- BTCUSD: 29,165; -3.25%
- ETHUSD: 1,849.40; -3.27%
- US10Y-US2Y: -0.977%; unchanged
- DXY: 101.317; +1.37%
- XAUUSD: 1962; -1.02%
- NDX: 15,448; -1.4%
- VIX: 13.9, +5%
On the macro side:
The PMI figures were released across Europe yesterday. The leading industrial powerhouse, Germany, kindled recession anxieties with a figure under 40. The overall European PMI broadly underperformed expectations as well (42.7 vs. 43.5), triggering risk-off moves across all markets.
In the Far East, the indicators do not look promising either. Youth unemployment rates are hitting a record high (officially 21.3%; unofficially around 30%), and stress is re-emerging among Chinese real estate developers. Evidence of this is clear in their bonds, currently trading at distressed levels of 50-80 cents per dollar.
Contrarily, the US economy is demonstrating a degree of resilience. However, even there, initial signs of vulnerability are emerging. The commercial real estate sector is starting to struggle with higher interest costs, and initial payment defaults are anticipated. The lenders for the commercial real estate sector are often regional banks, which already had to struggle with known difficulties at the beginning of the year.
The Federal Reserve is expected to increase rates by 25 bps to 5.5% tomorrow. The language used in the statement and the subsequent press conference will undoubtedly be scrutinised closely.
My expected scenario for the coming days:
The FED’s interest rate decision is received hawkishly and leads to slight sell-offs in risk assets.
From the mid-June up until yesterday, BTC has consistently fluctuated within the 29,800 to 31,700 range. However, yesterday, we witnessed a significant downward breakout, with the current trading figure at 29,125. As mentioned above, I think sell-offs are likely in the aftermath of the interest rate decision. I therefore see 28,000, 26,000 and 25,000 as support zones.
Chart 1: BTC
After the partial success of Ripple in the Ripple vs. SEC case, momentum now seems to have fizzled out, and in combination with a potential broader risk-off move in the market, sharp setbacks in XPR are quite likely. I see the next sustainable support zone between 0.52 and 0.55. These could be good entry points. On the upside, I see the potential limited at 0.85.