Daily Market Analysis and News From NordFX

[Stan NordFX]

CRYPTOCURRENCIES: ETH/BTC - Who Will Win?

Last week's crypto review was titled "In Search of a Lost Trigger." Over the past week, the trigger has still not been found. After the decline on July 23-24, BTC/USD moved to another phase of sideways movement, vigorously resisting the strengthening dollar. The surge on August 1-2 to $30,000 looked very much like a bull trap and ended with the pair hesitating and returning to the Pivot Point around $29,200. Digital gold, unlike physical gold, hardly reacted to the publication of labour market data in the US on August 4.

Some analysts believe that the crisis in DeFi is putting additional pressure on Bitcoin, and even predict a significant decline for the leading cryptocurrency in the near future. However, in our view, what they call a "crisis" is not actually one. Everything comes down to the vulnerabilities in early versions of the Vyper programming language, which is used to write smart contracts on which decentralized exchanges (DEX) operate. On July 30, liquidity pools in four pairs (CRV/ETH, alETH/ETH, msETH/ETH, pETH/ETH) using early Vyper versions 0.2.15-0.3.0 were hacked on the Curve Finance exchange. Other pools, the total number of which exceeds two hundred, were unaffected. The total loss amounted to about $52 million.

According to CertiK experts, traders lost digital assets worth $303 million as a result of hacking attacks in July. According to PeckShield data, from January to June 2023, the crypto industry faced at least 395 hacks, resulting in the theft of about $480 million. So, the hacking of Curve Finance is certainly unpleasant, but nothing extraordinary. It's far from the scale of last year's crashes in Terra (LUNA) and FTX.

Perhaps in order to feel more or less at ease, one should not put all their eggs in one basket. This was the message from the CEO of Galaxy Investment Partners, Michael Novogratz, in an interview with Bloomberg. "If an investor was young and took risks calmly, I would advise him to buy Alibaba shares," the billionaire said. "I would also advise investing in silver, gold, bitcoin, and Ethereum. That would be my portfolio."

Novogratz's confidence in bitcoin's future was bolstered after the largest investment company, BlackRock, filed an application for a spot bitcoin ETF. The businessman noted that BlackRock's CEO, Larry Fink, never believed in bitcoin, but has now changed his mind. "Now he says that BTC will be a global currency, and people around the world will trust it. He took the orange pill. He believes in bitcoin," Michael Novogratz stated.

Peter Brandt, a legendary trader and veteran of the financial industry, has also "taken the orange pill." He believes that over time, the first cryptocurrency will "come out of the shadow" of more traditional investment assets, such as stocks and gold, and in the future, it will be bitcoin that sets the tone in the financial market.

Peter Brandt emphasized that U.S. regulators will surely approve the launch of spot bitcoin ETFs. However, in his opinion, this approval will not be news, just as the halving will not be an event. After them, the price of BTC may even go down instead of up. "In 48 years of speculation," Brandt writes, "I have always found that markets take into account events before they happen." Always follow the saying "Buy on the rumour, sell on the fact," advises the Wall Street legend.

Moderate pessimism regarding the consequences of the halving was also expressed by analysts at CME Group. They noted that the demand for crypto assets, which was very strong during the first eight years of bitcoin's existence, has noticeably slowed down over the past five years. Therefore, in their opinion, there is no guarantee that the halving will lead to an appreciation of either BTC or altcoins.

Despite the warnings, many influencers and crypto enthusiasts continue to compete in forecasting how much bitcoin will grow in the coming years. Here are some opinions, sorted in ascending order. An analyst going by the nickname TechDev forecasts the price of BTC by relying on the behaviour of traditional financial markets, including the price of 10-year Chinese bonds, the dynamics of the Dollar Index, as well as the balances of the central banks of major countries, etc. According to him, the coin's rate closely follows the indicators of global liquidity, and the current economic cycle should once again conclude with massive growth in the money supply. Therefore, bitcoin is preparing for growth. In the analyst's view, the logarithmic growth curve indicator, which ignores short-term asset fluctuations, indicates that the leading cryptocurrency will reach a level of $140,000 by 2025.

"I will note that this is a very rough approximation, based on specific parameters of the indicator and the steepness of the momentum," warned TechDev. The analyst also noted that such an indicator as Bollinger Bands is in a very narrow range. The last time bitcoin exited such a range, a full-scale bull trend began.

Next in our top 3 is venture capitalist and billionaire Tim Draper, who stated in an interview with FOX Business that sooner or later, the entire world will embrace the first cryptocurrency. "It's only a matter of time before retailers realize they can save 2% by accepting bitcoin. They don't have to pay banks and credit card manufacturers," he explained. Draper repeated his forecast for the first cryptocurrency's growth to $250,000, predicting this would happen by 2025. (It's worth noting that the investor had already mentioned this price back in 2018, though at that time he referred to 2022 as the "Hour X." As we can see, the billionaire was mistaken.)

And finally, the gold step of the podium of honor this time goes to BitMEX co-founder Arthur Hayes. He published an article in which he forecasted the flagship cryptocurrency's surge to $760,000. In his opinion, the integration of Artificial Intelligence (AI) projects into the BTC blockchain will sharply increase the coin's appeal as a foundational asset of the ecosystem.

Hayes believes that ethereum should demonstrate a similar development model. If AI-based projects are integrated into this altcoin, the investment attractiveness of ETH, the main transaction instrument in the network, will sharply intensify. In this case, the altcoin may appreciate by 1,556%. In other words, the BitMEX co-founder does not rule out that ETH may soar to $31,063.

Another factor stimulating the growth of ETH over the next five years, according to Hayes, will be the expansion of the decentralized finance (DeFi) market. Most protocols of this ecosystem are based on ethereum, and their popularity continues to grow. An increase in the number of users of decentralized exchanges (DEX) will lead to a growth in transaction volumes with ETH and, consequently, to a rise in the price of the altcoin.

A survey was conducted among industry experts on the financial platform Finder to assess the future prospects of ethereum. The experts forecasted that ETH would be valued at an average of $2,400 by the end of 2023. They also predict that the price of ethereum will reach $5,845 by the end of 2025, and $16,414 by the end of 2030. It's worth noting that 56% of the experts believe that now is the most opportune time to buy ETH, while 41% advise holding the cryptocurrency, and a mere 4% recommend selling it.

PwC, the world's second-largest consulting firm, conducted a survey involving representatives from both cryptocurrency and traditional hedge funds. 93% of those surveyed believe that the market has already hit bottom, and they expect the cryptocurrency market to grow by the end of 2023. Among cryptocurrencies, they continue to favour bitcoin and ethereum. However, 72% think that ethereum has no chance of ever surpassing bitcoin in market capitalization. Of the remaining 28% who believe in the altcoin's victory, the majority expect that it will occur within the next 2 to 5 years.

A recent report from CME Group showed that ETH/BTC exhibits almost zero correlation with changes in interest rates, gold futures, and crude oil. However, it is significantly influenced by factors such as the strength of the dollar, changes in the market supply of bitcoin, and the dynamics of technology company stocks. The research indicates that ETH is more vulnerable to the strength of the USD, and changes in BTC supply have more influence on ETH/BTC than changes in ETH supply. At the same time, ETH often grows relative to BTC on days when technology company stocks (S&P 500 and Nasdaq-100 Tech indices) are on the rise.

As of the time of writing this overview, on the evening of Friday, August 4, BTC/USD is trading around $28,950, ETH/USD is around $1,820, and ETH/BTC is at 0.0629. The total market capitalization of the crypto market continues to decline and stands at $1.157 trillion ($1.183 trillion a week ago). The Crypto Fear & Greed Index remains in the Neutral zone at a mark of 54 points (52 points a week ago).


