Cryptocurrency market 9/2 CHK: Bitcoin falls below 23,000, financial markets are on fire

Bitcoin continues to fall below $23,000 after failing to break above the $23,500 area.

Cryptocurrency Market

Bitcoin is up 40% in January and continues to hold higher, generating breakout signals on various on-chain indicators.

Some analysts were cautious, choosing to wait and see if improving conditions persisted, but Franzen had his eye on data from the Williams %R oscillator. Williams %R is a momentum oscillator that measures BTC/USD price relative to its recent highs or lows. Momentum oscillators are used to measure the strength of price trends. As noted on Feb. 8 by senior market analyst at Cubic Analytics, Caleb Franzen, the Williams %R oscillator has left the bottom for the first time since May 2022.

Bitcoin’s 12-month Williams%R oscillator left the ‘oversold’ level at the close of January. In the past, a move away from the lower boundary has signaled two things: 1. The market has bottomed out. of the cycle. 2. The bear market is over.

The last time this signal occurred was in April 2019, with BTC/USD price then starting its journey out of the bear market bottom to establish an ATH in November 2021.

Experts describe the market as exhibiting “identical” behavior to Bitcoin’s late 2020 breakout, when it broke through its previous all-time high from 2017. The encouraging signs are also coming from economic sources. macro, notably the US Federal Reserve (Fed), as well as the “golden cross” event on the daily chart. Meanwhile, January saw a new influx of institutional investors into Bitcoin. Money flow into the market in the last week of the month has reached the highest level in the past 7 months.

The former BitMEX executive said that the first half of 2023 will be a good time to invest in the crypto space. As inflation and Fed rate hikes slow, the United States and the Fed, Congress, and the Treasury Department will steer the economy as they see fit. The point is that investors need to guess how these events will play out this year. For Hayes, 2023 can be split into two halves, with the first half of the year being the ideal investment environment for cryptocurrencies. This contrasts with an earlier thesis from mid-January, in which the former BitMEX CEO said he was on the sidelines out of fear that a Fed-led capitulation would affect risky assets. .

Hayes believes that Bitcoin may be far from recovering, despite having rallied 40% in January alone, comparing the risk-asset environment to 2009 and the beginning of quantitative easing.

This year, quantitative easing has given way to quantitative tightening, in which liquidity is removed from the US financial system at the expense of risky assets.

However, the first half of the year appears to be bringing some relief, with some liquidity having returned to the market. This could continue until Congress votes to raise the debt ceiling in the summer, which Hayes and others see as inevitable.

The altcoin market also gradually cooled down as Bitcoin continued to correct slightly below $23,000 yesterday.

SingularityNET (AGIX) is the project with the biggest drop in the top 100, evaporating nearly 21% of its value. However, on a 7-day timeframe, it is still one of the best performing altcoins, with a 3-digit rally. Render Token (RNDR), ImmutableX (IMX), Fantom (FTM), The Graph (GRT), Optimism (OP) are also major correction projects in the last 24 hours, with a plunge of more than 10%. Other projects such as dYdX (DYDX), Synthetix (SNX), Aptos (APT), GMX (GMX)… turned down from 6-8% on the day.

After failing to break above the $1,700 region yesterday, Ethereum (ETH) turned bearish, establishing a local bottom at $1,630 before bouncing slightly higher and is currently trading around $1,653, showing momentum. down 1.7% in 24 hours.

Macro factors

The US stock market rallied in Wednesday’s trading session (February 8), as investors turned their attention to the latest series of financial reports of listed companies and continued to weigh the prospect. monetary policy of the Federal Reserve (Fed). Crude oil prices rose for a third straight session as interest rate concerns temporarily eased.

At the close, the Dow Jones Industrial Average fell 207.68 points, or 0.65%, to 33,949.01 points. The S&P 500 index fell 1.11% to 33,949.01 points. The Nasdaq index slid 1.68% to 11,910.52 points.

Some listed companies witnessed a sharp drop in listed stock prices this session after announcing business results for the fourth quarter of 2022 that did not meet market expectations. Chipotle fell 5% while Lumen Technologies lost nearly 21% on a $3.1 billion quarterly loss and a worse-than-expected full-year forecast.

There were also some strong gainers such as CVS and Uber, with gains of 3% and 5% respectively thanks to better-than-expected results.

According to data from Refinitiv, up to now, 42 S&P 500 member companies have forecast declining profits for the first quarter of 2023; 8 companies have raised profit forecasts; while many other companies did not change their forecasts or make any forecasts. The percentage of businesses that make such a profit forecast is higher than the historical average, according to Refinitiv.

Of the 279 S&P 500 members that have released Q4 2022 financial statements so far, about 69% have outperformed analysts’ forecasts. Still, many analysts have lowered their expectations for the fourth quarter due to growing concerns about the health of the economy. Only 27% of the companies reported delivering results that fell short of expectations.

“This financial reporting season has generally been worse than usual. It takes time for interest rate hikes to affect corporate profits. Now it’s time for us to start seeing that,” Apollon Wealth Management chief investment officer Eric Sterner told CNBC.

Investors await further financial reports from companies including Walt Disney and Mattel to gauge whether there are any signs of a slowdown in consumption or a weakening economy.

In a development unrelated to earnings, shares of Alphabet – Google’s parent company – fell more than 7% as investors worried the company faced growing competition in the intellectual property space. artificial intelligence (AI).

The drop in US stocks was a reversal of Tuesday’s gains – a “green” session inspired by Fed Chairman Jerome Powell’s comments that inflation has begun to ease. Mr. Powell’s comments are no different from what he said in a press conference last week, thereby reinforcing investor expectations that the Fed will soon stop raising interest rates or even start cutting. interest rate.

However, Mr. Powell also warned that fighting inflation has a long way to go and the Fed will continue to have to raise interest rates. In addition, investors’ expectations about Fed policy continue to be dominated by US economic data.

“The market will continue to struggle because investors are still wondering what the Fed will do. We should expect volatility,” said Sal Bruno, chief investment officer of IndexIQ.

Fed officials on Wednesday continued to have mixed statements, making investors wonder. Governor Christopher Waller said hitting the 2% inflation target “will likely be a protracted battle”, while Governor Lisa Cook said January’s strong job growth raises hopes for the economy. soft landing”.

“The market is wondering, investors are wondering. Some investors are still cautious, while others have clearly become stronger,” Tim Ghriskey, chief investment strategist at Inverness Counsel, told Reuters.

World stocks fell on Wednesday, with the MSCI global index down 0.55%. In Europe, the regional market’s Stoxx 600 index lost 0.28% of its points, even though it reached a 9-month peak during the session.

The US interest rate futures market is reflecting the possibility that the Fed rate will peak at 5.132% in July this year, 0.25 percentage points higher than forecast last week. The market also forecast that by December, the Fed’s interest rate will drop to 4.813%, up 0.4 percentage points compared to a week ago.

In the oil market, interest rate worries seem to have calmed down, and the weakening dollar also contributed to an increase in oil prices. At the same time, energy prices remain supported by the prospect of strong demand in China.

At the close, the price of Brent crude oil futures in London increased by 1.4 USD/barrel, or 1.7%, to 85.09 USD/barrel. WTI oil futures in New York increased by 1.33 USD/barrel, or 1.7%, to 78.47 USD/barrel.

Oil prices have risen for three consecutive sessions since the beginning of the week, after falling sharply last week.

“The possibility of increased oil demand, coupled with the bleak outlook for global oil supply growth, will lead to a tightening in supply in the coming months,” PVM Oil trader Stephen Brennock told Reuters. .