiting the corridor in either direction. In both cases, it is prudent to wait for confirmation in the form of a rejection of 1000 one way or the other.
On the bulls' side is that Bitcoin has been falling for more than a year, having lost three-quarters of its peak price in that time. That is a very attractive disposition for long-term buyers. On the bears' side is that cryptocurrency is mainly interesting for speculators. With narrowing volatility and no growth, the exit of speculators from the market reduces liquidity, which puts additional pressure on prices on top of caution due to recent major crypto firms’ busts.

News background
According to The Block, there has been a significant decline in developer activity recently on the Ethereum network and other blockchains. The only exception has been the Arbitrum network.
US senators have introduced the Crypto-Assets Environmental Transparency Act, requiring miners to use more than 5MW of electricity to report greenhouse gas emissions.
The US Securities and Exchange Commission (SEC) has required US companies to publicly disclose their cryptocurrency investments and report doing business with any cryptocurrency firms.
The EU has set limits on cash payments of €10,000 to make it more difficult for such payments to be used for criminal purposes. This will make it much more difficult for users to remain anonymous when buying or selling digital assets. In addition, crypto transactions worth more than €1,000 will be audited by virtual asset operators and service providers to combat money laundering.

 

[FxPro_2022]

Stress test for Binance

Market picture
Alex Kuptsikevich, a senior analyst from FxPro reported that Bitcoin recouped all its early-day losses in the US session on Monday amid rising stock indices. BTC climbed above the $17,000 level, extending a period of almost no change in price that has become particularly pronounced this month. This is despite rising stock market volatility.
By Tuesday, the cryptocurrency Fear and Greed Index remained unchanged at 27 points (fear).
According to CoinShares, crypto investments saw an inflow of $9M after two weeks of outflows. Bitcoin investments increased by $17M, while Ethereum decreased by $2M. Investments in funds that allow shorts on bitcoin fell by $4M. Weekly trading volumes hit a new two-year low of $677. Sentiment towards bitcoin has steadily improved since mid-November, with total inflows of $108M since then, CoinShares noted.
That said, it would be incorrect to say that nothing is happening in cryptocurrencies. There is plenty of negative news.

News background
The Wall Street Journal and Reuters criticised Binance on Monday - a rare synchronisation by the iconic financial media. The exchange had to defend itself and publish evidence that Reuters had misinterpreted its words.
Nevertheless, it is reported that more than $1.4bn has been withdrawn in 24 hours, and as of Tuesday morning, Binance has paused the USDC withdrawal. The reason cited is that New York banks were closed. Traditional banks in such circumstances could not withstand the onslaught of deposits run as they did not have as much liquidity. As it turned out, FTX did not have the liquidity either. Will Binance withstand this test? The severe churn will likely continue for a few days, after which it will be possible to tell whether Binance is as honest and transparent as it claims.
A report by audit firm Mazars on Binance's bitcoin holdings has yet to convince that users' assets on the platform are safe, experts interviewed by The Wall Street Journal said.
Nobel laureate Ben Bernanke criticised cryptocurrencies. The Nobel Prize-winning economist is convinced that cryptocurrencies are doomed to fail regardless of whether they are regulated.

 

[FxPro_2022]

UK labour market reversal

Alex Kuptsikevich, a senior analyst from FxPro reported that UK data released today marked a sharp rise in jobless claims, marking a turnaround in employment recovery after covid restrictions. The ONS reported a 30.5K increase in claimant count for November after a 6.5K decline a month earlier and a sharply stronger-than-expected 3.5K. Previously there had been a trend of slowing job growth over the months, but new jobs were still being created.
The labour market often acts as a leading indicator for the economy, overshadowing the positive surprise from the GDP data released the previous day. Interestingly, steady buying in the currency market has continued, with the pound rising against the dollar for the fifth consecutive trading session, testing the 1.23 level.
The rise in the pound is now mainly due to a reassessment of key rate expectations, where the market is raising the forecast terminal level of the key Bank Rate. This reassessment is linked to still building up inflationary pressures and the fact that the Bank of England focuses on this rather than labour market indicators.
However, in the medium term, investors should still consider the labour market's weakness, as in Britain, this often quickly becomes a pressure in the real estate and services sector. If that is the case this time, too, the Bank of England will be quicker than currently expected to complete its policy tightening cycle and turn back to stimulative policy. We also note that the rise in unemployment caused by the economic problems of 2022 is well in line with the trend that started in 2016 and is likely to be linked to Brexit.

 

[FxPro_2022]

Another inflation release below expectations – another rally

Alex Kuptsikevich, a senior analyst from FxPro reported that US consumer prices added 0.1% for November, significantly weaker than the expected 0.3%. The annual price growth rate slowed to 7.1% YoY against expectations of 7.3%, 7.7% a month earlier and two percentage points below the June peak.
An important factor was the release of a lower-than-expected Core-CPI, which decreased to 6.0% YoY. This strongly indicates that the fall in commodity prices is also spreading rapidly across the basket.
For market players, such data reinforces expectations that inflation has proved more responsive to rate hikes and less sticky than warned at the Fed and feared by markets in previous months. The weak inflation strengthens hopes that Powell's tone tomorrow will be more amicable than in the last few months.

In terms of interest rates, this means that after three 75-point hikes, the main scenario is another 50-point increase, followed by two 25-point hikes.
If the inflation rate continues to react "favourably" to high-interest rates, the central bank's QE policy could already end at the end of 2023.
However, such expectations are very fragile constructions. Producer prices rise did not slow in November, adding 0.3% m/m for the 3rd month in a row. The annual growth rate is falling due to a high base effect but not due to a fall in prices. At the same time, the labour market remains "tight", suggesting further pressure on prices due to wages.
Thus, it may be too premature to celebrate victory over inflation and bet on an end to policy tightening by the Fed or other central banks.

 

[FxPro_2022]

Bitcoin is the first to show the market’s optimism

Market picture
Alex Kuptsikevich, a senior analyst from FxPro reported that Bitcoin was adding 5% intraday on Tuesday, at one point approaching 18K. The primary growth momentum co-occurred as the stock market after US inflation data boosted risk appetite.
The price increased a few hours before the release amid active European session. Perhaps Bitcoin's buying was facilitated by problems with USDT withdrawals from Binance, which prompted the search for liquid alternatives to Stablecoin.
In addition, the first cryptocurrency is trading just 0.8% below yesterday's peak, against a 3% decline in the Nasdaq100, which returned to its pre-release starting point three hours later. The risk hangs over the markets that the Fed might indicate in the evening that it does not share investor optimism on inflation.
Short-term, positive development and consolidation above $18K promise to be a strong bullish signal, opening a quick path to $20.8K.
News background
Popular YouTube crypto analyst Tone Vays expects bitcoin to rally before the end of the year, at least to $20,000, where selling could pick up. He says BTC fumbled for a bottom in November at around $15,500 and then broke the sideways range upward.
According to a JPMorgan study, the proportion of US adults who have ever transferred funds into a cryptocurrency-linked account has risen from 3% before 2020 to 13% as of June 2022.
According to Coinglass, bitcoin outflows from the Binance exchange intensified over the past week, with 40,150 BTC being withdrawn. The mass withdrawal of the cryptocurrency began after it was reported that the US Department of Justice was investigating money laundering through the trading platform.
The G20's International Financial Stability Board (FSB) will present proposals to regulate the cryptocurrency market in early 2023, with a specific timetable for implementation. The catalyst for the initiative was the collapse of FTX.