NordFX Analytical Group


Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

 

[Stan NordFX]

CryptoNews of the Week

– Craig Wright, an Australian computer scientist and businessman who claims to be Satoshi Nakamoto, has now expressed his disillusionment. "As the creator of bitcoin, I am both fascinated and disappointed by how far the so-called cryptocurrency industry has deviated from bitcoin's original vision," he wrote. Wright insists that bitcoin was never intended to be an investment or a store of value. Yet, the focus has now shifted towards speculation, quick profits, and "pump and dump" strategies. "It's saddening to see so much attention given to the price, rather than the transformative power of the technology," laments the scientist.

– Adam Back, one of the leading figures in the crypto industry and CEO of Blockstream, has wagered a million satoshi (0.01 BTC) that the price of bitcoin will reach $100,000 before the next halving. The bet was the result of a wager made with a user of platform X (formerly Twitter) under the pseudonym Vikingo. Vikingo believes that the 'digital gold' will not achieve this price level until at least 2025. The head of Blockstream is confident it will happen by March 31, 2024, which is roughly a month before the halving. Blockstream's former Director of Strategy and now CEO of Jan3, Samson Mow, agreed with his former colleague. He also anticipates a new all-time high will be reached before the halving, not after.
At the time of writing, a bet of 1 million satoshi is approximately worth $290. Considering Adam Back's net worth is estimated to be between $100-300 million, the bet amount elicited a number of cheeky comments. Some users even offered to provide the entrepreneur with financial assistance.

– The popular analyst known as PlanB, who created the S2F (Stock-to-Flow) bitcoin forecasting model, believes that by the time of the next halving, BTC will be valued at around $55,000. The S2F model's signals indicate the likelihood of the coin moving to this price point.
Opinions gathered by the BeInCrypto editorial team vary from PlanB's prediction. For instance, analysts from Seeking Alpha believe that the cryptocurrency should be priced at about $98,000 for miners to remain profitable after the halving event.

– Mayor of Miami and U.S. presidential candidate, Francis Xavier Suarez, told CoinDesk TV in an interview that his election campaign is accepting donations in the leading cryptocurrency. Supporters of the politician can donate a minimum of 0.00034 BTC or an equivalent of $1.
"Nobody wants the federal government to know how much money you have and where you keep it," Suarez stated. "The biggest mistake made by this administration [under President Biden] is that they don't understand the crypto industry, so they've resorted to a heavy-handed regulatory approach instead of establishing basic rules.".

– Trader, analyst, and founder of the venture company Eight, Michael Van De Poppe, debunked investors' speculations about the first cryptocurrency's price plummeting to the $12,000 mark and reassured those talking about a total capitulation of altcoins.
"The bear market has been ongoing for over two years," he wrote, making it the longest market in cryptocurrency history. However, this is unsurprising against the backdrop of hacks, bankruptcies, and legal disputes in the crypto industry. From the analyst's observations, bearish sentiments are most often found among those who invested in digital assets for the first time in 2021. "For them, the slow loss of money feels extremely painful, and they only anticipate further portfolio value decline," noted the expert.
In his view, we are currently in the second stage of capitulation – the most boring period of the cycle where it seems like nothing is happening in the markets. "Be patient, take solace in the fact that you're still in the game, accumulate positions. [...] Major companies are entering the fray, and the wisest thing you can do is follow their lead," Van De Poppe advised.

– Founder of the charitable foundation The Bitcoin Foundation, Charles Shrem, believes that the issuance of stablecoins by PayPal (PYUSD) will lead to an increase in the price of bitcoin to at least $250,000 much faster than anticipated. In his view, ETH will surge at an accelerated pace to $18,000 since PYUSD is issued on the Ethereum blockchain. Consequently, the value of this altcoin may rise due to an increased number of network users brought by PayPal clients.
It remains a mystery why Shrem believes PYUSD will positively impact bitcoin's price. A crypto trader known by the pseudonym Smitty thinks that the issuance of stablecoins will, on the contrary, result in a decrease in BTC's value, as it will boost the investment appeal of its competitor, ETH.

– The primary digital asset has been held within a narrow trading range for two months, and network indicators point to accumulation in anticipation of a price breakout. According to the Blockware Intelligence newsletter, the volume of liquid and highly liquid supply is at its lowest level since 2018. Speculative traders swap a decreasing number of coins back and forth, while long-term holders consistently resort to cold storage, Blockware stated.

– Prominent trader, Tone Vays, noted that selling pressure is on the rise and the price of the foremost cryptocurrency could significantly decline. "Bitcoin continues to struggle, but I'd say there's a high probability of the BTC rate dropping to the next moving average. And if daily candles keep closing below the previous ones, I'd advise reducing the position by 50% because I can't pinpoint to what levels bitcoin might drop. It could potentially fall to $25,000. There are enough people in the market who, for some reason, keep selling their coins," the analyst writes.
Tone Vays is convinced: if bitcoin does drop to $25,000, there's a high likelihood of further long-term decline. From an expert's perspective, the primary cryptocurrency "stands on the edge of a cliff, and things are looking grim." "The price needs to rebound immediately, I mean, within this month. We can't afford to decline for another month; otherwise, panic will ensue in the market, and I wouldn't be surprised if BTC trades below $20,000. Moreover, miners might start offloading their reserves, which is highly risky," the specialist warns.
It's worth noting that in late May, Vays predicted a swift rise of the premier cryptocurrency above $30,000. The forecast turned out to be accurate; however, BTC couldn't sustain that level.

– The Arkham Intelligence platform has offered a $46,000 reward for credible information leading to the perpetrator behind the FTX exchange hack. It's worth noting that on November 11, 2022, FTX suffered a theft of crypto assets amounting to approximately $400 million. On the same day, the exchange filed for bankruptcy. To claim the reward, individuals are required not only to identify the hacker but also to provide indisputable evidence of the individual's guilt. Submissions for this bounty must be made by August 17.
Miguel Morel, CEO of Arkham, has expressed that the platform will persistently support such investigations in the future to deter potential offenders.


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

 

[Stan NordFX]

Forex and Cryptocurrencies Forecast for August 14-18, 2023​

EUR/USD: Inflation, GDP, and Prospects for Monetary Policy

Looking at the two-week flat trend on the EUR/USD chart, one is reminded that it's August, a vacation season. Even the US inflation data released on Thursday, August 10th, couldn't disrupt the relaxed demeanour of traders. And yet, they warrant close attention. The year-on-year Consumer Price Index (CPI) growth of 3.2% and core inflation at 4.7% came in below forecasts (3.3% and 4.8% respectively). The monthly CPI remained unchanged at 0.2%, marking the lowest figure in over two years. As for the GDP, previously released data confirmed a diminished risk of the national economy slipping into a recession. After a 2.0% year-on-year rise in the first quarter of 2023, the second quarter recorded a 2.4% growth, significantly surpassing market expectations of 1.8%.

Therefore, the US boasts a robust economy with a gradually cooling labour market and inflation steadily approaching the 2.0% target level. All of this suggests that the Federal Reserve's monetary policy has been bearing positive fruits. The regulator can now, at the very least, pause the tightening process. They might even conclude the current monetary restriction cycle. The likelihood of the dollar interest rate remaining at the current 5.50% level in September is estimated at 89%, whereas the odds of it increasing by 25 basis points (b.p.) by year's end stand at just 27%.

In such a situation, the dollar should have begun to relinquish its positions, but this did not occur. Of course, immediately after the inflation data release, EUR/USD spiked by approximately 50 points but soon reverted. Why did this happen? While the vacation season theory could be considered, there are two considerably more crucial reasons. The first is the disappointing results of the latest auction for the 30-year US Treasury bonds, which concluded with a yield of 4.199%, lower than rates in the secondary market. The second reason lies in the weakness of the dollar's European counterpart.

