Daily Market Analysis and News From NordFX

[Stan NordFX]

GBP/USD: Inflation Continues to Bolster the Pound

The retail sales report released on January 19 in the United Kingdom turned out to be disappointing. Retail sales volumes in December decreased by -3.2% following a 1.4% increase in the previous month, while analysts had expected a -0.5% drop. Year-on-year, this indicator declined by -2.4% after increasing by 0.2% a month earlier (forecast was -1.1%). Sales excluding fuel dropped by -3.3% month-on-month and -2.1% year-on-year, against expert forecasts of -0.6% and -1.3%, respectively.

However, despite this, GBP/USD not only maintains its position within the six-week lateral channel of 1.2600-1.2800 but is even seeking to consolidate in its upper half. Analysts believe that the British currency continues to be supported by expectations that the Bank of England (BoE) will likely be among the last to lower rates this year.

It's worth recalling that the December inflation data showed the Consumer Price Index (CPI) in the United Kingdom rose month-on-month from -0.2% to 0.4% (consensus forecast was 0.2%), and year-on-year reached 4.0% (compared to the previous value of 3.9% and expectations of 3.8%). The core CPI figure remained at the previous level of 5.1% year-on-year. Following the release of this report, which showed rising inflation, UK Prime Minister Rishi Sunak quickly sought to reassure the markets. He stated that the government's economic plan remains sound and continues to work, having reduced inflation from 11% to 4%. However, despite the Prime Minister's optimistic statement, many market participants are now more convinced that the Bank of England will delay the start of easing its monetary policy until the end of the year. "Concerns that the disinflation process may stall have probably increased," Commerzbank economists wrote at the time. "And the market will likely bet that the Bank of England will respond accordingly and, therefore, be more cautious about the timing of the first interest rate cut."

The British currency was also bolstered by preliminary data on business activity in the country, released on Wednesday, January 24. The Manufacturing PMI rose from 46.2 to 47.3, against a forecast of 46.7. Furthermore, the Services PMI and the Composite PMI firmly established themselves in the growth zone (above 50 points). The Services PMI increased from 53.4 to 53.8 (forecast was 53.2), and the Composite PMI went up from 52.1 to 52.5 (forecast was 52.2). From these figures, the market inferred that the country's economy could withstand high interest rates for an extended period.

GBP/USD concluded the previous week at a level of 1.2701. Regarding the analysts' forecasts for the coming days, the sentiment is similar to that for EUR/USD: 70% voted for the pair's decline, only 10% were in favor of its rise, and 20% preferred to remain neutral. The outlook for the monthly and longer-term horizon is more ambiguous. Among the trend indicators on the D1 timeframe, in contrast to the specialists' opinions, there's a clear preference for the British currency: 80% indicate a rise in the pair, while 20% suggest a decline. Among oscillators, 35% are in favour of the pound, 10% for the dollar, and the remaining 55% maintain a neutral stance. Should the pair move southward, support levels and zones at 1.2595-1.2610, 1.2500-1.2515, 1.2450, 1.2330, 1.2210, 1.2070-1.2085 await it. In case of an upward movement, the pair will encounter resistance at levels 1.2750-1.2765, 1.2785-1.2820, 1.2940, 1.3000, and 1.3140-1.3150.

In addition to the FOMC meeting of the US Federal Reserve, we will also have a meeting of the Bank of England in the upcoming week. It is scheduled for Thursday, February 1st, and according to forecasts, the BoE is also expected to keep the borrowing rate at the current level of 5.25%. Besides this, no other significant events related to the economy of the United Kingdom are anticipated in the near future.

USD/JPY: Does the Drift Towards 150.00 Continue?

The Consumer Price Index (CPI) in the Tokyo region unexpectedly dropped from 2.4% to 1.6% in January, and the figure excluding food and energy prices decreased from 3.5% to 3.1%. Such a significant weakening of inflationary pressure could lead the Bank of Japan (BoJ) to refrain from tightening monetary policy in the foreseeable future.

This forecast is also supported by the monthly economic report of the Japanese government, published on Thursday, January 25. The report states that the consequences of the strong earthquake on the Noto Peninsula in central Honshu, Japan's main island, could reduce the national GDP by 0.5%. These estimates increase the likelihood that the Bank of Japan will maintain its ultra-loose monetary policy at least until mid-2024. Consequently, any speculation about an interest rate hike in April can be disregarded.

The minutes from the Bank of Japan's December meeting reinforce this outlook. It was noted that the Board members agreed that "it is necessary to patiently maintain an accommodative policy." Many members (another quote) "stated that it is necessary to confirm a positive wage-inflation cycle to consider the issue of phasing out negative rates and YCC." "Several members said they do not see the risk of the Central Bank falling behind schedule and can wait for developments at the annual wage negotiations this spring." And so on in the same vein.

Economists at MUFG Bank in Japan believe that the current situation does not hinder the selling of the yen. "Given our view on the strengthening of the US dollar in the near term and the more significant-than-expected drop in inflation data [in Japan]," they write, "we may see an increase in the appetite for Carry-trade positions funded by the yen, which will contribute to the further rise of USD/JPY." MUFG strategists opine that the pair will continue its drift northward, towards 150.00. However, as it approaches this level, the threat of currency interventions by Japanese financial authorities is expected to gradually increase.

In the interest of fairness, it should be noted that there are still those who believe in an imminent shift by the BoJ to a tighter policy. For instance, specialists at the Dutch Rabobank still adhere to a forecast suggesting the regulator could raise rates as early as April. "However," the bank's experts write, "everything will depend on strong wage data from the spring negotiations and evidence of changes in corporate behaviour regarding wages and pricing." "Our forecast, which sees USD/JPY ending the year at 135.00, assumes that the Bank of Japan will raise rates this year," continue the Rabobank economists. However, they add that there is still a possibility of disappointment in the pace of rate hikes.

USD/JPY recorded its peak for the past week at 148.69, finishing slightly lower at 148.11. In the near-term outlook, 30% of experts anticipate further strengthening of the dollar, 30% side with the yen, and 40% hold a neutral position. Regarding the trend indicators and oscillators on the D1 timeframe, all 100% point north, though 10% of them are in the overbought zone. The nearest support level is located in the 146.65-146.85 zone, followed by 146.00, 145.30, 143.40-143.65, 142.20, 141.50, and 140.25-140.60. Resistance levels are positioned at 148.55-148.80, 149.85-150.00, 150.80, and 151.70-151.90.

No significant events related to the Japanese economy are anticipated in the upcoming week.

continued below...

 

[Stan NordFX]

CRYPTOCURRENCIES: Why Bitcoin Fell

On January 10, the U.S. Securities and Exchange Commission (SEC) approved a batch of all 11 applications from investment companies to launch spot exchange-traded funds (ETFs) based on bitcoin. Against this backdrop, the quotations of the main cryptocurrency momentarily spiked to $47,787, a level last seen in the spring of 2022. However, instead of the expected growth, bitcoin then tumbled and recorded a local minimum of $38,540 on January 23. Thus, in just 12 days, the cryptocurrency lost nearly 20% of its value. According to several specialists, this is a classic case of the "buy the rumour, sell the news" scenario. Initially, there was a significant bull rally fueled by speculations about the launch of bitcoin-based ETFs. Now that these funds are operational, market participants have begun actively taking profits.

However, there are other reasons for the decline, reflected in specific figures. The capital inflow into BTC-ETFs, many of which were launched by major Wall Street players like BlackRock, turned out to be smaller than expected. It appears that investors have become disillusioned with cryptocurrency. According to CoinShares, the 10 new funds had gathered $4.7 billion by the end of Tuesday. Meanwhile, $3.4 billion flowed out of the Grayscale trust, which was considered the world's largest bitcoin holder and has now also been transformed into a BTC-ETF. Logic suggests that a significant portion of the funds likely just shifted from Grayscale investors to the 10 new funds with lower fees. If this is the case, then the net new investment inflow is just $1.3 billion. Moreover, in recent days, this has turned into a net outflow of $25 million.

It's also important to note that since the approval of BTC-ETFs, along with short-term speculators and Grayscale investors, the sell-off has been influenced by the bankruptcy manager of the FTX crypto exchange and especially by miners. Together, they have unloaded $20 billion worth of coins on the market, a large portion of which belongs to the miners. They are particularly concerned about the increasing computational difficulty and the halving in April, which will force many of them out of business. As a result, since January 10, miners have sent a record 355,000 BTC worth $15 billion to crypto exchanges, the highest in six years. In these circumstances, the demand for a spot bitcoin ETF of $4.7 billion (or realistically $1.3 billion) seems modest and unable to compensate for the resulting outflow of funds. Hence, we are witnessing such a significant drop in the price of the main digital asset.

Along with bitcoin, major altcoins, including Ethereum (ETH), Solana (SOL), Cardano (ADA), Avalanche (AVAX), Dogecoin (DOGE), Binance Coin (BNB), and others, also incurred losses. Analysts believe that the improvement in the stock markets has also exerted additional pressure on cryptocurrencies – over the last three weeks, both American and European indices have shown growth.

Peter Schiff, the president of Euro Pacific Capital, did not miss the opportunity to gloat over the buyers of bitcoin ETF shares. He believes that the approval of these funds does not create new demand for cryptocurrency. According to the financier, those investors who previously bought cryptocurrency on the spot market or invested in shares of mining companies and Coinbase are now merely shifting their investments to ETFs. "Shuffling deck chairs won't save the ship from sinking," predicted this advocate of physical gold.

Schiff thinks that the fate of investors in the spot product will be similar to those who invested in the futures ETF BITO, launched in the fall of 2021. Currently, shares of this fund are trading at a 50% discount, implying that bitcoin is also expected to fall to around $25,000. Since January 10, 2024, the share price of BTC-ETFs has already fallen by 20% or more from their peak. The shares of FBTC suffered the most, decreasing in value by 32% in two weeks. "I think VanEck should change the ticker of its ETF from HODL to GTFO [from 'hold' to 'get the heck out']," Schiff sarcastically commented on the situation.

Caroline Mauron, head of OrBit Markets, told Bloomberg that if bitcoin fails to firmly establish itself above $40,000 soon, it could trigger a massive liquidation of positions in the futures market, accompanied by a panic outflow of capital from the crypto sphere.

An analyst using the pseudonym Ali illustrated the price patterns of the last two cycles and, like Caroline Mauron, suggested a further decline in the coin's value. The expert noted that in previous rallies, bitcoin followed a consistent pattern: first reaching the 78.6% Fibonacci level and then correcting to 50%. Thus, according to this model, a drop in the BTC/USD pair to $32,700 (50%) is not ruled out.

Trader Mikeystrades also allowed for a drop to $31,000 and advised against opening long positions. "Save your money until the market begins to demonstrate bullish strength and follows the flow of orders," the expert recommended.

A crypto trader known as EliZ predicted a fall in the bitcoin price to $30,000. "I expect a bearish distribution over the next two to three months, but the second half of 2024 will be truly bullish. These stops are necessary to keep the market in a healthy state," he stated.

Michael Van De Poppe, founder of MN Trading, holds a different view. He emphasized that bitcoin has already collected liquidity and is approaching a local bottom. "Buy at the lows. Bitcoin below $40,000 is an opportunity," the analyst urged. Yann Allemann, co-founder of Glassnode, believes that a bullish rally in the bitcoin market will start in the first half of 2024, with the coin's value increasing to $120,000 by early July. This forecast is based on the dynamics of the asset's value changes in the past after the appearance of a bullish flag pattern on the chart.

Indeed, negative scenarios should not be ignored. However, it's important to consider that current pressures are largely due to temporary factors, while long-term trends continue to favor digital gold. For instance, since the fall of 2021, there has been an increase in the proportion of coins that have remained inactive for over a year. This indicator is now showing a record 70%. An increasing number of people are trusting bitcoin as a tool for inflation protection and savings. The number of cryptocurrency users has reached over half a billion people, about 6% of the Earth's population. According to recent data, the number of Ethereum holders has grown from 89 million to 124 million, while the number of bitcoin owners by the end of the year increased from 222 million to 296 million people.

