Week-over-week performance:
- BTCUSD: 66,262 / +5.88%
- ETHUSD: 3,176 / +4.65%
- US10Y: 4.61% / +0 bps
- DXY: 106.12 / -0.16%
- GOLD (USD/OZ): 2,312 / -3.18%
- SPX: 5,010 / -1.01%
- NDX: 17,210 / -2.80%
- VIX: 16.93 / -11.91%
Looking ahead – Economic Calendar
- Tuesday, 23 April: US PMI
- Thursday, 25 April: US GDP, Fed’s Balance Sheet
- Friday, 26 April: BoJ Interest Rate Decision, SNB Board Member Jordan Speaks, US PCE
On the macro side:
Geopolitical risks, coupled with a negative outlook by Fed members, pushed US equities lower and kept defensive assets such as gold, USD, and CHF higher.
While markets have once again become very sensitive to these events, the VIX was immediately sold off above 20.
The key economic figure for the week is the PCE, which I expect to be in line with the CPI trend.
If this is the case, we might see US02Y above 5% and US10Y at 4.8%, adding downside pressure to risk assets.
Nevertheless, the way Iran de-escalated the Israeli attack last week makes me feel comfortable with risk assets in the current state.
Chart 1: US Yields
On the FX side:
In response to the potential war news, we witnessed USDCHF and EURCHF selling off to 0.901 and 0.9563 respectively on Friday.
The gap was closed as soon as Iran de-escalated the attack. This illustrates that in a war event, markets are more comfortable with CHF rather than USD.
Despite CHF being considered a safe-haven asset, I believe that the risk of an escalation in the Israeli/Iran situation is low, so I continue to prefer USD over CHF.
US inflation is sticky, and the significant interest rate differential continues attracting demand for the US dollar.
This also aligns well with a long exposure in risk assets.
Chart 2: DXY 1d
On the crypto side:
Historically, crypto has often seen bullish trends during conflicts, but now it seems that the sensitivity is notably heightened.
My bias is that the root cause for this was the closure of traditional US and European equities overnight when the Israeli missile struck a site in Iran.
Indeed, I believe that many were outright speculating on triggering stop-loss and long liquidations.
Chart 3: Crypto, Gold, WTI, USD and Equities reaction on the Israeli Missiles striking a site in Iran
Nevertheless, as I mentioned last week, the market reset we experienced was beneficial.
Crypto has a natural demand for leverage, which should result in futures contango and call options being richer than put options (positive skew).
The way the skew was pushed down, funding in the negative territory paved the way for a short squeeze.
Currently, the market seems well reset, and this is where I prefer to watch and see.
We went through the halving, and the previous three halvings saw the spot price move higher only 50-100 days after the halving day; if this pattern persists, there is some time to build a longer position.
Sub USD 62,000 remains my favourite entry point, and in derivatives, with short-term volatility favouring puts over calls, I like to accumulate BTC by selling weekly puts in the USD 58,000-60,000 range for a 21-34% yield.
Chart 4: BTCUSDT 1h
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