The best insight into how the Eurozone's economy is faring is provided by the "Economic Bulletin" published by the European Central Bank (ECB) on that same Thursday, August 10. Here are its key points:

"Inflation continues to decline, but it is expected to remain too high for an extended period." "The immediate economic outlook for the Eurozone has worsened, mainly due to weakening domestic demand. High inflation and tighter financing conditions are suppressing spending growth." "A modest production growth in the Eurozone is anticipated in the third quarter, largely driven by the services sector." "Upside risks for inflation include potential resurgence in energy and food prices, as well as risks associated with Russia's unilateral withdrawal from the Black Sea Grain Initiative." "The prospects for economic growth and inflation remain highly uncertain." According to a recent Reuters poll, such a bulletin from the ECB has left market participants guessing about their next moves.

Next week, Eurostat will present a report with revised GDP data for the Eurozone for Q2 2023, as well as figures for industrial production and inflation for July. The preliminary GDP estimate showed a growth of +0.3% (+0.6% year-on-year) after stagnant growth in Q4 2022 and a decline of -0.1% in Q1 2023. While inflation is on the decline (currently at 5.5%, compared to 10.6% in October 2022), it still exceeds the target level of 2.0%. If the ECB continues to maintain a strict monetary policy and energy prices rise, many economists believe this could lead to a 5.0% drop in the Eurozone's GDP in 2024.

The comparison of the provided data suggests that the US currency currently has a greater chance of prevailing. The dollar's role as a safe-haven asset also plays in its favour. Naturally, a lot hinges on the actions of the Fed and the ECB this fall. As for the past week, after the release of the US production inflation data (PPI), the dollar further strengthened its position, and the EUR/USD pair concluded the week at 1.0947.

At the time of writing this review, on the evening of August 11, 35% of analysts have voiced in favour of the pair's rise in the near term, 50% sided with the dollar and took the opposite stance, and the remaining 15% voted for the continuation of the sideways trend. Among the oscillators on D1, the majority, 80%, favor the US currency (with 15% in the oversold zone), 10% point northward, and 10% are in the neutral zone. Among the trend indicators, 65% recommend selling, and the remaining 35% suggest buying. The nearest support for the pair is located around 1.0895-1.0925, followed by 1.0845-1.0865, 1.0780-1.0805, 1.0740, 1.0665-1.0680, and 1.0620-1.0635. Bulls will encounter resistance around 1.0985, then at 1.1045, 1.1090-1.1110, 1.1150-1.1170, 1.1230, 1.1275-1.1290, 1.1355, 1.1475, and 1.1715.

For the upcoming week, notable events include the release of U.S. retail sales data on Tuesday, August 15. On Wednesday, August 16, the Eurozone's GDP figures will be revealed, and the minutes from the latest FOMC (Federal Open Market Committee) meeting will also be published. Data on U.S. unemployment and manufacturing activity will be presented on Thursday. To cap off the week, on Friday, August 18, we'll get insights into the inflation (CPI) situation in the Eurozone.

GBP/USD: Day X – August 16

According to data released on Friday, August 11, by the UK's Office for National Statistics (ONS), the country's economic growth for the second quarter was 0.2%, compared to a 0.1% increase in the first quarter (with a forecast of 0.0%). Year-on-year, while forecasts were at 0.2%, the actual GDP growth was 0.4% (with the previous figure being 0.2%). The total volume of industrial production in June also rose, registering a +1.8% compared to a forecast of +0.1% and a -0.6% decline in May. Overall, the upward momentum is evident. This reduces the risks of recession and heightens the likelihood that the Bank of England (BoE) will maintain its hawkish stance at least until the end of 2023. Especially given that the country's inflation remains relatively high, with the year-on-year CPI at 7.9%. To combat this, according to predictions, the BoE might increase the key interest rate in 2-3 steps from the current 5.25% to 6.00% this year, giving the British currency a distinct edge.

Strategists at the Netherlands' largest banking group, ING, believe that the positive GDP figures won't be the defining factor for the Bank of England. "The June GDP growth numbers for the UK surpassed expectations," they agree. "However, we believe that the implications for the Bank of England are likely to be quite limited, as the numbers aren't significantly different from its forecasts. The primary focus will be on next week's service sector inflation and wage growth figures, [...] which are crucial for the pound."

GBP/USD closed at the 1.2695 mark on Friday, August 11. The near-term forecast from experts is as follows: 60% are bearish on the pair, 20% are bullish, and the same percentage chose to remain neutral. On the D1 oscillators, bears have a unanimous 100% backing, with 15% of these indicating an oversold condition. Trend indicators display a 65% to 35% split in favour of the bears (red). Should the pair trend downwards, it will encounter support levels and zones at 1.2675, 1.2620-1.2635, 1.2575-1.2600, 1.2435-1.2450, 1.2300-1.2330, 1.2190-1.2210, 1.2085, 1.1960, and 1.1800. In the event of an upward movement, resistance can be expected at 1.2760, followed by 1.2800-1.2815, 1.2880, 1.2940, 1.2980-1.3000, 1.3050-1.3060, 1.3125-1.3140, 1.3185-1.3210, 1.3300-1.3335, 1.3425, and 1.3605.

As for the UK macroeconomic statistics, a flurry of data from the national labour market awaits us on Tuesday, August 15, including indicators such as wage growth and unemployment rates. The next day, on Wednesday, August 16, key inflation (CPI) figures for the United Kingdom will be released. Lastly, on Friday, August 18, we'll receive statistics on retail sales in the country.

continued below...

 

[Stan NordFX]

USD/JPY: The Pair Returns to its Moonshot

While EUR/USD and GBP/USD spent the week trading sideways, USD/JPY once again soared into the stratosphere. On Friday, it reached a height of 144.995, almost touching the peak of June 30. It last traded at such levels over a year ago, in June 2022. The week concluded slightly lower, settling at 144.93. Neither the Bank of Japan's (BoJ) recent decision to shift from a rigid yield curve targeting for government bonds to a more flexible approach, nor the interventions conducted by the Japanese regulator, were able to support the yen.

Inflation data is crucial for most central banks. To combat rising prices, regulators in the US, EU, and the UK are tightening monetary policy and raising interest rates. However, the BoJ disregards such methods, even as inflation in the country continues to climb. Moreover, the country's government has recommended a 4% increase in the minimum wage, and spring wage negotiations have resulted in the highest wage growth in three decades. Against this backdrop, there's mounting evidence that businesses are ready to pass on these increases to consumers, which could lead to a rise in CPI.

At Japan's MUFG Bank, they forecast that the Bank of Japan might only decide on its first rate hike in the first half of the following year. Only then will there be a shift towards strengthening the yen. As for the recent change in the yield curve control policy, MUFG believes it's insufficient on its own to prompt a recovery of the Japanese currency.

Analysts at Germany's Commerzbank feel that the lack of clarity in the Bank of Japan's policy further depresses the yen and hinders its growth. Over the recent months, when all Central Banks, except the Japanese one, have raised their key rates, one thing has become clear: the monetary policy of the Bank of Japan will not be favourable for the yen in the foreseeable future, Commerzbank shares. They add that the yen is a complex currency to understand, possibly linked to the BoJ's monetary policy.

Strategists at Societe Generale opine that if the USD/JPY pair consolidates above 144.50-145.00, growth may continue to 146.10 (76.4% correction of the movement from last October) and then even higher to 147.90.

Analysts at Credit Suisse also maintain a bullish outlook on the pair and aim higher in their forecasts. "We continue to anticipate a retest of our interim target of 145.00-145.12," they write. "Although this mark is expected to hold again, our core forecast remains bullish, and we anticipate that it will ultimately be breached. This will lead the market to resistance at 146.54-146.66, and eventually, to a target of 148.57.".

Concerning the near-term perspective, the median forecast of experts greatly diverges from the aforementioned opinions. An overwhelming majority of them (80%) expect a correction of USD/JPY downwards. (One possible reason for the decline could be another currency intervention.) The remaining 20% chose to remain neutral. The number of those expecting further growth of the pair this time was zero. Both trend indicators and oscillators on D1 are 100% green, although a quarter of the latter signals overbought conditions. The nearest support level is located at 144.50, followed by 143.75-144.04, 142.90-143.05, 142.20, 141.40-141.75, 140.60-140.75, 139.85, 138.95-139.05, 138.05-138.30, 137.25-137.50. The closest resistance stands at 145.30, followed by 146.85-147.15, 148.85, and finally, the October 2022 high of 151.95.

