Daily Market Analysis and News From NordFX

USD/JPY: Record 500 Pips Down


All the same reasons mentioned above contributed to the strengthening of the Japanese currency. On the eve of the US Federal Reserve meeting on July 27, the USD/JPY pair was at a height of 137.45, and having flown by almost 500 points, it already fixed a six-week low at around 132.49 less than two days later. It is possible that such a sharp drop was facilitated by the oversold yen, which updated a 24-year low on July 14.

The publication of the US Personal Consumption Expenditures followed at the very end of the week, on Friday, July 29, causing a temporary rebound of the USD/JPY pair to the height of 134.58, after which the downtrend resumed, and the pair completed the five-day working period at 133.31.

As for the prospects of the Japanese currency, the experts' forecast looks quite neutral, as in the cases of previous pairs. 45% of them are waiting for a new breakthrough of the pair to the north, another 45% hope for a continuation of the downtrend, the remaining 10% talk about a side corridor. The picture is somewhat different in the readings of indicators on D1: trend indicators have a ratio of 65% to 35% in favor of red ones, 25% of oscillators look north, 75% look south, but a third of them give signals that the pair is oversold.

The values of possible slippage and ranges of support/resistance zones have sharply increased due to the ultra-high volatility of the pair. Supports are located at the levels and in the zones 132.50-133.00, 131.40, 128.60 and 126.35-127.00. Resistances are 134.20-134.60, 135.00-135.55, 136.30-137.45, 137.90-138.40, 138.50-139.00, followed by July 14 high 139.38 and round bull targets of 140.00 and 142.00.

CRYPTOCURRENCIES: Bitcoin May Rise. But not soon.

The fact that the US Federal Reserve raised the rate not by 1.0%, but by 0.75% at its meeting on July 27 provided strong support for risky assets, primarily the stock market. Some of the most radical analysts said that the regulator might stop raising rates as early as November, and it would return to the quantitative easing (QE) program in 2023 and start buying assets and building up the balance sheet again, flooding the market with new flows of cheap dollars. The S&P500, Dow Jones and Nasdaq stock indices went further up on such joyful expectations for investors, and the quotes of such risky assets as bitcoin and other cryptocurrencies followed them.

The price of bitcoin has been holding above the $20,000 level for two weeks now, which has concentrated the greatest attraction of speculators. According to Glassnode experts, this happened as a result of the transfer of coins from surrendered hodlers to "new" optimistic buyers. The specialists emphasize that there was also demand from speculators earlier at the levels of $30,000 and $40,000.

According to a number of analysts, those whales (investors with a balance of 1000+ and 10000+ BTC) who maintain hodle moods and continue to buy bitcoins on exchange rate drawdowns, also contributed to this. The activity of owners of small BTC balances is also noted. For example, the number of addresses with a balance of 0.01+ BTC reached an all-time high of 10,543,548.

Glassnode warns that it may take additional time to form a solid foundation. This is evidenced by such long-term indicators as URPD. To increase the chances of a market reversal, it is important to see the transition of speculative coins into the category of “held by long-term investors” (in other words, the “age” of coins from the moment of purchase must exceed 155 days).

Crypto analyst Nicholas Merten believes that an unexpected market jump is possible in the current situation, which will be a big surprise for the bears. “Bitcoin skyrocketed from $29,000 to $53,000 last July, up 80% within a month. I suppose that the market can grow up again now and retest the previous consolidation area around $30,000. There are no major resistance zones ahead and the moving averages are leading right into this point, giving bitcoin a great upside opportunity. Most people do not believe in this possibility, but the rally can surprise you with its scale in a market with excessive volumes of derivatives.”

Note that although Merten does not rule out BTC rising in the short term, he doubts that the asset has already hit the bottom: “Many people believe that the bottom was reached on June 18. Yes, we saw a huge sell-off and a good rebound. The market also got rid of significant amounts of borrowed funds used for crypto speculation. But one cannot discount the reality of the continued impact of the macro market, which will continue to limit long-term investment in cryptocurrencies.”

A similar thought was expressed by analyst Aaron Chomsky. He believes that the exit of the BTC/USD pair from the side channel through the upper border can only become a trigger for a further fall in prices. He expects a reversal and a breakdown of the lower border of the channel with the target of $17,500. At the same time, Aaron Chomsky believes that the goal of $10,000 is also quite realistic. “Apparently, we are in for a long period of crypto winter,” the expert writes. “Bitcoin is targeting $5-7k, while any delay, like what we are seeing now, forces us to revise the final targets down.”

And the “lower side,” according to Jim Rogers, co-founder of Quantum Fund and Soros Fund Management, could be a drop in the price of bitcoin to zero. This major American investor said that you need to get the support of governments regarding this sector before considering cryptocurrency as a safe investment. BTC is only a gambling tool, not real money. Bitcoin is well suited for speculation but will eventually fail as a currency.

Jim Rogers emphasized that he would consider buying BTC if the European Union accepted it as the official currency and introduced it into the region's payment system. However, his statement can only be taken as a sarcastic joke, since the EU is unlikely to take such a step in the next decade.

