Daily Market Analysis and News From NordFX

CryptoNews of the Week


- The number of “whales” among bitcoin holders, whose capital exceeds 1000 BTC, is rapidly declining. This figure has already reached its lows since the beginning of the year. At the same time, the volume of cryptocurrency on the exchanges, on the contrary, is at its maximum over the past three months. According to Glassnode analysts, the average volume of coin inflows to centralized exchanges is now hovering around 1755 BTC.
All this is happening against the backdrop of a rapid fall in the price of the coin: BTC set a new local low at $29,730 on May 10. This is the lowest result in 2022 and is more than 54% below the all-time high. The pressure on the market is exerted by the coin holders themselves, who, due to panic, are ready to get rid of them even at a loss. Crypto Fear & Greed Index has fallen to 10 points out of 100 possible, firmly entrenching itself in the Extreme Fear zone.

- The next few quarters will be volatile for the market due to the negative situation on Wall Street, which will jeopardize the support levels of $30,000 for bitcoin and $2,000 for ethereum. This point of view was expressed by Galaxy Digital founder Mike Novogratz.
As of March 31, Galaxy Digital had $2.7 billion in assets under management, down 5% from its December 31 estimate. Galaxy Digital's net cumulative loss was $111.7 million for January-March, compared with a profit of $858.2 million for the same period last year. This is largely due to losses on digital assets.
“Until we reach a new equilibrium, digital assets will continue to trade in close correlation with the Nasdaq. My intuition tells me that there will still be a drawdown ahead, and this will occur in a very unstable, volatile and complex market,” Mike Novogratz explained. He warned that the negative scenario could be realized if the Nasdaq index fell below 11,000 (12,500 at the time of writing).

- ARK Invest CEO Cathie Wood believes that the growing correlation between cryptocurrencies and traditional assets indicates that the bearish trend will end soon. The businesswoman opined that the depreciation of bitcoin along with the traditional market is a temporary phenomenon: “Cryptocurrency is a new asset class that should not follow the Nasdaq, but that is what is happening. We are currently in a bearish trend where all assets are moving in the same way and we are seeing one market after another capitulate, but cryptocurrencies may be close to completing it.”
The head of ARK Invest believes that the cryptocurrency market will grow exponentially as traditional assets collapse. “The current recession in the stock and bond markets, commodities and cryptocurrency markets is causing negative sentiment among investors. But look at our research… I can’t even tell you how confident we are that our products will change the world and are already on an exponential growth trajectory.” According to Wood, blockchain is in a technology sector that will grow more than 20 times in the next seven to eight years.

- The first cryptocurrency can be very successful, but it can also fail, so betting solely on it is risky. This opinion was expressed by a veteran of the bitcoin industry, a 2020 US presidential candidate, billionaire Brock Pierce in an interview with Fox Business. “Bitcoin could drop to zero. This is a binary result. Either there will be $1 million per BTC, or zero,” he said.
Pierce believes that the current “cryptocurrency landscape” is very similar to the history of the tech companies' bubble. “The situation is very similar to 1999. The market is now in the same phase. So what happened then? After the dot-com bubble, eBay, Amazon and other interesting companies appeared, but a lot of businesses went bankrupt. But this does not mean that digital assets are unrealistic and will not play an important role in our collective future,” the billionaire said.
Pierce admitted that he diversified his portfolio, primarily through ethereum. He also placed a “nine zeros” bet on EOS, converting all of his Block.one shares into cryptocurrency.

- Self-proclaimed creator of the main cryptocurrency, Australian computer scientist Craig Wright has sued cryptocurrency exchanges Coinbase and Kraken. This was reported by the law firm Ontier. He claims that these platforms misrepresent information by offering Bitcoin Core asset to customers under the guise of Bitcoin. According to Wright, the only digital asset “that remains true to the original bitcoin protocol” is Bitcoin Satoshi Vision.
“These and other exchanges have encouraged investors and consumers to trade and invest in Bitcoin Core, passing off this asset as bitcoin, despite it being created in 2017 as a software implementation that is different from the bitcoin protocol established by Dr. Wright when creating the electronic money system more than 13 years ago,” Ontier said in a statement.
Recall that Craig Wright himself claims that he is Satoshi Nakamoto, the mysterious inventor of bitcoin. According to Wright, he helped create the first cryptocurrency with his friend, the late computer security expert Dave Kleiman.

- BTC is a good insurance against inflation, but not a full-fledged alternative to gold. This position was expressed by the founder of the hedge fund Bridgewater Associates, Ray Dalio. The billionaire pointed to the obstacles to making bitcoin a reserve asset: “Transactions can be traced. They can be controlled, canceled and made illegal.” At the same time, the businessman expressed optimism about the prospects for the digital industry in the next ten years.

- Bank Of America, on the contrary, questioned bitcoin as a means of escape from inflation. The first cryptocurrency correlates well in its price behavior with the dynamics of the stock market since July 2021. Bitcoin's correlation with the S&P 500 hit an all-time high on January 31. The new all-time high was also close in correlation with the Nasdaq 100. In contrast, the price relationship between bitcoin and gold has been gradually weakening since 2021 and has turned negative in the last two months. The bank’s specialists emphasized that this trend “became obvious”, so bitcoin is not a full-fledged replacement for gold.

- The crypto community celebrated another mini-anniversary on May 5: bitcoin has overcome exactly half of the way to its next halving. It happened on block 735,000. Halving is reducing mining rewards by half. The event takes place every 210,000 blocks, or approximately every four years. At the same time, the rules of this procedure are written in the cryptocurrency code, which means that it is impossible to influence it without the consent of the majority of blockchain users. There are a little less than 105 thousand blocks left until the next such event.
Halving cycles are one of the main mechanisms of the bitcoin network, which involves halving the BTC reward for miners. Accordingly, the issue of bitcoins is also halved since miners' rewards are the only source of issuing new coins.
From the inception of bitcoin to the first halving, miners were rewarded with 50 BTC per block. Then the amount in bitcoins was reduced to 25 BTC, and in the next cycle to 12.5 BTC. Currently, miners receive 6.25 BTC for mining a block.
The halving date can be predicted to within a couple of days, because the block production time fluctuates around 10 minutes. The previous halving took place on May 11, 2020, and the next one will take place approximately in April 2024.
Halvings are considered very important events for another reason: as observations show, the explosive growth in the price of BTC is associated with them. So, before the first halving, BTC cost about $127, before the second, its price rose to $758, and before the third, to $10,943.


Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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Forex and Cryptocurrencies Forecast for May 16 - 20, 2022


EUR/USD: On the Way to 1.0000


The dollar continues to rise, while the EUR/USD pair continues to fall. The DXY dollar index crept close to 104.9 on Thursday, May 12. The last time it climbed this high was 20 years ago. The pair found the bottom at the level of 1.0349, in the area of the lows of December 2016 - January 2017. A little more, and following DXY, it will get to where it traded 20 years ago. And there, parity 1:1 is just a stone's throw away.

The reason for the next strengthening of the US currency was, as usual, two factors: the recovery of the labor market and the growth of inflation. It is these factors that determine the pace of tightening monetary policy by the Fed.

