Market News from FxPro

The financial market is moving slightly against the main news flow, showing signs of recovery in demand for risky assets while data is getting worse.

According to the latest Ifo report, business sentiment in Germany is falling harder than expected, but that is not stopping euro buying in European trading on Monday. The same can be said for purchases of European equities, which are also rising on Monday.

The Ifo reports a drop in the business conditions index to 88.6 in July from 92.2 a month earlier. The index was below the current values for four months in 2020, and before that, from October 2008 to July 2009. These have been the most challenging times for the German economy with high uncertainty and credit market conditions.

Extremely low expectations are pulling the indicator down. The respective Ifo index is close to the extremes, seems in a financial crisis and is only a couple of steps away from the lows of the pandemic.

The markets are probably starting to speculate that too much negativity is already priced in. So the authorities and the central bank might begin to slow down the pace of tightening the screws.

The US debt market is pricing in more and more chances of a recession, and politicians are shifting the emphasis away from the word recession, pointing out that two consecutive quarters of GDP decline should not automatically be called a recession.

This is reminiscent of the 'temporary' inflation story a year earlier when politicians softened the agenda by giving events other definitions. This temporarily relieved markets but, in fact, contributed to an accumulation of alarming trends. As a result, central banks now must do more to fight inflation than it took them to start earlier.

Good or bad in the long run, EURUSD is now enjoying solid buying on the decline to the 1.0200 area, although not failing on attempts to climb above 1.0270 since last week. We will only get a meaningful bullish victory signal when EURUSD rises above 1.0350. Until then, we can only talk about a technical correction after oversold conditions.

The German DAX40 is buying back from the 13000 level, but it gets too heavy when it rises above 13400, where the 50-day moving average is now running.
Bitcoin has lost 3.5% in 24 hours, having rolled back to $21,100 at the time of writing. Meanwhile, Ethereum has lost 6.1% in the same time frame, to $1430. Altcoins in the top 10 have fallen from 3.5% (XRP) to 6.8% (Solana). ¬¬

Total crypto market capitalisation, according to CoinMarketCap, fell 3.7% to $971bn overnight.

Bitcoin continued its corrective decline near its 50-day average on Monday but began to pull away from it on Tuesday morning. Without support from stock indices, the cryptocurrency market is buckling under its own weight with no meaningful growth drivers.

This situation is fuelling expectations of a prolonged lull, which fits into historical patterns. The history of previous cryptocurrency cycles teaches us that even after a bottom is reached, buyers may be slow to buy, as a sustained rally should be expected about a year after the previous peak. But even then, the last, brightest episode of FOMO-based growth will have to wait about another year. The history of cryptocurrencies is still too short to count on any trends. However, a prolonged pause in hype names after a massive sell-off is a familiar phenomenon in equities as well, though without specifying a period.

According to Glassnode, around 80% of bitcoins are already concentrated in the long-term holders' hands, which could indicate the 'bottom' is near.

Retail investors have rushed to buy up cryptocurrency stocks. In 10 days, capital inflows into crypto stocks totalled nearly $1 billion, according to VandaTrack.

A class action lawsuit has been filed in the US against Celsius Network, which filed for bankruptcy on 14 July. The crypto lending platform is accused of violating the Securities Act by selling unregistered securities.

The developers of Shiba Inu are preparing to issue a Visa-backed card to accelerate the burning of SHIB, thereby boosting the price.
Bitcoin is clinging to the $21,000 level, having changed little in the past 24 hours, while Ethereum is adding 1.7% overnight to $1450. Prices of the top altcoins range from -0.6% (Cardano) to +4.2% (BNB).

The total capitalisation of the crypto market, according to CoinMarketCap, rose 0.85% to $978bn overnight.

Bitcoin came under increased pressure on Tuesday, but the sell-off stalled during the New York trading session as it was supported by buying on declines below 21,000.