There is also growing acceptance of this new type of asset among large capital representatives. Last week, Morgan Stanley published a document titled "Digital (De)Dollarization?", authored by the investment bank's COO Andrew Peel. According to the author, there is a clear shift towards reducing dependency on the dollar, simultaneously fuelling interest in digital currencies such as bitcoins, stablecoins, and CBDCs. Peel writes that the recent surge in interest in these assets could significantly alter the currency landscape. According to a recent Sygnum Bank survey, over 80% of institutional investors believe that cryptocurrencies already play an important role in the global financial industry.

As of the evening of January 26, when this review was written, BTC/USD is trading around $42,000. The total market capitalization of the crypto market stands at $1.61 trillion, down from $1.64 trillion a week ago. The Bitcoin Fear & Greed Index remains in the Neutral zone at 49 points, slightly down from 51 a week earlier.


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

– Analysts note that the 12-month volatility of the first cryptocurrency has reached its lowest level in 12 years. The indicator has fluctuated significantly over the years, but overall, it has shown a clear downward trend during this period. From 179% in January 2012, it fell to 45% at the beginning of this year. A higher figure indicates significant price variability and signals greater market unpredictability. Lower metric values suggest much more stable trading conditions.
CryptoQuant believes that reduced volatility may indicate a greater number of long-term holders. Meanwhile, the research department at Galaxy Digital predicts that the launch of spot bitcoin ETFs in the USA will further smooth price fluctuations. "A huge amount of BTC will be in the accounts of [investment] advisors. They are not interested in intraday trading," the experts state.

– Analysts at Matrixport have predicted a fall in the price of the first cryptocurrency to $36,000. They believe that bitcoin can then appreciate, but only against the backdrop of favourable macroeconomic conditions and increased liquidity. It's worth recalling that in December, these same analysts forecasted bitcoin to reach $125,000 in 2024.

– Chris Burniske, a partner at the venture firm Placeholder, has forecasted that the price of bitcoin will initially drop to the $30,000-$36,000 range, before potentially reaching a local bottom around $20,000. "We're heading towards a consolidation lower than most people expect, due to too many variables (such as the specifics of the crypto market, macroeconomics, the adoption and development of new products)," the expert warned. However, he believes that testing levels around $20,000 will be a "real step" towards eventually returning to previous highs. "The journey there will be volatile – expect setbacks. And it will take months. As always, your best friend is patience," Burniske emphasized, adding that the fall in other assets will be deeper than that of bitcoin.

– Amazon MGM Studios has launched the production of the feature film "Razzlekhan," which will narrate the story of the 2016 Bitfinex cryptocurrency exchange hack involving 120,000 BTC. The film is based on a 2022 New York Times article about the married couple, Russian Ilya Lichtenstein and American Heather Morgan, who are accused of laundering the stolen funds. The film's title is derived from Morgan's rap pseudonym.
In February 2022, the U.S. authorities arrested the couple and seized bitcoins worth $3.6 billion. That same month, Morgan was released on a $3 million bail, while Lichtenstein remained in custody.

– Peter Schiff, President of Euro Pacific Capital and a well-known opponent of the first cryptocurrency, unexpectedly conceded that by 2031, the price of bitcoin could reach $10 million, albeit under a very hypothetical scenario. According to him, this could occur if the US dollar follows the path of the "German paper mark". This term informally referred to the currency introduced in Germany at the beginning of World War I in 1914, replacing the previous mark, which was backed by gold.
In the early 1920s, the paper mark depreciated due to hyperinflation. During these years, companies paid salaries several times a day so that workers could make purchases before the next price increase. The money supply grew so rapidly that the state couldn't print banknotes fast enough and had to involve private printers. The largest denomination issued was a 100 trillion-mark banknote.

– While Peter Schiff may be sceptical and ironic about the prospect of an economic collapse and the fall of the US dollar, Robert Kiyosaki, the investor and bestselling author of "Rich Dad Poor Dad," harbours no such doubts. He insists that gold, silver, and bitcoin should be part of every investor's portfolio. Kiyosaki, admitting his limited knowledge about the main cryptocurrency, believes in the success of bitcoin due to the "very smart people" involved in it. He is confident that the price of BTC could reach $1 million in the event of a global economic downturn.

– The analyst known as Rekt Capital believes traders have one last opportunity to purchase bitcoin at a low price. His analysis of historical data has led him to several conclusions. 1. If bitcoin's price does not decrease within the next two weeks, it's unlikely to significantly drop before the halving, which is scheduled for April 19. 2. Around 60 days prior to the halving, BTC’s price is expected to increase due to the excitement surrounding the event. 3. Following the halving, there might be a rush by speculators to sell their holdings, potentially causing bitcoin's price to fall for several weeks, possibly by 20-38%. 4. After this period, a phase of accumulation is anticipated, which could last up to 150 days and is characterized by relatively low price volatility for BTC. 5. This accumulation phase is expected to be followed by a phase of parabolic growth in bitcoin's rate, culminating in a new historical high.

– A new study has revealed that the adoption of digital assets continues to grow actively in Europe. The Binance team conducted a survey across several European countries, including France, Italy, Spain, and Sweden, involving over 10,000 participants. The findings from the study showed that 73% of European residents believe in the future of cryptocurrencies. 55% of respondents reported using cryptocurrency for purchases, with 10% doing so on a weekly basis. Additionally, 24% indicated that nearly half of their trading operations involve tokens.
The main factors contributing to the adoption of digital assets in Europe, as identified by survey participants, include high profitability, decentralization, and innovation. Rachel Conlan, Chief Marketing Officer at Binance, noted that such widespread integration of digital assets in Europe is facilitated by a safe and harmonized regulatory framework in the region.

– Analyst DonAlt informed his 56,700 YouTube subscribers that despite the volatility due to the launch of BTC exchange-traded funds (ETFs), bitcoin has managed to avoid a complete price collapse. The digital gold remains strong even after its price fell below $40,000 last week. The expert believes that the absence of major selloffs is a positive sign. "For this reason, I'm no longer in the bear camp; now I'm in the bull camp," he stated. DonAlt also emphasized that bitcoin is consolidating within a strong upward trend and is likely to regain its bullish momentum as soon as it overcomes the resistance level at $44,000.

– According to analysts at Glassnode, the majority of long-term investors are still reluctant to part with their coins. The Glassnode report indicates that the vast majority of BTC holders are adhering to a hodling strategy in anticipation of higher spot prices. K33 Market Research reports that the volume of spot trading in bitcoins has reached "consistently high activity following the approval of ETFs." It's noted that "a significant portion of ETF flows is likely distributed among other over-the-counter orders, not affecting the spot market order books." According to The Block’s Data Dashboard, the monthly volume of on-chain transactions in the bitcoin network in January was at a multi-month high, with trading volume for January exceeding $1.11 trillion.

– Anthony Scaramucci, founder of SkyBridge Capital hedge fund, believes that the price of bitcoin will surge to at least $170,000 following the halving in April. "On the day of the halving, multiply the BTC price by four, and it will reach this level within the next 18 months," he stated. "For instance, if the price is $50,000, then later bitcoin will be worth $200,000," explained the investor. Previously, the head of SkyBridge had claimed that the BTC price post-halving could reach $100,000. He also cited the reduction of the Federal Reserve's interest rate in the USA as an additional reason for the onset of a bullish rally.
Regarding the long-term price, Scaramucci forecasts that bitcoin's market capitalization could reach half of gold's market capitalization, which is $14.5 trillion. Consequently, according to his calculations, the price of the coin could be around $345,000.

– Markus Thielen, Head of Research at 10x Research, utilizes Elliott Wave Theory in his forecasts, which suggests that asset prices move in five waves. According to this theory, the first, third, and fifth waves are "impulse waves," while the others are "corrective waves." The recent decline in bitcoin’s price represents the fourth wave, or a correction, the analyst believes. Currently, the fifth wave is starting, which could drive the price upwards. "Wave analysis has marked this recovery up to $52,671 potentially by the end of Q1 2024," the 10x Research representative announced. In his view, the bitcoin price is influenced by the overall growth of the stock market and the cessation of fund outflows from Grayscale's largest bitcoin exchange-traded fund. The growth of digital assets will also be supported by Google's decision to allow advertising for cryptocurrency ETFs.


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]

January 2024 Results: Gold Regains Value in the New Year

NordFX, a brokerage firm, has summarized the trading performance of its clients for January 2024. The effectiveness of social trading services, PAMM and CopyTrading, as well as the profits earned by the company's IB partners, were also evaluated.

- The most successful trader in the first month of the new year was a client from Western Asia, with account number 1740XXX, who achieved a profit of 18,732 USD through transactions with gold (XAU/USD).
- The XAU/USD pair also aided a representative from South Asia, account number 1694XXX, to secure the second step on the podium with a result of 16,355 USD.
- Third place went to a compatriot of the latter, the owner of account number 1595XXX. By trading the same instrument favoured by NordFX traders, gold (XAU/USD), as well as the British pound (GBP/USD), he earned a profit of 12,725 USD.

As for NordFX passive investment services, the situation unfolded as follows:

- In the PAMM service, the Trade and Earn account continues to attract the attention of passive investors. Opened in March 2022, it remained dormant for four months before awakening in November. As a result, during its "active" period, its return exceeded 415%. Unfortunately, at the end of 2023, the account manager made a serious mistake. While for a long time the maximum drawdown did not exceed 17%, in just a few days of December, it approached a dangerous 60%. However, the manager was able to rectify the situation afterwards, leading to a sharp increase in profitability, with the maximum drawdown in January not exceeding 10%.

Among startups, the account Kikos2 is noteworthy, showing a profit of 325% in just 72 days. However, given the aggressive trading strategy, it also experienced a significant maximum drawdown of about 60%. This serves as a reminder that investors should exercise utmost caution when investing their money. Past results do not guarantee future performance, so it is important to assess one's financial capabilities and be prepared for potential setbacks.

- In CopyTrading, we continue to monitor the signal from yahmat-forex, which has shown a return of 335% over 222 days, with a maximum drawdown of 37%. The startup Fund Manage Global 100 also caught our attention, delivering a 160% return in just 83 days with a relatively moderate drawdown of 20%. Additionally, the signal FX NEW SKY cannot be overlooked. In just two weeks, it achieved not just a sky-high, but a cosmic profit of 1820%. However, it also experienced a cosmic maximum drawdown of 77%. After all, as is well known, journeys to the stars are exceptionally risky and fraught with potential crashes and catastrophes.

Among the IB partners of the brokerage firm NordFX, the top 3 are as follows:
- The largest commission reward in January was credited to a partner from East Asia, with account number 1218XXX, amounting to 8,268 USD;
- is was followed by a colleague from West Asia, account number 1645XXX, who earned 5,746 USD for the month;
- nally, completing the top three is a partner from South Asia, account number 1718XXX, who received 3,842 USD in commissions.


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

 

[donald26]

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[Stan NordFX]

Forex and Cryptocurrencies Forecast for February 05 – 09, 2024​

EUR/USD: Dollar Strengthening Prospects Increase

Throughout January, a series of indicators: GDP, employment, and retail sales, consistently highlighted the strength of the US economy. The threat of recession diminished, and it became evident that the high interest rate did not significantly hinder economic performance. Market participants were keenly awaiting the Federal Open Market Committee (FOMC) meeting of the US Federal Reserve, scheduled for Wednesday, January 31, against the backdrop of these positive economic indicators.

As anticipated, the regulator maintained the key rate at its current level (5.50%) but shifted its rhetoric to indicate that its next move would likely be to ease monetary policy. The question on everyone's mind was: when? During the press conference, Fed Chair Jerome Powell sought to temper expectations. He stated that FOMC members wanted to be 100% certain of victory over inflation and that they would not rush into a dovish pivot until convincing evidence of inflation falling below the 2.0% target was seen. Fortunately, the strong economy permits this cautious approach. However, Powell acknowledged that should there be a sharp cooling in the labour market, the easing of monetary policy could occur quite swiftly.

It should be noted that throughout the latter half of January, Fed officials made concerted efforts to temper expectations of a rate cut starting as early as March. And it must be said, they succeeded. The probability of a policy reversal in March dropped from a peak of 90% to 35.5%, while the likelihood of a rate cut in May increased to 61%.

The market's reaction to the outcome of the FOMC meeting was rather muted. The DXY dollar index failed to reach 104.00, and EUR/USD, having dropped to 1.0800 on February 1, reversed direction and climbed back to 1.0900 by Friday, in anticipation of the release of data on the state of the American labour market.

