Week-over-week performance:
- BTCUSD: 29,352, +0.41%
- ETHUSD: 1,841, +0.44%
- US02Y: 4.99%, +25bps
- DXY: 103.07, +0.81%
- GOLD (USD/OZ): 1,905, -1.44%
- NDX: 15,205, -1.32%
- VIX: 14.81, -6%
On the macro side:
Last week, we had the US CPI, and especially the US PPI (+0.8% YoY), showing us that the macro landscape is still hotter than desired.
Consequently, this development led to an upswing in market yield rates and an appreciation of the US dollar.
Interestingly, despite these shifts, market expectations concerning Fed rates remained unchanged.
The initial rate reduction is still anticipated to occur during the May 24 meeting.
Additionally, this situation led to a decline in global equities and had a neutral impact on crypto (again).
Looking ahead:
The upcoming economic calendar is relatively sparse.
Noteworthy events include US Building Permits, and the release of FOMC Meeting Minutes on Wednesday, followed by US Employment figures on Thursday.
Wrapping up the week, attention will shift to Europe’s CPI on Friday.
Chart 1: Target rate probabilities for Sep 20, 2023 Fed meeting change; source: www.cmegroup.com
On the crypto side:
As the week was light in news, volume and volatility remained lower across the board.
Given this context, I find an intriguing prospect in leveraging liquidity premia.
If trading volumes were to see an increase, it is plausible that several low-volume cryptocurrencies could experience substantial surges as upside volatility would be largely subdued.
This approach is not rooted in beta or correlation trading but rather in exploiting pure liquidity premia.
Looking at the charts, the Bitcoin Hash Ribbon indicator now calls for a buy. This signal, which is crypto-specific, compares Bitcoin hash rate moving averages to identify distress in miner activity.
When miners are capitulating, BTC may have bottomed, and it might be a good opportunity to buy for the medium term.
Chart 2: BTCUSD 1w, hash ribbons, source: TradingView
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