TA Tuesday: A Week of Twists and Turns in the World of Digital Assets

Week-over-week performance:

  • BTCUSD: 28,236 / +2.12%
  • ETHUSD: 1,588 / +0%
  • US02Y: 5.10% / +12bps
  • DXY: 106.36 / +0.18%
  • GOLD (USD/OZ): 1,916 / +3.12%
  • NDX: 15,172 / +0.83%
  • VIX: 17.2 / -2.76%

On the macro side:
With macro figures largely in line with expectations, markets exhibited minimal movement.
Amid the ongoing earnings season, I am keeping a close eye on tech companies, as their performance may provide insights into the digital asset landscape.

Another area of close observation is the unfolding developments in conflicts.
While the market impact remains subdued as long as it remains regional, an expansion may cause bitcoin to take a defensive role, leveraging its digital gold value proposition.

Looking ahead:
Tuesday brings US Retail Sales and China GDP into the spotlight.
Wednesday follows with the UK CPI.
Thursday features the US Philadelphia Fed Manufacturing Index, US Jobless Claims, and a keynote speech from Fed Chair Powell.

On the FX side:
With a busy economic calendar, intraday moves in the market have been notable, but the overall landscape remains unchanged.
Looking at the DXY, unless significant news disrupts the scene, I expect a consolidation phase between 105.87 and 106.70, supported by a calming RSI.
A downside break could lead to an accumulation around the lower 105 level, where I’m eyeing a potential Head and Shoulders pattern.
On the downside, resistance looms at 108.65.

Chart 1: DXY 1d

On the crypto side:
Another eventful week in the crypto sphere.
A tweet from Cointelegraph claiming SEC approval of the iShares BTC spot ETF immediately sent the market into a frenzy.
Despite the lack of an official source, prices jumped 7.5% within minutes, briefly touching the $30k mark, and BTC’s dominance peaked at 52.6%.
Unfortunately, the excitement was short-lived as Blackrock later refuted the rumour, leading to a BTC spot sell-off.

The aftermath is disheartening for the crypto industry and once again reinforces Gensler’s claims about the susceptibility of crypto spot markets to manipulation, thereby hindering the approval of spot ETFs.
It underlines the importance attached to the approval of a crypto spot ETF, with significant capital eagerly awaiting the resolution of this regulatory puzzle.

The landscape seems to have changed after yesterday’s event, ushering in a new regime, even if the fast money has already left.
The prevailing conditions of low margins, tighter internal credit risk policies, and reduced liquidity make it clear that a spot trading short squeeze is a distinct possibility.

Given these factors, it wouldn’t be surprising to see the unwinding of many short positions.
At the same time, there’s been some notable positioning ahead of a potential BTC spot approval, with Bloomberg analysts revising the likelihood of an approval by 10 January to 90% from the 75% previously.
And yet the Digital Gold theme could be a thing. On the other hand, the DeFi narrative is very different.

Considering this dynamic, I see $28k as a robust support level, while $28.7k marks the initial resistance, followed by a significant hurdle at $30k.
On the downside, the trend line continues to provide significant support around the $26.5k level.

Chart 2: BTCUSD 1d

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