The data published on February 2 revealed that the number of new jobs in the US non-farm sector (Non-Farm Payrolls) increased by 353,000 in January, far exceeding the expected 180,000. This followed a December increase of 333,000. Unemployment remained stable at 3.7%, while wage inflation rose to 4.5% on an annual basis, significantly surpassing market expectations of 4.1%. Thus, Fed Chair Jerome Powell's concerns about a sharp cooling of the labour market were unfounded, which clearly benefited the American currency.

Let's recall that a week earlier, on January 25, the European Central Bank (ECB) held a meeting where the regulator also left the key interest rate unchanged at 4.50%. During the press conference following the meeting, ECB President Christine Lagarde refrained from commenting on the possible timing of rate cuts. According to her, the Governing Council members believe it is too early to discuss easing monetary policy. However, many market participants think that economic challenges may prompt the ECB to initiate this process first. A comparison of macroeconomic indicators between the Old and the New World is enough to support this view.

The unemployment rate in the Eurozone stands at 6.4% compared to 3.7% in the US. European GDP barely moved from a recessionary negative level of -0.1% to 0% in Q4, while the US saw a growth of +3.3%. Moreover, inflation in the Eurozone is close to the target of 2.0%, currently at 2.9%, compared to 3.4% in the US. All these indicators could prompt the European Central Bank to begin easing monetary policy soon. Furthermore, ECB Vice President Francois Villeroy de Galhau recently stated that the rate could be reduced at any moment. Many market participants interpreted this as a signal that a dovish trend might begin within the next two months.

However, analysts at Commerzbank believe that an initial rate cut in March or April might not occur. They note that one negative factor for the euro persists. The bank's strategists think that there is a significant faction within the ECB Governing Council that is merely biding time, to then seize the first opportunity to advocate for a rate cut. "This may even be too soon," Commerzbank warns.

Economists at another bank, the British HSBC, expect the dollar to strengthen slightly in the medium term, especially against the euro and the pound. This is attributed to the continued outperformance of the US economy compared to many other G10 countries, allowing the Federal Reserve to delay easing its policy. "A less aggressive easing path could lead to a decrease in risk appetite, which would support the US dollar," HSBC specialists write.

EUR/USD closed the week at 1.0787. At present, 30% of experts have voted for the dollar to strengthen in the near future, anticipating further decline in the pair. An equal percentage sided with the euro, believing that the pair will at least remain within the 1.0800-1.0900 channel. The remaining 40% have adopted a neutral stance. Indicator readings on the D1 are more definitive. Oscillators are 100% in the red (though 20% of them signal oversold conditions). Among trend indicators, the balance of power is 85% red to 15% green. The nearest support for the pair is located in the 1.0780 zone, followed by 1.0725-1.0740, 1.0620-1.0640, 1.0500-1.0515, and 1.0450. Bulls will encounter resistance in the areas of 1.0820, 1.0890-1.0925, 1.0985-1.1015, 1.1110-1.1140, and 1.1230-1.1275.

Key events for the upcoming week include the release of data on business activity (PMI) in the US services sector on Monday, February 5. The next day, volumes of retail sales in the Eurozone will be disclosed. Thursday traditionally brings information on the number of initial jobless claims in the United States. And towards the very end of the workweek, on Friday, February 9, data on consumer price inflation (CPI) in Germany, the main engine of the European economy, will be released.

GBP/USD: US Labor Market Delivers Blow to the Pound

Last week, on Thursday, February 1, the Bank of England (BoE), like its counterparts across the Channel and the Atlantic, maintained its key interest rate at 5.25%. The Bank of England made no changes to its policy and did not issue any dovish statements. However, the pound received support as two members of the BoE's Monetary Policy Committee continued to vote for a rate hike of 25 basis points. This argument proved to be relatively weak, especially since another committee member voted for a rate cut, while the overwhelming majority, eight members, supported keeping the rate unchanged.

Analysts continue to believe that expectations are on the side of the British currency, speculating that the BoE might be among the last to cut rates this year. However, according to Scotiabank specialists, for further growth of the GBP/USD pair, a breakthrough of the late December peak at 1.2825 is necessary. Yet, there seems to be no foundation for this at the moment. Moreover, strong data from the US labour market strengthened the dollar and prevented the pair from remaining near the upper boundary of the 1.2600-1.2800 sideways channel, where it has been trading for seven weeks.

GBP/USD concluded the past week at 1.2632. According to economists at Internationale Nederlanden Groep (ING), a strong dollar may keep GBP/USD around the 1.2600-1.2700 range in Q1 2024. Regarding the median forecast of analysts for the coming days, 35% voted for the pair falling below the 1.2600 support level, 50% for its rise, and 15% preferred to maintain neutrality. Unlike the experts, trend indicators on D1 show a slight bias towards the American currency, with 60% indicating a strengthening dollar and further decline of the pair, against 40% suggesting its rise. Among oscillators, 65% lean towards the dollar (with 10% indicating oversold conditions), 10% favour the pound, and the remaining 25% hold a neutral position. Should the pair move south, it will encounter support levels and zones at 1.2595-1.2610, 1.2500-1.2515, 1.2450, 1.2330, 1.2210, and 1.2070-1.2085. In case of an upward movement, resistance will be met at levels 1.2695-1.2725, 1.2785-1.2820, 1.2940, 1.3000, and 1.3140-1.3150.

No release of significant macroeconomic data related to the economy of the United Kingdom is anticipated for the upcoming week.

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[Stan NordFX]

CryptoNews of the Week

– Nayib Bukele was re-elected as President of El Salvador on February 4, winning by a substantial margin. The leader, who has openly supported bitcoin and made it the country's first legal tender, garnered the support of the majority of the Salvadoran society, securing approximately 85% of the electorate's votes. "This is a record for democratic elections worldwide," Bukele stated.
Shortly before the election, it was announced that should Bukele win the presidency by a large margin, he would expand the use of bitcoin. Specifically, Bukele plans to issue passports to bitcoin entrepreneurs and launch Volcano bonds, which will fund the construction of Bitcoin City, a tax haven for crypto companies.

– Jim Rogers, an investor who co-founded the Quantum Fund with George Soros, believes that bitcoin does not pose a threat as a potential replacement for existing government currencies. According to him, despite bitcoin's growth and current perception, the primary role of the flagship cryptocurrency is to serve as a trading instrument. Rogers emphasized that governments are unlikely to recognize bitcoin as a currency, as they fear potential competition with existing monetary systems. However, the investor suggests that Central Bank Digital Currencies (CBDCs) are likely to be adopted in several countries around the world.

– The former President of the United States, Donald Trump, also commented on the possibility of the country adopting a Central Bank Digital Currency (CBDC). He stated that if he were to be re-elected, he would prevent the introduction of this type of currency in the United States. Trump emphasized that a CBDC infringes upon citizens' rights and freedoms, as it would allow government entities access to detailed information about people's financial activities. "I will never allow the creation of a central bank digital currency that would enable the theft of your money," Trump declared.

– The popular blogger PlanB has stated that following the upcoming bitcoin halving in April, bitcoin will become scarcer than gold and real estate, suggesting that the cryptocurrency could reach a price around $500,000. Based on his Stock-to-Flow model, the expert considered that the digital asset's market capitalization might not surpass that of gold: over $10 trillion. However, approaching this mark and a coin issuance of 20 million could lead to the stated price. PlanB did not specify a timeframe for reaching this price.
The analyst also named the minimum level below which, in his opinion, the primary cryptocurrency will not fall. The 200-week moving average (200WMA) of the BTC price has exceeded $31,000, and according to PlanB, historically, the price has never dropped below this metric.

– Scott Melker, a renowned trader, investor, writer, and host of "The Wolf Of All Streets" podcast, who also holds the title of Binance Influencer of the Year, has shared his perspective on the upcoming bitcoin halving. He believes this event could drive the price of bitcoin up to $240,000. "The bitcoin halving will occur when the number of mined blocks reaches 840,000 in April 2024, at which point the block reward will decrease from 6.25 to 3.125 BTC," Melker explained. "Essentially, this means that the issuance of new coins will be halved. It will become twice as difficult for miners to earn money from bitcoin mining." Following the previous halving, the BTC price soared from $20,000 to $69,000, marking a 250% increase. Therefore, if the situation repeats this time, the next peak after $69,000 could be $240,000. "I know it might seem like an exaggeration... This cycle has worked in the past. And until I see it fail [this time], I'm prepared to bet that bitcoin will exceed $200,000," Melker insists.
It's worth noting that Anthony Scaramucci, the founder of Skybridge Capital, also recently expressed optimism about bitcoin's future. He believes the halving will lift the BTC price to $170,000.

– CryptoQuant has announced that bitcoin miner reserves have dropped to their lowest level since July 2021. The wallets of mining pools are holding the lowest volume of cryptocurrency since the so-called Great Migration of miners from China to other countries in Eurasia and North America. Moreover, last week saw the largest outflow of BTC from miners' autonomous wallets to exchanges.
Analysts at Bitfinex are also observing an influx of bitcoins to exchange addresses associated with mining companies. They believe that a massive coin dump could occur in the coming days. Consequently, pressure will increase again, and the digital currency may fall below $40,000. The Bitfinex report notes that sales are increasing due to the approaching halving. They estimate that, following the miners, short-term investors may join the sell-off. They will start to dispose of the cryptocurrency for fear that its price will fall below the level at which they purchased the coins.

– Michael Van De Poppe, a renowned trader, investor, and founder of MN Trading, believes that the value of bitcoin could reach $500,000. He highlighted several factors that will cause an explosive growth in the flagship coin's rate. Among these factors are the current market state, the launch of BTC-ETFs, inflows from institutional investors, and others. An important factor will be the halving, after which a bullish growth of the cryptocurrency market is expected. The researcher emphasized that the current cycle might be slightly longer than before, due to the entry of institutional players into the market and a change in the overall direction of the industry's development. According to the analyst, liquidity influences, macroeconomic factors, and others could have a greater impact on the market.
Van De Poppe suggests a scenario where the value of bitcoin could rise to $48,000 before the halving, hitting a key resistance level. This would be followed by another correction, resulting in a 20% price drop. After the halving, the BTC value will start to rise again and reach a local peak by the fall.

– Grok, an artificial intelligence developed by Elon Musk's company xAI, has made two predictions: by the end of 2024, the Ethereum rate will range from $4,000 to $5,000; within the year, the value of ETH could peak at $6,500. Grok highly values the prospects of Ethereum due to the development of its ecosystem and the upcoming Dencun update, scheduled for February 8. This upgrade is expected to enhance the scalability of the ETH blockchain and significantly reduce transaction processing costs in second-layer networks through the implementation of proto-danksharding technology, which allows for increased blockchain throughput. The artificial intelligence also identifies spot Ethereum ETFs as catalysts for the coin's price growth, which could be approved by the end of May. Applications for the issuance of these derivatives have been submitted to the U.S. Securities and Exchange Commission (SEC) by six major American companies: Volatility Shares, Bitwise, Grayscale, VanEck, Roundhill, and Proshares.

– Senator Elizabeth Warren asserts that her legislative proposal has already garnered the support of 19 members of the U.S. Senate. She hopes that "common sense will prevail," and her supporters, along with other congressmen, "will achieve effective measures to combat the criminal use of crypto assets."
Should the law come into effect, the anti-money laundering regulations from the traditional finance sector will fully apply to digital asset market players. According to the draft document, Know Your Customer (KYC) rules will affect providers of autonomous wallets, miners, validators, and other independent network participants. All financial institutions in the U.S. will be required to report on measures to prevent money laundering, tax evasion, and other criminal activities. "This bill will close the gaps in our anti-money laundering regulations," Warren stated, referencing a report by the analytics firm Chainalysis, which indicated that from 2022 to 2024, stablecoins accounted for more than 50% of transactions by cybercriminals.

– Cathy Wood, CEO of ARK Invest, asserts that investors have begun shifting from gold to bitcoin following the launch of spot bitcoin exchange-traded funds (ETFs). "Bitcoin is growing relative to gold. The substitution of gold with bitcoin is in full swing. And we believe this will continue now that a less complex access to bitcoin has emerged," she stated.
Cathy Wood anticipates that bitcoin will emerge as a "risk-free asset" when the banking sector shows signs of weakness again. The market witnessed this firsthand in March 2023, during the "regional banking crisis" in the United States, which resulted in a 40% surge in the price of digital gold. (Recent analysis by Fidelity indicates that bitcoin's inverse correlation with banking interest rates disappeared in 2023, despite rising rates worldwide).


