Market News from FxPro

[FxPro_2022]

Old altcoins are back in vogue
Market picture

Alex Kuptsikevich, a senior analyst from FxPro reported that Bitcoin rose 2.2% over the past week, finishing near $17K. On Monday morning, a new upward momentum lifted the price to $17.2K, a new high in almost four weeks. Over the week, Ethereum has added 8% to $1310. Other top-ten altcoins gained between 3.4% (XRP) and 17.9% (Cardano). Total crypto market capitalisation, according to CoinMarketCap, rose 5.3% to $850bn for the week.
The crypto market reacted positively to favourable news for the US stock market and negative news for the dollar, climbing to a new level. Such smooth growth is reminiscent of building a solid foundation for future recovery.
On Monday, Bitcoin draws its sixth daily growth candle, increasingly confidently trading above its 50-day average. The largest and oldest altcoins are also attracting market attention.
In addition to Ethereum, which is approaching December highs, Litecoin deserves attention. On Monday morning, its price jumped 7.5% to $82, which is in the region of November and December highs and near the highest levels since last May.
The interest in long-only altcoins is an essential indication of the work of long-term buyers. In Meanwhile, investors are busy assessing the most ambitious and advanced projects' vulnerability.

News background

The cryptocurrency community has heard rumours about the potential insolvency of the Huobi exchange amidst the outflow of funds, rumours of layoffs in the team and reductions in employee payments. Huobi has confirmed layoffs of around 20% of its staff. The NT exchange token has collapsed by 28% in the past month.
Justin Sun, a founder of Tron and advisor to Huobi, denied rumours of problems with the exchange, stressing that users' assets are safe. Meanwhile, CryptoQuant said that Huobi was "in a vulnerable position", while analytics service Arkham explicitly urged subscribers to withdraw funds from the site.
Digital Currency Group (DCG), troubled cryptocurrency broker Genesis's parent firm, announced the closure of its digital asset management subsidiary HQ Digital. Bloomberg reported that the SEC and other US regulators had investigated DCG.
Cryptocurrencies have no intrinsic value and should be regulated like gambling, ECB executive committee member Fabio Panetta said.

 

[FxPro_2022]

US statistics fuel hopes for more dovish Fed

Alex Kuptsikevich, a senior analyst from FxPro reported that data from the US on Friday supported risk appetite and provided a technically significant blow to the dollar against many of its peers.
The monthly report showed that the US economy created 223k new jobs in December after 256k a month earlier. The unemployment rate declined to 3.5%. The data came out better than expected but did not help the dollar. On the contrary, the markets interpreted the report as a sign of weakness rather than strength in the labour market, and it is hard to argue with such an interpretation.
Wage growth slowed to 4.6% y/y against 4.8% a month earlier and peaked at 5.6% in March. This data remains an anti-inflationary factor.

We also point to the decline in the working week. So strong is this fact that the index of working hours in the economy has fallen for the second month in a row, despite the growth of jobs. Companies prefer to grow in terms of staff but not wages. Possible reasons are that low-skilled people are more actively returning to the labour market. However, they had previously avoided returning to work because of covid pay and fear of contagion.
Aside from the NFP publication, the ISM Non-Manufacturing Index was also released on Friday, which suddenly fell from 56.5 to 49.6 (55.0 was expected). Values below 50 indicate a contraction in activity after 30 months of consistent growth. The index was pulled down by a slump in new orders and business activity. The employment and orders indices moved into a decreasing territory, indicating a pessimistic view of the near-term economic outlook. The ISM notes that such index values indicate a GDP contraction of around 0.2% for December.

The latest economic data package from the USA turned out to be a significant factor in favour of the Fed raising interest rates by 25 points at the start of February, continuing the slowdown. Furthermore, markets are still laying into the futures quotations that the Fed will reverse to a policy easing by the end of 2023 despite the bombardment from the FOMC members. The latter continues to reassure that they are ready to raise the rate above market expectations and do not intend to cut it this year.

The publication of reports showing the shrinking economy and looming recession caused a bearish reversal on the dollar index. The Dollar Index lost over 2% from levels before Friday's release. But more importantly, a strong move reversed the previous bullish candlestick, taking the Dollar Index back to 103.3, the lows of December and under the 61.8% Fibonacci retracement area from the early 2021 rally.
In addition, a "death cross" is forming on the daily charts above the DXY when the 50-day average slides below the 200-day average. And the price is under both lines at the same time, reinforcing the bearish signal. The following potential stopping points in the decline of the DXY are waiting at 101.50-102 (local lows of May-June) and 50% of the rally. A more distant target is 97.8-99.0.
In EURUSD, the first target for the bulls in a couple of weeks is 1.09 and up to 1.12 before the end of the first quarter.

