Last week’s lower than expected CPI and PPI numbers helped momentum remain high both in crypto and TradFi, while volatility and cross-asset correlation continue their meltdown.
On the macro side:
Looking at traditional markets, risk-on momentum continues despite economical concerns and geopolitical tensions.
S&P500: $4.3k (+4% WoW)
VIX: $19.9 (-9.44% WoW)
Crude Oil: $88.9 (-3.18% WoW)
Gold: $1,777 (-0.3% WoW)
US10Y Yield: 2.784% (+0.83% WoW)
US02Y Yield: 3.18% (-0.9% WoW)
In my view, the next key events thar need to be “solved” are the China recession and the relations between China and Taiwan.
PBoC cut key rates to stimulate the economy as most of the economic figures are negative. I do not expect domestic demand (borrowing) nor exports to increase that much given the current economical concerns and relations with the West. I would rather say that China’s economic slowdown is consistent with longer-term trends of GDP, and there are few reasons to start panicking.
More important is the tension between China and Taiwan. For the most advanced semiconductors, Taiwan accounts for 92 percent of production (92%!!), according to a report by Boston Consulting. Chips are literally everywhere, and sanctions/shortages over these products will likely halt the economy in general and even more so in the crypto space – given the high dependence on miners and their graphic cards.
While it is hard to quantify the price impact, it will surely slow down mining activities as well as efficiency.
On the crypto side:
Crypto Total Market Cap: $1.11T (+3.73% WoW)
BTC: $23,842 (+0.23% WoW)
ETH: $1,858 (+4.65% WoW)
SOL: $42.8 (+1.64% WoW)
MATIC: $0.93 (+1.79% WoW)
BTCUSD 1d
Digital assets are lagging TradFi as 30-days correlation between BTC and Nasdaq melt down to 0.44.
Realised volatility remains low (30-day realised vol: 53.94%), and I see no reason for a spike
RSI is breaching the overbought territory, which means that a short-term correction is feasible
BTC is testing the upside triangle; a break above the $25k resistance may pave the way for BTC to reach $30k before mid-September. The VPVR between $25k and $30k is almost nothing.
ETHUSD 1d
Update on last week’s chart:
The price action is in-line with the Elliot Triangle Wave (ABCDE in the figure) and the upside triangle. ETH momentum is staying high and driving up the L2s and crypto in general. $2.3k is my current price target if it breaks the $2k resistance.
At the moment, I am in the “buy the rumours, sell the news” mode, and I am likely going to take profit/closing my position into the merge event as a “worse than expected” PoS scenario is very likely.
ETH/BTC is trading at 0.078, and I see the new spread trading above 0.085 soon.
The derivatives market keeps pricing a higher ETH and a lower BTC, and I keep feeling comfortable in taking on more risk in high betas (SOL, MATIC, MIDs, etc.) now going into the merge.