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.

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[Stan NordFX]

Forex and Cryptocurrencies Forecast for February 12 - 16, 2024​

EUR/USD: Dollar Dips but Promises a Rebound

Last week saw a scarcity of significant macroeconomic data. In anticipation of new drivers, market participants analysed the state of the US labour market and statements from Federal Reserve officials.

Data released on February 2 revealed that the number of new jobs in the US non-farm sector (Non-Farm Payrolls) increased by 353,000 in January, against the expected 180,000. This figure followed a December increase of 333,000. Unemployment remained stable at 3.7%, although experts had forecast a rise to 3.8%. Meanwhile, wage inflation grew to 4.5% on an annual basis, significantly exceeding market expectations of 4.1%. The report, issued on Thursday, February 8, was also robust, showing that the number of US citizens applying for unemployment benefits was 218K, down from 227K previously.

Thus, Federal Reserve Chair Jerome Powell's concerns proved unfounded. Recall that he recently suggested that if the labour market were to cool sharply, easing of monetary policy could occur quite rapidly. However, no cooling has occurred, so the FOMC members may not rush to a dovish pivot until they see convincing evidence of inflation dropping below the 2.0% target.

Subsequent comments from Fed representatives confirmed the low likelihood of an easing of national monetary policy in the near term. For instance, Susan Collins, President of the Federal Reserve Bank of Boston, stated that due to a strong labour market and economic growth, a rate cut is currently not advisable. Her colleague from the Federal Reserve Bank of Richmond, Thomas Barkin, expressed serious doubts about the sustainability of the inflation reduction pace, as price growth continues in the services and rental sectors. As the figures above indicate, wage inflation is also rising.

Against this backdrop of the regulator's representatives' hawkish stance, the probability of a rate cut in March has decreased, and according to the FedWatch Tool, it currently stands at only 15.5%, with May at 54.1%. In such conditions, bulls on the Dollar Index (DXY) feel significantly more confident than bears.

Regarding the euro, the common European currency has been significantly impacted by recent dovish statements from European Central Bank (ECB) officials. Weak statistics from the Eurozone also support the case for an earlier start to monetary policy easing. A comparison of macroeconomic indicators between the Old and New Worlds suffices to illustrate this. Unemployment in the Eurozone stands at 6.4% compared to 3.7% in the US. European GDP in Q4 barely moved from a recessionary level of -0.1% to 0% (in contrast to the US, which saw a +3.3% increase). The service sector activity index dropped from 48.8 to 48.4 points, while the composite indicator, which includes both services and manufacturing, is at 47.9 points. Hence, both these indicators remain in the stagnation zone (below 50.0). In Germany, exports of goods decreased by 4.6% in December, and imports by 6.7%.

On the other hand, the Consumer Price Index (CPI), a crucial inflation indicator, showed a slight increase in consumer prices in Germany from 0.1% to 0.2% month-on-month, offering the euro some support by giving investors hope that the ECB may not be the first to cut rates. As a result, EUR/USD ended the week at 1.0785.

A number of experts believe that the dollar's weakening last week was a corrective pullback, and the fundamental backdrop continues to favor the American currency. As of the writing of this review, on the evening of Friday, February 9, 70% of experts voted for a strengthening of the dollar in the near future and a further decline of the pair. 15% sided with the euro, and an equal percentage adopted a neutral position. Oscillators on D1 share a similar view: 65% are coloured red, indicating a bearish outlook, 10% green, showing a bullish outlook, and 25% in neutral grey. Among trend indicators, the distribution of forces between red (bearish) and green (bullish) stands at 65% to 35%. The nearest support for the pair is located in the zone of 1.0725-1.0740, followed by 1.0680, 1.0620, 1.0495-1.0515, and 1.0450. Bulls will encounter resistance at levels 1.0800-1.0820, 1.0865, 1.0925, 1.0985-1.1015, 1.1110-1.1140, and 1.1230-1.1275.

The upcoming week's noteworthy events include the publication of the US Consumer Price Index (CPI) data on Tuesday, February 13. Market participants will analyse the latest Eurozone GDP data on February 14, the same day Valentine's Day is celebrated. American statistics on manufacturing activity, unemployment, and retail sales volume will be highlighted on Thursday, February 15. The week will conclude with the release of the US Producer Price Index (PPI) for January on Friday.

GBP/USD: Factors Supporting and Weighing on the Pound

On Friday, February 2, strong data from the US labour market strengthened the dollar and pushed GBP/USD from the upper boundary of the sideways channel at 1.2600-1.2800 to the lower end. The decline continued over the past week, with the pair finding a local bottom at 1.2518 on February 5. It is to the credit of the British currency that it managed to recover its losses and returned to the 1.2600 zone, which shifted from support to resistance.

Analysts believe that the British currency continues to be supported by expectations that the Bank of England (BoE) may be among the last to cut rates this year. It's worth noting that on February 1, the BoE held its meeting and kept the key rate at the previous level of 5.25%. However, the pound received support because two members of the BoE's Monetary Policy Committee continued to vote for a rate hike of 25 basis points (bps). The following day, Catherine Mann explained that she voted for a rate increase because she is not confident that the decline in core inflation will continue in the near term. Another Committee member, Jonathan Haskel, acknowledged that inflationary pressures might be easing but noted that he would need additional evidence of this process before changing his stance on rate hike prospects.

Furthermore, GBP/USD is significantly influenced by market participants' risk appetite, which has been increasing, as evidenced by the quotations of stock indices such as the S&P 500, Dow Jones, and Nasdaq. Consequently, hawkish remarks from Bank of England representatives and improved sentiment regarding risk have helped the pair offset its losses.

Working against the British currency is the fact that inflationary pressures are indeed starting to ease. According to the KPMG and the Recruitment & Employment Confederation's UK Report on Jobs, the wage inflation index decreased from 56.5 points to 55.8 points in January, indicating that wage growth in the country was at its slowest pace since March 2021. Thus, signs of cooling inflation serve as an argument for the Bank of England to begin cutting interest rates. At the regulator's last meeting, as mentioned, two members of the Committee voted for an increase in borrowing costs, eight for keeping the rate unchanged, and only one member voted for a reduction. However, if at the next meeting on March 21, the doves gain not just one but two or three votes, this could trigger active selling of the GBP/USD pair.

The pair concluded the past five-day period at the mark of 1.2630. Regarding the median forecast of analysts for the coming days, 50% voted for the pair's decline, 15% for its rise, and the remaining 35% abstained from commenting. Among the oscillators on D1, 50% indicate a downward direction, the remaining 50% look eastward, with none showing a preference for moving north. The situation with trend indicators is different, where a slight majority favors the British currency – 60% pointing north and the remaining 40% south. Should the pair move southward, it will encounter support levels and zones at 1.2595, 1.2570, 1.2495-1.2515, 1.2450, 1.2330, 1.2210, 1.2070-1.2085. In case of an upward movement, resistance will be met at levels 1.2695-1.2725, 1.2785-1.2820, 1.2940, 1.3000, and 1.3140-1.3150.

Regarding the UK economy, the upcoming week's calendar highlights include a speech by Bank of England Governor Andrew Bailey on Monday, February 12. A significant amount of statistics from the British labour market will be released on Tuesday, February 14. On Wednesday, February 15, the Consumer Price Index (CPI) values will be announced, followed by the country's GDP indicators on February 16. The week's stream of statistics will conclude on Friday, February 16, with the publication of data on retail sales in the UK.

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[Stan NordFX]

USD/JPY: The Pair's Flight to the Moon Continues

Thanks to the hawkish rhetoric from Federal Reserve representatives, USD/JPY continued to rise last week, coming close to the psychological resistance level of 150.00. It likely would have breached this level, but market participants are exercising caution ahead of the January Consumer Price Index (CPI) data release in the US, which is scheduled for February 13.

The yen continues to be under pressure due to the Bank of Japan's (BoJ) persistent dovish stance. Investors observe that the regulator still has no intention of raising interest rates. On Thursday, February 8, BoJ Deputy Governor Shinichi Uchida stated that "the future course of rates depends on economic and price developments" and that monetary policy conditions in the Japanese economy are on a deeply negative trajectory, with no expectations of aggressive inflation. The following day, BoJ Governor Kazuo Ueda traditionally spoke, stating that "the chances of maintaining accommodative conditions are high even if negative rates are abandoned."

From this, the market concluded that if any changes are to be made to the central bank's monetary policy, they will occur very slowly and it's uncertain when. The investors' reaction is evident in the USD/JPY chart: a local maximum was recorded at 149.57, with the week's final note hitting at 149.25.

Regarding the near-term outlook for USD/JPY, experts' opinions are evenly divided: a third anticipate further growth, another third expect a decline, and the remaining third have chosen to remain neutral. Trend indicators and oscillators on D1 unanimously point north, indicating bullish sentiment, but 25% of the oscillators are in the overbought zone. The nearest support level is located in the zone of 148.25-148.40, followed by 147.65, 146.85-147.15, 145.90-146.10, 144.90-145.30, 143.50, 142.20, and 140.25-140.60. Resistance levels are found at 149.65-150.00, 150.75, and 151.70-151.90.

Among the significant events related to the Japanese economy, the publication of the country's GDP data on Thursday, February 15, stands out. Traders should also be aware that Monday, February 12, is a public holiday in Japan: the country observes National Foundation Day.

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[Stan NordFX]

CRYPTOCURRENCIES: Why Bitcoin Is Rising

"Halving: Grief or Joy?" was the question we posed in the title of our previous review. The debate on this matter does not subside but, on the contrary, becomes more intense as April approaches.

The process of profit-taking after the approval of bitcoin spot ETFs on January 10 has ended. However, a new threat looms over the market now. And this threat is the miners. Scott Melker, a renowned trader, investor, and host of the podcast "The Wolf of All Streets," writes the following: "The bitcoin halving will occur when the number of mined blocks reaches 840,000 in April 2024, at which point the block reward will decrease from 6.25 to 3.125 BTC. Essentially, this means that the issuance of new coins will be halved. It will become twice as hard for miners to earn money from mining bitcoin."

The halving is tentatively scheduled for April 19, meaning there are roughly two months left. If the price of digital gold does not show significant growth in this period, the majority of miners will face a sharp liquidity shortage. Therefore, to replenish their liquidity, they may start actively selling their BTC holdings, which would exert significant pressure on the market.

According to estimates, bitcoin miners still had about 1.8 million BTC worth approximately $85 billion (at current prices). And now, CryptoQuant has announced that the reserves of these companies have fallen to their lowest level since July 2021. Currently, the wallets of mining pools hold the lowest volume of cryptocurrency since the so-called "Great Migration" of miners from China to other countries in Eurasia and North America. Coins have moved from miners' autonomous wallets to exchanges.

Bitfinex also observes an influx of bitcoins to exchange addresses associated with mining companies. Analysts believe that at some point, a large-scale coin dump could occur, which is concerning. However, miners are holding onto their reserves for the time being, despite reduced transaction fee revenues. According to CryptoQuant, their daily sales have dropped and are now less than 300 BTC.

The situation of mining companies is also complicated by the decline in the production volumes of new coins. According to TheMinerMag, BTC mining by U.S. miners dropped to historical lows in January due to a 29-50% increase in electricity tariffs. High electricity costs are expected to persist until the end of Q1 2024. Therefore, if the trend continues, a certain bitcoin supply deficit will be observed before the halving amid growing demand. And the fact that demand is increasing is confirmed by analysts at Santiment, who note a sharp increase in the number of "whales" owning more than 1,000 BTC. Naturally, this pushes BTC/USD upwards.

From February 7 to 9, bitcoin's price showed a sharp surge, reaching a peak of $48,145. In this rally, in addition to the reasons mentioned, the global increase in risk appetites of major investors likely played the most significant role. The inflow of capital into stock markets also benefited the crypto market. According to IntoTheBlock, the correlation between bitcoin and the S&P 500 index was negative at the end of January but has since returned. Another reason some experts cite for the digital gold's price increase is the approach of the New Year according to the Chinese calendar. It is noted that the price of cryptocurrency always rises in anticipation of this date.