Among the events of the upcoming week in the calendar, one can note Tuesday, August 15, when data on consumer spending, industrial production volumes, and Japan's GDP will be published. The next day, the value of the Reuters Tankan Business Confidence Index will be known, and on Friday, August 18, we will learn the values of the National Consumer Price Index (CPI).

continued below...

 

[Stan NordFX]

CRYPTOCURRENCIES: The Search for a Trigger Continues

Two weeks ago, we titled our review "In Search of the Lost Trigger". Over the days that have passed since then, the trigger has still not been found. After the drop on July 23-24, BTC/USD moved to another phase of sideways movement, moving along the Pivot Point around $29,500. According to some analysts, market participants avoided sharp movements in anticipation of inflation data in the US, which was published on Thursday, August 10. Which, as a result, the crypto market completely ignored.

Bitcoin network indicators suggest accumulation in anticipation of a price breakthrough. According to the Blockware Intelligence newsletter, the volume of liquid and highly liquid supply has dropped to its lowest level since 2018. As noted in Blockware, speculative traders are exchanging a decreasing amount of coins back and forth, while long-term holders have tucked their reserves into cold wallets.

Opinions on which direction this breakthrough may take, as usual, are divided. For instance, trader, analyst, and founder of the venture firm Eight, Michael Van De Poppe, refuted suggestions about the first cryptocurrency's price dropping to the $12,000 mark and reassured those talking about a complete capitulation of altcoins.

"The bear market has been ongoing for more than two years," he wrote, making it the longest market in cryptocurrency history. However, this is not surprising given the hacks, bankruptcies, and litigations in the crypto industry. From the analyst's observations, the most bearish sentiments are often found among those who first invested in digital assets specifically in 2021. "For them, the slow loss of money feels extremely painful, and they only expect further portfolio value decreases," the expert noted.

In his opinion, the second stage of capitulation is now taking place: the most boring period of the cycle, during which it seems that nothing at all is happening in the markets. "Be patient, enjoy the realization that you are still in the market, accumulate positions. [...] Big companies are getting into the game, and the wisest thing you can do is to follow them," Van De Poppe advised.

A considerably less optimistic forecast was given by another renowned trader, Tone Vays. He noted that selling pressure is increasing and the price of the first cryptocurrency might significantly decline. "Bitcoin continues to struggle, but I'd say there's a high chance the BTC price could drop to the next moving average. And, if daily candles keep closing below the previous ones, I would advise reducing the position by 50% because I can't predict how low bitcoin might fall. It could easily drop to $25,000. There are enough people in the market who, for some reason, keep selling their coins," the analyst writes.

Tone Vays is convinced: if bitcoin does indeed drop to $25,000, there's a high likelihood of further long-term decline. From the expert's perspective, the first cryptocurrency is "on the edge of a cliff, and things look bad." "The price needs to turn around immediately, I mean - this month. We don't have the luxury to drop another month, otherwise, panic will spread in the market, and I won't be surprised if BTC trades below $20,000. Miners will also start liquidating their holdings, which is very dangerous," warns the specialist. (It's worth noting that at the end of May, Vays spoke about the imminent rise of the first cryptocurrency above $30,000. The forecast turned out to be correct, but BTC couldn't maintain that level.).

A potential trigger for the start of a bullish rally could have been the news of payment giant PayPal issuing its own stablecoin, PayPal USD (PYUSD). This was announced on Monday, August 7. The founder of the charity The Bitcoin Foundation, Charlie Shrem (Charles Shrem), quickly stated that this event would lead to a rise in bitcoin's price to at least $250,000. Moreover, this will happen much faster than expected. In his opinion, ETH will also appreciate at an accelerated pace to $18,000, as PYUSD is issued on the Ethereum blockchain. Consequently, the price of this altcoin may increase due to a rise in the number of network users from PayPal's clientele.

However, unlike Charlie Shrem, most experts reacted sceptically to the news, as the tool doesn't offer anything new or useful for users. It also remains a mystery why Shrem suddenly decided that PYUSD would positively affect the price of bitcoin. Logically, the issuance of stablecoins should, on the contrary, cause a decrease in BTC's value, as it would enhance the investment appeal of a competitor - ETH. Nonetheless, PYUSD did not act as a trigger for either bitcoin or Ethereum, which is evident from the BTC/USD and ETH/USD charts.

As a result, investors have three events in "reserve" that can potentially push the crypto market upward. These are: 1) a radical easing of the monetary policy of the US Federal Reserve, 2) the approval by the Securities and Exchange Commission (SEC) to launch spot bitcoin ETFs, and 3) the bitcoin halving.

It should be noted that the next halving is tentatively scheduled for April 12, 2024. Every 210,000 blocks or once every 4 years, it halves the reward that miners receive for mining a block. This is done to create a deflationary environment and support the value of BTC by reducing the rate of new coin issuance. (The total emission limit is set at 21 million coins). Initially, from 2009, miners received 50 BTC for each generated block. In 2012, the reward was reduced to 25 BTC, in 2016 to 12.5 BTC, and after 2020, to 6.25 BTC. When the 2024 halving occurs, the mining reward will decrease to 3.125 coins.

As a result of this event, miners will have to adapt to the new reality. They will need to acquire more powerful and energy-efficient equipment or upgrade existing ones. According to forecasts, many small companies will likely leave the market or be acquired by larger players. Consequently, a centralization of the mining market can be expected, which will be taken over by a few large pools. This will make the network more susceptible to manipulations and hacker attacks. However, a sharp increase in the price of BTC can at least partially offset these negative factors.

Many market participants expect that after this event, the bitcoin price might skyrocket once again, as evidenced by historical data. After the 2012 halving, the BTC price rose from $11 in November 2012 to $1,100 in November 2013. The 2016 halving: the price increased from $640 in July to $20,000 in December 2017. The 2020 halving allowed the coin's price to rise from $9,000 in May 2020 to a peak of $69,000 in November 2021. However, despite these statistics, experts warn that past results do not guarantee their repetition in the future.

One of the leading figures in the crypto industry and CEO of Blockstream, Adam Back, placed a bet of one million satoshi (0.01 BTC) that the price of bitcoin would reach $100,000 a month before the halving. The bet was made as a result of a wager with a user of platform X (formerly Twitter) under the nickname Vikingo, who believes that the digital gold quotes will not reach this height until 2025.

Back's former colleague at Blockstream, and now CEO of Jan3, Samson Mow, agreed with him. Experts from Seeking Alpha mention almost the same figure. They believe that the cryptocurrency should be worth about $98,000 for miners to stay afloat after the halving. However, a popular analyst known as PlanB, based on his S2F model, stated that by the time of the halving, BTC will be worth much less - only about $55,000.

As of the time of writing this review, on the evening of Friday, August 11, BTC/USD is trading around $29,400, ETH/USD is around $1,840. The total market capitalization of the crypto market has grown and is now $1.171 trillion ($1.157 trillion a week ago). The Crypto Fear & Greed Index remains in the Neutral zone at 51 points (54 points a week ago).


NordFX Analytical Group


Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

 

[Stan NordFX]

CryptoNews of the Week

– The digital gold market has reached a stage of extreme apathy and exhaustion, with volatility indicators at the beginning of the week hitting record low levels. This conclusion was drawn by Glassnode analysts. To support their statement, the experts pointed to the Bollinger Bands spread narrowing to 2.9%. Lower values were observed only twice in history: 1) in September 2016, when quotes were at $604 ahead of the bull market's onset, and 2) in January 2023, when the price traded between $52 and was at $16,800.
Such low volatility reflects a situation where the acquisition cost of most coins moving on the blockchain is very close to the spot price. For this reason, realized gains and losses are relatively small. "This suggests that all investors wanting to lock in profits or losses at this price range have done so. The market needs to take steps to incentivize new spending and break the investors' apathy," the specialists explained.

