Week-over-week performance:
- BTCUSD: 63,423 / -4.28%
- ETHUSD: 3,172 / -0.13% (!)
- US10Y: 4.62% / +1 bp
- DXY: 105.94 / -0.16%
- GOLD (USD/OZ): 2,319 / +0.3%
- SPX: 5,116 / +2.12%
- NDX: 17,782 / +3.32%
- DVOL: 52.76 / -23.06%
- VIX: 14.68 / -13.29%
Looking ahead – Economic Calendar
- Tuesday, 30 April: EU CPI, EU GDP
- Wednesday, 1 May: EU/CH/UK/APAC Labour Day, US JOLTs, FOMC & Press
- Thursday, 2 May: CH CPI
- Friday, 3 May: US NFP
On the macro side:
Last week, the US PCE index exceeded expectations, registering a year-on-year increase of 2.7%.
While this indicates a deviation from the Fed’s 2% inflation target, the overall impact is seen as tolerable.
Bond traders have adjusted their expectations and are now foreseeing a single 25 bps rate cut from the Fed this year, compared to the 7 (!!) initially anticipated at the start of the year and 3 in March.
This is a massive shift in duration and reflects the “higher for longer” sentiment.
US risk assets performed positively, supported by a decline in the VIX.
My inclination is that the markets are accepting a prolonged period of rates, especially given the strong economy.
However, how Jerome Powell handles the FOMC press conference will have a major impact on market reactions.
Additionally, with the FOMC meeting scheduled for 1 May, a public holiday in many countries outside the US, reduced liquidity may amplify movements in equities and cryptocurrencies compared to previous FOMC meetings.
On the FX side:
As we approach a busy week of US macroeconomic events, market activity has consolidated.
The US dollar index (DXY) has stabilised just below the 106 mark, while the EURCHF and USDCHF are trading in tight ranges.
My stance remains unchanged, in favour of the CHF as a funding currency.
All eyes are on the FOMC + NFP.
Chart 1: DXY 1d
On the crypto side:
With inflows into bitcoin BTC ETFs slowing, markets have entered a period of a choppy downtrend, characterised by low trading volumes.
Volatility has contracted, with 30-day realised volatility in BTC at 50.25% and 30-day implied volatility at 50%.
While this decrease in DVOL suggests market exhaustion, it is consistent with my view of consolidation following the halving and ETF excitement.
Notably, BTC continues to attract significant buying interest below USD 62,000, suggesting that it may be close to the average entry price for ETFs.
Chart 2: BTCUSD 1h
On the other hand, the recent outperformance of ETH is a positive sign that profit-taking or consolidation in BTC is flowing into ETH and alts.
With realised volatility at lower levels, high volatility assets appear to be a favourable choice in upwards trending markets.
In derivatives trading, however, the risk is skewed to the downside, with ETH underperforming BTC.
Implied volatility is significantly higher by 4v, risk reversals are more negative, and wings are more expensive.
Chart 3: ETH – BTC Volatility Surface
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