Overall, most forecasts for the entirety of 2024 look quite optimistic, with some being very optimistic. Scott Melker, for instance, believes that the halving could lead to a rise in bitcoin's price to $240,000. "After the previous halving, the BTC price updated its maximum from $20,000 to $69,000, which is a 250% increase," he writes. "Thus, if the situation repeats this time, the next maximum after $69,000 will be $240,000." "I know it might seem like an exaggeration," Melker continues. "This cycle has worked in the past. But until I see it fail [this time], I'm willing to bet that bitcoin will exceed $200,000."

According to ARK Invest CEO Cathy Wood, investors have begun shifting from gold to bitcoin following the launch of spot Bitcoin ETFs. "Bitcoin is growing relative to gold. The substitution of gold with bitcoin is in full swing. And we think this will continue...," she stated.

Echoing Cathy Wood's sentiment is the popular blogger and analyst PlanB. "After the upcoming halving, bitcoin will become scarcer than gold and real estate," he writes. "This implies that the cryptocurrency could reach a price of around $500,000." Based on his Stock-to-Flow model, the expert suggested that the market capitalization of the digital asset might not surpass that of gold – over $10 trillion. However, approaching this mark and a supply limit of 20 million coins would lead to the stated price. PlanB did not specify a timeframe for reaching this price, but he did mention a minimum price level that, in his opinion, the primary cryptocurrency will not fall below. According to PlanB, the BTC price has historically never dropped below the 200-week moving average. (At the time of writing the review, the 200WMA is around $32,000). Another analyst, known by the nickname ali_charts, believes that the critical support level is now $42,560.

Renowned trader, investor, and founder of MN Trading, Michael Van De Poppe, like PlanB, believes that the value of bitcoin could reach $500,000. The expert highlighted that there are numerous factors that will cause explosive growth in the flagship coin's rate. Among these are the current state of the market, the launch of BTC ETFs, inflow of funds from institutional investors, among others. The halving is considered a significant factor, after which a bullish growth of the cryptocurrency market is expected. Van De Poppe suggests that the current cycle might be slightly longer than previous ones, due to the entry of institutional players into the market and changes in the overall direction of industry development.

Van De Poppe believes that a scenario where the value of bitcoin soon reaches the key resistance level of $48,000 is quite plausible. This would be followed by another correction, resulting in a 20% price drop to $38,400. After the halving, the value of BTC will begin to rise again and reach a local peak by the autumn.

Elon Musk's company xAI developed Artificial Intelligence Grok, which has made two predictions regarding Ethereum, the main competitor to the leading cryptocurrency: 1) by the end of 2024, the price of ETH will range from $4,000 to $5,000; 2) within the year, the value of ETH could peak at $6,500. Grok highly values Ethereum's prospects due to the development of this altcoin's ecosystem and the Dencun update. This upgrade will increase the ETH blockchain's scalability level and significantly reduce transaction processing costs. The Dencun deployment took place in the Goerli test network on January 17th, and in the Sepolia test network on January 30th. The launch of Dencun in the main network is scheduled for March 13th. (It's worth noting that this update has already become one of the reasons why large ETH coin holders have started moving their assets from long-inactive wallets. Recently, such a "whale" moved 492 ETH worth over $1.1 million from a wallet that had been dormant for more than eight years).

Grok also considers the potential approval of spot Ethereum ETFs by the end of May as a catalyst for the altcoin's price growth. Six major American companies have submitted applications for these derivatives to the U.S. Securities and Exchange Commission (SEC).

However, the situation is not so straightforward. We have previously quoted SEC Chairman Gary Gensler's statement that positive decisions regarding spot ETFs exclusively concern bitcoin-based exchange products. According to Gensler, this decision "in no way signals a readiness to approve listing standards for crypto assets that are securities." Recall that the regulator still refers to bitcoin as a commodity, while "the vast majority of crypto assets, in his view, are investment contracts (i.e., securities)."

Last week, it was revealed that the SEC had postponed its decision on applications from Invesco and Galaxy. The agency had previously postponed the review date for other applications. "The only date that matters for spot ETH-ETFs at the moment is May 23. This is the deadline for the VanEck application," Bloomberg notes.

Analysts at investment bank TD Cowen believe it is unlikely that the SEC will make any decision before the second half of 2024. "Before approving an ETH-ETF, the SEC will want to gain practical experience with similar investment instruments in bitcoins," commented Jaret Seiberg, head of the TD Cowen Washington Research Group. TD Cowen believes the SEC will return to the discussion of Ethereum ETFs only after the U.S. presidential elections in November 2024.

Senior JP Morgan analyst Nikolaos Panagirtzoglou also does not expect the prompt approval of spot ETH-ETFs. For the SEC to make a decision, it needs to classify Ethereum as a commodity, not a security. However, JP Morgan considers this event unlikely in the near future.

The cryptocurrency market has shown impressive growth over the past week. As of the evening of February 9, BTC/USD is trading in the $47,500 zone, and ETH/USD at $2,500. The total market capitalization of cryptocurrencies is $1.78 trillion (up from $1.65 trillion a week ago). The Crypto Fear & Greed Index has risen to 72 points (from 63 a week ago) and remains in the Greed zone.


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.

 

[Stan NordFX]

CryptoNews of the Week

– The price of bitcoin surged past $51,700 on 14 February, reaching a new high since 2021. This bull rally is largely attributed to the commencement of operations by nine leading spot bitcoin ETFs. According to The Block, a month after their launch, their assets exceeded 200,000 BTC (about $10 billion). These new bitcoin ETFs have risen to second place in the ranking of commodity exchange-traded funds in the US by asset volume, becoming a more popular investment instrument than silver ETFs. Observers have highlighted a statement from investment giant BlackRock, noting, "Investor interest in bitcoin remains high, hence the fund is ready to purchase even more BTC."
Documenting Bitcoin reports that Wall Street representatives are currently purchasing 12.5 times more BTC coins daily than the network can produce. Researchers believe this is the key driver behind the increased demand and price for the flagship crypto asset.

– Analysts at CryptoQuant have identified another factor that could lead to an increase in the price of BTC in 2024 and 2025: the upcoming halving. The researchers emphasised that this event significantly reduces the supply of bitcoin approximately every four years. They also agree that the recent approval of spot bitcoin ETFs has been one of the most powerful bullish factors for the growth in value of the leading cryptocurrency.
CryptoQuant also noted a significant increase in the number of active wallets, indicating a long-term upward trend. "Considering the reduction in supply, increased demand, and various economic and social issues, particularly the expected ongoing inflation, bitcoin is likely to strengthen its position as a long-term alternative investment asset with an upward trend," the analysts conclude.

– Anthony Pompliano, co-founder and partner at Morgan Creek Digital, also highlighted the success of the recent launch of spot BTC ETFs. The fact that BlackRock and Fidelity were able to attract $3 billion each in record time marks a historic event for exchange-traded funds.
"Wall Street is not just in love with bitcoin," the financier wrote, "they are in an active love affair. The daily supply of bitcoin to funds is limited to just 900 BTC, which equates to approximately $40-45 million. Meanwhile, the daily net inflow of funds into BTC ETFs already equals $500 million. This is a clear indicator of a BTC shortage and its bullish impact on the price of the cryptocurrency and the market as a whole," Pompliano stated, noting the imbalance between the market supply of bitcoin and the demand from Wall Street companies.
The billionaire is optimistic about the future trajectory of BTC and asserts that with the demand from Wall Street continuing, especially considering the upcoming halving, the top cryptocurrency by market capitalization could significantly surpass its historical highs.

– The appearance of photographs with laser eyes in the personal accounts of US President Joe Biden sparked a wave of discussion within the crypto community. This led to speculation on whether Biden has become a supporter of bitcoin or if this was a strategic move for his 2024 presidential campaign to gain the support of crypto investors. There was also speculation that Biden's account might have been hacked.
It's important to remember that the "laser eyes" phenomenon is typically used as a symbol to demonstrate a bullish outlook on bitcoin. It emerged as part of a social media movement aimed at driving the price of BTC to $100,000 by the end of 2021, a goal that was not achieved. Among the most famous personalities who once featured laser eyes were Paris Hilton and Elon Musk.

– Anthony Scaramucci, founder of SkyBridge Capital and former White House official, believes that some retail investors might think they have missed the opportunity to buy bitcoin. His unequivocal response is, "No, it's not too late." In addition to the launch of spot BTC ETFs and the halving, Scaramucci highlighted the monetary policy of the US Federal Reserve. "The US Consumer Price Index (CPI) data released on Tuesday, 13 February, signalled that inflation may not be as under control as the Fed would like," the investor writes. Based on data published by the US Bureau of Labor Statistics, the consumer price index for January showed an inflation rate of 3.1%. The data also led to speculation that the Fed's reduction of interest rates in March and May is likely off the table.
According to Scaramucci, the delay in rate cuts could lead to turbulent trading in the mainstream market but will act as a boom for the crypto world, as bitcoin is used as a hedge against inflation.

– Glassnode has identified that numerous on-chain indicators are now in what's termed the "risk zone." This assessment leverages a variety of metrics that analyze a comprehensive array of data pertaining to hodlers' behaviour, covering both short-term and long-term investment cycles. Experts have noted that a heightened risk level is typically observed at the beginning stages of a bull market. This phenomenon occurs as hodlers might start securing profits upon reaching a "significant level" of return.
Specifically, the MVRV ratio, which monitors the activity of long-term hodlers, has reached a critical zone. Such a high ratio (2.06) has not been seen since the FTX collapse. Currently, a "high" to "very high" risk status is also attributed to six out of the nine remaining metrics. These metrics highlight a relatively low level of profits being realized, in spite of the recent weeks' active price surge, as explained by the specialists.

– In the first two days of this week, the S&P 500 index fell from 5051 to 4922 points. Robert Kiyosaki, the renowned author of "Rich Dad Poor Dad," financier, and writer, has once again issued a stark warning that this stock index is on the brink of a massive crash, with a potential plunge of up to 70%. He accompanied this statement with his consistent recommendation to invest in solid assets such as gold, silver, and bitcoin.
Kiyosaki argues that financial advisors tend to direct their clients towards traditional investments due to their historical appeal and the significant commissions they earn from these recommendations. However, he emphasizes that historical data actually supports the superiority of solid assets, particularly gold, which has outperformed the S&P 500 index over decades. Kiyosaki firmly believes that diversification and the inclusion of solid assets in investment portfolios can be a wise strategy to mitigate potential losses in market volatility. He has called on investors to reassess their strategies and choose knowledgeable financial advisors.

– A popular analyst on Platform X, known as EGRAG CRYPTO, believes that the market capitalization of bitcoin will reach $2 trillion by September this year. Based on this, the price of the leading cryptocurrency will exceed $100,000. "Prepare for the journey of your life," EGRAG CRYPTO urges his followers. "Hold on tight, as you are witnessing a cryptocurrency revolution. Don't blink, or you might miss this historic moment in financial history!"

– During Q3 2023, the billionaire Peter Thiel's Founders Fund, known as the founder and former CEO of PayPal, invested $200 million in bitcoin and Ethereum. The amount was evenly distributed between the first and second cryptocurrencies, as informed sources told Reuters. According to the agency's information, this move marked the return of some institutional players to digital assets after the collapse of FTX and the subsequent regulatory pressure.
As one of the first venture crypto investors, Founders Fund began aggressively purchasing bitcoin back in 2014 but sold off this asset before the market crash in 2022, securing a profit of approximately $1.8 billion. In 2023, Founders Fund made its first purchases when the digital gold was valued below $30,000. Considering the current price, this operation has resulted in an unrealized profit of over 65%.

– US Federal Reserve Chairman Jerome Powell has recently asserted that US banks are very strong, a claim met with sarcasm by former BitMEX CEO Arthur Hayes, who noted that New York Community Bancorp (NYCB) might disagree.
Last week, the US banking sector was engulfed in fear as NYCB reported a colossal quarterly loss of $252 million. The bank's total loan losses quintupled to $552 million, fuelled by concerns over commercial real estate. Following this report, NYCB's stock plummeted by 40% in one day, leading to a downturn in the US Regional Banks Index.
Arthur Hayes recalled the bitcoin rally triggered by the banking crisis in March 2023, when three major US banks failed within five days. "Yeah... From solid to bankrupt, that's the future. And then there will be even more money, printers... and BTC at $1 million," he commented on the NYCB failure.

