TA Tuesday: Assessing Trends in Equities, Forex, and Crypto

Week-over-week performance: 

  • BTCUSD: 39,976 / -6.16% 
  • ETHUSD: 2,345 / -7.05%  
  • US10Y: 4.10% / +10 bps 
  • DXY: 103.01 / +0.03% 
  • GOLD (USD/OZ): 2,033 / -0.78% 
  • NDX: 17,330 / +2.95% (!) 
  • VIX: 13.18 / +3.86%

On the macro side:

Following the recent surge in risk assets, fuelled by the dovish rate cut sentiment towards the end of the year, the recent breach of all-time highs in both the SPX and NDX serves as confirmation that market conditions are currently robust. 
While there may be an element of FOMO contributing to this trend, the presence of ample liquidity entering the equity markets, coupled with a lack of significant macroeconomic data, continues to support a bullish trajectory.

As we are approaching a week of central banks’ policy rate decisions, I expect no news and another rate-skip, and I will remain vigilant until March.

Looking ahead:

  • Wednesday, 24 January: BoC Interest rate decision 
  • Thursday, 25 January: ECB Interest rate decision, US GDP QoQ, US Job Figures
  • Friday, 26 January: US PCE

On the FX side:

SNB President Thomas Jordan expressed less concern about inflation, while highlighting growing concerns in certain industries about the strength of the Swiss franc (CHF). 
As CHF appreciation shifts from nominal to real, my strong bias remains towards a short CHF position and a long EUR and USD stance.

I expect the USDCHF to remain in the the 0.85/0.9 range, with clear constraints on both sides, and the recent assertive statements from the SNB contribute to a limited downside.
In addition, my risk bias suggests that an acceleration in global growth would likely favour the EUR against the USD.

In light of the DXY decline and the breach of a key support/resistance area, my perspective supports a period of consolidation in EURUSD.

Chart 1: DXY 1d

On the crypto side:

Several days have passed since the launch of the ETF, and the observed post-launch trend shows selling pressure during US opening hours and consolidation outside of these periods. 
Analysing the BTCUSD chart on Coinbase, along with volume metrics, and assessing the discount/premium between Coinbase and Binance prices, reveals potential value.

Chart 2: BTCUSD 15m – Coinbase vs. Binance, US hours volume

Notably, volumes are concentrated around US opening hours, with the majority occurring at market openings and closings. 
Additionally, Coinbase’s price exhibits a discount relative to Binance, suggesting that the selling pressure may be influenced by Greyscale’s GBTC. 
While we have highlighted GBTC as a catalyst for the bull market in the past, it appears to be a contributing factor to the current sell-off.
Although GBTC has witnessed an outflow of $3 billion since the ETF was launched, the key question is at what level this outflow will stop. 
The unknown amount of USD invested in GBTC and held in taxable accounts may represent the floor for outflows. 
Blockchain data indicates Grayscale is transferring BTC at a rate of 10k-15k per day prior to the opening of the US markets.
Once the GBTC redemption ceases, we can expect to see a local bottom in the market.

The value I see here is a sort of crowd trade by selling before the US market opening (3PM Zurich time) and then buy-backs during the closing hours (9:30PM Zurich time).
This crowd trade concept is further supported by the notion that some of the outflow from GBTC is likely to find its way into other ETFs.

Chart 3: Grayscale BTC Movements

Conversely, the continued strength in equity markets reinforces my inclination to continue accumulating at lower price levels. 
Given that BTC put options are trading at 5v+ than that of calls for the same delta in the weekly timeframe, I find selling puts to be an attractive strategy.

In the context of ETHBTC, I confirm the observation of a rounding top from last week and expect a retest of the trendline in the range of 0.056 to 0.057.

Chart 4: ETHBTC 1d

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