– Michael Van De Poppe, a trader, analyst, and founder of Eight Venture Company, posits that we're currently in the second phase of capitulation. This phase is often perceived as the most uneventful period in the cycle, making it feel as though the markets are stagnant. "Stay patient and find solace in the fact that you're still engaged in the market. Continue to accumulate positions," Van De Poppe suggests. He emphasizes that as major corporations make their moves, the smartest strategy is to follow their lead. He believes that for bitcoin to experience substantial growth, it needs to break the $29,700 barrier. Once this is achieved, its next significant milestone will be reaching $40,000.

– Kevin Kelly, the co-founder and head of research at Delphi Digital, has identified signs of an early bull rally. According to Kelly, a typical crypto cycle begins when bitcoin reaches an all-time high (ATH), followed by an 80% drop. Roughly two years later, it rebounds to its previous ATH and continues to ascend to a new peak. This pattern typically spans about four years.
Kelly believes this trend isn't arbitrary and aligns with a "broader business cycle." He observed that bitcoin's price peak often coincides with the ISM manufacturing index, which is currently in the final phase of a downtrend. This situation reminds Kelly of the market dynamics between 2015 and 2017.
He pointed out that the last two bitcoin halvings occurred approximately 18 months after the asset hit its lowest point and seven months before it broke its historical high. The next halving is anticipated in April 2024. Following that, Kelly estimates that about six months later, bitcoin might reach a new ATH. However, he cautioned that there's no certainty this scenario will play out as described. He also speculated on the possibility of a "false bottom" emerging.

– An analyst known as Ignas has also conducted a cyclical analysis and predicts a bitcoin bull market in 2024. He bases his projection on a recurrent sequence observed in the primary cryptocurrency over the years: 1. A descent of 80% from its all-time high (ATH), bottoming out a year later (4th quarter of 2022). 2. A two-year period to recover and reach its preceding peak (4th quarter of 2024). 3. An additional year of price appreciation leading to a new ATH (Q4 2025).
Ignas notes that in 2022, the cryptocurrency sector grappled with macroeconomic hurdles. However, current indications suggest an improving landscape. The anticipated bitcoin halving in April 2024 might align with a worldwide uptick in liquidity, potentially fuelling the expected bull run. Furthermore, emerging applications for bitcoin and the initiation of spot bitcoin ETFs, once greenlit by the SEC, are likely to have a consequential impact on its price.

– Based on a survey conducted by the popular blogger and analyst known as PlanB, 60% of respondents believe that a bull market will commence following the halving. PlanB himself estimates that by the time of this event, BTC will be valued at around $55,000. Indications for the coin's potential rise to this level are suggested by the Bitcoin forecasting model S2F, which was developed by him.

– Since November 2022, the Russian rouble has depreciated by approximately 65% (from 50 to 100 roubles per $1). This devaluation has allowed miners in Russia to earn substantially more since mining costs have remained constant. This has sparked a significant surge, despite international sanctions. Representatives from the company BitCluster have shared that orders for large batches of equipment (of 10, 20, or even 30 MW) are coming in almost daily. "The market simply can't construct new data centres fast enough to meet the demand. Major clients find themselves waiting for months," shared sources at BitCluster.
A significant portion of the demand comes from Chinese miners who are migrating from the US to Russia. However, there remain inherent risks in conducting this business in Russia due to the near absence of regulatory oversight.

– The author of the best-selling financial book "Rich Dad Poor Dad," Robert Kiyosaki, dubbed gold and silver as "God's money," while designating bitcoin as the "dollar of the people." "I have an affinity for bitcoin primarily because we both oppose the same entities - the US Federal Government, its Treasury, the Federal Reserve, and Wall Street. I hold no trust in them. If you trust them, then keep your savings in dollars; you'll essentially have an IOU," he expressed.
He further opined, "Bitcoin seems to be on a trajectory towards $100,000. The downside: if there's a crash in the stock and bond markets, we might see gold and silver prices soaring astronomically. Even grimmer, a collapse of the global economy could see bitcoin valued at a million, with gold potentially costing $75,000 and silver around $60,000. The magnitude of the national debt is alarming, putting everyone in a precarious position," Kiyosaki commented. He concluded with, "I sincerely hope I'm mistaken.".

– Goldman Sachs strategists anticipate that the US Federal Reserve (Fed) will cut its key interest rate in the second quarter of 2024. Such a move is expected to provide a boost to BTC's price. The motivation behind this rate cut could be the inflation reaching its target rate of 2.0%. However, Goldman Sachs acknowledges that the Fed's actions remain unpredictable, and the rate might linger at its peak level for an extended period.
For context: According to the CME FedWatch Tool, 68% of market participants expect that by May 2024, the rate will be reduced by at least 25 basis points.

– American political commentator Jon Stewart accused Wall Street, the global financial hub, of corruption and compared its operations to the schemes of Sam Bankman-Fried, the head of the now-bankrupt cryptocurrency exchange FTX. "His objective was to sow discord in certain parts of the financial system, namely the cryptocurrency sector. When I look at the intricate workings of Wall Street, it doesn't seem much different from what Bankman-Fried was up to," Stewart stated.

– Well-known trader and analyst, Dave_the_Wave, who has a reputation for accurate predictions, has cautioned that bitcoin might undergo a major correction by the end of 2023. He suggests that bitcoin could drop to the lower end of its Logarithmic Growth Curve (LGC), marking an approximate decline of 38% from its high this year. However, Dave_the_Wave also points out a silver lining: as bitcoin experiences heightened price stabilization from a macroeconomic standpoint, it's gradually shedding its volatility and evolving into a more stable investment asset.


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

 

[Stan NordFX]

Forex and Cryptocurrencies Forecast for August 21-25, 2023​

EUR/USD: What Strengthens the Dollar and What Can Weaken It

The US currency maintained its ascent last week. The minutes from the Federal Open Market Committee (FOMC)'s July meeting of the US Federal Reserve were published on Wednesday, August 16, suggesting the possibility of further monetary policy tightening.

Before the minutes were unveiled, market players debated how long the central interest rate would linger at 5.5%. However, once the document's content was revealed, discussions shifted to how much more this rate could increase. Several FOMC members expressed in the minutes that the current economic landscape might not see as significant a decrease in inflation as hoped. This sentiment paves the way for the Fed to consider another rate hike. As a result, the likelihood that the interest rate could climb to 5.75% or even higher in 2023 has surged from 27% to 37%, reinforcing the dollar's position.

Other factors bolstering the US dollar include the favourable state of the securities market and the robust health of the US economy. Positive retail sales figures prompted the Federal Reserve Bank of Atlanta to revise its Q3 GDP forecast for the country, raising it from 5.0% to 5.8%. The real estate market is also showing promising signs: the monthly issued construction permits rose by 0.1%. Furthermore, the construction of new homes increased by 3.9%, reaching 1.452 million units, surpassing the projected 1.448 million. Retail sales statistics released on August 15th further supported the Dollar Index (DXY), with consumer activity in July expanding by 0.7%: outpacing the anticipated 0.4% and the prior 0.2% figure. Collectively, these data points underscore a diminishing risk of the US economy entering a recession, suggesting a likely continuation of the monetary restriction phase. Additionally, escalating oil prices might nudge the regulator towards subsequent rate hikes, potentially spurring another inflationary wave.

On the other hand, the situation in the US banking sector could pose challenges for the dollar. Neil Kashkari, the President of the Federal Reserve Bank of Minneapolis, believes that the crisis that began in March, leading to the bankruptcy of several major banks, might not yet be over. He opines that if the Federal Reserve continues to raise interest rates, it will significantly complicate the operations of banks and could trigger a new wave of bankruptcies. This perspective is echoed by analysts at Fitch Ratings. Their projections even consider the possibility of downgrading the ratings of several US banks, including giants like JPMorgan Chase & Co.