Markets await the US Federal Reserve's rate decision to be announced on Wednesday and are set to see the Fed's another 75 points hike, but futures are pricing a 20% chance of a 100-points hike. Some speculators are rushing to bet that we will see a relaxation rally when the most pessimistic expectations do not come true.

According to CoinShares, capital inflows into crypto funds last week amounted to $30M, of which $19M for BTC. At the same time, investments in funds, which allow opening shorts on bitcoin, dropped sharply (to $0.6 mln). The previous week's total capital inflows sharply revised from $12M to $343M.

The number of ransomware attacks fell by 23% amid the decline in the crypto market, SonicWall noted.

The US Commodity Futures Trading Commission (CFTC) will create a new Office of Technology Innovation to regulate the cryptocurrency industry.

According to Bloomberg, the US Securities and Exchange Commission is conducting a full-scale investigation into token listings on Coinbase that could be treated as securities.
Bitcoin has surpassed the $23170 mark, adding more than 9% in the past 24 hours. Ethereum jumped 13% to $1640. Other leading altcoins in the top 10 have gained between 6% (BNB) and 15% (Polkadot).

The total capitalisation of the crypto market, according to CoinMarketCap, rose 8.9% overnight to $1.06 trillion.

Bitcoin buying picked up sharply on Wednesday following the Fed's decision and subsequent comments. The crypto market has once again proved that it is growing stronger than equities regarding restoring demand for risky assets. While policy tightening is a negative for asset valuation, it was already priced in, and the subsequent relatively neutral signals from Chairman Powell added strength to new buying in equities and cryptocurrencies.

Technically, BTCUSD has moved back above its 50-day moving average in a strong move and continues to rise as of Thursday morning. We will draw attention to the $24K area, where earlier in July, growth momentum stalled. The ability to gain further strength could increase the confidence of the market participants that the bottom is behind us.

The International Monetary Fund (IMF) released a report on the global economy, noting that the fall in the cryptocurrency market has not affected the global financial system's stability. The IMF suggests that the crypto market will undergo a painful transformation, with a string of bankruptcies of cryptocurrency companies continuing.

Katie Wood's ARK Invest fund sold $75m worth of Coinbase shares because of an SEC investigation. The regulator accuses some former top Coinbase executives of insider trading.

According to media reports, the US Treasury suspects cryptocurrency exchange Kraken is violating sanctions against Iran.

The US Consumer Financial Protection Bureau (CFPB) will investigate the use of digital currencies for payments and increase oversight of technology companies as they enter the traditional financial sector.

Tether, the issuer of USDT, the biggest by capitalisation stablecoin, has promised to zero in on commercial paper reserves from the current $3.7bn no later than November and clarified that they do not hold Chinese securities.
Bitcoin closed Thursday near $24,000, retesting that area after a failed attempt to climb higher in the middle of last week. The first cryptocurrency has added 3.8% over 24 hours, about as much as it has gained in the past seven days. Ethereum has added 4.8% in 24 hours, to $1720. Altcoins from the top 10 gained between 3.8% (BNB) and 10% (Solana).

The total capitalisation of the crypto market, according to CoinMarketCap, rose by 3.8% to $1.1 trillion overnight.

Bitcoin has closed above its 50-day moving average for two days. Closing the week above 22,700 would be a telling return to territory above the 200-week moving average.

Such a technical disposition could inspire retail buyers. Other factors are at work for institutionalists, notably a recovery in demand for risky assets and a pullback of the dollar from multi-year highs.

However, the longer-term and whole picture is working against the buyers. As long as we see tightening monetary and economic conditions, the crypto market has to move against the tide. In addition, Guggenheim Partners' widely held view remains that the industry has not yet been "cleared" of distressed participants. Crypto will be in trouble long-term because of regulatory pressure and a lack of strong institutional support.

According to the IMF, the cryptocurrency market will fall if the economy goes into recession. Preliminary US GDP data released on Thursday confirmed the start of a technical recession in the country.