– Popular blogger and analyst Lark Davis believes investors have 692 days to become wealthy. He discussed the importance of market cycles and the timely sale of assets. Davis noted that if traders pay attention, they can make a lot of money in the next two years. According to the expert, 2024 will offer the last chance to buy digital assets, while 2025 will be the best time to sell them. However, he advises against selling everything at once, recommending a gradual profit-taking strategy instead. Lark Davis also warned that a "Great Depression" will begin in the global economy and the cryptocurrency market in 2026. Failing to sell in time could result in significant losses.


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.

 

[Stan NordFX]

Forex and Cryptocurrencies Forecast for February 19 - 23, 2024​

EUR/USD: A Week of Mixed Data

The macroeconomic statistics released last week were mixed in both the United States and the Eurozone. As a result, EUR/USD failed to break through either the 1.0700 support or the 1.0800 resistance, continuing to move within a narrow sideways channel.

The US dollar received a strong bullish impulse on Tuesday, February 14, following the release of US inflation data. The Dollar Index (DXY) surged by more than 0.5% and nearly reached the 105.00 resistance level. Consequently, EUR/USD moved downward, towards the lower boundary of the specified sideways range. Meanwhile, the S&P 500 stock index fell from 5051 to 4922 points.

It can be said that the US inflation data caught the markets off guard. Some analysts even described them as shocking. It turned out that the final victory over prices is not as close as it seemed before, and that the Federal Reserve is unlikely to start lowering interest rates anytime soon.

In January, the Consumer Price Index (CPI) sharply increased against the backdrop of a significant rise in the cost of rent, food, and healthcare services. On a monthly basis, the overall index accelerated from 0.2% to 0.3%. On an annual basis, the CPI was 3.1%, which is below the previous value of 3.4%, but significantly above the forecast of 2.9%. Excluding the volatile prices of food and energy, inflation in January rose from 0.3% to 0.4% month-on-month, while the annual core CPI remained at the previous level of 3.9%, although analysts had forecast a decrease to 3.8%. Particularly sharp was the increase in so-called "super-core inflation," which also excludes housing costs. In January, on a monthly basis, it reached 0.8%: the highest level since April 2022.

Certainly, the Federal Reserve's achievements in combating inflation are significant. It is worth recalling that in the summer of 2022, the CPI reached a 40-year peak at 9.1%. However, the current inflation rate is still almost twice the target level of 2.0%. Based on this, the market concluded that the Federal Reserve is now unlikely to rush into easing monetary policy and will probably maintain high interest rates for longer than previously anticipated. At the beginning of January, according to the FedWatch Tool, the probability of a 25 basis point (bp) rate cut in May was 54.1%. After the inflation report was released, this figure dropped to 35%. An even lower probability is given by the monitoring tool developed by Investing.com. The possibility of a dovish pivot in March, according to its readings, stands at 5%, and in May – around 30% (just a few weeks ago, it was over 90%). As for the beginning of summer, the probability of a reduction in the cost of borrowing through federal funds in June is estimated at 75%.

The inflation report was a boon for dollar bulls, but their joy was short-lived. The data on industrial production and retail sales in the US released on Thursday, February 16, were weaker than expected. In January, retail sales showed a decline of -0.8% compared to the December increase of 0.4% and the forecast of -0.1%. As a result, the dollar was under pressure, and the EUR/USD pendulum swung in the opposite direction: the pair headed towards the upper boundary of the 1.0700-1.0800 channel.

The dollar received a slight boost at the very end of the workweek. On Friday, February 16, the Producer Price Index (PPI) indicated that industrial inflation in January rose just as consumer inflation did. Against a forecast of 0.1%, the actual increase was 0.3% month-on-month, which is 0.4% higher than December's figure. On an annual basis, the PPI rose by 2.0% (forecast 1.6%, previous value 1.7%). However, this support was soon offset by a drop in the University of Michigan's US Consumer Confidence Index, which, although it increased from 79.0 to 79.6, was below the forecast of 80.0 points.

On the other side of the Atlantic, the news was also rather contradictory, resulting in the European statistics not being able to significantly support its currency. The February Economic Sentiment Index from ZEW in Germany improved more than expected, rising to 19.9 from 15.2 in the previous month. The economic sentiment indicator for the Eurozone as a whole also showed growth, moving from 22.7 points to 25.0. However, the assessment of the current situation fell to -81.7, the lowest level since June 2020.

Preliminary GDP data for Q4 2023, released on Wednesday, February 14, showed that the Eurozone is in a state of stagnation. On a quarterly basis, the figures remained at 0%, and on an annual basis, they were at 0.1%, exactly matching forecasts. This statistic did not add optimism, and markets continued to exercise caution, fearing that the Eurozone economy might slip into recession.

Europe faces a significantly sharper choice between supporting the economy and fighting inflation compared to the United States. Isabel Schnabel, a member of the Executive Board of the ECB and a well-known hawk, stated on Friday, February 16, that the regulator's monetary policy must remain restrictive until the ECB is confident that inflation has sustainably returned to the medium-term target level of 2.0%. Furthermore, Ms. Schnabel believes that persistently low labour productivity growth increases the risk that companies may pass their higher labour costs on to consumers, which could delay the achievement of the inflation target.

However, despite such hawkish statements, according to a ZEW survey, more than two-thirds of business representatives still hope for an easing of the ECB's monetary policy within the next six months. The probability of a rate cut for the euro in April is currently estimated by the markets at about 53%.

After all the fluctuations of EUR/USD, the final note of the past week was struck at the level of 1.0776. At the time of writing this review, on the evening of Friday, February 16, 55% of experts voted for the strengthening of the dollar in the near future and the further fall of the pair. 30% sided with the euro, while 15% took a neutral stance. Among the oscillators on D1, 60% are coloured red, 40% in neutral-grey, and none in green. The ratio among trend indicators is different: 60% red and 40% green. The nearest support for the pair is located in the zone of 1.0725-1.0740, followed by 1.0695, 1.0620, 1.0495-1.0515, 1.0450. Bulls will encounter resistance in the areas of 1.0800-1.0820, 1.0865, 1.0925, 1.0985-1.1015, 1.1110-1.1140, 1.1230-1.1275.

Among the events of the upcoming week, the minutes from the last meeting of the Federal Open Market Committee (FOMC) of the US Federal Reserve, which will be published on Wednesday, February 21, are of great interest. The following day, a powerful flow of data on business activity (PMI) in Germany, the Eurozone, and the US will be released. Moreover, on Thursday, February 22, the January figure for the Consumer Price Index (CPI) in the Eurozone and the number of initial jobless claims in the US will be known. Towards the very end of the workweek, on Friday, February 23, data on Germany's GDP, the main engine of the European economy, will arrive. Additionally, traders should keep in mind that Monday, February 19, is a holiday in the United States: the country observes Presidents' Day.

continued below...

 

[Stan NordFX]

GBP/USD: What's Happening with the UK Economy?

As is known, following the meeting that concluded on February 1, the Bank of England (BoE) announced the maintenance of the bank rate at the previous level of 5.25%. The accompanying statement mentioned that "more evidence is needed that the Consumer Price Index will fall to 2.0% and remain at that level before considering rate cuts."

On February 15, Catharine Mann, a member of the Monetary Policy Committee (MPC) of the regulator, provided the most comprehensive overview of the state of the British economy, including aspects concerning inflation. The key points of her analysis were as follows: "The latest GDP data confirm that the second half of 2023 was weak. However, GDP data is a rearview mirror. On the other hand, the Purchasing Managers' Index (PMI) and other leading indicators look promising. The unemployment rate in the UK remains relatively low, and the labour market continues to be tight. Wage growth is slowing, but the pace remains problematic for the target Consumer Price Index (CPI) indicator. In the UK, goods prices may become deflationary at some point, but not on a long-term basis. Inflation in the UK's services sector is much more persistent than in the EU or the US." Consequently, Catharine Mann's conclusion was: "Mitigating the sources of inflation will be crucial in decision-making" and "Before making a decision on further actions, the Bank of England needs to receive at least one more inflation report."

Referring to specific figures, the latest data from the Office for National Statistics (ONS), published on February 16, showed that retail sales in the UK in January increased by 3.4% against the expected 1.5% and a decline of -3.3% in December (month-on-month). The core figure (excluding automotive fuel retail sales) rose by 3.2% over the month against a forecast of 1.7% and -3.5% in December. On an annual basis, retail sales also showed growth of 0.7% against the expected decline of -1.4% and a December figure of -2.4%.

Labour market data also supports the pound. The unemployment rate fell to 3.8% from 4.2%, against expectations of 4.0%. The reduction in the number of active job seekers in the labour market intensifies competition among employers, which helps maintain a higher wage growth rate. For the three months to December, wage growth was 5.8%. Such strong labour market statistics, complemented by high inflation (CPI 4.0% year-on-year, core CPI 5.1% year-on-year), are likely to push back the anticipated date for easing the Bank of England's monetary policy. Many analysts do not rule out that ultimately, the BoE may be among the last mega-regulators to cut rates this year.

GBP/USD ended the week at the level of 1.2599. According to economists at Scotiabank, the 1.2500 zone represents strong long-term support for it, and a confident move above 1.2610 will strengthen the pound and set GBP/USD on a growth path towards 1.2700. Regarding the median forecast of analysts for the coming days, 65% voted for the pair's decline, 20% for its rise, and the remaining 15% maintained neutrality. Among the oscillators on D1, 75% point south, the remaining 25% look east, with none willing to move north. The situation is different with trend indicators, where there is a slight bias in favour of the British currency – 60% indicate north, while the remaining 40% point south. If the pair moves south, it will encounter support levels and zones at 1.2570, 1.2500-1.2535, 1.2450, 1.2370, 1.2330, 1.2185, 1.2070-1.2090, 1.2035. In case of an increase, the pair will meet resistance at levels 1.2635, 1.2695-1.2725, 1.2775-1.2820, 1.2880, 1.2940, 1.3000, and 1.3140-1.3150.

Thursday, February 22 stands out in the calendar for the upcoming week. On this day, a batch of data on business activity (PMI) in various sectors of the economy of the United Kingdom will be released. The release of other significant macroeconomic statistics in the coming days is not anticipated.

USD/JPY: The Flight Continues

On Tuesday, February 13, USD/JPY reached another local maximum at 150.88. The Japanese currency retreated again, this time against the backdrop of inflation data in the US. The yen also continues to be under pressure due to the Bank of Japan's (BoJ) consistent dovish stance. On February 8, Deputy Governor Shinichi Uchida expressed doubts that the regulator would start to quickly raise its benchmark rate anytime soon. Last Friday, February 16, BoJ Governor Kazuo Ueda spoke in a similar vein. He stated that the issue of maintaining or changing monetary policy, including the negative interest rate, would only be considered "when there is a chance of sustainable and stable achievement of the price level target." Ueda declined to comment on short-term fluctuations in the exchange rate and the factors behind these movements.

In general, there's nothing new. However, many analysts continue to hope that in 2024 the Bank of Japan will finally decide to tighten its monetary policy. "We believe," write economists at the Swiss financial holding UBS, "that the normalization of the Bank of Japan's policy this year will occur against the backdrop of strong negotiations on wage increases and corporate profitability. We still believe that the Japanese yen is likely at a turning point after significant depreciation from 2021 to 2023. Considering that the yield differential between 10-year U.S. and Japanese bonds will narrow over the year, we believe the current entry point for buying yen is attractive."

A similar position is held at Danske Bank, where they forecast a sustainable decrease in USD/JPY below 140.00 on a 12-month horizon. "This is primarily because we expect limited growth in yields in the US," say strategists at this bank. "Therefore, we expect the yield differential to become a tailwind for the yen throughout the year, as the G10 central banks, with the exception of the Bank of Japan, are likely to start rate-cutting cycles."

