Daily News | Jobs Report, Fed Policy, and Tech Surge as Crypto Market Experiences Fluctuations
Crypto Daily Digest: Bitcoin’s Disconnect, Tech Stocks Rise; Tether Surges, and Hong Kong Regulates
In May and June, cryptocurrency prices experienced a dip, with Bitcoin (BTC) trading below $27,000 for two consecutive days while Ether (ETH) remained stable. Litecoin (LTC), however, saw a 7% increase ahead of its upcoming halving event. The overall crypto market cap. declined by 1%, contrasting with the rise in stock markets after the U.S. House of Representatives passed a bill to raise the debt limit. Despite challenges, the global crypto industry remains optimistic and shows signs of positive growth.
One interesting trend is the weakening correlation between Bitcoin and technology stocks which is impacting crypto investors. Bitcoin had its first monthly decline in 2023 while the Nasdaq 100 gained almost 10% due to the hype surrounding artificial intelligence. The reduced alignment in their movements poses challenges for digital assets, as the Nasdaq’s AI narrative continues to separate crypto and tech shares, favoring the Nasdaq’s performance.
Amidst the market fluctuations, Tether‘s USDT stablecoin regains all-time high market capitalization of $83.2 billion, defying stablecoin market trend. USDT attracts holders despite transparency criticisms. Competitors face challenges, increasing Tether’s market share and use in developing countries.
In DeFi news, the MakerDAO community has approved the creation of a new vault called BlockTower Andromeda. This vault will enable the purchase of up to $1.28 billion in U.S. government bonds through BlockTower Capital. MakerDAO has already invested in bonds and made loans to banks using its existing vaults. This decision reflects the growing interest among crypto-native entities, such as decentralized autonomous organizations (DAOs), in traditional financial instruments to earn stable yields on their treasuries.
Shifting our attention to regulatory developments, Hong Kong has implemented new regulations for the cryptocurrency industry. These rules allow crypto exchanges to offer trading services to individuals and institutions, provided they obtain licenses designed to protect investors from the risky practices witnessed during the 2022 market crash. While there is interest in the new regulatory framework, major crypto firms have yet to disclose specific investment plans for Hong Kong. It is uncertain how many crypto exchanges the Hong Kong market can support, and whether crypto will remain a long-term priority for officials. Despite uncertainty remains, the market generally supports the new regulatory regime.
Technical Analysis: Bitcoin (BTC) $26,797 (-0.03%) - Neutral Outlook
Building upon yesterday’s analysis, we now have the 1-hour chart to further uate the situation. It is evident that BTC has found temporary support within the 4-hour secondary test (ST) range of 26570-26690, which is a positive indication that the 4-hour accumulation structure is still intact. Zooming in on the 1-hour timeframe, we can observe a potentially smaller accumulation structure. The current phase within this structure suggests that there might be some volatility within the 1-hour Last Point of Support (LPS) range of 26660-26858 before a strong upward movement beyond the 1-hour Creek range (27055-27085). This would be the most optimistic scenario, signaling a bullish trend. However, it is important to consider the possibility that BTC may experience a further decline to form the 1-hour Spring zone. Therefore, we should not dismiss the chance of BTC testing the area between 26570-26380.
Overview:
- Closest hourly support zone: 26790 - 26700
- Closest hourly resistance zone: 26790 - 26895
- Key Level: 26280 (Weekly Close between Dec. 21-28, 2020)
Hourly Resistance zones
- 26790 - 26895
- 26970 - 27080
- 27150 - 27265
Hourly Support zones
- 26790 - 26700
- 26690 - 26570
- 26380 - 26280
Macro: Jobs Report and Fed Policy in Focus as Investors Navigate Tech Surge
Tech giants led a renewed rally in the S&P 500, driving the index to a nearly 10% gain as investors anticipate a potential pause in the Federal Reserve’s interest-rate hikes. The surge in big tech stocks, fueled by the artificial intelligence (AI) frenzy, resumed after a temporary slowdown. Nvidia Corp., a prominent player in the AI industry, emerged as a top performer with a 5% climb, contributing to gains in the Nasdaq 100. This resurgence in tech stocks was further supported by Dell Technologies Inc., which reported better-than-expected sales.
Despite the positive momentum in the tech sector, Broadcom Inc., one of the world’s largest chipmakers, indicated that the demand for AI-powered gear was not sufficient to counter a broader post-pandemic slowdown. While the AI theme drove significant gains in May, investors remain cautious about potential market corrections and the sustainability of outsized equity returns from US big tech companies.
The S&P 500 rose 1% on Thursday, reclaiming the 4,200 mark, while Bank of America’s indicator, which tracks Wall Street strategists’ recommended allocation to stocks, suggested a potential “buy” signal, the closest it has been in over six years. These developments indicate positive sentiment in the market despite concerns of a potential correction.
Investors are closely watching the upcoming jobs report, with projections indicating a moderation in the pace of hiring. This data could influence the Federal Reserve’s decision on whether to pause its tightening policy in June. Some Federal Reserve officials, such as Patrick Harker of the Federal Reserve Bank of Philadelphia and James Bullard of the Federal Reserve Bank of St. Louis, have expressed their views on interest rates. Harker suggested skipping a rate hike in the upcoming meeting, while Bullard believes current rates are at the low end of what is necessary to combat inflation.
In addition to market dynamics, policymakers are grappling with other challenges. The US Treasury is considering postponing regular bill auctions scheduled for next Monday due to constraints related to the statutory debt limit. Senators are working to develop a plan to address the debt limit and prevent a destabilizing default ahead of the June 5 deadline.
Meanwhile, in Asian markets, stock futures climbed as investors took cues from the rally in tech stocks on Wall Street. The focus remains on the upcoming jobs report and the speculation surrounding the Federal Reserve’s interest-rate policy. The AI frenzy continues to captivate market participants, with Nvidia Corp. experiencing notable gains. However, Broadcom Inc.’s cautionary note about the limitations of AI-related sales amid a broader economic slowdown adds a note of caution to the market.
