Last week, the crypto market cap grew by 3% from $1.084 trillion to $1.117 trillion. While little corrections and pullbacks were seen, they were very healthy. Most of the correction was in anticipation of continued or higher hawkish commentary from federal reserve chairman Jerome Powell. Ultimately the rate hike marked in at 25 bps as expected, and the commentary that followed was neutral to slightly accommodating. This created a decent environment for Cryptocurrencies and tech indices. The tech earnings announced this week have given good support to the tech indices like Nasdaq, and further strong earnings can provide support to the overall market as a whole too. NASDAQ was the main winner this week in percentage terms, while all major cryptocurrencies and altcoins saw good growth and experienced a good move to the upside.
Bitcoin Price Analysis:
When bitcoin fell below $20,500 less than two weeks ago, it appeared that the 2023 rally had come to a halt. However, the asset quickly recovered its losses and recorded new gains in the following days. The end of that week was especially impressive, with BTC rising from $21,000 to over $23,000. Last week’s price fluctuations were much lower, and BTC stayed mostly around $23,000, except for a spike to $23,800 on Wednesday last week. Yesterday morning, Bitcoin came close to $24,000 for the first time since mid-August of last year.
Yesterday, Bitcoin came close to the short-term resistance area between $24,000 and $25,000, but the bulls could not capitalize on the momentum. Due to possible short-term traders’ temptation to book profits, the price has decreased to $22,700. Price bouncing off of $22,700 would indicate that bulls have turned the level into support. That might raise the possibility of a rally to $25,000 However, given the significant macroeconomic data being released this week, if bears manage to lower prices below $22,700 once more, the correction may deepen to or near the psychological support level of $20,000.
Fundamental Updates
The markets experienced a good relief post Fed Chairman Jerome Powell’s commentary. The Federal Reserve’s statement emphasized their close monitoring of all relevant data and market conditions and affirmed their readiness to take prompt action as deemed necessary. A slight hint of multiple signs denoting a decent reduction in inflation was also given. The markets had been looking forward to this slight change in tone for a long time. As mentioned in our previous outlook, the current rate hike and meeting have set the tone for markets to have a slight breather for the upcoming few months. Still, the macroeconomic situation hasn’t fully changed yet; hence, regular retracements and pullbacks should be expected.
Along with decent earnings releases, a lot of other supporting data also worked in favor of the market. The Employment Cost Index q/q was marked at 1% Instead of 1.1%. A sharp decline in the ADP Non-Farm Employment Change became positive for the broader markets as it’s a major contributor to bringing inflation under control. The importance of managing and negating the wage growth spiral risk is something we have been conveying in our market outlook for a decent amount of time. This was a big question raised in the post Jerome Powell’s speech, and his answer had a high correlation with our commentary. The outlook on wage growth spiral control remains short and sharp, which can cause a huge impact on the market and hence should be avoided at any costs.
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattisaThe personal income and PCE data came in on the expected mark, with personal spending seeing a net decline which further instilled a decent confidence in spending being under control and getting better. While a good spending environment is needed for economic growth, a balance in prices and supply-demand needs to be established first so that it doesn’t lead to higher inflation from rampant spending. Next week the consumer credit m/m data is set to be released. The personal and credit card debt numbers are already near all-time highs. While the immediate effect on the market might not be evident immediately, it’s a big issue that needs to be addressed at the macro level., pulvinar dapibus leo.
Bitcoin returns were 2.49% for this week. The Alpha Blue Chip Focused Strategy returns were 11.65% during the same period (26 JAN – 2 FEB). The Top Cap Digital Assets Strategy and Arbitrage and Balanced Opportunities Strategy returns were 4.88% and 2.52%, respectively.
