The macroeconomic situation seems to have stabilised and is currently finding a new equilibrium.
The primary driver of the current price action is low liquidity, which is causing crypto prices to swing in wider bands.
Week-over-week performance:
- BTCUSD: 28,124, +4.41%
- ETHUSD: 1,821, +6.06%
- US02Y: 3.98%, +4 bps
- DXY: 102.01, -0.59%
- GOLD (USD/OZ): 1,981, +1.23%
- NDX: 13,148, +3.74%
- VIX: 18.8, -8.78%
- VVIX: 84, -11.6%
On the macro side:
The macroeconomic situation seems to have stabilised and is currently finding a new equilibrium. The VIX, which is below 20, and the VVIX, which is below 90, indicate that the market is quite calm (too calm?). I would now expect to see this high-mean low-volatility regime continue for a while before there is any potential increase. The dust created by the banking industry needs to settle first.
Looking towards Friday: there is an important release of US Non-Farm Payroll (NFP) data. If there is a softening in terms of job figures, it will be seen as a positive result for Powell, as it would indicate that his efforts are starting to show results. However, if the NFP numbers remain strong, it will be a challenging situation for Powell and the Fed. I believe that the NFP numbers will be in line with expectations, at 240,000 jobs compared to the previous month of 311,000 jobs. Should this be the case, we will likely see VIX below 18 and further market consolidation.
On the crypto side:
ETH and other alts have performed slightly better than bitcoin, but the overall results are still nothing out of the ordinary. The primary driver of the current price action is low liquidity, which is causing the price of bitcoin to fluctuate around USD 2,700 (within the range of USD 26,500-29,200).
This situation is a result of several factors, such as the inability to settle USD instantly through SEN or SIGNET, and Binance’s removal of fees-free trading on BTC and ETH.
This low-liquidity environment presents several opportunities, including extended grid-trading.
These opportunities are not limited to BTCUSD or ETHUSD but also include trading crypto-crypto pairs, such as ETHBTC.
Looking at BTCUSD:
The 30-day realised volatility is still well above the historical average, and is trading at 66%. And with the RSI at 60, I would now expect to see a general consolidation. My bias is that crypto volatility will follow equity-volatility, so that bitcoin will keep swinging between USD 26,500 (support) and USD 28,200 (resistance) for another while.
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