Week-over-week performance:
- BTCUSD: 66,618 / +3.39%
- ETHUSD: 3,456 / -0.20%
- US10Y: 4.25% / +4 bps
- DXY: 104.34 / -0.01%
- GOLD (USD/OZ): 2,397 / -1.36%
- SPX: 5,564 / +1.20%
- NDX: 19,823 / -2.77%
- DVOL: 67.65 / +22.24%
- VIX: 15.33 / +16.76%
Looking Ahead – Economic Calendar:
- Wednesday, 24 July: US Flash PMI data, BOC Interest Rate Decision
- Thursday, 25 July: US Durable Good Orders, US Advance GDP (QoQ), US Bitcoin Conference
- Friday, 26 July: US Core PCE Price Index
On the macro side:
Last Thursday, the ECB kept rates unchanged at 3.75%, with Lagarde stating that the September meeting is ″wide open″ amid ongoing services inflation. Traders are pricing in rate cuts for September and December due to weak economic data and ongoing disinflation.
The day before, EUR CPI YoY came in at 2.5%, in line with forecasts, which has been quite sticky in this area since March 2024.
Chart 1: EUR CPI YoY
In the US, Initial Jobless Claims were worse than expected (expected: 229,000, actual: 243,000), while the Fed Manufacturing Index exceeded estimates. The market is pricing in nearly a zero percent chance of a rate cut at the end of this month. However, there is more than 90% consensus that the Fed will cut rates in September, with traders pricing in a more than 93% chance of at least two rate cuts by the end of the year.
Chart 2: Target Rate Probabilities Fed Meetings 31 July / 18 September
On the FX side:
The USD index is still below 104.5, but has recovered from last week’s low of 103.6. In yesterday’s session, the USD went slightly higher as investors digested President Joe Biden’s decision, which could add more volatility to the market. As a result, attention is now turning to this Friday’s US Core PCE data, which will provide further direction. If treasury yields remain high, the USD will strengthen; if they fall, it could create a more favourable environment for risk assets, including crypto.
On the crypto side:
Spot ETH ETFs have received final approval to begin trading today. Grayscale’s ETH Mini Trust will be the most cost-effective ETF after the fee-waiver period, which will last about a year for most issuers (the longest fee waiver period is set by Franklin Templeton until the end of 2025. However, with Grayscale’s Ethereum Trust (kept the high fees of 2.50%) sending more than USD 1 billion worth of ETH to the Coinbase wallet, the recent price action and conditions are rather indicating a sell the news event post-launch. Personally, I am rather biased that it will be difficult for ETH demand to outpace its ETH supply on the first few days, but the positive effect of the ETF should more be seen around the next few weeks/months.
BTC ETF spot inflows remained positive throughout last week, and yesterday’s inflows of over USD 533 million (over USD 500 million into IBIT) were quite strong, indicating a sustained positive shift in sentiment over the past two weeks. After Biden announced on Sunday that he will not accept the nomination for the presidential election, the crypto market is looking forward to the Trump-Vance duo leading the race for the presidential election. Trump is scheduled to speak at the Bitcoin Conference in Nashville this Saturday. The crypto community is hoping for hints about a potential US BTC strategic reserve, which would significantly impact Bitcoin’s global legitimacy.
In the perpetual futures market, total open interest increased by more than 11% WoW. Funding rates for BTC and ETH still remain below 10% APR, which is not so interesting for basis trades and suggests strong spot demand as confirmed by ETF flows.
BTC failed to stay above USD 67,000 this morning, a level that would have made an initial push to USD 70,000 very likely. The next major support level is USD 64,100, last Friday’s US opening price. I am biased that it would be healthier for the market to consolidate around the current range for a few days or weeks before attempting another push higher. A rapid move to USD 70,000 is likely to be rejected as spot sellers would step in again.
Chart 3: BTCUSD 1d
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