Market Deep Dive: BTC and ETH Analysis Amidst Economic Indicators


This week, BTC traded in a tight range facing major resistance in the USD 67,000-67,300 range on Monday and Tuesday, and finding support at the level of USD 63,000 yesterday. As anticipated, the BTC halving on the weekend did not have a big impact on the price. Market sentiment in the cryptocurrency sphere appears to be predominantly influenced by macroeconomic news and its potential impact on interest rate cuts.

In light of lower-than-expected US GDP data, risk assets experienced a decline, suggesting reduced likelihood for rate cuts in June and a postponement to September. Accordingly, the first resistance for BTC is USD 67,000, then USD 68,200, followed by USD 70,000. On the downside, the first support is USD 63,000, then USD 61,200, followed by USD 60,000. BTC is currently stuck between USD 60,000 and USD 70,000. I am biased in the short to medium term towards the downside if there are no major surprises on the interest rates/macro side. However, often if everything looks bearish there’s the danger that BTC squeezes up first. If we break below the major resistance of USD 60,000, we might see the low USD 50,000 levels very quickly. On another note, Wednesday and yesterday saw negative total flows for spot BTC ETFs, with IBIT registering zero inflows on both days for the first time since launch.

Including the weekend, ETH fluctuated in the range between USD 3,000-3,300, and is currently trading around USD 3,150. ETH slightly outperformed BTC this week with the ETHBTC ratio starting the week at 0.0476 and peaking just below 0.0495. It is currently trading below 0.049. Hence, the first support is USD 3,000, then USD 2,860, from where it can very quickly go down to USD 2,700. On the upside, the first resistance to beat is USD 3,300, followed by USD 3,400 and then USD 3,620.

The 30-day BTC ATM implied volatility fell strongly from 68% to 55% (-13% WoW), while the 30-day ETH ATM implied volatility fell further from 67.5% to 60.5% (-7.5% WoW). Due to heavy options selling over the past days and markets trading in a tight range, the implied volas have collapsed. Looking at the 25-delta skew, it is still negative for BTC between the timeframes of 0-60 days, and for ETH between 0-90 days, which confirms the probability for sideways or downside being much more likely than breaking above the current range.

On Tuesday, both the US manufacturing PMI as well as the services PMI came in lower than forecasted, as well as lower than the previous month, signalling a slowdown in the US economy in April. The worse than expected quarterly US GDP growth (exp. 2.5%, act. 1.6%) for Q1 confirmed a slowdown in the recent months.

This morning, the BOJ kept interest rates unchanged at 0.1% after a momentous hike in April. However, the BOJ expects higher inflation and lower growth in the Japanese economy in the coming years. This dovish stance keeps questions about the Central Bank’s possibly hiking rates in the future, and therefore results in a dovish outlook for JPY.

This afternoon, all eyes will be on the US PCE Price Index data, which should give some further insights on the Fed’s interest rate decision next week.

Next week will see some major macro events, with all eyes on the Fed’s interest rate decision on Wednesday. Additionally, further key economic events to watch will be EUR CPI data, Chinese Manufacturing PMI, and US CB Consumer Confidence on Tuesday. The JOLTS Job Openings and the FOMC press conference will be on Wednesday, and US NFPs will be released on Friday. 

Read more News here

Do you want to unleash the full potential of digital assets?