According to the forecast, US jobless claims should have shown a slight increase. But the actual data, released on Thursday May 12, showed that the situation in the labor market is much better than expected. The number of initial requests has grown, but not by 3K, as predicted, but only by 1K. The number of repeated requests, instead of increasing by 3K, decreased by as much as 44K.

A day earlier, on May 11, inflation data appeared. The core consumer price index in the US increased by 0.3% in April and amounted to 0.6%. This growth is much less than the 1.2% increase in March. But this does not mean at all that inflation in the country has reached a peak and will only decrease further. Not at all. Oil prices remain above $100 a barrel, pushing up the cost of goods, transportation costs and household spending. New cars increased in price by 1.1% in April (only by 0.2% in March), while airfare prices rose by 18.6% over the month, showing the largest increase in 60 years. In addition, with a high degree of probability, a series of lockdowns in China due to a new wave of coronavirus will lead to problems with logistics and commodity exchange, which will not help reduce inflation either.

The combination of these factors suggests that the US Federal Reserve is unlikely to change its plans to tighten monetary policy: to reduce the balance sheet and raise rates. Following the head of the regulator Jerome Powell, his colleagues in the FOMC - the head of the Federal Reserve Bank of Cleveland Loretta Mester and the head of the New York Fed John Williams supported the intention to raise the federal funds rate by 0.5% at each of the two upcoming meetings, bringing it to 2.0%.

As for their counterparts on the other side of the Atlantic, the ECB's key figures advocating a start to raise interest rates are still in the minority. Most members of the Board of Governors of the Bank are still convinced that the increase in inflation in the Eurozone is a temporary phenomenon, caused primarily by rising energy prices due to sanctions against Russia, which invaded Ukraine.

As a result, a powerful divergence between the clearly hawkish position of the US Fed and the indistinctly dovish position of the ECB continues to push the EUR/USD pair down, forcing new multi-year lows.

At the moment, analysts' voices are divided as follows: 70% of analysts are confident that the dollar will continue to strengthen, the remaining 30% are waiting for the pair's correction to the north. At the same time, when switching from a weekly to a monthly forecast, the number of those voting for the growth of the pair increases to 80%. All 100% of the indicators on D1 side with the dollar, after another fall of the pair. However, 20% of oscillators are in the oversold zone. The nearest resistance is located in the zone of 1.0420, the next target of the bulls on EUR/USD is a return to the zone of 1.0480-1.0580. If successful, they will then try to break through the resistance at 1.0640 and rise to the zone of 1.0750-1.0800. For the bears, the number 1 task is to update the May 13 low of 1.0350, after which they will storm the 2017 low of 1.0340, below are only the support of 20 years ago.

As for the calendar for the coming week, we recommend paying attention to the publication of data on prices and volumes of retail sales in the US on Tuesday, May 17. The speeches of the heads of the ECB Christine Lagarde and of the Fed Jerome Powell are expected on the same day. The Eurozone Consumer Price Index will be known on Wednesday, May 18, and data on manufacturing activity and the state of the labor market in the United States will be received on Thursday, May 19.

GBP/USD: GBP Rate Hike Is Possible, But Not Obvious

As mentioned above, the DXY dollar index has reached 20-year highs. According to experts, it has risen by 5.1% over the past 4 weeks. At the same time, the GBP/USD pair fell 7.4%, outperforming the average by 2.3%. However, not everything is so bad for the British currency.

The Bank of England predicted a rise in inflation from the current 7.0% (30-year high) to 10.25% at its meeting on May 05. And although the regulator left the forecast for GDP growth for the current year unchanged (+3.75%), it expects a recession starting from the Q4. The British Central Bank expects a 0.25% reduction in GDP in 2023 instead of the previously planned growth of 1.25%. According to the new forecast, GDP will grow not by 1.0%, but by only 0.25% in 2024.

This scenario, of course, cannot be called optimistic. However, a week later, on May 12, statistics showed that the country's GDP in the Q1 rose by 8.7% year-on-year, seriously exceeding the previous figure of 6.6%. This dynamics gives investors hope that the regulator will not stop at the current interest rate of 1.0%, and like the Fed, it will go on further raising it in order to fight inflation. And this, in turn, will support the British currency. Or at least keep it from sliding further down.

GBP/USD hit a weekly low at 1.2154, with the last chord at 1.2240. In case of further correction to the north, the pair will have to overcome the resistance in the zone 1.2300-1.2330, then there are zones 1.2400, 1.2470-1.2570, 1.2600-1.2635, 1.2700-1.2750, 1.2800-1.2835 and 1.2975-1.3000. When moving south, the first support will be the level of 1.2200, then 1.2154-1.2164 and 1.2075. A strong point of support for the pair is at the psychologically important level of 1.2000. 85% of experts vote for further weakening of the British currency, 15% expect a rebound upwards. And here it should be noted that when switching to forecasting until the end of the June, the number of the pair's growth supporters increases to 75%. There is still a total advantage of the red ones among the indicators on D1: 100% among trend indicators and 90% among oscillators look down. The remaining 10% among the latter have turned north.

As for the events of the upcoming week concerning the economy of the United Kingdom, we can highlight the publication of data on unemployment and wages in the country on Tuesday May 17. The new value of the Consumer Price Index will become known on Wednesday, May 18, and retail sales in the UK for April at the end of the working week, on Friday, May 20.

USD/JPY: From Return on Capital to Its Safety

The Japanese yen performed better last week than its "colleagues", the euro and the British pound. As most experts expected, the bulls tried to renew the April 28 high at 131.24. However, having risen only 10 pips higher to 131.34, they gave up, and the USD/JPY pair flew down, finding support only at 127.51. Undoubtedly, the current volatility of the pair is impressive: the weekly trading range was 383 points. This is despite the fact that it hovered around 150 points on average in the Q4 2021 - the Q1 2022. The finish of the last week took place in the central zone of the indicated range, at the level of 129.30.

Barring volatility during the coronavirus pandemic, the USD/JPY drop on Thursday May 12 was the biggest one-day swing since 2010. The strengthening of the Japanese currency, according to a number of experts, was due to the increased craving of investors for the most risk-free assets. Up to this point, the dollar has risen on the back of rising interest rates and higher yields on 10-year US Treasury bills. However, if investors continue to prefer capital preservation over returns, USD/JPY will continue to fall.

The yen was also strengthened by the expectation of changes in the policy of the Bank of Japan. Many investors, especially foreign ones, are expecting that, despite the regulator's assurances of commitment to an ultra-soft monetary policy, it may still go for an increase in interest rates. Moreover, there have already been such precedents, albeit in the opposite direction. Markets remember 2016, when the head of the Central Bank, Haruhiko Kuroda, first denied the possibility of introducing negative rates categorically, and then suddenly decided to take such a step.

At the moment, experts' forecasts look as uncertain as the pair's quotes. 40% vote for its growth, 50% are in favor of the fall of the pair and the remaining 10% have taken a neutral position. There is a similar discord among the indicators on D1. As for trend indicators, 65% are green, 35% are red. The oscillators have 40% on the green side, 25% on the red side, and 35% hve turned neutral gray. The nearest support is located at 128.60, followed by zones and levels at 128.00, 127.50, 127.00, 126.30-126.75, 126.00 and 125.00. The goal of the bulls is to rise above the 130.00 horizon and renew the May 05 high at 131.34. The January 1, 2002 high of 135.19 is seen as the final goal.

