Week-over-week performance:
- BTCUSD: 50,107/ +17.18% (!)
- ETHUSD: 2,650 / +14.67%
- US10Y: 4.18% / +4 bps
- DXY: 104.12 / -0.14%
- GOLD (USD/OZ): 2,024 / -0.20%
- NDX: 17,882 / +1.52%
- VIX: 13.94 / +1.90%
On the macro side:
The light macro week turned once again into a positive week for risk assets with SPX breaking the 5,000 mark and NDX hitting 18,000 intraday.
Despite a slight increase in long-term yields over the week, the resilience of the US real economy remains evident.
With the upcoming US elections, maintaining liquidity and the continued rise in US equities are advantageous for the current administration.
Anticipating potential rate cuts from the Federal Reserve, the US Treasury is delaying locking in long-term issuances in favour of short-term debt, a move that bolsters risk assets and consequently crypto assets.
However, if the US Treasury opts to increase long-term issuances, it could lead to higher bond yields and to subsequent equity sell-offs.
Currently, the bullish scenario seems more probable, and I foresee the current risk-on trajectory persisting.
Looking ahead:
Tuesday, 13 February: US CPI
Wednesday, 14 February: UK CPI, EU GDP
Thursday, 15 February: UK GDP, CH PPI, US Jobless Figures
Friday, 16 February: US PPI
On the FX side:
The past week unfolded rather tranquilly, with the DXY stabilising below its trendline, while the EURUSD found support around 1.07292.
This morning, Switzerland’s inflation figures reiterated that concerns about inflation are firmly rooted in 2023, with little cause for concern about its resurgence in 2024.
Swiss CPI data revealed a modest 0.2% MoM increase and a 1.3% YoY rise (significantly below the forecast and reaching the SNB target).
As the USDCHF pair contends with resistance at 0.8811, I prefer to close the long USDCHF position ahead of US Figures. Conversely, I see potential in EURCHF, which is also grappling with a downward-sloping trendline at 0.9480. Given the dearth of significant economic news anticipated this week, I am inclined towards a breakout towards 0.96.
Overall, CHF keeps being the currency I prefer to borrow/sell.
Chart 1: DXY 1d
On the crypto side:
The surge in Hi-Tech stocks bolstered US equities, and digital asset investment products witnessed a substantial $1.1 billion influx last week, bringing net inflows into BTC ETFs to $2.8 billion since their launch, indicating a sustained appetite for crypto.
The total crypto market cap rebounded to $1.8 trillion after finding robust support at $1.5 trillion once again.
With momentum intact, the $2 trillion market cap seems imminent, suggesting an overall 11% increase.
BTC continues to lead the market with a dominance of 54%, and my bias is for this trend to stay. The likelihood of a Spot ETH ETF approval remains low due to the ambiguous nature of ETH (security or commodity) and the divided SEC sentiment, with only three out of five members approving the BTC Spot ETF, including Chair Gensler’s persistent concerns about crypto assets.
Approval might be possible if the SEC delays BlackRock and Fidelity’s deadlines to align with VanEck and Ark21 deadlines by late May, similar to the BTC approvals.
However, a delay until the end of June without clustering may signal no intention to approve the ETH spot ETF this year.
Hence, I maintain a preference for BTC, eyeing the $1 trillion market cap milestone while expecting it to trade within a range below $54,000.
Despite the BTC basis and vols edging higher, with the 30-day basis at 14% and the 30-day vol at 52.76%, the market does not appear overly extended or gripped by FOMO, reinforcing my bullish stance.
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