Daily News | BTC Outlook Shaken by Multiple Factors; Inflation Moderates, But US Default Concerns Loom
Crypto Daily Digest: Market Volatility and Uncertainty Shake Bitcoin’s Outlook; Options Contracts Indicate Caution Ahead
The cryptocurrency market has been experiencing significant volatility lately, with multiple factors contributing to its ups and downs. One such factor is the release of the U.S. inflation report, which initially led to a rise in the prices of Bitcoin and ether. However, rumors about the U.S. government selling Bitcoin caused a subsequent drop in bitcoin prices. Despite this setback, bitcoin prices managed to recover and demonstrate resilience. Moving forward, the market remains uncertain as investors closely monitor economic data, including jobless claims and the producer price index, which could have a substantial impact on the market’s direction, particularly with regards to the decision on interest rates in June.
In April, there was a decline in trading volume for cryptocurrency derivatives on centralized exchanges. Additionally, spot trading volume experienced an even more significant decrease. Surprisingly, this resulted in a new record high for the market share of derivatives trading, reaching 77.6%. Although there was a decrease in absolute derivatives trading volume by 23.3% to $2.15 trillion, this rise in market share emphasizes the speculative nature of the crypto market. It is worth noting the uncertainties surrounding potential rate hikes by the Federal Reserve.
Meanwhile, options contracts for Bitcoin now suggest a price range of $22,000 to $32,000, indicating a lower ceiling compared to the previous week’s projections. Technical analysts have identified a head-and-shoulders pattern, raising concerns about a potential further decline in Bitcoin‘s price. The increased congestion and high transaction fees caused by meme tokens on the Bitcoin network have added additional pressure to the cryptocurrency’s performance. Uncertainty surrounding interest rates and policy settings further contribute to the market’s volatility.
Ether (ETH) $1834 (-0.42%) - Neutral Outlook
The overall perspective remains unchanged: we are currently in a significant phase of accumulation, aiming for a target range of approximately 1953-1963. Smart money utilized the influential CPI data to activate numerous stop-loss orders, resulting in an expansion of the Spring area. This strategic move allows for the possibility of maximizing profits to the fullest extent.
Overview:
- Closest hourly support zone: 1835 - 1842
- Closest hourly resistance zone: 1830 - 1823
- Key Level: 1918 (Monthly Close of Mar. 2021)
Hourly Resistance zones
- 1835 - 1842
- 1848 - 1855
- 1857 - 1873
Hourly Support zones
- 1830 - 1823
- 1818 - 1810
- 1806 - 1791
Macro: Market Sentiment Hangs in the Balance; US Default Concerns Loom as Stocks Rise and Inflation Eases
US stocks managed to post modest gains in a lackluster trading session on Wednesday, while Treasuries saw an increase in demand after a report revealed a slight moderation in inflation during April. The S&P 500 wavered between gains and losses throughout the day but ultimately ended with a 0.4% increase. Meanwhile, the tech-heavy Nasdaq 100 performed well, posting a solid gain of 1.1% and closing at its highest level since August 18. The positive performance of key tech stocks such as Amazon, Apple, and Microsoft contributed to the overall strength of the benchmarks.
However, not all stocks fared as well. Walt Disney Inc. experienced a decline of 3.1% in after-hours trading due to unexpected losses in its streaming division. This setback highlights the volatility and challenges faced by companies operating in the streaming space.
The report on US consumer prices showed a 0.4% rise in April, with the year-on-year headline Consumer Price Index (CPI) coming in at 4.9%. Although this reading marks the first time in two years that the CPI has fallen below 5%, it still remains significantly higher than the Federal Reserve’s target of 2%. The moderation in inflation led to a decline in yields, particularly for the two-year Treasury. Additionally, swaps traders increased their bets on the possibility of the Federal Reserve cutting interest rates later this year.
While the moderation in inflation and the positive market performance may provide some relief, experts caution against excessive Optimism. Inflation rates remain relatively high, and there are ongoing concerns about the banking sector and the potential for a recession. Traders are also keeping a close eye on the US debt talks, as a failure to reach an agreement could have severe consequences. Some of Wall Street’s experienced traders have warned of the “unthinkable” long-term damage that could result from a US default.
President Joe Biden and congressional Republicans have made limited progress in averting a default. The cost of insuring US debt against default has now surpassed that of some emerging markets and even lower-rated nations. It is hoped that further discussions between President Biden and House Speaker Kevin McCarthy, scheduled for Friday, will yield more tangible results.
Looking ahead, investors will be closely watching the release of the producer prices report on Thursday. Economists surveyed by Bloomberg expect the headline number to rise by 0.3%. This data will provide additional insights into inflationary pressures and could influence market sentiment.
As attention shifts to the Asian markets, shares in the region showed mixed performance. US equity futures continued to rise, indicating potential positive momentum. The dollar remained relatively flat after a recent decline, while the yen strengthened against major currencies. Australian bond yields fell, while New Zealand bond yields remained stable. In China, investors eagerly await the release of consumer and producer price growth data, which is expected to show a drop to the lowest level since February 2021.
Oil prices saw a slight increase after a recent decline, offering some relief to the energy market. Gold prices remained relatively stable.