Data on Japan's GDP for the Q1 of this year will be published next week, on Wednesday, May 18. It is expected that this indicator will decrease by 0.4% from the previous value of 1.1%.

continued below...
 
CRYPTOCURRENCIES: "$1 Million per BTC, or Zero"

If you read the headlines of the last week, you get the strong impression that the cryptocurrencies have only a few months left to live, if not days. “Crypto Market Massacre”, “Bitcoin Requiem”, “Crypto Bubble Burst” are just some of them. But is it all that scary?

Indeed, the market suffers very serious losses. Bitcoin has lost about 45% of its value since the end of March, hitting $26,580 on May 12. Most other coins feel even worse. As has been said many times, the cause of panic is the global drop in investor risk appetite. The crypto market only follows in the wake of the stock market: the correlation between digital asset quotes and stock indices S&P500, Dow Jones and Nasdaq is at its maximum.

The tightening of the monetary policy of the US Federal Reserve, new outbreaks of coronavirus in China, fears about the future of the EU economy: all this has led investors to prefer the dollar over risky assets. An additional driver is rising yields on 10-year US Treasury bonds. This figure has almost doubled since March and rose over 3%: to the highest level since 2018, exceeding the returns of most sectors of the US stock market.

In addition to global factors, the collapse of the third largest stablecoin in terms of capitalization, UST, put additional pressure on the crypto market. It is believed that stablecoins serve to facilitate investment transactions and should be pegged to the real dollar in a ratio of 1:1. The price of UST immediately collapsed to $0.64, casting doubt on the ability of the Terra team to maintain its rate. Against the backdrop of problems with UST, the native Terra LUNA token also went down, losing more than 90% of its price. It cost about $120 back in April, but you can buy it for $5 now. And here it must be borne in mind that the Terra blockchain protocol is a fairly large project that was in the TOP-10 in terms of market capitalization.

The fate of the centralized stablecoin Tether with a capitalization of $82 billion causes some concern as well. An audit of this project conducted in 2021 showed that instead of dollars, which should provide a reserve for the project, there are a lot of securities in the accounts. Against this background, the sale of USDT has intensified: its capitalization has decreased by $1.4 billion in recent days.

The total capitalization of the crypto market continues to fall. At the time of writing this review, Friday evening, May 13, it is at $1.290 trillion ($1.657 trillion a week ago). The Crypto Fear & Greed Index has fallen from 22 to 10 points out of 100, firmly entrenched in the Extreme Fear zone. The BTC/USD pair, after a slight upward rebound, is trading around $30.150. The low of the week, as already mentioned, was fixed at $26.580. The last time the pair was so low was in December 2020.

The number of "whales" among bitcoin holders, whose capital exceeds the bar of 1000 BTC, is rapidly declining. This figure has already reached its lows since the beginning of the year. At the same time, the volume of cryptocurrency on the exchanges, on the contrary, is at its maximum over the past three months. According to Glassnode analysts, the average volume of coin inflows to centralized exchanges is now hovering around 1755 BTC.

Galaxy Digital founder Mike Novogratz expressed doubt that the bulls will be able to defend the $30,000 support levels for bitcoin and $2,000 for ethereum. “Until we reach a new equilibrium,” he wrote, “digital assets will continue to trade in close correlation with the Nasdaq. Intuition tells us that there will still be a drawdown ahead, and this will occur in a very unstable, volatile and complex market.” Mike Novogratz warned that the negative scenario could materialize if the Nasdaq index falls below 11,000 (it hit 11,688 on May 12).

Gold apologist, billionaire Peter Schiff, predicted the main cryptocurrency to collapse below $10,000. And another billionaire veteran of the bitcoin industry, 2020 US presidential candidate Brock Pierce said in an interview with Fox Business that it can be very successful, but it can also fail. “Bitcoin could drop to zero. Here is the binary result. Either there will be $1 million per BTC, or zero,” he said.

Pierce believes that the current “cryptocurrency landscape” is very similar to the history of the tech companies' bubble. “The situation is very similar to 1999. The market is now in the same phase. So what happened then? After the dot-com bubble, eBay, Amazon and other interesting companies appeared, but a lot of businesses went bankrupt. But this does not mean that digital assets are unrealistic and will not play an important role in our collective future,” the billionaire said. Pierce admitted that he diversified his portfolio, primarily through Ethereum. He also placed a “nine zeros” bet on EOS, converting all of his Block.one shares into cryptocurrency.

Unlike other influencers, ARK Invest CEO Katherine Wood continues to express sustained optimism and believes that the growing correlation between cryptocurrencies and traditional assets indicates that the bearish trend will end soon. The businesswoman opined that the depreciation of bitcoin along with the traditional market is a temporary phenomenon: “Cryptocurrency is a new asset class that should not follow the Nasdaq, but that is what is happening. We are currently in a bearish trend where all assets are moving in the same way and we are seeing one market after another capitulate, but cryptocurrencies may be close to completing it.”

The head of ARK Invest believes that the cryptocurrency market will grow exponentially as traditional assets collapse. “The current recession in the stock and bond markets, commodities and cryptocurrency markets is causing negative sentiment among investors. But look at our research… I can’t even tell you how confident we are that our products will change the world and are already on an exponential growth trajectory.” According to Wood, blockchain is in a technology sector that will grow more than 20 times in the next seven to eight years.

Another hope for investors is that bitcoin is already halfway to its next halving. It happened at block number 735,000 on May 05. This event occurs every 210 thousand blocks, or approximately once every four years, with a little less than 105 thousand blocks left until the next one. The halving date can be predicted to within a couple of days, because the block production time fluctuates around 10 minutes. The previous halving took place on May 11, 2020, and the next one will take place approximately in April 2024.

Halving cycles are one of the main mechanisms of the bitcoin network, which involves halving the BTC reward for miners. Accordingly, the issue of bitcoins is also halved, since miners' rewards are the only source of issuing new coins. From the inception of bitcoin to the first halving, miners were rewarded with 50 BTC per block. Then the amount in bitcoins was reduced to 25 BTC, and in the next cycle to 12.5 BTC. Currently, miners receive 6.25 BTC for mining a block.

And if miners suffer losses due to halving, investors, on the contrary, earn. As observations show, before the first halving, BTC cost about $127, before the second, its price rose to $758, and before the third, to $10,943. It remains to wait for not so long, less than two years, to find out whether there will be a similar explosive rise in the price of BTC in 2024.


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market
 
CryptoNews of the Week


- Due to the speculative nature of cryptocurrencies, investors need more protection, otherwise they may lose confidence in the markets. This was stated by the head of the US Securities and Exchange Commission (SEC) Gary Gensler. As a rule, buyers of cryptocurrencies do not receive the amount of information that is typical for other asset classes, the official said. For example, this applies to the trading platforms they use or whether users actually own funds in their digital wallets.
According to him, cryptocurrency markets are considered decentralized, but in reality, most of the activity takes place on a few large trading platforms. Regarding crypto platforms, he recalled the need to comply with the basic principles of the market, such as “fighting fraud, countering manipulation and insider practices, ensuring a real, not fictitious, order book.” Gensler noted that the SEC will continue to work to cover all types of cryptocurrencies with supervision. “There is a lot to be done here, and investors are not so well protected so far,” he concluded.

