Week-over-week performance:
- BTCUSD: 65,640 / -4.89%
- ETHUSD: 3,447 / -3.17%
- US10Y: 4.28% / -17 bps (!)
- DXY: 105.41 / +0.28%
- GOLD (USD/OZ): 2,320 / +0.78%
- SPX: 5,473 / +2.11%
- NDX: 19,902 / +4.34% (!)
- DVOL: 49.12 / -5% (!)
- VIX: 12.74 / -0.08%
Looking Ahead – Economic Calendar:
- Tuesday, 18 June: EU CPI, US Retail Sales
- Wednesday, 19 June: US Holiday (Juneteenth), UK CPI & PPI, SNB Monetary Policy
- Assessment
- Thursday, 20 June: SNB Interest Rate Decision, BoE Interest Rate Decision, US Jobless claims
- Friday, 21 June: US Home Sales, Fed Monetary Policy Report
On the macro side:
Last week, the Federal Open Market Committee (FOMC) left interest rates unchanged, with the median forecast from the Dot Plot indicating one rate cut in 2024. Despite Chairman Powell’s statement that more positive economic data is needed to consider further cuts, market participants are anticipating two rate cuts by the Federal Reserve by the end of the year, potentially during the September and December meetings.
Overall, Powell has managed the economy well. The economy is performing robustly, inflation is relatively under control, and the stock market is thriving—although this success has not extended to the cryptocurrency market recently. As we approach summer, the VIX is calm, and equities are soaring, driven by a small number of companies. Notably, 43% of the S&P 500 constituents are negative year-to-date.
This week is also significant for macroeconomic events, with interest rate decisions expected from both the Swiss National Bank (SNB) and the Bank of England (BoE).
On the FX side:
The DXY is in the mid-105 range as we approach the interest rate decisions from the SNB and BoE. I anticipate that the SNB will implement another 25-bps rate cut, bringing rates down to 1.25%, given that inflation is within the target range and the SNB views current policy as restrictive, even though its rate is the lowest among G10 central banks (excluding Japan).
In contrast, the BoE is expected to maintain its interest rate at a 16-year high of 5.25%, while closely monitoring any changes in its forward guidance.
Considering these factors, I expect the EUR to appreciate against both the CHF and USD, with the DXY likely to remain within the 105 to 105.88 range.
Chart 1: DXY 1D
On the crypto side:
What’s Going on in Crypto?
Despite positive news from various fronts, the crypto markets have been weak, with altcoins underperforming compared to BTC and ETH. Recent developments include SEC Chairman Gary Gensler hinting at the likely approval of ETH ETFs by the end of summer, and Eric Balchunas predicting the launch of an Ether ETF on 2nd July, citing minimal comments on the S-1 filings. Additionally, former President Trump continues to express support for crypto.
However, there is a clear decoupling from traditional markets, which are consistently reaching new highs, while BTC and other cryptocurrencies struggle to maintain their current levels. A lack of liquidity is evident as volumes on centralised exchanges (CEXs) decline weekly, and forwards are trading flat. Historically, the crypto market tends to be quiet during the summer.
Despite this, the positive developments make it hard not to remain structurally bullish on BTC and ETH. This supports my strategy of continuing to accumulate throughout the summer, combining short-volatility positions with buying the dip. Conversely, disappointing inflows from the anticipated Ether ETF could trigger another risk-off scenario. Analysing the BTCUSD chart, USD 67,000 stands as the main resistance level, with USD 64,600 serving as a critical pivot point. A break below this could lead to a retest of the USD 63,000 level.
Chart 2: BTCUSD 1d
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