The UK has suggested that cryptocurrencies be treated as a new type of property, making it much easier to protect investors in this instrument.
Bitcoin has lost 2.1% in the past 24 hours, pulling back to $22.9K. Ethereum has fallen 6.5% over the same period, to $1580. Top altcoins fell from 2.7% (XRP) to 12% (Polkadot).

Total cryptocurrency market capitalization, according to CoinMarketCap, fell 3.7% to $1.05 trillion during the day. The cryptocurrency Fear and Greed Index fell further to 31 by Tuesday morning, marking the exhaustion of last week's bullish momentum.

Although BTCUSD formally rewrote local highs at the end of last month, as in two other episodes since early July, price gains are quickly losing momentum, and the surge is followed by selling pressure.

Crypto Dynamics

These cryptocurrency market dynamics point to a continued impressive cryptocurrency supply overhang, although Bitcoin confirmed the upward channel in July. The rate is potentially heading towards the channel's lower boundary, which now coincides with the 50-day moving average and passes near $21.7K. A decisive dip below $21.0K would be evidence of a break of this upward consolidation and could trigger a true market capitulation. For now, however, there are more signs that the market is gradually warming to buying.


Popular Opinions

According to CoinShares, net capital inflows into crypto funds last week amounted to $81 million, of which $85 million came from BTC investments. At the same time, investments in funds, which allow opening shorts on bitcoin, decreased by $2.6 million. The total monthly inflow in crypto funds for July amounted to $474 million and was the highest in the current year.

Capriole Investments noted that the past two months had seen a capitulation in many of the most critical metrics for bitcoin. This is a great time to invest in BTC and digital assets. The crypto fund expects the next 6-12 months to provide the best opportunity to enter this market for years to come.

MineXMR, the largest mining pool in the Monero ecosystem, announced its closure on 12 August. In February, Monero community members were concerned about the concentration of mining capacity in the MineXMR pool, which carried a potential 51% attack risk.
WTI oil lost more than 4.5% on Monday, returning to the area of last month's lows and marking a new stage of the downtrend.

Oil dynamics are tightly linked to the expected economic growth rate and appear weakly linked to gas prices. The trend in oil has already turned downwards in the first half of June, while gas has been rising strongly for most of July, only beginning to correct in the last few days.

The WTI price slumped sharply by more than 4% on Monday and stayed below its 200-day moving average. Earlier in July, this curve acted as a strong support line several times.

For Brent, it is even more symbolic, as yesterday's sell-off took it below $100. The British benchmark has managed to stay above its 200-day average, but getting well below the important round level could trigger a sell-off in the weaker hands. That is, from those speculators who have been making bullish bets.

The global economic slowdown, in our view, is a more significant factor influencing the oil price than fears of supply cuts. If we are correct, we might see a local sellers' victory this time and consolidation below the 200-day average, which we have not seen since November 2020.

This week, US jobs data could be critical in determining the direction of oil in the future. In case of weak economic data, commodity prices may increase their decline. A new upward momentum cannot be ruled out if the following jobs report surprises with its strength. However, the latter scenario looks less likely.

A collapse in WTI crude under the 200-day average would open a direct route to $84, the cyclical highs of last November. For Brent, a further bearish sentiment would open up the potential for a correction to $85-86.
Bitcoin continues its soft landing towards the lower end of the upward corridor, losing around 0.5% over Tuesday and retreating to $23K. Ethereum has strengthened by 2.7% to $1630 in the past 24 hours. Leading altcoins moved from down 3.8% (Solana) to up 2.6% (BNB).

Total cryptocurrency market capitalisation, according to CoinMarketCap, rose 1.1% to $1.06 trillion overnight. The Cryptocurrency Fear and Greed Index added 3 points to 34.

Cryptocurrencies await further signals from policymakers or the macro economy, with a total capitalisation hovering around $1 trillion. The market managed to stay above the 2018 highs. The market has moved out of the extreme lows and removed oversold conditions.

