Crypto Weekly Wrap: 12th July 2024
Bitcoin Awaits U.S. Inflation Data and Bond Market Cues
The cryptocurrency market is on edge, anticipating the upcoming U.S. Consumer Price Index (CPI) report scheduled for release at 12:30 UTC (8:30 ET). The CPI data is expected to show a 0.1% month-over-month increase for June, following a flat performance in May, with a year-over-year rise of 3.1%. The core CPI, which excludes volatile food and energy prices, is forecasted to have risen by 0.2% month-over-month and 3.4% year-over-year. These figures will provide crucial insights into the inflationary trends in the world's largest economy and potentially influence the Federal Reserve's (Fed) monetary policy decisions.
The anticipated CPI report could bolster the likelihood of Fed rate cuts, a scenario that typically benefits risk assets like Bitcoin. Lower rates increase market liquidity, attracting investors to higher-yielding, riskier assets such as cryptocurrencies. Bitcoin, which has seen a recovery from its July 5 lows of around $53,500, faces resistance at the $59,000 mark. Market participants are keenly watching the CPI release, which could set the tone for Bitcoin's next move.
Treasury Yield Curve and Bitcoin's Market Sentiment
The U.S. Treasury yield curve's reaction to the CPI data will also be critical for Bitcoin's market sentiment. A soft CPI release could lead to lower yields on the two-year Treasury note as investors anticipate rate cuts, while the 10-year note yield might remain elevated due to concerns over potential budget deficits. This dynamic could result in a "bull steepening" of the yield curve, where the spread between the yields on the 10-year and two-year notes increases. Historically, periods of bull steepening have coincided with economic contractions and risk aversion, posing challenges for equities and cryptocurrencies.
The current political climate, including the increased odds of a Trump presidency, adds another layer of uncertainty, with potential implications for inflation and fiscal policies.
Mt. Gox Repayments: Strategic Plays in BTC and BCH
In the midst of these macroeconomic factors, the cryptocurrency market is also navigating the ongoing Mt. Gox repayments. The defunct exchange is distributing substantial amounts of Bitcoin (BTC) and Bitcoin Cash (BCH) to creditors affected by the 2014 hack. The selling pressure on BCH is expected to be significantly higher compared to BTC, creating an opportunity for pair trading strategies.
Bitcoin Technical Analysis: A Crucial Juncture
Bitcoin's technical landscape is presenting mixed signals. Currently trading at $57,700, Bitcoin has rebounded from last week's low of $53,600 but remains in a downtrend from its March high of $73,800. The Profit and Loss Index hovering around its 365-day moving average is a critical metric, as previous downside crossovers have heralded major market corrections. Additionally, the lack of growth in Tether's (USDT) market cap, often a driver of bull markets, suggests limited immediate upside potential.
Source: TradingView
Despite these bearish indicators, Bitcoin whales are accumulating at the fastest rate in over a year, with large holders increasing their stash by 6.3% over the past month. This accumulation trend is a bullish signal, indicating that major investors see value at current price levels. Furthermore, the cessation of aggressive selling by Germany, which had been liquidating seized BTC, removes a significant supply-side pressure from the market.
Celestia's TIA Token: A Market Phenomenon
Celestia's TIA token has recently surged by 25% to $7.30, making it the top performer among the top 100 digital assets by market value. This rally has caught traders off guard, as funding rates in TIA perpetual futures remain negative, indicating a strong bias for short positions. This scepticism could lead to a short squeeze, driving prices higher as traders are forced to cover their bearish bets.
Celestia's role as a data availability layer for layer 2 networks like Orderly Network is a fundamental driver behind the token's recent performance. The network's ability to provide scalable and secure data storage solutions for decentralised applications underscores its growing significance in the blockchain ecosystem. The token's price momentum appears poised for further gains.
Source: TradingView
Goldman Sachs Expands Crypto Offerings
Goldman Sachs is preparing to launch three tokenization projects by the end of the year, reflecting increased demand from investors. This move signals a broader acceptance and integration of digital assets within traditional financial institutions. Goldman Sachs' digital assets global head, Mathew McDermott, emphasised that these initiatives are driven by investor interest and the transformative potential of tokenization.
The bank's renewed focus on crypto, including trading crypto derivatives and participating in the ETF markets, marks a significant shift. This expansion is contingent on regulatory developments, particularly post-election, which could unlock further opportunities for crypto-related products.
In conclusion, the cryptocurrency market is at a pivotal point, influenced by macroeconomic data, technical indicators, and strategic developments within the industry. Bitcoin's next move will likely hinge on the upcoming CPI report, Treasury yield curve dynamics, and ongoing market-specific events like the Mt. Gox repayments and institutional adoption by entities like Goldman Sachs.
Weekly Heatmap
Source: Quantifycrypto
Total Daily Volume
Source: CoinMarketCap
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