Strategists at Goldman Sachs believe that the Federal Reserve might only consider reducing the key rate in Q2 2024. A potential trigger for this move could be the inflation rate stabilizing at the target level of 2.0%. However, Goldman Sachs acknowledges that the actions of the regulator remain unpredictable, which means the rate could stay at peak levels for a more extended period. Overall, according to the CME FedWatch Tool, 68% of market participants anticipate that by May 2024, the rate will be reduced by at least 25 basis points (b.p.).

Regarding the Eurozone's economy, data published on August 16th showed that it grew by 0.3% (quarter-on-quarter) for Q2 2023. This figure aligns perfectly with predictions and matches the growth rate of Q1. On an annual basis, the GDP growth stood at 0.6%, which is consistent with both forecasts and the previous quarter's numbers. The inflation figures released on Friday, August 18, were also unsurprising. They matched both market expectations and previous figures. In July, the Core Consumer Price Index (CPI) was recorded at 5.5% (year-on-year) and -0.1% (month-on-month).

Amid such consistently modest economic performance, the euro continues to face downward pressure. Factors contributing to this include the potential energy crisis in Europe this upcoming winter and uncertainties surrounding the monetary policy of the European Central Bank (ECB).

Starting the five-day trading period at 1.0947, EUR/USD closed at 1.0872. As of the evening of August 18, when this review was written, 50% of analysts predict a rise for the pair in the near future, 35% favour the dollar, and the remaining 15% maintain a neutral stance. Regarding oscillators on the D1 timeframe, 100% are leaning towards the US currency, but 25% of them indicate that the pair is oversold. Trend indicators show 85% pointing southward, while the remaining 15% look north. The nearest support levels for the pair lie in the range of 1.0845-1.0865, followed by 1.0780-1.0805, 1.0740, 1.0665-1.0680, 1.0620-1.0635, and 1.0525. Bulls will encounter resistance in the range of 1.0895-1.0925, then at 1.0985, 1.1045, 1.1090-1.1110, 1.1150-1.1170, 1.1230, 1.1275-1.1290, 1.1355, 1.1475, and 1.1715.

Next week, the spotlight will be on the symposium of heads of major central banks in Jackson Hole, taking place from August 24 to 26. If the Federal Reserve Chairman, Jerome Powell, even hints at the imminent conclusion of the current rate-hike cycle in his speech on August 25, the DXY (Dollar Index) might turn downward. However, it's evident that currency pair dynamics will also depend on what leaders of other central banks say, naturally including ECB President Christine Lagarde.

Other notable events for the week include the release of US labour market data on August 22 and 23. On Wednesday, August 23, business activity indicators (PMI) for the United States, Germany, and the Eurozone will be disclosed. Additionally, on Thursday, August 24, statistics on durable goods orders and unemployment in the US will be made available.

continued below...

 

[Stan NordFX]

GBP/USD: BoE's Indecision - A Disaster for the Pound

GBP/USD has oscillated within the 1.2620-1.2800 range for the past two and a half weeks, with neither bulls nor bears establishing a clear upper hand. Despite the Bank of England (BoE) recently raising interest rates, bullish momentum for the pound remains elusive.

There's growing concern among market stakeholders that an aggressive monetary policy tightening could further destabilize the UK's already fragile economy, which teeters on the brink of recession. In July, the unemployment rate rose notably by 0.2%, settling at 4.2%. More worryingly, youth unemployment surged by 0.9%, moving from 11.4% to 12.3%. Additionally, there was an increase of 25K in those claiming unemployment benefits compared to the prior month. This rise in unemployment can be largely attributed to the wave of business bankruptcies that initiated in 2021. This trend saw a stark acceleration in early 2022, matching levels witnessed only during the late 1980s crisis and the 2008 financial meltdown.

As per the latest data released by the Office for National Statistics (ONS) on August 18, retail sales in the UK for July declined by 1.2% on a monthly basis, a more significant drop than the 0.6% seen the previous month. On an annual basis, there was a 3.2% contraction, compared to the 1.6% decrease observed in June.

The inflation data (CPI) released on August 16 indicates that despite dropping from 7.9% to 6.8% year-on-year (YoY), inflation remains notably high. Moreover, the core rate remained steady at 6.9%. The rising cost of energy could potentially lead to a further inflationary surge.

The market firmly believes that the Bank of England must take appropriate action in response. The central bank might need to continue increasing rates not only this year but potentially into 2024. However, as economists from Commerzbank suggest, if in the coming weeks the market gets the impression that the BoE is wavering in its commitment to tackle inflationary risks for fear of hampering the economy too much, it could have catastrophic implications for the pound.

GBP/USD closed at 1.2735 n Friday, August 18. Experts' forecast for the near future is as follows: 60% lean bullish on the pound, 20% are bearish, and the remaining 20% prefer a neutral stance. On the D1 oscillators, 50% are coloured red, indicating a bearish trend, while the other 50% are in a neutral gray. For trend indicators, the ratio of red to green is 60% to 40%, favouring the bullish side.

Should the pair move downward, it will encounter support levels and zones at 1.2675-1.2690, 1.2620, 1.2575-1.2600, 1.2435-1.2450, 1.2300-1.2330, 1.2190-1.2210, 1.2085, 1.1960, and 1.1800. If the pair ascends, resistance will be met at 1.2800-1.2815, 1.2880, 1.2940, 1.2980-1.3000, 1.3050-1.3060, 1.3125-1.3140, 1.3185-1.3210, 1.3300-1.3335, 1.3425, and 1.3605.

In terms of macroeconomic data, Wednesday, August 23 will be the "PMI day" not only for Europe and the USA but also for the UK, as business activity indicators in various sectors of the British economy will be released. And, of course, one cannot forget about the annual symposium in Jackson Hole.

USD/JPY: Anticipating Currency Interventions

The release of the FOMC minutes and the rise in yields of 10-year U.S. Treasuries to levels not seen since 2008 propelled USD/JPY even higher, reaching 146.55. As noted by economists from Japan's MUFG Bank, "The dollar's strengthening has pushed USD/JPY into a danger zone where the risk of intervention to halt its upward movement is increasing." Colleagues from the Dutch banking group ING concur that the pair is now in the territory of currency interventions. "However," ING believes, "it likely lacks the necessary volatility to alarm Japanese officials."

Recall that the Ministry of Finance (MOF) had intervened in USD/JPY at levels above 145.90 last September. But currently, neither the Ministry of Finance nor the Bank of Japan (BoJ) are in a hurry to defend the domestic currency. Contrary to the U.S., Eurozone, and the UK, where inflation is on a decline (albeit at different rates), inflation in Japan is on the rise. On Friday, August 18, the country's Statistical Bureau published the National Consumer Price Index (CPI) for July, which stood at 3.3%, whereas a result of 2.5% (year-on-year) was anticipated.

Commerzbank analysts don't see much chance for the yen to appreciate again, even though the country's GDP is growing. (Preliminary data indicates growth in the second quarter was at 1.5% (year-on-year) compared to a forecast of 0.8% and a previous rate of 0.9%). On the contrary, there are concerns that under current conditions, the yen could weaken further if the Ministry of Finance doesn't take action to halt the decline. "Perhaps the Bank of Japan and the Ministry of Finance are hoping the situation will shift once U.S. interest rates begin to drop again," Commerzbank economists suggest. "We also anticipate a weakening of the dollar at that point. However, that moment is still some time away. The only thing the Ministry of Finance will achieve with its interventions up until then is to buy time. In our view, going against the prevailing winds cannot succeed in strengthening the yen. It might work temporarily, but that's not a certainty.".

However, market participants are growing increasingly concerned that a weak yen might at some point prompt action from Japanese officials. As suggested by ING, the oversold status of the Japanese currency coupled with the threat of interventions will likely exacerbate any bearish corrections in USD/JPY. It was following such a correction, albeit a modest one, that the pair concluded the past week at a level of 145.37.