Previous crypto cycles

However, we conclude from past crypto history that even if the bottom is passed, there could be a prolonged lull and a very uneven recovery ahead. A powerful year-long surge, as it has been since early 2017 and October 2020, follows only after a long lull.

Due to falling real incomes (wages are growing slower than inflation) in much of the global economy, people will be less inclined to be quite adventurous to seed investments in cryptocurrencies. This means that the industry is now entering a stress testing period in which only the most viable projects will survive. For crypto enthusiasts, the most prudent approach may be to focus on the most global projects, such as BTC, ETH, and products that have become businesses, not just industry hype.

Stablecoin USDT's capitalisation has risen for the first time in three months, indicating consolidation and further growth in cryptocurrencies. However, it could also prove to be a sign of an increasing number of people's interest in transactions bypassing the traditional banking system due to both the sanctions against Russian banks and the declining confidence in traditional finance in less developed parts of the world.

Popular Opinions

Meanwhile, Glassnode questioned the continuation of bitcoin's recovery rally, citing that on-chain indicator data has not improved fundamentally in recent days. Online activity remains subdued, suggesting little new demand is coming in.

According to the Morgan Creek CEO, bitcoin will not enter a new growth phase until 2024, when the halving will take place. However, the cryptocurrency's current price is too low; a fair price for BTC should be around $30K.
Silver has pulled back 3% in the last 18 hours while Gold has lost 1.2% in the same time frame. The pullback came as some investors exhaled after China's reaction to the Pelosi plane landing in Taiwan. Investors were banking on a slight chance of a sharper escalation than they saw.

On the technical analysis side, yesterday's pullback prevented the precious metals from breaking out of the grip of a short-term bearish trend, exposing the 50-day moving average as resistance.

The situation, in this case, looks double-edged. A bearish view on silver suggests that the momentum of the rise since the beginning of last week was a corrective bounce to 76.4% from the declines from April's highs to July's lows. Resistance in the 50-day moving average served as an additional pressure factor, keeping silver within the short-term downtrend. In addition, silver also bounced back when it tried to return to the 200-week average, further encouraging sellers.

The bullish scenario in silver suggests that yesterday and today, the market cooled down a bit after the latest momentum. The drawdown to two-year lows and the previous meaningful consolidation area made silver attractive for long-term buyers. This is doubly true with easing expectations of further monetary policy tightening in the US and other major economies.

Gold has seen more sustained buying, with the price already showing positive momentum on Wednesday morning. This relatively quick return to growth suggests less about the persistence of geopolitical risks and more about gold's continued attractiveness after touching the two-year lows earlier last month.

On the weekly gold timeframes, the RSI has been recovering strongly after approaching the oversold area and staying close to its 200-week moving average in July. Also, on the longer-term gold charts, the two-year sidewall looks like a prolonged correction after an upside impulse.

This week we see an intensified tug-of-war between bulls and bears, which might spark a further strong move in the next few years. Traders and investors, even long-term ones, should not overlook the signals that silver and gold could give this week, particularly if we see an apparent capitulation by either side.
Inflation in Turkey continues to gain momentum. A fresh set of monthly statistics showed consumer inflation accelerating to 79.6% y/y and producer inflation to 144.6% against 78.6% and 138.3% a month earlier, respectively. The rise in the PPI rate is a continuing adverse signal that the inflationary trend in CPI is unlikely to change over the next few months.

Meanwhile, monetary policy remains on hold as the central bank has kept its key rate unchanged at 14% since the end of last year.

Increasing differences between inflation and key interest rates keep pressure on the Turkish lira, which is again trading around the lows of last December and June against the euro. Against the dollar, the lira has already updated the highs of June and is approaching 18.

The nature of the intraday movement in the lira indicates a somewhat artificial fluctuation in the highs, with an apparent hold on the historic lows.

However, it is worth realising that central bank interventions and tight capital controls are only effective in the short term to calm the panic. Such a confrontation usually ends in a one-off devaluation. But it is impossible to predict how long the Central Bank will resist the market.