Regarding the short-term outlook, specialists at Singapore's United Overseas Bank Limited believe that the dollar still has the potential to test 151.00 before weakening. "The risk of the US dollar rising to 152.00 will remain unchanged as long as it stays above 149.55," UOB states. This position is supported by only 25% of experts, with the majority (60%) already siding with the yen, and the remaining 15% preferring to maintain neutrality. Among the trend indicators and oscillators on D1, all 100% point north, however, 25% of the latter are in the overbought zone. The nearest support level is located in the zone of 149.65, followed by 148.25-148.40, 147.65, 146.65-146.85, 144.90-145.30, 143.40-143.75, 142.20, 140.25-140.60. Resistance levels are located at the following levels and zones - 150.65-150.90, 151.70-152.00.

No significant events related to the Japanese economy are scheduled for the upcoming week. Moreover, it is important to note that Friday, February 23, is a public holiday in Japan: the country observes the Emperor's Birthday.

continued below...

 

[Stan NordFX]

CRYPTOCURRENCIES: Bitcoin Breaks Records

Last week, the price of bitcoin rose above $52,790, setting a new peak since 2021. According to CoinGecko, the market capitalization of the leading cryptocurrency exceeded $1.0 trillion for the first time in two years, and the total market capitalization of the entire crypto market rose above $2.0 trillion for the first time since April 2022.

Much of this bull rally is attributed to the launch of nine leading spot bitcoin ETFs. According to The Block, a month after their launch, their assets exceeded 200,000 BTC (about $10 billion). The new bitcoin ETFs rose to second place in the ranking of US commodity exchange-traded funds by asset volume, becoming a more popular investment instrument than silver ETFs. Observers note BlackRock's statement that "interest in bitcoin among investors remains high," hence the fund is ready to buy even more BTC.

According to Documenting Bitcoin, the net interest from ETF issuers exceeds 12,000 BTC per day. Thus, Wall Street representatives are currently buying 12.5 times more BTC coins daily than the network can produce. Researchers believe this has been a key driver of the price increase for the flagship crypto asset.

Morgan Creek Digital co-founder and partner Anthony Pompliano also highlighted the success of the newly launched spot BTC-ETFs. According to him, the fact that BlackRock and Fidelity managed to attract $3 billion each in record short times was a historic event for exchange-traded funds. "Wall Street is not just in love with bitcoin," the financier wrote. "They are in an active love affair. The daily supply of bitcoins to funds is limited to just 900 BTC, which corresponds to approximately $40-45 million. Meanwhile, the daily net inflow of funds into BTC-ETFs already equals $500 million (max. $651 million). This is a clear indicator of BTC scarcity and its bullish impact on the cryptocurrency's price and the market as a whole," Pompliano stated, noting the imbalance between the market supply of bitcoin and demand from Wall Street companies. The billionaire is optimistic about BTC's future trajectory and asserts that with continued demand from Wall Street, especially considering the upcoming halving, the top-capitalization cryptocurrency could significantly exceed its historical highs.

CryptoQuant noted that, in addition to the demand from BTC-ETFs, the number of active wallets is also significantly increasing. This too indicates a long-term upward trend. "Given the reduction in supply, increased demand, and various economic and social issues, especially ongoing inflation, bitcoin is likely to strengthen its position as a long-term alternative investment asset with an upward trend," analysts conclude.

SkyBridge Capital founder and former White House senior official Anthony Scaramucci also emphasized inflation. Beyond the launch of spot BTC-ETFs and the halving, Scaramucci pointed to the monetary policy of the US Federal Reserve as a driver for Bitcoin's growth. "The US Consumer Price Index (CPI) data released on Tuesday, February 13, signalled that inflation may not be as under control as the Fed would like," the investor writes. "Based on data published by the US Bureau of Labor Statistics, the consumer price index for January showed inflation at 3.1%. The data also sparked speculation that a Federal Reserve interest rate cut in March and May is likely off the table." Delays in rate cuts can cause turbulent trading in the main market but will serve as a boom for the crypto world, as Bitcoin is used as a hedge against inflation. Therefore, according to Scaramucci, the time to invest profitably in digital gold has not yet passed.

Popular blogger and analyst Lark Davis shared a similar position: he believes investors have about 700 days to get rich. Discussing the importance of market cycles and the timely sale of assets, the specialist noted that if traders are attentive, they can make a lot of money in the next two years. According to the expert, 2024 will be the last chance to buy digital assets, and 2025 will be the best time to sell them. The specialist emphasized the importance of not disposing of everything at once but gradually securing profits. Lark Davis also warned that in 2026, a "Great Depression" will begin in the global economy and the cryptocurrency market. And if not sold in time, investments could be lost.

The onset of the "Great Depression" is also predicted by the famous author of "Rich Dad Poor Dad," financier, and writer Robert Kiyosaki. He believes that the S&P 500 index is on the verge of a monumental crash with a potential collapse of a full 70%. He accompanied this statement with his consistent recommendation to invest in assets such as gold, silver, and bitcoins.

Ex-CEO of the cryptocurrency exchange BitMEX, Arthur Hayes, identified another driver for Bitcoin's growth related to the Federal Reserve's monetary policy. Last week, the US banking sector was gripped by fear as New York Community Bancorp (NYCB) reported a colossal quarterly loss of $252 million. The bank's total loan losses increased fivefold to $552 million, fuelled by concerns over commercial real estate. Following the release of this report, NYCB shares fell 40% in one day, leading to a decline in the US Regional Banks Index.

Arthur Hayes recalled the Bitcoin rally triggered by the banking crisis in March 2023, when three major American banks, Silicon Valley Bank, Signature Bank, and Silvergate Bank, went bankrupt within five days. The crisis was caused by an increase in the Federal Reserve's refinancing rate and, as a consequence, the outflow of deposit accounts. Its biggest victims also included Credit Suisse and First Republic Bank. To prevent the crisis from affecting even more banks, global industry regulators, primarily the Fed, intervened to provide liquidity. "Yeah... From rock to bankruptcy, that's the future. And then there will be even more money, printers... and BTC at $1 million," the ex-CEO of BitMEX commented on the current NYCB failure.

Popular analyst on the X platform known as Egrag Crypto believes that by September this year, Bitcoin's market capitalization will reach $2.0 trillion. Based on this, the price of the leading cryptocurrency at that moment will exceed $100,000. "Get ready for the journey of your life," Egrag Crypto urges his followers. "Hold on tight, as you are witnessing a cryptocurrency revolution. Don't blink, or you might miss this historic moment in financial history!"

As of the evening of February 16, when this review was written, the BTC/USD pair is trading in the $52,000 zone. The total market capitalization of the crypto market stands at $1.95 trillion ($1.78 trillion a week ago). The Crypto Fear & Greed Index remains in the Greed zone at a level of 72 points.

– It's worth noting that the Greed zone corresponds to a situation where traders are actively buying an asset that is increasing in price. However, Glassnode warns that many on-chain indicators have already entered the so-called "risk zone". The analysis is based on a group of indicators that consider a wide range of data regarding investor behaviour. Their combination covers both short-term and long-term cycles. In particular, the MVRV indicator, which tracks long-term investors, has approached the critical zone. Such a high value (2.06) has not been observed since the FTX collapse. A similar "high" and "very high" risk status is currently characteristic of six out of the remaining nine metrics. They record a relatively low level of realized profit considering the active price increase in recent weeks. According to observations by Glassnode specialists, a high risk indicator is usually observed in the early stages of a bull market. This is because, having reached a "significant level" of profitability, hodlers may start to secure profits, which, consequently, could lead to a strong correction downwards.


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.

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[Stan NordFX]

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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]

CryptoNews of the Week

– Lucas Outumuro, head of research at IntoTheBlock, forecasts an 85% chance that bitcoin will reach a new all-time high within the next six months, potentially surpassing $70,000. He identifies five growth catalysts.
1. The halving in April, marking the fourth reduction of the mining reward from 6.25 BTC to 3.125 BTC per block, which is expected to decrease selling pressure. Outumuro suggests bitcoin could reach a new all-time high (ATH) just a month after the halving.
2. The continued influx of funds into spot exchange-traded funds (ETFs) based on bitcoin could act as a second growth catalyst. While the duration of this strong inflow remains uncertain, its persistence could bolster the cryptocurrency's price through increased demand.
3. IntoTheBlock believes the Federal Reserve's tight stance on interest rates in 2022 laid the groundwork for a bear cycle not only in the crypto market but also across other risk assets. With inflation dropping from 10% to 3% by 2024, many anticipate a policy shift by the Federal Reserve towards cutting interest rates, likely driving the recent rally in both bitcoin and stocks. The expert notes that bitcoin's price movement has been more closely aligned with traditional assets recently, enhancing its correlation with the Nasdaq and S&P 500 to two-month highs.
4. The US presidential election, although current President Joe Biden is generally opposed to digital assets, the election campaigns tend to have a positive impact on the crypto market. IntoTheBlock's report states, "Polymarket currently gives Biden only a 33% chance of re-election, making Donald Trump, who is significantly more crypto-friendly, the most likely victor." However, to boost the incumbent's re-election chances, the Federal Reserve might adopt a more aggressive easing of its monetary policy, encouraging an influx of funds into both the stock and crypto markets.
5. Hedge funds are considered an unexpected growth driver by Outumuro. He recalls that when bitcoin recovered from the COVID-19 pandemic in 2020, traditional financial giants first acknowledged the cryptocurrency's potential. The introduction of spot bitcoin ETFs provided hedge funds with an opportunity to accumulate a new asset class, thus increasing demand from traditional investors and leading to greater adoption and acceptance of digital assets.
However, IntoTheBlock notes that these scenarios could change due to various factors. For instance, if the Federal Reserve does not ease its policy, bitcoin could face a 10% correction. The development of geopolitical conflicts could also negatively impact the price of digital gold. The experts do not rule out unexpected selling pressure in the event of major player bankruptcies.

– Analysts at investment bank Goldman Sachs have revised their forecast for the S&P 500 index after it surpassed 5,000 points. They have set a year-end target for the index at 5,200, indicating a 3.9% increase from its current level. As previously noted by IntoTheBlock observations, the correlation between bitcoin and the S&P 500 is increasing, suggesting that the coin's value will rise alongside the US stock market.

– According to the Financial Times, hackers linked to North Korea are increasingly turning to artificial intelligence to aid their efforts. In 2023, they launched 1.3 million attacks against South Korean companies and government agencies. Previously, their attempts often failed due to poor language skills and a lack of understanding of local social nuances. Now, North Korean hackers are leveraging artificial intelligence to enhance their effectiveness.
Erin Plante, Vice President of Research at Chainalysis, views this as a significant new threat. "North Korean hacking groups are creating trustworthy profiles on professional sites like LinkedIn. Generative neural networks help them communicate, send messages, create images, and new identities: everything needed to build close relationships with their victims," she explained. "They use detailed profiles on LinkedIn and other social networks to develop relationships over weeks and months." Plante described an instance where North Korean hackers deceived a senior engineer at a cryptocurrency exchange by posing as representatives of a Singaporean company. They asked the victim to perform a "technical test" by downloading software that turned out to be phishing malware.
Moreover, AI services like ChatGPT are assisting North Korean criminals in developing more complex and sophisticated forms of malicious software. The era of poorly worded emails with a "click this link" prompt is evolving into a more cunning approach to cybercrime.

– Dennis Liu, also known as Virtual Bacon, shared his bitcoin investment strategy, emphasizing the importance of identifying the optimal moment to sell an asset, which is as crucial as deciding to buy it. He outlined three elements designed to signal that the market might have reached its peak.
1. The first indicator to consider is the achievement of certain price milestones: $200,000 for bitcoin and $15,000 for Ethereum. Liu's assumption is based on historical cycles and diminishing returns. This is a clear, quantifiable indicator that eliminates guesswork when deciding to exit a position.
2. Liu's second benchmark is time-based. Regardless of the price dynamics of the assets, he plans to exit his positions by the end of 2025. This decision relies on the importance of historical patterns and is based on the analysis of halving cycles and the duration of bull markets.
3. The final element of Liu's methodology involves meticulous monitoring of price patterns, specifically the behaviour of BTC relative to its 200-day and 21-week exponential moving averages (EMAs). Falling below these support levels would signal the need to sell bitcoin.

– Analyst Gareth Soloway suggested that bitcoin could potentially retest the $30,000 mark, especially if the stock market undergoes a correction in the range of 20% to 30%. He referred to a new possible support level for bitcoin as the "line in the sand." "My main line in the sand is the level from $30,000 to $32,000. If we drop there, I will start buying quite large volumes of BTC," he stated.