- FTX CEO Sam Bankman-Fried questioned bitcoin's ability to become a popular payment system due to the inefficiency and high environmental costs of its blockchain. This is reported by the Financial Times. The top manager pointed out that it is not possible to scale the network “to millions of transactions” [per second]. “Blockchain must be extremely efficient, lightweight and have low energy costs. We should not scale bitcoin to such an extent that the consumption of electricity by miners has increased a hundred times,” he explained. The CEO of FTX, who is already being called the “new Zuckerberg”, stressed that the first cryptocurrency can remain in the status of an asset, a commodity and a store of value.

- Rich Dad Poor Dad bestselling author and entrepreneur Robert Kiyosaki called the bitcoin crash “great news” and predicted a test of the $17,000 level. “As I said earlier, I expect bitcoin to fall to $20,000. Then we will wait for the bottom test, which may be $17,000. Once that happens, I'll go big. Crises are the best time to get rich,” he said.
Earlier, Robert Kiyosaki explained sarcastically why he is confident in the long-term success of digital gold: “Bitcoin will win because America is led by three puppets.” He ranked US President Joe Biden, Treasury Secretary Janet Yellen and Fed Chairman Jerome Powell among them.

- Crypto strategist known as DonAlt believes that after breaking the key psychological support area of $30,000, Bitcoin is ready to show a serious move. “Over the next 3 months, we will either see the capitulation that everyone is waiting for, or bitcoin will close the range and start moving up to $58,000,” the expert writes. – In my opinion, the probability of going down is higher. According to my calculations, the next support is at $14,000, after which a recovery of more than 2 times to the high of the range is possible.”
DonAlt noted that the current structure of the bitcoin market may hint that the bottom has already been reached. However, he fears the strong correlation of BTC with the stock market and the possibility of a collapse in the S&P 500 index.
The trader known as Rekt Capital agreed with the opinion that bitcoin is expected to fall further. The specialist believes that the coin needs to lose another 25% of its value before the expected local minimum.

- One of the main critics of bitcoin, president of Euro Pacific Capital Inc. Peter Schiff believes that the cryptocurrency has an opportunity for a further strong fall. The businessman drew attention to the fact that bitcoin has lost an important support level near $33,000. And the cryptocurrency will have to fall to $8,000 to touch the next level. “The support line has been broken. There is a high probability of movement to the lower support line. The chart shows two patterns at once: a double top and a head-shoulders pattern. This is an ominous combination. We have a long way down,” Peter Schiff wrote on his blog.

- But an analyst nicknamed Pentoshi expects a bitcoin rally soon, as the situation, in his opinion, is in favor of the bulls. According to Pentoshi, the bears are making serious efforts to lower the price of bitcoin, but they are not succeeding in achieving the desired result. “A lot of coins change hands with a lot of effort. But do the sellers receive appropriate remuneration? It doesn't look like it.
As an example, he looked at an inverted chart of bitcoin, which shows extremely high trading volume, coupled with a small exchange rate movement. As Pentoshi believes, the failure of the bears to depreciate BTC despite strong selling pressure suggests that the momentum is about to turn in favor of the bulls.

- During a discussion of the impact of cryptocurrencies on the country's economy, the Reserve Bank of India (RBI), said that they could lead to dollarization, as well as have a negative impact on the banking system. Bank Governor Shaktikanta Das stated that "this seriously undermines the RBI's ability to control the country's monetary policy."
The official fears that cryptocurrencies can become a medium of exchange and replace the national currency in financial transactions both domestically and abroad. “Almost all cryptocurrencies are denominated in dollars and are issued by foreign individuals. This, in the end, can lead to the dollarization of part of our economy, which is contrary to the sovereign interests of the country,” Shaktikanta Das said.
According to various estimates, there are from 15 to 20 million cryptocurrency investors in India with a total volume of crypto assets of about $5.34 billion.

- The cryptocurrency market has recently been actively selling coins, as investors get rid of risky assets amid global economic turmoil. Cryptocurrency billionaires have suffered the most.
According to the Bloomberg Billionaires Index, Coinbase CEO Brian Armstrong's net worth has decreased from $13.7 billion to $2.2 billion. This was not only due to the fall in digital asset prices, but also due to the fall in Coinbase shares, the price of which fell by more than 80%.¬ The capital of the CEO of the FTX crypto exchange Sam Bankman-Fried has halved and now stands at $11.3 billion. The well-known founders of the Gemini cryptocurrency trading platform, the brothers Cameron and Tyler Winklevoss, have individually lost more than $2 billion, which is equivalent to almost 40% of their total fortune.

- American billionaire investor Bill Miller announced in January that half of his capital was invested in the largest cryptocurrency by capitalization. And now some of his coins were sold on a margin call.
In an interview with CNBC, the head of Miller Value Partners said he still remains bullish for the long term. According to him, for the first time he bought an asset in the range of $200-300 and during this time he went through at least three drops in BTC by more than 80%. Despite this, he still views bitcoin as an insurance policy against financial disaster.

- The US Department of State, the Treasury Department and the Federal Bureau of Investigation (FBI) have issued a joint warning stating that North Korean IT professionals are trying to get jobs in cryptocurrency projects by posing as citizens of other countries. The authorities have noticed that coders from the DPRK pretend to be citizens of the United States very often.
The statement emphasizes that many of them receive income that contributes to the creation of weapons of mass destruction and the military buildup of North Korea in circumvention of the sanctions imposed on it. In addition, the document says that for the same purpose, some IT professionals from the DPRK have developed virtual currency exchangers or have created analytical tools and applications for cryptocurrency traders.


Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #forex #cryptocurrencies #bitcoin #stock_market
 
Forex and Cryptocurrencies Forecast for May 23 - 27, 2022


EUR/USD: Growth of the Pair as a Result of DXY Correction

The DXY dollar index hit a multi-year high of 105.05 on Friday, May 13 after a six-week rise. The last time it climbed this high was 20 years ago. However, a reversal followed, and the DXY was below the 103.00 horizon on May 19-20. According to a number of analysts, such a drop is more likely the result of a technical correction, and not a consequence of changes in fundamental factors. The latter still remain on the side of the American currency. However, there are already some alarming signals here, as the sharp tightening of the Fed's monetary policy increases concerns about the growth of the US economy and increases the likelihood of a recession.

But, once again, the fundamental factors are still on the side of the dollar. Thus, data on retail sales in the US released on May 17 showed an increase in consumer activity in April by 0.9%, which is higher than the forecast of 0.7%. Industrial production exceeded the forecast as well: it grew by 1.1% instead of the expected 0.5%.

Last week, the head of the Federal Reserve Jerome Powell once again confirmed his intention to raise the key rate by 0.5% at the FOMC (Federal Open Market Committee) meetings in June and July. Recall that the US regulator has already raised the rate twice this year. This, of course, led to an increase in costs for various types of loans not only for industry, but also for the population, including mortgage lending, consumer loans, interest on credit cards etc.

However, on Tuesday May 17, Jerome Powell stated unequivocally that the Fed would continue to tighten and back off from aggressive rate hikes only when it received "clear and compelling evidence" of a slowdown in inflation. And if the rate of inflation decline does not suit the Central Bank, it may not limit itself to a rate of 3.0%, but increase it to 4.0% within 12-15 months. That will give the dollar additional advantages over other currencies in the DXY basket, including the euro.

