Week-over-week performance:
- BTCUSD: 94,805 / -6.95%
- ETHUSD: 3,176 / -13.46%
- US10Y: 4.76% / +15 bps (!)
- DXY: 109.59 / +1.34% (!)
- GOLD (USD/OZ): 2,668 / +0.87%
- SPX: 5,836 / -2.33%
- NDX: 20,784 / -3.59%
- DVOL: 62.13 / +5.66%
- VIX: 19.21 / +19.84%
Looking ahead – Economic calendar:
- Tuesday, 14 January 2025: CH PPI, US PPI
- Wednesday, 15 January 2025: US CPI, Fed Beige Book, Earnings: $JPM $WFC $C $GS, Token Unlocks ($STRK 2.65% MC, $SEI 1.32% MC)
- Thursday, 16 January 2025: US Jobless Claims, US Retail Sales, Earnings: $BAC $MS, Token Unlocks ($ARB 2.2% MC)
- Friday, 17 January 2025: EU CPI, Token Unlocks ($APE 2.16% MC)
- Saturday, 18 January 2025: Token Unlocks ($ONDO 135% MC !)
On the macro side:
Markets were driven last week by better –than expected US employment data, which reignited the “good news is bad news” narrative. The strong employment figures fuelled fears of a “higher for longer” rate environment, with Fed Fund Futures pricing in just one rate cut by July of this year.
US Treasury yields surged, with the 30-year only finding support at 5%, pushing the DXY above 110, gold higher, and risk assets lower. The 5-year breakeven inflation rate implied by Treasuries hit a 2022 high at 2.55%, putting the upcoming CPI and PPI reports in the spotlight.
Despite the prevailing market fear, it is worth noting:
- The ”higher for longer” narrative has persisted since the first rate hike, yet risk assets have outperformed during this period.
- There is plenty of room for the yield curve to re-price, providing a solid foundation for a potential rally.
Finally, I believe the influence of the Trump administration will shape the Fed’s policy path.
On the FX side:
The USD has regained dominance, driven by a widening yield spread between the USD and other currencies.
The DXY peaked at 110 as EURUSD found decent support at 1.02. Key support for the DXY is at 108 (a 1.38% drop in the USD), which could provide some relief to risk assets.
The market’s focus remains firmly on economic data.
On the crypto side:
Cryptocurrencies, being the riskiest liquid tradable assets, were the worst performers in last week’s risk-off environment, with the total crypto market capitalisation falling 9% WoW to USD 3.22T.
The downtrend continued into Monday evening, culminating in a flash crash that saw BTCUSD fall to USD89,000 and ETHUSD to USD 2,913.
BTCUSD has since recovered quickly, indicating strong buying interest around the USD 90,000 level. The USD 96,800 level appears to be the first key inflection point for a higher range, while USD 92,000 acts as an early support level.
ETHUSD, on the other hand, has faced greater challenges, with USD 3,000 providing solid bids and USD 3,200 acting as the first significant turning point.
This week is expected to be pivotal due to major token releases in the altcoin market, which is likely to cause to ETH to underperform as a beta hedge.
Nevertheless, macro remains in focus, so the correlation with traditional financial TradFi is expected to continue.
Read more News here