Week-over-week performance:
- BTCUSD: 51,953 / +3.68%
- ETHUSD: 2,928 / +10.49% (!)
- US10Y: 4.29% / +11 bps (!)
- DXY: 104.33 / +0.20%
- GOLD (USD/OZ): 2,022 / -0.10%
- NDX: 17,865 / -0.1%
- VIX: 14.25 / +2.22%
On the macro side:
Last week, US inflation data exceeded expectations, leading to an increase in US Treasury yields to around 4.30%. While the VIX and DXY also saw upward movement, US equities remained unchanged week-over-week. The swift decline and subsequent rebound in the SPX and NDX after the US CPI release highlight two significant points:
- The market was caught off guard by the unexpected surge in inflationary pressures.
- Each market dip is attracting substantial buying interest.
Considering these factors, I anticipate volatility surrounding the key Federal Reserve events on the horizon. Given Powell’s acknowledgment of potential inflationary influences, I am not surprised by occasional negative figures. Hence, I am inclined to continue buying during these downturns, both in equities and digital assets.
Looking ahead:
Wednesday, 21 February: FOMC Meeting Minutes
Thursday, 22 February: EU CPI, US Jobless claims
Friday, 23 February: DE GDP
On the FX side:
Following the release of the US CPI data, USDCHF initially surged to 0.8880 before retracing to test the 0.88 level.
This reaffirms my bullish outlook on the pair, with a target set at 0.8927.
Likewise, in EURCHF, with no significant new developments, the price action remains generally positive.
The bullish stance persists as the trend line was retested, targeting a long position in EURCHF towards 0.96.
Regarding DXY, as 105 once again serves as a pivot point, I anticipate a trading range between 104.2 and 105.2.
Chart 1: FX map
On the crypto side:
The crypto markets have exhibited a predominantly bullish trend, highlighted by BTC’s market cap surpassing the $1 trillion milestone and the Crypto Total Market Cap reaching $1.9 trillion. My stance remains favourably inclined towards a crypto market cap of $2 trillion, as several projects have yet to catch up with this risk-on sentiment.
However, it appears to me that the market is currently quite stretched:
- Perpetual swaps funding rates have remained elevated for an extended period.
- BTCUSD 30-day Basis stands at 17%, compared to 14.47% a week ago.
- BTCUSD 30-day ATM IV has increased to 55.02% from 51.8% a week ago, while the realised volatility sits at 39.05%.
These indicators suggest that while leverage is present, there is not yet a full-blown FOMO sentiment.
In light of this, the failure to break the $53,000 mark in the near future will likely prompt a retest of previous lows.
This could occur as long positions become increasingly expensive to maintain. For me, this scenario signals an opportunity to increase buying activity on the sharp drops.
With a positive macro-outlook and largely favourable ETF flows, any sharp retracement keeps being a favourable buying opportunity.
Chart 2: BTCUSD 1d
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