Unlike the US economy, investors are much more concerned about the prospects for the European economy. This concern is primarily due to the strong dependence of the European Union on Russian energy resources. On Monday, May 16, EU countries started negotiations on the sixth package of sanctions against Russia due to its invasion of Ukraine. It is known that we are talking, among other things, about the introduction of an embargo on the purchase of Russian oil and gas. It is not yet clear whether such an embargo will be total or partial, when it will be introduced and what exceptions there will be, but it is already clear that it will create serious problems not only for the Russian, but also for the European economy. And this cannot but cause concern for investors.

US Treasury Secretary Janet Yellen added additional uncertainty to this complex situation. She stated that the G7 countries are discussing the idea of establishing the maximum possible duties on energy from Russia. On the one hand, it makes no sense to impose an embargo on their supplies in this case. But on the other hand, this will hit hard on the pockets of European consumers who want to avoid energy hunger.

The situation with inflation in the Eurozone remains unclear. According to data published on Wednesday May 18, it remains at a record level of 7.4%, that is, 3.7 times the ECB's target level of 2.0%. The head of the Central Bank of Finland, Olli Rehn, said that in such a situation, members of the ECB Governing Council agree on the need for a “fairly quick” move away from negative interest rates. Recall that the deposit rate in the euro area is now minus 0.5%, and has been negative for 8 years, since 2014. However, "fairly quick" exit is a very vague wording, in contrast to the specific decision of the US Federal Reserve to raise the dollar rate by another 1.0% in the next two months.

This divergence between the specifically hawkish monetary policy of the Fed and the vaguely dovish ECB suggests that the US currency will continue to strengthen its position. Although the opposite happened last week: the dollar lost about 150 points to the euro from May 16 to May 20 and the EUR/USD pair ended the trading session at 1.0557. However, according to some experts, what happened is a consequence of the general correction of the DXY index and fits into the medium-term downtrend of the pair.

At the time of writing, on the evening of May 20, the opinions of experts are divided as follows: 45% of analysts are sure that the EUR/USD pair will return to the movement to the south, the same number is waiting for the continuation of the correction to the north, and the remaining 10% have taken a neutral position. There is a certain discrepancy in the readings of indicators on D1 caused by a correction. Among the trend indicators, 40% side with the reds, 60% side with the greens. The oscillators have a clearer picture: 70% are colored green, 20% red and 10% neutral gray. The nearest resistance is located in the zone 1.0600, if successful, they will try to break through the resistance 1.0640 and rise to the zone 1.0750-1.0800. For the bears, task number 1 is to break through the support in the 1.0500 area, then 1.0460-1.0480, and then update the May 13 low at 1.0350. If successful, they will move on to storm the 2017 low of 1.0340, there is only support from 20 years ago below.

As for the calendar for the coming week, it will be useful to pay attention to the publication of data on business activity (Markit) in Germany and the Eurozone as a whole on Tuesday, May 24. US orders for capital and durable goods will be released on Wednesday. The minutes of the last FOMC meeting of the Fed will be published on the same day, and preliminary US GDP indicators for the Q1 2022 will be known on Thursday, May 26.

GBP/USD: Inflation Continues to Rise

Of course, the dynamics of the GBP/USD pair was dominated by what happened to the DXY dollar index last week. However, certain adjustments were also made by specific factors related to the economy of the United Kingdom.

The Bank of England published a forecast about two months ago that inflation should have peaked in April. The data published on Wednesday, May 18, confirmed this forecast, with the exception of one very big “but”. The regulator predicted that the peak would be reached at 7.2%, but it turned out to be 9.0%, which is the highest over the past 40 years. And in this case, to paraphrase the great English playwright William Shakespeare, it is time to exclaim: “Is this a peak or not a peak? That's the question!". Apparently, there is no talk of any slowdown in inflation yet, and it is precisely this that is the main “toothache” of the UK economy.

GBP/USD hit 1.2524 at a weekly high. Two pieces of news kept the pound from weakening. First, according to the UK Office for National Statistics, retail sales in the country unexpectedly rose by 1.4% in April, while the market expected a fall of 0.2%. And in addition, the British currency was supported by the chief economist of the Bank of England Hugh Pill, who said that the regulator has yet to continue tightening monetary policy, as bullish risks for inflation still prevail, and it is projected to rise to double digits in 2022.

As a result, the pair ended the five-day period at 1.2490 where it traded in late April - early May, and where it has already been in 2016, 2019, and 2020. Will it continue to fall? 20% of experts answered this question positively, 25% answered negatively. The majority (55%), not knowing how to react to the words of the chief economist of the Central Bank, shrugged their shoulders. As for the indicators on D1, then, as in the case of EUR/USD , their opinions are divided. Among the trend indicators, 50% point to the growth of the pair, exactly the same number points to the fall, among the oscillators the balance of forces is somewhat different: only 20% are looking south, 80% are looking north, although a quarter of them are already in the overbought zone. Supports are located at 1.2435, 1.2400, 1.2370, 1.2300, 1.2200, then 1.2154-1.2164 and 1.2075. A strong point of support for the pair is at the psychologically important level of 1.2000. In case of further correction to the north, the pair will have to overcome the resistance in the zone 1.2500-1.2525, then there are zones 1.2600-1.2635, 1.2700-1.2750, 1.2800-1.2835 and 1.2975-1.3000.

UK economic developments in the coming week include a speech by Bank of England Governor Andrew Bailey on Monday May 23 and the release of the PMI Composite and Markit Manufacturing and Services PMIs on Tuesday May 24.

continued below...
 
USD/JPY: Why the Yen Is Strengthening


According to officials from the International Monetary Fund (IMF), "in general, the depreciation of the yen is helping Japan." The same could be repeatedly heard from the leaders of the Bank of Japan. The IMF also believes that the control over the yield curve applied by the Japanese regulator is quite effective, and the dynamics of the yen "are in line with medium-term fundamentals."

However, contrary to the statements of high officials, we have seen not weakening, but strengthening of the Japanese currency over the past two weeks. And on May 20, it is exactly where it was on April 20: at the level of 127.85, without having updated the maximum of May 09 at 131.34. According to a number of experts, the strengthening of the Japanese currency was due to the increased craving of investors for the most risk-free assets. However, this is not the only reason.

Inflation in the country continues to grow, which causes discontent among the population. The rise in consumer prices is recorded for the eighth month in a row. In April, they increased by 2.5% compared to the same month a year earlier, showing the highest growth rate since October 2014. As noted by Dow Jones, inflation has exceeded the 2.0% mark for the first time since September 2008, and this is without taking into account the effect of the consumption tax increase. It was 1.2% in March. Naturally, all this causes discontent among the citizens of the country, to which politicians are already actively reacting. But at some point, there should be a reaction from the Central Bank of Japan. Many investors, especially foreign ones, expect that, despite the regulator's assurances of its commitment to an ultra-soft monetary policy, it will still be forced to increase the interest rate. And, apparently, it is this expectation that provides the yen with additional support.