Of course, in contrast to the skeptics who are ready to bury the crypto market, there are always optimists who predict a bright future for bitcoin. For example, Real Vision Group co-founder and former Goldman Sachs CEO Raoul Pal believes that the cryptocurrency markets are preparing for a major positive trend reversal. The markets are mainly driven by liquidity, which comes from the M2 money supply, he said. This money supply correlates with the total amount of currency in circulation, plus it is highly liquid non-cash assets that can be easily converted into cash.

Most crypto investors believe that miner reward cuts at the next halving, which is scheduled for May 2024, will drive the price up. However, Pal argues that the role of M2 is greater than that of halving: “Cryptocurrency is not driven by the business cycle, but by global liquidity. So the main indicator of the growth of bitcoin is the rate of change of M2. Every time there was an increase in the money supply, there was always a reversal, the specialist says.

It is appropriate to recall what we talked about at the very beginning of the review. If the Fed actually returns from quantitative tightening (QT) to quantitative easing (QE), and there is extra money in the market, investor appetite for risky assets will definitely go up.

Raoul Pal is also right that many investors expect the next big rise in cryptocurrency prices to occur before the next halving. Moreover, such expectations are based on quite convincing historical data. One of the proponents of this scenario is financial analyst Florian Grummes, managing director of investment firm Midas Touch Consulting. In his opinion, despite the current rise, the cryptocurrency winter is far from over. The rise to $35,000, in his opinion, will occur only in 6-12 months. And this will be a so-called "auxiliary rally" that may precede larger rally in the future.

In the long term, Grummes is confidently optimistic, but warns that since the crypto market is directly correlated with the stock market, one must be prepared for deviations not only upwards, but also downwards at the current stage.

The biggest optimist last week was the well- known analyst under the nickname PlanB, the creator of the Stock-to-Flow model. He predicted the day when both US stocks and bitcoin would reach new all-time highs. “Some people are afraid of macroeconomics, bitcoin's relationship with the stock market, etc.,” he tweeted. “My opinion is that the S&P 500 will be in the range of $5,000-$6,000 over the next 5 years, and bitcoin will be between $100,000 and $1 million.

The prospects are wonderful of course. But both PlanB and Florian Grummes have already been wrong in their predictions. Therefore, their forecasts, as well as all other ones, should be treated with sufficient caution now as well. The only thing that persists is that at the time of writing this review (Friday evening July 28), bitcoin is trading around $23,900. The total capitalization of the crypto market is $1.098 trillion ($1.026 trillion a week ago), and the Crypto Fear & Greed Index is still in the Fear zone at 39 points (33 points a week ago).


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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July 2022: TOP 3 NordFX Traders Earn Over $105,000


NordFX Brokerage company has summed up the performance of its clients' trade transactions in July 2022. The services of social trading, PAMM and CopyTrading, as well as the profit received by the company's IB-partners have also been assessed.

The maximum profit in July was received by a client from Southeast Asia, account No. 1627XXX. This trader managed to earn 47,976 USD on transactions on the GBP/JPY currency pair.

The second line in the rating of the most successful traders was taken by his compatriot, account No. 1633XXX, who earned 31,652 USD. This solid result was achieved thanks to trades in gold (XAU/USD).

The third step on the July podium also went to the representative of Southeast Asia (Account No. 1397XXX), whose result was 25,652 USD. In addition to transactions with bitcoin (BTC/USD) and gold (XAU/USD), transactions with ethereum (ETH/USD) appeared in the TOP-3 for the first time.

The situation in NordFX's passive investment services is as follows:

In CopyTrading, the “veteran” signal KennyFXPRO once again attracts attention: Journey of $205 to $5,000, which has shown a profit of 374% for the period from March 2021 with a maximum drawdown of about 67%. At the same time, it should be noted that this drawdown occurred quite a long time ago, in mid-October 2021, and the trader had to raise the leverage to 1:337 to get out of it. After that, nothing similar was observed, and the leverage has not exceeded 1:40.

If you decide to subscribe to this signal, we strongly advise you to read the recommendations given in the description by its author. It contains a lot of interesting information and gives an explanation of the name of the signal "of $205 to $5,000".

Other signals from this provider include KennyFXPRO - Prismo 2K (the profit on it has been 178% for 453 days of its life with a drawdown of a little more than 45%, which happened at the same time, in October 2021). And the third signal of the same author, KennyFXPRO - The Cannon Ball appeared on the CopyTrading showcase 121 days ago, the profit on it is moderate, about 33%, but the drawdown is less than 7%.

It is for the second month in a row that we also mark the BSTAR signal in the CopyTrading service (profit 48% / max. drawdown 14% / days of life 163). As for startups, there have been quite a few of them lately. We note only one: PT_Bot Scalping (26%/3%/29).

The TOP-3 in thePAMM service has not changed over the past month. The leader is still the same manager under the nickname KennyFXPRO . The capital on on his KennyFXPRO-The Multi 3000 EA account has been increased by 127% in 552 days. The top three also includes: the account TranquilityFX-The Genesis v3, which showed a profit of 96% in 483 days, and the account NKFX-Ninja 136 , which has brought in an income of 82% since June 11, 2021. All these three signals have a very moderate maximum drawdown of about 21%. There is another interesting account, COEX.Investment - Treis, with a profit of 47% for 272 days with a drawdown of less than 20%.