 

[FxPro_2022]

Equities cautiousness holds back crypto again

Market picture
Alex Kuptsikevich, a senior analyst from FxPro reported that Bitcoin rose to $17350 on Monday but returned to $17200, showing zero momentum over the past 24 hours. The buying was held back by the waning momentum of buying in US equities.
Fed officials continue to press the market, warning that they are ready to raise the rate "markedly above 5%". Such statements are alarming because they come after labour market data showed increasing economic weakness.
As the source of the pressure on Bitcoin is pressure on equities, the overall capitalisation of the crypto market has not suffered as much, adding 0.3% in the last 24 hours to 850bn - near the highs of the last four weeks.
According to CoinShares, investments in crypto funds declined by $10m last week, with outflows continuing for the third week. Investments in Bitcoin were down $6.5m, and into Ethereum decreased $3m. Investments in funds that allow shorts on bitcoin were up $1m.
From the tech analysis side, the positive scenario remains prevalent as long as Bitcoin trades above 16800, which coincides with the 50-day moving average and the local resistance area at the end of December.
News background
Slightly highlighted is a $3 million influx in XRP, likely due to hopes for a positive outcome of Ripple's lawsuit against the SEC. However, CoinShares notes that trading volumes remain low, and sentiment in early 2023 is moderately negative.
US authorities are investigating US hedge funds' ties to cryptocurrency exchange Binance as part of an investigation into possible anti-money laundering violations, The Washington Post reports. According to Reuters, attackers laundered at least $2.35 billion in illicit funds through the exchange between 2017 and 2021.
According to Beosin, damage to the crypto industry in 2022 from 167 major attacks was about $3.6 billion, up 47% from a year earlier. Decentralised finance (DeFi) projects were attacked the most, as security in this sector leaves much to be desired.

 

[FxPro_2022]

Improving investor sentiment in Europe

Alex Kuptsikevich, a senior analyst from FxPro reported that Europe is climbing out of its economic hole. At least, this applies to business and investor sentiment. A new assessment from Germany's Sentix marked a recovery of the investor confidence indicator from -21.0 a month earlier to -17.5 - a significant improvement from October's bottom at -38.9.
The indicator's recovery exceeded expectations for the third month, surprising analysts. The increase is supported by milder weather, which allows for lower gas prices and boosts business confidence that it will survive this winter. But it is also noteworthy that the recovery is by no means hampered by the harsh tone of the monetary authorities, raising interest rates, and the strengthening of the euro by more than 12% from the September lows.

The eurozone economy is recovering more strongly, despite the energy crisis and a tough reshaping of logistical links. It is more alive than it has been since the global financial crisis, which for the most part, has affected US and UK banks.
The outperformance of European equities and the rise of the single currency in recent weeks shows that investors realise that they were overly spooked by the start of the autumn, and expectations are now becoming a little rosier. A more rapid deceleration in inflation than previously feared is adding to the positive sentiment.
However, it may be too soon to celebrate a victory for the European economy as the full effect of the interest rate increases is yet to be felt. On the other hand, it is positive for the Eurozone and the Euro exchange rate that China is switched to active stimulus. EURUSD is trading near 1.0740, near the highs since early June, and continuing positive economic surprises are setting the pair up for further gains towards the 1.09 area by the end of the month and at 1.12 by the end of the first quarter.

 

[FxPro_2022]

Improving investor sentiment in Europe

Alex Kuptsikevich, a senior analyst from FxPro reported that Europe is climbing out of its economic hole. At least, this applies to business and investor sentiment. A new assessment from Germany's Sentix marked a recovery of the investor confidence indicator from -21.0 a month earlier to -17.5 - a significant improvement from October's bottom at -38.9.
The indicator's recovery exceeded expectations for the third month, surprising analysts. The increase is supported by milder weather, which allows for lower gas prices and boosts business confidence that it will survive this winter. But it is also noteworthy that the recovery is by no means hampered by the harsh tone of the monetary authorities, raising interest rates, and the strengthening of the euro by more than 12% from the September lows.

