Fed Expectations & Risk Appetite
Following heavy losses over the prior fortnight, crypto sentiment has recovered this week with BTC futures ending the week firmly higher. A better tone to risk markets ahead of next week’s FOMC meeting has helped drive demand back into BTC. Despite a mixed reaction to recent labour market and inflation data, the US Dollar trailed off through the end of the week as traders perceived a higher likelihood of a deeper rate-cut next week in response to comments from former FOMC member Dudley, as well as reports in the FT and WSJ. Traders have ramped up their bets on a larger Fed cut next week with pricing now evenly split, creating plenty of volatility risk for markets next week.
US Elections Uncertainty
Away from the focus on the Fed, uncertainty ahead of the US elections is also impacting BTC. A downturn in expectations for a Trump win have hindered BTC recently. Given that Trump is seen as the more pro-crypto candidate, weaker polling results have fuelled disappointment among crypto traders who, over early summer, had been buying into crypto, optimistic of a Trump win. Still, given the broader pick up in risk appetite this week, many players point to the fact that either candidate winning is likely to fuel a fresh rally in crypto simply through adding clarity and putting an end to pre-election uncertainty. As such, the near-term outlook looks favourable again for BTC with Fed easing and the US elections expected to add support for crypto over the remainder of the year.
Technical Views
BTC
The sell off in BTC has stalled for now into a test of the 53,525 level with price since bouncing and breaking back above 57,215. This is a key pivot for the market (monthly open) and while above here, the focus is on a further push higher towards the channel highs. 60,695 offers initial resistance for bulls.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.