– Investor and founder of MN Trading, Michael Van De Poppe, believes the main question for traders now is how the price of BTC will change in the coming months. The analyst expects a pullback in bitcoin could occur when it reaches the $53,000-$58,000 level. Therefore, investors should wait for a correction of 20-40% before entering the market. However, "if you buy bitcoin with the intention of holding it for two to three years, and if you believe that over this period bitcoin will grow to $150,000, then nothing should stop you from purchasing it at these [current] prices," Van De Poppe wrote.

– Recently, Erik Voorhees, CEO and founder of the cryptocurrency exchange Shapeshift, discreetly urged Apple to purchase several billion dollars' worth of BTC and to adopt the first cryptocurrency as a payment method in Apple Pay. He believes this move could instantly generate substantial profits for the company and contribute to the further spread of cryptocurrency. A similar idea was proposed in 2021 by Michael Saylor, co-founder of MicroStrategy. "If Apple added support for bitcoin to the iPhone and converted its treasury to the bitcoin standard, it would bring its shareholders at least one trillion dollars," he wrote at the time.
Chen Fang, Chief Operating Officer of BitGo, also spoke about Apple, suggesting that integrating BTC into Apple Pay and the new Apple Vision Pro headset would allow the company to dominate payments in the metaverse.
It's worth noting that Apple, the world's second-largest company by market capitalization, has had a complicated relationship with the emerging cryptocurrency sector. In the Apple App Store, applications related to bitcoin and other cryptocurrencies are regularly removed. Over time, apps like MetaMask, Coinbase Wallet, Trust Wallet, and Damus have faced sanctions. Meanwhile, Apple co-founder Steve Wozniak has called bitcoin a sensible investment choice, revealing that he once made significant investments in this digital asset.

– Over the past week, Ethereum has significantly outpaced bitcoin in terms of growth rate. According to Standard Chartered bank, the coin's price could rise to $4,000 in anticipation of the U.S. Securities and Exchange Commission (SEC) approving spot Ethereum ETFs. Bernstein analysts believe the likelihood of this happening is substantial: nearly 50% for a launch by May and almost 100% within the next 12 months. "Ethereum, with its dynamic yield rates, environmentally friendly design, and utility in creating new financial markets, has strong potential for widespread institutional adoption. It is likely the only digital asset alternative to bitcoin that could receive clear ETF approval from the SEC," Bernstein suggests. Analysts believe that officials may be influenced by the fact that participants in the traditional stock market are not only looking to launch spot ETFs on Ethereum similar to bitcoin ETFs but also intend to "build more transparent and open tokenized financial markets on the ETH network, where the utility goes beyond mere asset accumulation."


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 February 26 - March 01, 2024​

EUR/USD: ECB Rhetoric Against the Dollar

Data on consumer inflation (CPI) in the US, published on February 13, exceeded expectations. The Producer Price Index (PPI) also indicated a rise in industrial inflation in the country. However, despite this, the American currency failed to gain additional support. The Dollar Index (DXY) began to decline from February 14, while EUR/USD steadily climbed higher.

The minutes of the latest FOMC (Federal Open Market Committee) meeting of the US Federal Reserve were published on Wednesday, February 21, serving as a reminder that the American regulator might not be in a hurry to lower interest rates. However, market expectations still dominate that the Fed will begin to ease its monetary policy significantly earlier than the ECB. This factor exerts serious pressure on the dollar, especially as such expectations are constantly fuelled by statements from high-ranking European officials. ECB Executive Board member Isabel Schnabel stated that monetary policy must remain restrictive until the regulator is confident that inflation has sustainably returned to the medium-term target level of 2.0%.

A similar stance was taken by Schnabel's ECB colleague, Bundesbank President Joachim Nagel. On Friday, February 23, he stated that "it is still too early to cut rates, even if this step might seem tempting to some." According to Nagel, the price forecast is not clear enough yet, and key data on price pressure will only be received in Q2, which is when it might be appropriate to consider lowering interest rates.

The Bundesbank head believes that the period of rapid inflation decrease has ended, some setbacks are possible ahead, and in the coming months, inflation will remain noticeably above the target level of 2.0%. (According to the latest forecasts by MUFG Bank, CPI in the Eurozone is expected to be 2.7% in 2024).

EUR/USD surged to 1.0887 on Thursday February 22 and then fell to 1.0802, due to uneven business activity (PMI) data across various Eurozone countries. Preliminary estimates showed that France's manufacturing PMI jumped from 43.1 to 46.8 points, exceeding the expected 43.5. The services index rose from 45.4 to 48.0, surpassing the anticipated 45.7. Significantly exceeding expectations, these indicators ignited investor risk appetite, encompassing not only stock indices but also purchases of the common European currency against the dollar.

However, the joy of euro bulls was short-lived, halted by the publication of Germany's PMI. The manufacturing index of this powerhouse of the European economy plummeted from 45.5 to 42.3, against a forecast of 46.1. The Eurozone's manufacturing PMI dropped from 46.6 to 46.1, contrary to the expected rise to 47.0. It's important to note that all these indicators are below the key horizon of 50.0, indicating an economic downturn. Only the services sector reached this significant threshold of 50.0. Overall, the Eurozone's composite PMI increased to 48.9, the highest since June 2023, but it still remains in the negative zone for the seventh consecutive month.

Regarding the situation on the other side of the Atlantic, these indicators suggest economic growth in the US. Preliminary data showed that the business activity indicator in the services sector was 51.3 points, and in the manufacturing sector, 51.5. On Thursday, the traditional number of initial unemployment claims in the United States was also published, decreasing from 213K to 201K over the week (forecast was 217K), indicating a strengthening labour market.

EUR/USD closed the last week at 1.0820. According to some analysts, the recent macroeconomic data suggest that the dollar's weakening is a temporary phenomenon, and the DXY is expected to return to an upward trajectory. Only extraordinary events in the economy or politics could prevent this. As of the writing of this review, on the evening of Friday, February 23, 50% of experts voted for the strengthening of the dollar and the fall of the pair. 30% sided with the euro, while 20% took a neutral position. Among the oscillators on D1, only 10% are coloured red, 15% are in neutral grey, and 75% are green, with 20% of them in the overbought zone. The balance among trend indicators is different: 35% are red, and 65% are green. The nearest support for the pair is located in the 1.0800 zone, followed by 1.0725-1.0740, 1.0695, 1.0620, 1.0495-1.0515, 1.0450. Bulls will encounter resistance in the areas of 1.0840-1.0865, 1.0925, 1.0985-1.1015, 1.1050, 1.1110-1.1140, 1.1230-1.1275.

Key events to highlight for the upcoming week include Tuesday, February 27, when updates on US durable goods orders will be released. Preliminary data on the American GDP volume for Q4 2023 will follow the next day. Data on retail sales and consumer prices (CPI) in Germany will be published on Thursday, along with the Personal Consumption Expenditures Index and labour market statistics in the US. Significant volatility can be expected towards the end of the working week. On the first day of spring, the annual inflation rate (CPI) in the Eurozone and the final figures of the Business Activity Index (PMI) in the United States will be disclosed.

GBP/USD: UK Economy Gains Momentum

Alongside business activity data from the US and the Eurozone, preliminary indicators for the United Kingdom were also released on Thursday, February 22. The UK's manufacturing sector Business Activity Index (PMI), though slightly below the forecast of 47.5, showed a modest increase from 47.0 to 47.1 points. The services sector indicator remained steady at 54.3. However, the composite PMI reached 53.3, surpassing both the forecast and the previous value of 52.9. Values in the green zone above 50.0 clearly indicate an improvement in the outlook for the British economy. It seems that the technical recession experienced in the second half of 2023 has ended or is at least close to ending.

In a previous review, we cited economists from Scotiabank's forecast that, starting from a strong long-term support zone of 1.2500, GBP/USD would begin to rise towards 1.2700. This prediction came true on 22 February, following the publication of the British PMI, as the pair reached a peak of 1.2709, returning to the very centre of the medium-term sideways channel of 1.2600-1.2800.

Favourable data on the UK economy and the recovery of global risk appetites should have a positive impact on the pound. In such a situation, strategists from the Japanese MUFG Bank write, "if the Fed and the ECB delay the timing of the first rate cut, then the Bank of England (BoE) will delay it as well." Recall that at the conclusion of the meeting that ended on February 1, the BoE announced it would keep the bank rate at its current level of 5.25%. The accompanying statement mentioned that "before lowering rates, more evidence is needed that the Consumer Price Index will fall to 2.0% and remain at this level." Market participants expect the first rate cut to occur in August. This expectation is already priced in and prevents GBP/USD from falling.

MUFG believes, "although the pound's correlation with global stocks has begun to weaken, it remains stronger than the dollar's correlation with risk. And if risk appetite persists, this could cause some strengthening of the pound." However, the bank's experts warn that some concerns about the growth of the British economy still remain, and this could restrain the growth of GBP.

GBP/USD closed the past week at 1.2670. As for the median forecast of analysts for the coming days, 65% voted for the pair's decline, while 35% supported its growth. Among the oscillators on D1, only 10% point south, 15% look east, and the remaining 75% point north, of which 10% signal overbought conditions. Trend indicators show a significant bias towards the British currency: 90% point north, with the remaining 10% pointing south. Should the pair move southward, it will encounter support levels and zones at 1.2635-1.2650, 1.2570, 1.2500-1.2535, 1.2450, 1.2370, 1.2330. In case of an increase, resistance will be met at levels 1.2695-1.2710, 1.2755-1.2775, 1.2825, 1.2880, 1.2940, 1.3000, and 1.3140-1.3150.

No significant macroeconomic data releases related to the UK economy are scheduled for the upcoming week.

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[Stan NordFX]

USD/JPY: To the Moon and Beyond, Mars is Next

The yield on 10-year US Treasury bonds, currently around 4.30%, continues to support the dollar against the yen, with its low yield and negative interest rates. USD/JPY once again rose above 150.00 last week and attempted to storm the 151.00 mark. Again, it was unsuccessful: the local maximum was recorded at 150.76, with the week closing at 150.52.

The caution of bulls on USD/JPY is largely due to the fact that the 150.00-152.00 zone was where the Ministry of Finance of Japan initiated currency interventions in October 2022 and November 2023. However, every trader knows that past results do not guarantee future performance. Thus, it is not certain that the Ministry of Finance and the Bank of Japan (BoJ) will follow the same path this time.

It should be noted that Japan's GDP has fallen for the last two quarters. A weak national currency supports exporters by making Japanese products more attractive and competitive in foreign markets, thereby stimulating the country's economy. This explains the reluctance of Japanese financial regulators to tighten monetary policy. According to Kazuo Ueda, the head of the BoJ, the question of maintaining or changing monetary policy, including the negative interest rate, will only be considered "when there is a chance of sustainable and stable achievement of the target price level."

As mentioned, the likelihood of a reversal in USD/JPY southward from the 151.00-152.00 zone is high, yet it remains less than 100%. Currently, the pair's rate is approximately 14% higher than a year ago. As some experts note, the financial authorities in Japan start to get nervous when this figure approaches 20% year-on-year. For now, they can feel relatively relaxed and comfortable, especially since the country's economy has already adapted to such an exchange rate over the past two years. Therefore, it's not entirely out of the question that instead of falling to 140.00 as expected by Danske Bank, we might see the pair reach heights of 160.00, as was the case 34 years ago in April 1990.

Regarding the near future, specialists at Singapore's United Overseas Bank believe that within one to three weeks, USD/JPY is likely to trade within the range of 148.70 to 150.90. However, UOB does not rule out that a breakthrough above 150.90 could trigger a rise to 152.00. At the time of writing this review, 40% of experts sided with the dollar, while the majority (60%) voted for the strengthening of the yen. Trend indicators and oscillators on D1 all point north, yet 10% of the latter are in the overbought zone. The nearest support level is located in the zone of 149.70-150.00, followed by 148.25-148.40, 147.65, 146.65-146.85, 144.90-145.30, 143.40-143.75, 142.20, 140.25-140.60. Resistance levels and zones are at 150.90, 151.70-152.05, and 153.15.

No significant events related to the Japanese economy are scheduled for the upcoming week.

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