The eurozone economy is recovering more strongly, despite the energy crisis and a tough reshaping of logistical links. It is more alive than it has been since the global financial crisis, which for the most part, has affected US and UK banks.
The outperformance of European equities and the rise of the single currency in recent weeks shows that investors realise that they were overly spooked by the start of the autumn, and expectations are now becoming a little rosier. A more rapid deceleration in inflation than previously feared is adding to the positive sentiment.

However, it may be too soon to celebrate a victory for the European economy as the full effect of the interest rate increases is yet to be felt. On the other hand, it is positive for the Eurozone and the Euro exchange rate that China is switched to active stimulus. EURUSD is trading near 1.0740, near the highs since early June, and continuing positive economic surprises are setting the pair up for further gains towards the 1.09 area by the end of the month and at 1.12 by the end of the first quarter.

 

[FxPro_2022]

The crypto market continues its move up
Market picture

Alex Kuptsikevich, a senior analyst from FxPro reported that Bitcoin returned to growth on Tuesday and was approaching $17.5K in early trading on Wednesday, developing its smooth ascent to levels last seen in mid-December.
Total crypto market capitalisation has risen 1% in the last 24 hours to $857bn, while top altcoins are adding between 0.1% (Cardano) and 3.9% (XRP).
Bitcoin will confirm its bullish trend if it consolidates above 17800 at the end - the highest close of the day in December. In this case, the sequence of higher highs will be started, whereas, since November, we only have a sequence of higher local lows.
News background

Gemini co-founder Cameron Winklevoss in another open letter, called on Digital Currency Group (DCG) head Barry Silbert to step down due to $900 million in outstanding debt.
Despite DCG's accumulated problems, the price of bitcoin trust Grayscale (GBTC) rose 12% overnight thanks to news of Morgan Stanley's $3.6 purchase of Grayscale Investments' bitcoin shares. The discount in the value of GBTC relative to NAV (bitcoin market price) fell to 38% from a record 49% recorded on 13 December.
The former CTO of the bankrupt FTX exchange has begun cooperating with the investigation, which could shed light on the details of multi-million-dollar donations to US politicians by FTX and its former head Sam Bankman-Fried.
Meanwhile, DeFi project Ondo Finance has launched tokenised US Treasury bonds.

 

[FxPro_2022]

Japan's Inflation Rate Continues to Climb

Alex Kuptsikevich, a senior analyst from FxPro reported that the deflationary days in Japan will become history for at least the next few years. The released advance data from Tokyo yesterday pointed to a further acceleration in the year-on-year price increase. The overall CPI rose from 3.7% to 4.0% last month, and excluding food and energy, rose by 2.7% y/y. For the former index, these are highs in more than 40 years, and for the latter, they are more than 30.
Fast Retailing, the owner of Uniqlo, was shocked today with the announcement of a 40% pay rise. This is a separate but telling case, signalling a change in a multi-year trend towards cost-cutting. If this case becomes a trend (albeit not with such a shocking increase), it risks triggering the inflationary spiral that the Central Bank has tried in vain for years. For companies, wage increases could be the start of competition for labour resources and consumers, a source of both higher income and higher costs, as wage increases will sooner or later begin to be built into prices.

Inflationary news is good for the Japanese yen as it sets the stage for a tightening monetary policy by the Bank of Japan in the coming months. In the previous two months, the USDJPY has retreated 13.5% from a peak of 152 to 132.5. Nevertheless, the pair remains high by historical standards and is still 30% higher than at the start of 2021, further boosting inflation trends: prices in Japan continue to rise while US and European annual inflation has been declining for the past few months.

 

[FxPro_2022]