Regarding the near-term outlook, the median forecast from experts is as follows: An overwhelming majority (60%) anticipates the dollar to strengthen and expects USD/JPY to continue its upward trajectory. The remaining 40% anticipate a bearish correction. On the D1 oscillators, a full 100% are colored green, although 20% indicate overbought conditions. For the trend indicators, 80% are in green while 20% are in red. The nearest support level is situated at the 144.50 zone, followed by 143.75-144.04, 142.90-143.05, 142.20, 141.40-141.75, 140.60-140.75, 139.85, 138.95-139.05, 138.05-138.30, and 137.25-137.50. Immediate resistance lies at 145.75-146.10, then 146.55, 146.90-147.15, 148.45, 150.00, and finally, the October 2022 high of 151.95.

The Consumer Price Index (CPI) for the Tokyo region will be released on Friday, August 25. No other significant data releases pertaining to the state of the Japanese economy are scheduled for the upcoming week.

continued below...

 

[Stan NordFX]

CRYPTOCURRENCIES: How Elon Musk Crashed the "People's Dollar"

From July 14, the primary cryptocurrency, and the digital asset market as a whole, have been under the pressure of a strengthening dollar. Clearly, when the weight on the BTC/USD scale tips towards the dollar, bitcoin becomes lighter. In fact, from August 11 to 15, it seemed as if the market had completely forgotten about cryptocurrencies, with the BTC/USD pair's chart thinly stretching from west to east, hugging the Pivot Point of $29,400.

Glassnode analysts noted at the time that the digital gold market had reached a phase of extreme apathy and exhaustion. Volatility metrics at the beginning of the week hit record lows, with the Bollinger Bands spread narrowing to 2.9%. Such low levels were only seen twice in history: in September 2016 and January 2023. "The market needs to take steps to...break the investor apathy," concluded Glassnode specialists.

Such actions were taken, though not necessarily in the direction investors would have preferred. The first move occurred on the evening of August 16 when BTC/USD dropped to $28,533. This decline was likely triggered by the publication of the minutes from the Federal Reserve's July meeting, as mentioned earlier. But that modest setback wasn't the end of it. The next significant drop occurred on the night of August 17 to 18. It can be described as a plunge into the abyss, with bitcoin reaching a low of $24,296. The crash came after The Wall Street Journal, citing undisclosed documents, reported that Elon Musk's SpaceX had liquidated its BTC holdings, accounting for a $373 million markdown in cryptocurrency. However, the report did not specify when exactly SpaceX had sold these coins. Still, such details aren't necessary to ignite panic in the market.

Several other events also added pressure to the quotations. For instance, a U.S. Federal Court granted the Securities and Exchange Commission's (SEC) appeal against Ripple, casting doubt on a partial decision made in favour of Ripple a month prior. The ongoing series of legal claims by U.S. authorities against major cryptocurrency exchanges remains another negative influence.

Bitcoin's nosedive dragged the entire crypto market down with it, leading to a mass liquidation of open margin positions. According to Coinglass, over a 24-hour span, positions of more than 175,000 market participants were liquidated, resulting in traders' losses surpassing $1 billion.

The situation could have been much graver had it not been for a report from Bloomberg stating that the SEC was preparing to authorize the creation of the first futures ETFs for Ethereum. As a result, BTC/USD and ETH/USD corrected upwards, returning to levels seen two months prior. As a reminder, the market soared on June 15 after BlackRock filed an application to establish a spot bitcoin ETF. However, after the recent plunge, those gains were virtually erased.

Should we expect further declines? Notably, a trader and analyst known by the pseudonym Dave_the_Wave, renowned for his accurate forecasts, had warned that by the end of 2023, bitcoin could drop to the lower boundary of its Logarithmic Growth Curve (LGC), implying a roughly 38% drop from this year's peak. In such a scenario, the bottom would be around $19,700.

Another well-known trader, Tone Vays, did not rule out a drop in BTC to $25,000 (which has already occurred). In this case, Vays believes there's a high likelihood of a further long-term decline. From his perspective, the premier cryptocurrency is "teetering on the edge, and things look bleak." "The price needs to reverse immediately, I mean – this month. We cannot afford another month of decline; otherwise, panic will set in the market. I wouldn't be surprised if BTC trades below $20,000. Miners might even begin offloading their holdings, which is highly precarious," Vays cautions.

We have previously mentioned another expert, Michael Van De Poppe, founder of the venture company Eight, who has refuted claims of BTC's price dropping to the $12,000 mark. However, in his view, for bitcoin to return to active growth, it needs to surpass the $29,700 level. The next significant target for the coin would be $40,000.

In contrast to Michael Van De Poppe, Kevin Kelly, co-founder, and head of research at Delphi Digital, has already spotted early signs of a bull rally. However, this observation was made before the slump on August 18. According to Kelly, a standard crypto cycle starts when bitcoin reaches an all-time high (ATH), followed by an 80% decline. Roughly two years later, it rebounds to its previous ATH and continues climbing to a new peak. This sequence typically spans around four years.

Kelly believes this pattern isn't random but aligns with a "broader business cycle." He noted that bitcoin's price peak often coincides with the ISM manufacturing index, which currently appears to be in the final phase of its downturn. The current situation reminds Kelly of the market dynamics between 2015 and 2017.

He highlighted that the last two bitcoin halvings occurred roughly 18 months after the asset bottomed out and about seven months before it broke its historical peak. The next halving is anticipated in April 2024. After which, about six months later by the expert's estimates, the digital gold might reach its ATH. However, Kelly warned that there are no guarantees of this scenario unfolding. He also speculated about the possibility of a "false bottom."

A similar cyclical analysis was conducted by an analyst known as Ignas, predicting a bitcoin bull market in 2024. His calculation is based on the pattern that the primary cryptocurrency has showcased for many years: 1. An 80% dip from ATH, lowest point a year later (Q4 2022). 2. Two years for recovery and reaching the previous peak (Q4 2024). 3. Another year of price growth leading to a new ATH (Q4 2025).

According to Ignas, the crypto industry faced macroeconomic challenges in 2022, but the situation is now improving. The bitcoin halving in April 2024 might align with a global liquidity surge, fuelling the anticipated bull rally. Additionally, new use cases for bitcoin and the launch of spot bitcoin ETFs, once approved by the SEC, will influence its price.

From a survey conducted by the popular blogger and analyst known as PlanB, 60% of respondents believe in a bull market's onset post-halving. PlanB himself theorizes that by the time of this event, BTC will be priced around $55,000. Signals from his bitcoin price prediction model, S2F, hint at the coin's potential movement towards this figure.

Robert Kiyosaki, investor, and author of the financial bestseller “Rich Dad Poor Dad” made another prediction. "Bitcoin is heading to $100,000," Kiyosaki believes. "The bad news: if the stock and bond market crashes, gold and silver prices will skyrocket. Worse, if the global economy collapses. Then bitcoin will be worth a million, gold can be bought for $75,000, and silver for $60,000. The national debt is too great. Everyone is in trouble," wrote Kiyosaki. But he added, just in case, "I hope I'm wrong."

Fittingly for a writer, Kiyosaki metaphorically called gold and silver "God's money" and bitcoin the "people's dollar". "I like bitcoin because we have a common enemy - the US federal government, the treasury, the Federal Reserve, and Wall Street. I don't trust them. If you trust, then collect dollars, and you'll get an IOU," he said.

It's worth noting that, in contrast to Robert Kiyosaki's stance, many investors have recently been gravitating towards the US dollar instead of the "people's currency." They view the dollar as a more reliable safe-haven asset. This shift is evident when comparing the DXY and BTC charts. At the time of this review, on the evening of August 18, the market has shown some signs of stabilization, with the BTC/USD trading close to $26,100. The total market capitalization of cryptocurrencies took a significant hit, narrowly maintaining above the psychological threshold of $1 trillion, registering at $1.054 trillion, down from $1.171 trillion just a week prior. Not surprisingly, the Crypto Fear & Greed Index also saw a decline, moving from the Neutral category into the Fear territory, marking a score of 37, a drop from last week's 51 points.


