Market Fundamentals Analysis
A flattish NY equity session led to a mildly firmer weekend that saw BTC and ETH reclaim C$38k and C$2.5k respectively. We continue to trade in a range-bound fashion given the lack of catalysts and look forward to this week’s US GDP and CPI release. Equity futures are trading firmer at about 1% higher this morning.
Spot over the weekend traded firmer with flows skewed towards better buying in majors, particularly sub-C$ 38k BTC and C$2.5k ETH although the overall volume remains fairly light. LUNA and its ecosystem the notable weekend outperformer, after the latest governance, hit the required votes, with a new Terra network to be formed on May 27. Derivs continued to see gamma better bid, particularly in alts like SOL and AVAX. Liquidity is still thin but slowly improving. We started seeing some topside interest given the cheapness of calls relative to put. Lending continues to remain active in two ways.
Last week, Bitcoin traded lower seven-weeks in a row for the first time in history. Traders who were bearish two months ago feel vindicated, and traders who were bullish are embarrassed to have been so. There are myriad reasons the price has moved lower: pressure from the Fed, melting tech stocks, the LUNA blowup, etc. However, the market is a machine to take inputs and pushes out a price which reflects them. All of those catalysts are reasons why Bitcoin has traded lower for the last seven weeks, but they are not necessarily the reasons it will continue lower in the next seven. In a difficult market, it's always best to own assets that one is ok with owning even if the timing doesn't work, supported by strong fundamentals. ETH has strong, deflationary fundamentals with the healthy yield coming, perhaps as soon as August, so even if you catch the knife too early, it's one that feels worth hanging onto.
In the macroeconomic sense, stocks did their best to rebound from one of their worst trading days in recent months but ultimately slid further at the close last week. It was a choppy day in the market for both crypto and equities, but even with the volatility, we saw muted trading volumes which seem to be a recurring theme for this week. BTC and ETH have bounced off recent lows trading higher over the course of the day both up over 2% in the last 24hrs. Even on a slow day, interestingly we saw interests/spot flows come through on a myriad of assets with a skew to selling. For borrow/lending flows, we were active as usual in majors, USD, but also saw pockets of interest in SOL, AVAX, and DOGE. Turning towards derivatives, it was a quieter day week. We head into the week with BTC pinned to C$38k thanks to dealers flush with gamma here.
The market seems to still be in a consolidatory phase, with no indication coming in as to which it might head. The macroeconomic outlook is also uncertain which in turn puts bearish pressure on the assets. Most assets are fluctuating around their crucial support levels, but the silver lining has been the fact that none of them have broken below that, and have taken the plunge. The next few days remain crucial, for a recovery to set in, inflows need to see an upside, along with strong volumes, being led by BTC.
Weekly Snapshot
Market Updates
- “The African Blockchain Report 2021,” shows that blockchain startups were able to raise $91 million within 2022's first quarter.
- The United Kingdom’s Economic and Finance Ministry announced in April that it would work to incorporate stablecoins into a regulatory framework on digital assets.
- The latest metrics on new registrations and renewals of existing domains on ENS show that interest in the digital identity service has shattered previous records.
- Near Protocol picks up the slack, and onboards Tracer following Terra’s downfall.
Bitcoin Technical Analysis
Bitcoin has traded in red for the past seven weeks in a row, for the first time in history and the prices have plunged almost by 33% making the low of C$33,095. However, the asset is taking good support at the key level of $35,500 and has shown signs of recovery. Currently, on a daily time frame, BTC is consolidating and trading in a range from C$37,000 to C$40,500 with declining volumes. Breakouts on either side with good volumes will further decide the trend for the asset. The RSI is rising from oversold levels. To witness a rally, Bitcoin needs to trade and close above C$41,000 whereas C$35,500 act as strong support.
KEY LEVELS:
For the latest cryptocurrency prices, check out NDAX's Markets page.
Disclaimer:
Information provided in the weekly market report is for information purposes only and should not be interpreted as investment, legal, or tax advice. Prior to investing, it is very important to evaluate your investment objectives and your risk tolerance carefully. This technical report is not meant to provide guarantees of future performance, and users should not rely on it, as the actual performance and financial results may differ significantly.