WEEK #7 - 2023
QUICK UPDATE ¦ CPI and FED ¦ CRYPTO UNDER ATTACK ¦ PRICE LEVELS TO WATCH
This will be a short one for those that do not follow me on Twitter (I share updates more frequently as I see anything important developing, so I strongly recommend you click the button below and follow me), to give you a quick look at what happened recently and what to watch out for this week.
CPI and FED
Valentine’s day comes with tons of volatility courtesy of CPI data and with new weights on certain areas of what makes up CPI numbers, we have already seen revised data for previous MoM to the upside. Some think it has a good chance of data coming in hotter than expected which in turn would seriously dent any hopes for bulls of sustaining the rally that started in January.
Last week in the stock market has seen the first red candle, after some wild intra-day swings. Fed members apart from Jerome Powell, were swinging right and left with their hawkish comments on rising interest rates higher and keeping them there longer (so nothing new really but the risk on markets still do not really believe this rhetoric), despite that #SPX and other indexes pushed up strongly on Monday as it’s been quite common in the last few months leading up to CPI data release.
Currently, markets are betting against FED’s promise of no pivot this year, with the most likely scenario of 25pts hikes in each of the next 2 FOMC meetings. That view might change very quickly tomorrow and/or, if next month we will also see a surprisingly resilient jobs market just like this month.
CRYPTO UNDER ATTACK
No, not by aliens as one could think looking at what is trending on social media these last few days, but what seems to be a coordinated “attack” by SEC, OCC and FED. All actions of course under the cover of “protecting the customers”, by discouraging any financial institutions from engaging crypto market and punishing existing participants like Kraken, Paxos and likely many others in line to get hit in the next few weeks.
In short, so far BUSD stablecoin has been deemed a security and Paxos ordered to cease any further issuance which already caused a slight de-pegging of BUSDUSD. Binance confirmed they will start to wind down any trading pairs using BUSD, so this is serious and if you do hold BUSD, please do yourself a favor and swap while you still can.
Next in line is rumored to be Circle, issuer of USDC, but no guarantee others like Tether won’t follow. It will be interesting to see where the money will flow, whether back into Fiat (although there are obstacles there now with Binance.US users not allowed to withdraw/deposit amounts smaller than 100k$ and some reporting other issues in other Binance jurisdictions instances too).
US crypto investors using Kraken are no longer allowed to stake and whether this will flow to other regions and countries only time will tell, but there were comments in that vain during G20 meetings. While I agree crypto needs regulation, this is not how it should be done and I feel it will only increase the risk for consumers that will try to navigate around the strict measures and fall for high-risk high yield “opportunities” in Defi.
TA and ON-CHAIN
Unfortunately, that is all the time I have today, so no detailed chart analysis. For those interested in on-chain I have written a “quictake” on Stablecoin inflows last week and you can find it here.
As for the likely price targets on BTC and ETH, a lot depends on what CPI reading we will see tomorrow and when the next anti-crypto actions surface.
BULLISH CASE - CPI lower than expected and no immediate SEC or other agency actions against digital assets market participants
BTC up to 23.5-25k (we still have not reclaimed 200 Weekly MA, though considering the first ever death cross for Bitcoin, this might not happen so soon unless stock market goes parabolic)
ETH back in 1600-1700 range
BEARISH CASE - CPI higher or as expected and further announcements vs Circle or other crypto projects
BTC has several important levels, but at minimum, I would see it dropping to the 19.5-20.5k range
ETH down to 1250-1350, but considering its recent weakness I would not rule out going below 1200
Stay safe, and watch out for UFOs and other low/high-flying objects tomorrow, especially CPI ;)