NordFX Analytical Group


Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

 

[Stan NordFX]

CryptoNews of the Week

– The Bank for International Settlements (BIS) has called for the regulation of cryptocurrencies rather than their outright ban. According to the bank's experts, a ban that's hard to enforce might hamper innovation. BIS also pointed out that cryptocurrencies are especially popular in emerging markets due to the volatility of local fiat currencies and challenges in accessing banking institutions. However, they could trigger severe sudden shifts in capital flows, threatening the financial stability of these nations.
Additionally, the BIS assessed cryptocurrency exchange-traded funds (ETFs). Analysts believe that the introduction of such investment products will also increase risks, as it provides market access to a broader audience lacking financial expertise.
It's worth noting that in June, several major investment firms, including BlackRock, submitted applications to launch spot bitcoin ETFs. However, according to some experts, the current regulatory body is likely not to approve them, and the process could be postponed until 2024. Analysts opine that if such products receive approval in the US, the cryptocurrency market could access up to $30 trillion in capital, and the price of bitcoin might exceed $150,000 per coin.

– The Bitcoin Legal Defense Fund has filed a petition on behalf of 12 Bitcoin Core developers in the High Court of the United Kingdom, seeking to dismiss a lawsuit from Craig Wright, who they regard as the self-proclaimed creator of the first cryptocurrency, and his company Tulip Trading. The case dates back to February 2021, where Wright demanded access to two wallets containing approximately 111,000 BTC (~$2.86 billion at the time of writing), allegedly stolen due to the fault of Bitcoin Core employees. One of the addresses is associated with the hacking of the crypto exchange Mt.Gox.
The fund's lawyers insist that Wright, mockingly referred to as "pseudosatoshi," must prove his ownership of the bitcoins before the court makes a final decision. The document states, "Dr. Wright has a long history of fraudulent schemes, forgeries, and dishonesty (including in legal cases within this jurisdiction and internationally). [...] These proceedings are an attempt by Wright, through Tulip Trading, to use British courts as an instrument of fraud."
Craig Wright claims that he purchased the bitcoins at the end of February 2011 from the Russian exchange WMIRK. However, he has been unable to provide any evidence of this transaction. Furthermore, the Bitcoin Legal Defense Fund emphasized that if Wright truly owns the address containing 79,957 BTC, it would be tantamount to complicity in the hacking of Mt.Gox.

– An analyst known by the pseudonym Tolberti has predicted a continuation of the bearish trend in the bitcoin market and a decline in the cryptocurrency's value to $10,000. This forecast is based on the BTC price falling below the 200-week and 20-month moving averages (MAs), and the formation of a bearish flag on the chart, signalling the persistence of the negative trend.
According to the expert, the price of bitcoin will oscillate within a downward channel until it reaches a bottom around $10,000 by the time of the halving in April 2024. During the bearish trend, two significant corrections will occur, providing opportunities to profit from short positions.
Tolberti also noted the low demand for BTC and the weakness of digital gold relative to physical gold. Since reaching its all-time high of $68,917 in the fall of 2021, bitcoin has depreciated by more than 2.6 times. In contrast, the price of the precious metal has increased during the same period, reaching a historic value of $2,080 on May 4.

– Trader, analyst, and founder of venture firm Eight, Michael Van De Poppe, noted that bitcoin's dominance is declining, increasing the likelihood of an altcoin rally. According to him, as soon as bitcoin's dominance tested the 200-week moving average (MA) and exponential moving average (EMA), BTC's market share started to decline, indicating a potential shift in market dynamics.
The downward trajectory described by the analyst may persist in the coming months and could signal a temporary diversification in the cryptocurrency market as investors turn to other fast-profit instruments. However, if the leading cryptocurrency rises above the 200-week MA and EMA, it will lead to a restoration of bitcoin's dominance and a growth in its price.

– In the opinion of many investors and traders, the Relative Strength Index (RSI), a classic indicator, serves as a valuable tool to gauge the condition of an asset. It fluctuates between 0 and 100, with values above 70 typically indicating overbought conditions, and values below 30 suggesting oversold conditions.
The current fall of bitcoin's daily RSI below the 20 mark (17.47 at its lowest) is comparable to the oversold conditions during the market crash in March 2020, when the entire financial landscape was gripped by fear and uncertainty.
Analysts and traders are now closely watching this RSI movement, as it could signal a potential bullish reversal in the BTC trend. Historically, extreme oversold values have often preceded significant price rebounds. However, this indicator must be approached with caution. RSI oversold levels can provide insights into potential price reversals, but they are not a guaranteed sign. Cryptocurrency markets are known for their unpredictability, and their direction can be influenced by a multitude of factors, among which political and macroeconomic factors play a huge role.

– Analyst Dave the Wave, who accurately predicted the cryptocurrency market crash in May 2021, believes that the current bear market for bitcoin will last at least until the end of the year. The expert used his own version of logarithmic growth curves, which allow for predicting bitcoin's macro-maximums and macro-minimums, filtering out medium-term volatility and noise. Currently, according to his calculations, bitcoin is trading at the lower boundary of the logarithmic growth curves but is still in the "buy zone." Dave the Wave does not rule out that bitcoin may decline a bit further, and by mid-2024 will rise to new highs above $69,000.

– According to popular analyst Benjamin Cowen, the current decline in the price of the first cryptocurrency may be far from final, and bitcoin will continue to fall. This bearish trend, in his opinion, aligns well with the current trend of the global economy.
Cowen also noted that a similar drop in bitcoin occurs every four years. "The fact is that every four years, in August or September, the year before the U.S. presidential elections, there's a correction in the American market. And bitcoin correlates with the indices of the U.S. stock market. If we look at 2023, we will see this as well. In 2019, bitcoin plummeted by 61%. In 2015, the decline was about 40%. In 2011, we saw a 'black swan' of 82.5%. So, every year before the halving and the American elections, we see a decline in bitcoin."

– Wall Street legend, analyst, and trader Peter Brandt already allowed for a drop in the bitcoin price back in May, as he identified a pattern on the price chart known as a "pennant" or "flag," indicative of "bearish consequences." Now, he has warned that bitcoin may break out of the upward trend that began in January 2023, as it approaches a critical price region. The expert clarified that a close below $24,800 will damage the daily and weekly charts and increase the likelihood that the bullish impulse in BTC will fail.

– Another analyst, publishing under the pseudonym Credible Crypto, noted that the current market scenario closely resembles what was observed in 2020. Back then, the leading digital currency rose in price from approximately $16,000 to $60,000 within a few months. The specialist stated that the market's flagship is now "taking a breather" after the price increase since the beginning of this year. According to the analyst, this is a normal correction. The current situation almost entirely reflects the price movement dynamics of bitcoin from March to August 2020. What's happening now, in his opinion, indicates that the goal is asset accumulation. Credible Crypto pointed out that bitcoin began a "parabolic rally" in 2020 precisely after such a phase. "The breakout from the accumulation range last time triggered the next step upward, causing BTC's price to soar." And according to the expert, this time bitcoin has twice as much time, or about 4 months, to do it again in 2023. Meanwhile, the analyst emphasized that his forecast will become invalid if the digital gold's quotations fall below $24,800. (This is the support level that Peter Brandt also identified as critical.)

– Since 2018, criminal groups from North Korea have conducted over 30 hacking attacks, stealing digital assets totaling around $2 billion, according to a report by TRM Labs. In just the first seven months of 2023, hackers from North Korea stole about $200 million in cryptocurrency. However, analysts note that criminal activity has significantly decreased compared to the previous year. At that time, according to the U.S. Federal Bureau of Investigation, the North Korean government-controlled group Lazarus carried out the largest hack in history, stealing $625 million from the crypto project Ronin Bridge.
The United Nations has repeatedly warned that North Korea continues to develop its nuclear program, and an important source of its funding is becoming the funds obtained from attacks on bitcoin exchanges.


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.