At the moment, 55% of analysts vote for the yen to continue to strengthen and USD/JPY to continue moving south, 40% vote for the resumption of the uptrend to the north, and 5% expect movement in the sideways. At the same time, supporters of technical analysis pay attention to the fact that a classic figure has formed on the chart: a "double top" (or "head - shoulders"). Among the indicators on D1, the alignment of forces is as follows. Oscillators have 80% red, 10% green, and 10% neutral gray. Among trend indicators, the parity is 50% to 50%. The nearest support is located at 127.50, followed by zones and levels at 127.00, 126.30-126.75, 126.00 and 125.00. The goal of the bulls is to rise above the horizon of 128.00, then overcome the resistances of 129.00, 129.60, 130.00, 130.50 and renew the high of May 09 at 131.34. The high of January 01, 2002, 135.19, is seen as the ultimate goal.

Of the upcoming week's events, one can pay attention to the speech of the Bank of Japan Governor Haruhiko Kuroda on Wednesday, May 25, although it is unlikely to bring any surprises and at least somehow affect market sentiment. But what if something does happen? Markets remember 2016, when Haruhiko Kuroda first categorically denied the possibility of changing rates, and then suddenly decided to take such a step…

continued below...
 
CRYPTOCURRENCIES: End of the Digital Gold Rush?

The BTC/USD bulls have been desperately trying to hold the line in the $30,000 zone since May 11. The struggle took place in the $28,650-31,000 zone all last week. And even though the S&P500, Dow Jones, and Nasdaq stock indices rebounded on May 18, putting additional pressure on bitcoin, it continued to resist.

In general, decoupling bitcoin from stock indices, primarily from the S&P500, is the dream of many supporters of the first cryptocurrency. On the other hand, these same people dream that as many institutions as possible will come to the crypto market, and that bitcoin, along with stocks, will take its rightful place in their investment portfolios. But in order to become a full-fledged participant in financial markets, a cryptocurrency must obey the rules and laws established on it. And if large investors get rid of risky assets, one should not expect that, by dumping shares of Microsoft, Apple or Amazon, they will invest the dollars received not in treasuries, but in bitcoin or ethereum.

Another dream is for bitcoin to establish itself as a store of value on par with physical gold. However, the concept of "digital gold" at the moment is nothing more than a compliment towards the first cryptocurrency. Or a marketing ploy to increase its value in the eyes of small investors. But the importance of the precious metal for humanity has been confirmed for thousands of years, while the history of bitcoin is not even 15 years old. And its value lies only in its limited emission and thirst for profit.

Back in 2010, BTC was worth 5 cents, and its price reached $69,000 at its peak in November 2021. It is clear that the prospect of quickly and easily turning $100 dollars into $138,000,000 attracted a huge mass of people willing to get rich quickly. So what happened in the last 10-12 years can be called the “Digital Gold Rush”, by analogy with the Gold Rush in the USA in the second half of the 19th century. But then many, instead of getting rich, on the contrary, lost their money. The same can be observed now: bitcoin, having fallen to $26.579 on May 12, updated the low of the current year and returned to the values of December 2020, having lost about 60% of its value in just 6 months.

According to the Bloomberg Billionaires Index, Coinbase CEO Brian Armstrong's net worth has decreased from $13.7 billion to $2.2 billion. This was not only due to the fall in digital asset prices, but also due to the fall in Coinbase shares, the price of which fell by more than 80%. The capital of the CEO of the FTX crypto exchange Sam Bankman-Fried has halved and now stands at $11.3 billion. The well-known founders of the Gemini cryptocurrency trading platform, the brothers Cameron and Tyler Winklevoss, have individually lost more than $2 billion, which is equivalent to almost 40% of their total fortune. Well, what means of "savings and hedging" can we talk about in such a situation?

Another advantage of bitcoin that its proponents like to talk about is its decentralized nature and the anonymity of its holders. However, it seems that this is just a fake. The head of the US Securities and Exchange Commission (SEC), Gary Gensler, explained that although cryptocurrency markets are considered decentralized, in reality, most of the activity takes place on a few large trading floors. Regulators and law enforcement officers are closely watching them. And the fact that the wallets belonging to the Russians were blocked after the imposition of sanctions against Russia, says a lot.

Finally, the fourth opportunity to raise the value of BTC is its widespread use as a means of payment. Although not everything is so smooth here. For example, Sam Bankman-Fried, CEO of the FTX crypto exchange, has recently expressed doubts about the ability of bitcoin to become a popular payment system. The top manager pointed to the lack of the ability to scale the network "to millions of transactions" per second due to the inefficiency and high environmental costs of his blockchain.

Returning from wishful thinking to reality, we must state that the total capitalization of the crypto market continues to fall. At the time of writing this review, Friday evening, May 20, it is at $1.248 trillion ($1.290 trillion a week ago). The Crypto Fear & Greed Index is firmly entrenched in the Extreme Fear zone and is at around 13 points. Moreover, it fell to 8 points on Tuesday, May 17, the lowest level since March 28, 2020. The BTC/USD pair is hardly kept in the "war zone", at the level of $29.325.

Gold advocate, president of Euro Pacific Capital Inc. Peter Schiff believes that bitcoin has already lost an important support level near $33,000. And the cryptocurrency will have to fall to $8,000 to touch the next level. “The support line has been broken. There is a high probability of movement to the lower support line. The chart shows two patterns at once: a double top and a head-shoulders pattern. This is an ominous combination. We have a long way down,” this “gold bug” wrote in his blog.

Rich Dad Poor Dad bestselling author and entrepreneur Robert Kiyosaki called the bitcoin crash “great news” and predicted a test of the $17,000 level. “As I said earlier, I expect bitcoin to fall to $20,000. Then we will wait for the bottom test, which may be $17,000. Once that happens, I'll go big. Crises are the best time to get rich,” he said.

But according to the crypto strategist nicknamed DonAlt, the question of where bitcoin will move after breaking the key support area of $30,000, has not yet been resolved. “Over the next 3 months, we will either see the capitulation that everyone is waiting for, or bitcoin will close the range and start moving up to $58,000,” the expert writes. In his opinion, the probability of going down is higher, and the next support is at $14,000. DonAlt notes that the current structure of the bitcoin market may hint that the bottom has already been reached. However, he fears the strong correlation of BTC with the stock market and the possibility of a further collapse of the S&P500 index.

The trader known as Rekt Capital agreed with the opinion that bitcoin is expected to fall further. The specialist believes that the coin needs to lose another 25% of its value before the expected local minimum.

Analyst nicknamed Pentoshi, on the other hand, expects a bitcoin rally soon, as the situation, in his opinion, is in favour of the bulls. According to Pentoshi, the bears are making serious efforts to lower the price of bitcoin, but they are not succeeding in achieving the desired result. “A lot of coins change hands with a lot of effort. But do the sellers receive appropriate remuneration? It doesn't look like it.

As an example, he looked at an inverted chart of bitcoin, which shows extremely high trading volume, coupled with a small exchange rate movement. As Pentoshi believes, the failure of the bears to depreciate BTC despite strong selling pressure suggests that the momentum is about to turn in favor of the bulls.

American billionaire investor Bill Miller also looks optimistic. According to him, he survived at least three bitcoin drops by more than 80%. And despite the fact that some of his coins have been currently sold on a margin call, he remains bullish in the long term.