Bitcoin breaks through $18K and fights downtrend

Market picture
Alex Kuptsikevich, a senior analyst from FxPro reported that Bitcoin rose on Wednesday on the back of stock gains and strengthened further on Thursday morning. In the low-liquid morning market, stop-loss orders were triggered, pushing the price up 4% within an hour and a half. At the peak, the price climbed to $18.3K but then retreated to $18.0K.
Santiment estimates that crypto whales resumed buying in early January. In five days, addresses controlling between 1,000 and 10,000 coins increased their reserves by more than 20,000 BTC.
Realised volatility in bitcoin and Ethereum fell to extreme lows, which historically preceded explosive moves in either direction, Glassnode said.
Registering its 9th consecutive trading session of gains, Bitcoin is testing the downtrend resistance line and the area of previous local highs. Therefore, today's bitcoin momentum will likely be decisive for the next few days and may even register a long-term reversal, returning the market to the active buying phase.
On the other hand, the RSI on the daily charts has entered overbought territory as a long lull preceded the last rally. Are the bulls getting tired? We will find out in the next couple of days.
News background
Galaxy Digital founder Michael Novogratz said that we shouldn't expect cryptocurrencies to fall significantly, but it's too early to talk about a broad recovery. According to him, the cryptocurrency industry needs time to lick its wounds and restore confidence. But BTC and ETH have stabilised in recent months and have even risen in recent days.
Bloomberg strategist Mike McGlone said he believes in the future of the first two cryptocurrencies. Bitcoin and Ethereum will perform better than other assets, but they will still come under pressure when the stock market falls. McGlone is confident that ETH will hold support at $1,000.
According to Glassnode, the popularity of the stable USD Coin (USDC) has risen sharply since the collapse of FTX. Users are more likely to choose this stablecoin because of monthly audits by accounting firm Grant Thornton on USDC and the collateral of short-term US government bonds.

 

[FxPro_2022]

Chinese inflation turns to acceleration

Alex Kuptsikevich, a senior analyst from FxPro reported that China picked up the torch this morning with the publication of national inflation data. In December, the consumer price index rose from 1.6% to 1.8% y/y. Producer prices, an important leading indicator for national and global inflation, are losing 0.7% y/y, the third consecutive month of y/y decline. While consumer prices matched expectations, producer prices came in well below analysts' average forecast of -0.1%.
In contrast to much of the world, China faces low rather than high inflationary pressures - the tail-end effect of austerity policies due to quarantines that have stifled economic activity. Some are suggesting a contraction of the economy in the first quarter, and the trend of a sharp slowdown coupled with widespread unrest was a fundamental reason for the December withdrawal of the 0-covid policy.

Overall, the opening of the economy promises to be a crucial pro-inflationary factor capable of pushing up global commodity prices. But China also buys more from Russia and Iran at a discount and is almost a monopoly buyer. At the same time, China is re-establishing coal purchases from Australia, which can also keep domestic prices down.
In the same direction, the appreciating renminbi has risen by 2.3% against the dollar since the start of the year and by 8% from its peak in November to 6.75 USDCNH, where the pair had consolidated before from May to August. On the weekly charts, the USDCNH struggles for long-term trends as the pair trades between the 50- and 200-week averages. Overcoming these levels in the last three years has triggered powerful moves. And now, similarly, it could be the starting point for a strong movement.

 

[FxPro_2022]

Nasdaq100 tests crucial levels

Alex Kuptsikevich, a senior analyst from FxPro reported that US inflation data promises to directly impact Fed policy, to which the Nasdaq100 is the most sensitive among key indices. The heavy reliance of the index on inflation and a set of significant key levels makes us watch the Nasdaq100 closely today and in the week with double attention.
After managing to turn to the upside at the end of last week, the Nasdaq100 index has added an impressive 3.3% since the beginning of the week, rising to 11,400. The latest increase brought the market to another attempt to reverse the downtrend. The inflation data coming out on Thursday, which has become the primary economic market mover in recent months, is set up so that we may see the outcome of this battle in the coming hours.
The Nasdaq100 received clear support on dips to the 10,700-area last October and December. From about the same levels, the rally in September 2020 started. Thus, the bulls defended basic levels, which is not enough to start a new rally.

Despite the "double bottom", the Nasdaq100 maintained a sequence of declining highs, and the sellers brutally crushed the attempt of the market to rewrite the local highs in December.
The moving averages are also pointing to the importance of momentum. On the daily timeframes, the Nasdaq100 is trying to return above the 50-day moving average. By the way, the same moving average has been supporting the Dow Jones for a month. Successful consolidation of the Nasdaq100 above its 50 SMA would probably take the next target of the 200 SMA, which is now close to 12000, coinciding with the reversal area of December and generally represents a more critical trendline.
On the weekly charts, the 11500 area, where the 200-week average passes, looks like an important trend signal level. In 2018 and 2020, approaching this area attracted long-term buyers. From October through December 2022, declines below that curve were also quickly redeemed, but buyers ran out of steam in the year’s final weeks. This week looks more encouraging, but this may change in a matter of hours.