By Rubikav® on The Capital
Investors this week will remain focused on the risks of rising US-China tensions and developments in Washington over the next round of Coronavirus pandemic relief.
Market participants will also be keeping an eye on the dollar, which despite a rebound after Friday’s U.S. jobs report posted its seventh consecutive weekly loss, the longest such streak in a decade.
On the economic calendar, we will see weekly jobless claims numbers on Thursday, followed by July retail sales numbers on Friday. China will also release a battery of economic data that will be closely followed and the results season will enter the final stretch.
This is what you need to know to start your week and according to the principal newspapers.
Strong Resistance
The weekly close of the CME was exactly at $ 11,800 with the creation of a new GAP. We radically closed a new week, strongly breaking the main downward trend line that supported the market since the historical high of 2017.
Really now the bears are going to have to cry literally. The bear market is over and we are ready to see what will be the beginning of a great wave of a new economic cycle that we believe will reach the price of 100k.
For now, we have a weekly Bitcoin close above 50% of the Fibonacci support line and we believe that the next step will be the touch of 38% of the Fibonacci retraction line within a wave 3 that we are confirming today and exactly in the price of 13,373 USD and with an approximate appreciation of 13%.
Trading volumes very quiet, but at any moment we will see how the big players will make their move.
On the indicator side, Bitcoin begins to enter an overbought zone, which indicates that at any moment we can see a small correction that could be triggered up to $ 10,878 with the touch of the resistance line that marked the historical downtrend.
Bitcoin Market Health
According to the last report made by glassnode, Bitcoin had another high-performing week, starting out Week 32 at around $11,100 and ending the week at $11,650. As of Monday morning, it has spiked up even further and is currently hovering slightly below $12,000.
Bitcoin on-chain fundamentals decreased slightly throughout Week 32, with GNI slipping down to 69 points from 73 the previous week. This drop was due to slight decreases in on-chain fundamentals across all subindices — but overall on-chain health remains intact.
Network Health lost 5 points over the past week but remains strong at a score of 84 points. Network activity suffered slightly more than network growth during Week 32, as on-chain transactions slowed down relative to the previous week.
Liquidity also saw a slight decrease, losing 3 points due to a drop in the transaction liquidity subcategory. This, in turn, was caused by the above-mentioned decrease in the number of on-chain transactions over the past week. However, overall transaction rates remain high relative to pre-bull market levels.
Sentiment dropped by 4 points during Week 32, as the saving behavior subcategory continued to drop. This was caused by a decrease in the rate at which hodlers are acquiring BTC — but this figure is still in the positive numbers, meaning that hodlers are still doubling down on BTC, but at a slower rate due to the increased price.
Many Satisfied With Gold Rise
Gold bugs have been rejoicing in recent weeks and for good reason; the yellow precious metal broke to a new all-time high in USD terms last week and just breached $2,000/oz for the first time yesterday and reported Delphi Capital.
As we’ve noted, the latest dollar weakness coupled with deeply negative real yields has created a perfect storm for gold and precious metals more broadly and is a key reason we’ve been bullish on the sector for quite some time.
Gold’s latest surge puts it among this year’s best performing assets, outpacing global equities by 34 percentage points. Its 35% gain year-to-date through August 6th is also its best since the early 1970s.
Another thing is that real rates hold the key to asset prices in the short-to-medium term. The real yield on 10-year US Treasuries recently fell to a new low (-1.07%) as nominal yields rolled over; the latter just broke below key support, indicating further declines could be in store.
As a result, long-dated bond prices (measured by the iShares 20+ Year Treasury Bond ETF) are threatening to break out to new highs if yields fall further.
Once again, investors find themselves grappling with raging equity valuations on one hand and glaring warnings from the bond market on the other.
Market participants aren’t fully convinced the worst is behind us but the fear of missing out on further stock gains has left many with their foot halfway through the door. Ironically, the collapse in bond yield sits at the center of the bull case for equities; lower discount rates translate to higher valuations while paltry Treasury yields force investors further out the risk curve in search of higher income streams.
Last time we saw a similar divergence between US equities and Treasury yields, the bond market turned out to be right.
Dollar Weakness
The US dollar rebounded on Friday after July employment figures helped ease some investor concerns in the US labor market as reported investing, but the currency posted a seventh straight week of declines.
While the U.S. economy added 1.76 million jobs a little more than expected last month, it was still much lower than the record 4.8 million in June.
Sentiment has turned against the dollar due to a combination of rising coronavirus infections in the US, a steady decline in Treasury yields, and a lack of consensus in Washington on additional stimulus.
Analysts say the dollar will continue to decline, particularly against the euro, the yen and the Swiss franc, as expectations for a V-shaped recovery from the pandemic fade and investors take a more optimistic view of the markets.
“I see further weakness in the dollar,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
“Optimism for an economic recovery is not supported by the data. Safe havens are very high, but stocks are also high, which doesn’t make sense. The party has to end at some point.”
Crypto Derivatives In Demand
Options interest and volumes reach their all-time highs, with derivatives markets exploding as market sentiments remain bullish on Bitcoin and Ethereum as reported by Cointelegraph. And According to TokenInsight’s recent crypto derivatives industry report, trading volumes are seeing a 166% year-on-year increase compared to Q2 2019.
The derivative products driving these volumes are futures and options. While futures grow with traders betting on a bullish price sentiment, both open interest and volumes of options have reached all-time highs.
This all-time high seen the day before its expiration on the last Friday of the month could often mean the increasing acceptance of options and structured products, especially considering the record OI’s hit even on CME, which is the largest derivatives exchange in the world.
See you in the next story! With love ? Rubikav® Team!
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