As follows from the above, there is no consensus among influencers and experts at the moment. What to do in such a situation? Of course, you can sit and wait with your hands down. Or you can, for example, engage in active trading. Moreover, trading on the CFD principle, you can earn both on the growth and fall of the crypto market. Moreover, you do not need to have a real cryptocurrency for this: in the NordFX brokerage company, in order to open a transaction of 1 bitcoin, you will only need $150, and $15 for a transaction of 1 ethereum. Why is this not a crypto life hack?


NordFX Analytical Group


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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World Confederation of Businesses Presents NordFX with Business Excellence Award for the Second Time


For the second time, NordFX has received the BIZZ AWARDS, an award that the World Confederation of Businesses annually awards to companies that have achieved outstanding business success.

The World Confederation of Businesses (WORLDCOB) has been playing a leading role as an international business organization for over 15 years, promoting business development in over 130 countries and encouraging the growth of companies and entrepreneurs through THE BIZZ AWARDS. NordFX received its first such award in 2020, and now there is a new success.

“On behalf of the World Confederation of Businesses,” the organization's president, Jesus Moran, wrote in their letter, “we extend our most sincere congratulations to you and your team NORDFX, for being selected as a winner of of this important business excellence award.

Your company has been selected for consistently exceeding the evaluation criteria noted in our Business Excellence Questionnaires: Business Leadership, Quality of Products and Services, Management Systems, Innovation and Creativity, Corporate Social Responsibility, and Results Achieved. For this reason, we would like to extend our congratulations once more in recognition of this outstanding achievement. WORLDCOB wishes you to continue the excellent work your team is doing."


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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CryptoNews of the Week


- The collapse of LUNA and the general weakening of the market affected the expectations of crypto derivatives market participants. According to Glassnode, the ratio of open puts and calls in bitcoin has increased from 50% to 70%, indicating an increased desire of investors to secure positions from continued negative dynamics.
The largest open interest (OI) in call contracts with expiration at the end of July this year is concentrated around the $40,000 mark. However, participants give the greatest preference to put options, which will bring profit in case of price reduction to $25,000, $20,000 and $15,000. In other words, until the middle of the year, the market focuses on hedging risks and/or speculating on a further price reduction.
Optimists predominate over the longer distance. Contracts maturing at the end of the year have the most open positions in the range of $70,000 to $100,000. In the put option, the largest OI is concentrated between $25,000 and $30,000, that is, it is in the zone of current values.

- The rate of burning ethereum through EIP-1559 fell to a record low. 2,370 ETH was withdrawn from circulation Last week, which is 50% less than in early May. The share of coins not subjected to this procedure reached a record 81.6%, which has also put pressure on the price.

- Most Americans consider digital assets as an investment tool, not a means of payment. This is stated in the annual Fed report on the state of US households. According to the document, 12% of adult citizens of the country have owned or interacted with cryptocurrencies. But only 2% have used them for purchases, and only 1% have used them to send funds.

- Against the background of the increase in the key interest rate and the tightening of the monetary policy of the US Federal Reserve, the price of bitcoin may fall below $8,000. Guggenheim Partners investment director Scott Minerd said this in an interview with CNBC. “When you “break through the $30,000 level, $8,000 is the ultimate bottom. So, I think we still have a lot of room to decline, especially with the Fed acting tough,” he said.
The investment director of the Guggenheim compared the situation in the crypto market to the dot-com bubble. According to him, most digital assets are “junk”, but bitcoin and ethereum will survive the crypto winter.
Minerd emphasized that the digital asset industry has not yet come to the right design for cryptocurrencies. In his opinion, the currency should store value, be a means of exchange and a unit of account. “There is nothing like that, they [cryptocurrencies] have not even come to a single basis,” he concluded.

- The PayPal payment company is making every effort to implement “all possible” integrations with blockchain and cryptocurrencies into its services. This was stated by PayPal's Vice President Richard Nash during the World Economic Forum in Davos. “We are looking to work with other [projects] to cover everything we can, whether it be the coins we have today in PayPal digital wallets, private digital currencies or CBDCs in the future,” Nash said.
The payments giant’s VP also hinted that he has also invested in crypto assets: “I have a lot of things that I work on at PayPal and I enjoy using the services myself, so I think it’s natural.”

- Unidentified people hacked into the Twitter account of Mike Winkelman, an artist known under the pseudonym Beeple, posting phishing links on it. Users were invited to a website purporting to be Beeple's partnership with Louis Vuitton fashion house.
Clicking on this link resulted in an unauthorized withdrawal of funds from the user's wallet. The cybercriminals got 135 ETH and 45 NFTs worth about $438,000. The hackers retained control of the artist's account for approximately five hours before he managed to get it back.

- The crypto strategist aka Credible believes that, despite the general bearish mood in the markets, BTC is ready to take off. According to him, bitcoin has been in a bull market for the last decade, and the bear markets of 2014 and 2018 became periods of correction: “After the peaks of 2013 and 2017, there were major bear markets and it took 3 years to return to the highs. The current corrections are somewhat smaller, and this will be proven when BTC soars to new all-time highs in a few months.”
Credible uses the Elliott wave theory for technical analysis, which predicts the behavior of the rate based on the psychology of the crowd, which manifests itself in the form of waves. This theory assumes that a bull market cycle goes through 5 impulse waves, with the asset correcting during the 2nd and 4th waves and rallying during the 1st, 3rd and 5th waves. In addition, each major wave consists of 5 smaller sub-waves.
According to the analyst, bitcoin is now in the middle of the main 5th wave that began at the start of 2019. In addition, BTC is currently still in the 5th sub-wave, which can push the asset to a new all-time high above $100,000. “I understand that my approach is controversial,” says Credible. “Most do not expect a new record high until the next halving in 2024, and I expect it sooner.”

- According to another crypto analyst nicknamed Rager, given the length of BTC’s bearish cycles in 2014 and 2018, the asset has a long way to go to the bottom, from 6 to 8 months. “If BTC is declining and rebounding from the 200-week moving average, as in past bearish cycles, then this is a good sign. There will be a decline of only 68% from the maximum, although it had reached 84% in the past. If we take the current realities, a pullback of 84% will lead to the rate of $11,000.”
Rager believes that the price of bitcoin will depend on the strength or weakness of the US stock market in the short term: “You should not look at the bitcoin chart, it is better to watch the chart of the S&P 500 index. There is limited upside potential for BTC right now, but it won’t get stronger until the stock markets turn around.”

- Rekt Capital, one of the most followed analysts on Twitter with over 300,000 followers, has warned that bitcoin could briefly drop 28% below its 200-week moving average. He explained that this SMA is playing the role of an ever-growing latest support. Bitcoin has fallen below this line in the past, but these periods of capitulation were very short-lived. The weekly candlestick has never closed below this SMA yet, but its shadows were as high as 28%. If this happens again now, the cryptocurrency rate will be at the level of $15,500. The 200-week moving average is currently in the $22,000 zone.

- Galaxy Digital CEO and bitcoin proponent Mike Novogratz believes that even despite a significant drop from their all-time highs, altcoins risk losing more than half of their value.
Novogratz defines the outlook for the entire financial market as bleak, which means that a further decline in crypto assets should be expected. However, despite the bearish macroeconomic background, the head of Galaxy Digital remains optimistic and believes in the recovery of the crypto market in the future: “Cryptocurrency is not going away. The number of new users is not decreasing, the pace of creating decentralized infrastructure is not slowing down, the GDP of projects in the metaverse is growing. The crypto community is resilient, it believes in innovation and believes that the markets still provide early entry opportunities.”

