After BTC stayed in the USD 60,000 area over the last weekend, we saw several retests of the USD 57,500 level on Monday and on Tuesday night. Following the 50-basis point rate cut by the Federal Reserve, risk appetite has returned to the cryptocurrency market and risk assets in general.
The breakout from the downward trendline (forming a higher low narrative; at USD 52,500, and then USD 57,500) has boosted BTC’s momentum and sentiment on higher time frames. This pushed it to USD 64,000 this morning. The daily EMA 50bands around USD 60,850 and then the daily EMA 100 bands around 60,000 can be seen as immediate support, while a break below USD 57,500 can be seen as bearish confirmation.
Nevertheless, on the upside BTC’s next big resistance level is around USD 65,000 from where it can go to USD 68,000 and then USD 70,000. Should we quickly flush through USD 65,000, I would be more biased towards a quick deeper dip, from where one needs to see if the first support levels are held. If we slowly grind higher, I would see this as a bullish confirmation.
On another note, after dropping below the 0.04 level over the weekend, ETHBTC climbed back above 0.04 this morning. This rebound may be driven by bullish sentiment and hopes for an altcoin season, signalling a potential return of the bull market.
The 30-day BTC ATM implied volatility remained steady at 51% (0% WoW), while that of ETH saw a slight increase from 59% to 60% (+1% WoW). Following the recent move, the 25-delta skew is strongly positive for BTC over the 0–7-day time frame, slightly positive over the 7–30-day time frame and becomes steeper and more positive for longer time frames. The skew is similar for ETH, but more pronounced, with a negative skew for 7-30 days, and a higher positive skew across longer time frames than BTC.
After the 50 bps rate cut by the Federal Reserve on Wednesday, the updated projections hint at another 50 basis point cut by the end of 2024 and a further 1% decrease in 2025. The key economic data to watch, based on Powell’s comments, are employment (4 October) and Q3 USD GDP (30 October, with Q2 revisions on 26 September). It remains to be seen if the current bullish trend will be supported by the upcoming data, but it’s clear we are not back in a fully risk-on environment. The market remains highly sensitive to negative job market reports and recession concerns.
Meanwhile, the Eurozone saw a slight 0.1% rise in inflation in August, with the annual rate slowing to 2.2% from 2.6% in July. Core CPI also eased, dropping to 2.8% from 2.9%, suggesting a cooling inflationary trend and sparking discussion of possible monetary policy changes.
Yesterday, slightly better than expected Jobless Claims and Manufacturing data led to an overall positive market reaction.
This morning, the Bank of Japan kept interest rates at 0.25%, which was highly expected.
Looking ahead, key events on next week’s economic calendar include Manufacturing and Services PMI data on Monday, US Consumer Confidence on Tuesday, the SNB Interest Rate Decision and US Durable Goods Orders on Thursday, and the US Core PCE Price Index data on Friday.
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