TA Tuesday: Market Analysis, Central Bank Decisions, BTC’s Performance Analysis, and Option Insights

Week-over-week performance:

  • BTCUSD: 26,779 / +3.95%
  • ETHUSD: 1,634 / +3.42%
  • US02Y: 5.06% / +7bps
  • DXY: 105.19 / +0.54%
  • GOLD (USD/OZ): 1,930 / +0.57%
  • NDX: 15,225 / -1.52%
  • VIX: 14.01 / +1.45%

On the macro side:

Last week, the ECB raised interest rates to 4%, hinting that this might mark the end of their rate increases.

Looking ahead:

This Wednesday, the FOMC will be making a rate decision, but no rate hikes are expected. On Thursday, the SNB will announce its rate decision, possibly with a 25 bps hike (following ECB), and the BoE will also decide on rates, with another 25 basis point increase expected.

In my opinion, since the actions of the current central banks are largely anticipated, we may not witness significant market movements in response to these events outside of the FX world.

On the FX side:

The US dollar held above 104.3, but with the RSI still in the 65s, momentum is likely gone.

As we enter a week dominated by central bank decisions, the US Dollar Index (DXY) should consolidate comfortably above 104.8.

However, any significant departure from expected policy decisions by these central banks could push the DXY either down to 104.2, or up to 105.8, especially if the SNB goes for a no-hike.

This USD consolidation period may also reduce the correlation with digital assets, potentially benefiting them.

Nevertheless, despite the likelihood of interest rate hikes (EUR, GBP, and CHF), I maintain a bias toward a stronger US dollar due to future macro uncertainties.

Chart 1: DXY, 1d

On the crypto side:

We witnessed the anticipated pivot in the market, with BTC briefly surpassing the $27k mark as global futures open interest surged by approximately $1B.

However, this upward movement was short-lived, as spot trading volumes failed to follow suit.

In my mind, this pattern is likely to persist for some time. I tend to view breakouts without significant trading volumes as a potentially fake breakout.

If breakouts continue to be driven primarily by spikes in open interest, they are susceptible to being overshadowed by speculative trading activity.

There are certain looming concerns on the horizon (such as issues with Binance US and DCG), but I maintain a bias toward expecting lower realised volatility in the market. Nevertheless, I won’t be surprised to see BTC retesting $28.7k soon.

In options:

  • I like selling $28k calls and therefore spend a bit of the premium in puts, as the volatility smile is favouring calls.

In spot:

  • Key support: $25.2
  • Key resistance: $28k

Chart 2: BTCUSD 1d

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