- The analytical company Santiment has published the data of its Weighted indicator, which calculates negative and positive comments on an asset in social networks. Based on this information, a kind of mood of the crypto community is determined. According to the readings of this instrument, bitcoin has already reached the global bottom and can be expected to rise in the coming weeks.
“History shows that prices most often rise when investor sentiment is low. Now is the moment when bitcoin has every chance of a limited strengthening,” analysts at Santiment believe.


Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #forex #cryptocurrencies #bitcoin #stock_market
 
Forex and Cryptocurrency Forecast for May 30 - June 03, 2022


EUR/USD: Fed's "Boring" FOMC Protocol

The DXY dollar index hit a multi-year high of 105.05 on Friday, May 13, after a six-week rise. The last time it climbed this high was 20 years ago. However, a reversal followed, and it was already at the level of 101.50 exactly two weeks later. Following the general trend, the EUR/USD pair has also been growing since May 13, reaching the height of 1.0764 on May 27. The euro has pushed the dollar by 415 points during this time. And this is not at all the European currency that did it, but the American one. More specifically, the US Federal Reserve.

The minutes of the last Federal Open Market Committee (FOMC) meeting released on Wednesday May 25 did not bring any surprises. It had only what everyone already knew about. The content of the document simply confirmed the intention of the regulator to raise the refinancing rate by 0.5% at each of the next two meetings. Fed officials also unanimously approved a plan to start reducing the asset portfolio, which currently stands at $9 trillion, from June 1. The absence of any surprises in the FOMC protocol hurt the dollar, but it helped the shares: the stock indices S&P500, Dow Jones and Nasdaq went straight up.

The Eurozone macroeconomic calendar remained almost empty last week. As for the statistics from the US, it came out rather multidirectional. Initial jobless claims for the week fell to 210K, which is less than the expected 215K. Orders for durable goods rose by 0.4%, indicating further growth in consumer activity, which is the main driver of economic growth. However, on the other hand, US GDP for the Q1 was revised down to negative -1.5%, which is worse than both the previous estimate of -1.3% and the forecast of -1.4%.

Among medium-term factors, the aggressive policy of the US Central Bank continues to play on the side of the dollar. Its head, Jerome Powell, has repeatedly confirmed his intention to raise interest rates in order to curb inflation and prevent the economy from overheating. US annual inflation (CPI) hit 8.3% in April, more than four times the target of 2%. At the same time, according to analysts, a record rise in energy prices will continue to push inflation further upward in the coming months. And this, in turn, may push the Fed to further tighten monetary policy.

The US currency also continues to be supported by its status as a protective asset. As the armed conflict between Russia and Ukraine is expected to escalate, demand for it will continue to grow, as investors are concerned about the threat of stagflation in Europe. Rising tensions between China and Taiwan have increased craving for safe haven assets as well.

EUR/USD completed the past week at 1.0701. At the time of writing the review, on the evening of May 27, the voices of experts were divided as follows: 30% of analysts are sure that the pair will return to the movement to the south, 50% of analysts are waiting for the continuation of the ascent to the north, and the remaining 20% have taken a neutral position. There is no unity in the readings of the indicators on D1. Oscillators are 80% green, 10% red, and 10% neutral gray. At the same time, a quarter of the "green" is already in the overbought zone. There is parity among the trend indicators: 50% vote for the growth of the pair, 50% vote for its fall. The nearest resistance is located in zone 1.0750-1.0800. If successful, the bulls will try to break through the resistance of 1.0900-1.0945, then 1.1000 and 1.1050, after which they will meet resistance in the 1.1120-1.1137 zone. For the bears, task number 1 is to break through the support at 1.0640, then 1.0480-1.0500, and then update the May 13 low at 1.0350. If successful, they will move on to storm the 2017 low of 1.0340, there is only support from 20 years ago below.

A lot of statistics on consumer markets in Germany (May 30 and June 01) and the EU (May 31 and June 03) will be released this week. The publication on Wednesday, June 01 of the ISM business activity index in the US manufacturing sector is also noteworthy. On the same day, the ADP report on US non-farm employment will be published, and another piece of data from the US labor market will arrive on Friday, October 08, including such important indicators as the unemployment rate and the number of new non-farm payrolls (NFP).

GBP/USD: "Not Boring" Decision of the UK Government

The main factor behind the strengthening of the pound and the growth of the GBP/USD pair, as in the case of the euro, was the general weakening of the US currency. The two-week drop in the DXY dollar index was its worst losing streak since December 2021. However, unlike the euro, the British currency was helped by two more factors. The first is strong labor market data. The second is inflation in April, which peaked in four decades and gave investors hope for further tightening of monetary policy and higher interest rates by the Bank of England.

British Prime Minister Boris Johnson expressed his concern about the country's economic prospects last week. He said in an interview with Bloomberg TV on May 27 that he "expects a difficult period ahead" and "doesn't want to see a return to the 1970s-style wage-price spiral."

A day earlier, the decision of the government of the United Kingdom, in contrast to the "boring" of the Fed's protocol, greatly surprised the markets. UK Finance Minister Rishi Sunak announced a one-off payment of £650 to the lowest income households to help them with rising prices. The total amount of this fiscal bailout will be £15bn. And although Sunak argued that the support package would have a “minimal impact” on inflation, many analysts thought that this injection could prompt the Bank of England to revise its economic forecasts for this and next year. It is possible that the regulator will decide to take a more hawkish stance in order to limit inflationary pressure on the country's economy.

At the same time, for now, growth prospects for the UK economy remain significantly lower than on the other side of the Atlantic. And this causes many experts to doubt that the pound, together with the GBP/USD pair, can continue to grow steadily in the medium term. Especially if the tension around the Northern Ireland Protocol increases. Recall that this document is an addition to the Brexit Agreement, which regulates special trade, customs and immigration issues between the UK, Northern Ireland and the European Union.

The last chord of the past week sounded at 1.2628. 55% of experts vote for further growth of the pair, 35% for its fall, and the remaining 10% are for a sideways trend.

The situation with indicators on D1 is similar to their readings for EUR/USD. Among the trend indicators, 50% indicate the growth of the pair, and the same number indicate the fall. Among the oscillators, the balance of power is somewhat different: only 10% are looking south, another 10% are neutral, 80% are pointing north, although a quarter of them are already in the overbought zone. Supports are located at 1.2600-1.2620, 1.2475-1.2500, 1.2400, 1.2370, 1.2300, 1.2200, then 1.2154-1.2164 and 1.2075. A strong pivot point for the pair is at the psychologically important level of 1.2000. In case of further movement to the north, the pair will have to overcome the resistance 1.2675, then there are zones 1.2700-1.2750, 1.2800-1.2835 and 1.2975-1.3000.

Among the events of the upcoming week concerning the economy of the United Kingdom, we can note Wednesday, June 01, when the May value of the index of business activity in the manufacturing sector (PMI) will be published. Thursday 02 June and Friday 03 June are bank holidays in the UK.

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