The commissions of TOP 3 NordFX IB Partners in July were as follows:
- the largest commission, 10,388 USD, was credited to a partner from Southeast Asia, account No.1371ХXХ;
- next is the partner from South Asia, account No. 1507XXX, who received 8,953 USD;
- and, finally, another partner from Southeast Asia closes the TOP-3, account No. 1630ХХХ, which received 4,057 USD as a reward.


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 increase in the outflow of cryptocurrencies from exchanges and the growth of net inflow to stablecoins signal a bullish momentum in the market. This conclusion was made by analysts of Bank of America. They noted the “easing of pressure from sellers” with the transition of the initiative to buyers of digital assets. The experts pointed to the stability of the trend despite the Fed's increase in the key rate by 0.75% at once.
Bank of America estimated the amount of withdrawn bitcoins from cryptocurrency platforms to cold wallets at ~$508 million, ethereum at ~$381 million (data from July 2 to August 1). The first asset has risen in price by 19% over this period, the latter - by 56%.

- If bitcoin holds the $20,700 level, the price will soon be in the $27,000-$28,000 range. This is stated in the latest report from Arcane Research. A series of rising local lows has been forming on the chart since July. But “if bitcoin falls below $20,700, it will mark a falling low. This is a bearish signal in the context of technical analysis.”
The company emphasized that much depends on the dynamics of the US stock market, with which the price of bitcoin is closely correlated. The dynamics of the Fed's key rate also plays an important role. “Rising interest rates increase the cost of capital and thus cause stock prices to fall. Tech stocks are declining the most. As the degree of institutionalization has increased, bitcoin has become closely associated with traditional financial markets,” the researchers explained. According to them, if the stock market continues to fall, the downtrend of digital gold will continue.

- On the contrary, Glassnode has doubted the continuation of bitcoin's recovery rally. The rise in prices of BTC and ethereum in recent days is not accompanied by a fundamental improvement in the readings of on-chain indicators. And this does not give confidence in a fundamental change in the market situation, the company's analysts believe.
The number of active bitcoin addresses remains within the downtrend channel. With the exception of brief bursts during periods of capitulation, network activity remains subdued. This indicates a small influx of new demand. Similar trends are observed in the ethereum blockchain. Despite the recent powerful price movement, the network load in terms of the number of transactions has been systematically decreasing since May 2021 to the lowest levels since the summer of 2020.
There has been a surge in activity in recent weeks, which analysts have associated with the consolidation of coins in wallets. They explained that they would change their mind if this trend proved sustainable. Glassnode experts had previously warned that it might take additional time to form a solid foundation. This is evidenced by long-term indicators such as URPD. To increase the chances of a market reversal, it is important to see the transition of speculative coins into the category of “held by long-term investors” (in other words, the “age” of coins from the moment of purchase must exceed 155 days).

- North Korean hackers plagiarize online resumes from legitimate LinkedIn and Indeed profiles to get remote jobs at US cryptocurrency companies. This is reported by Bloomberg with reference to security specialists from Mandiant Inc. As a rule, North Koreans communicate actively on the profile site GitHub, pretending to be from other countries, ascribe to themselves specialization in the technology industry and extensive experience in software development. After getting a job, they are engaged in theft and laundering of illegally obtained digital assets. Naturally, the DPRK government denies any involvement in such crimes.

- The crypto analyst aka Dave the Wave, who correctly predicted the collapse of the crypto market in May 2021, is now talking about the approach of a bullish rally. The basis for this, according to him, are the signals of the Moving Average Convergence/Divergence (MACD) indicator, which was accurate to indicate the 300% BTC rally in 2019.
Dave the Wave noted that many traders are currently concerned about the uncertainty that is caused by macro-economic factors. However, in his opinion, these factors may not have such a strong impact on bitcoin as the market thinks. “Despite macro factors, BTC is doing its job,” the analyst said optimistically.

- According to Mark Yusko, managing partner at Morgan Creek Digital, the current structure of the bitcoin market indicates a bottoming out process. “I am not ready to say unequivocally so far whether the bottom has been reached,” the investor said. “But if you look back, you can see that bitcoin has made several higher lows and highs. […] This is a pretty good bullish trend, and a crypto spring is possible.”
Yusko agrees with the narrative that the main cryptocurrency goes through speculative cycles. In his opinion, BTC is in the “spring” part of the cycle and forms the basis for the next “summer” bull run, which should occur shortly before the next halving (2024): “In my opinion, the crypto spring has begun. If we look at the last two cycles, we see the same number of days in the cycle where spring began and winter ended. The crypto spring can last for months, and we don't need a bull market right now. When we get to the crypto summer, we will see the next bull run and it should happen in anticipation of the next halving in 2024.”
The head of Morgan Creek also believes that the current price of the first cryptocurrency is unfair. In his opinion, despite the forecasts of experts about a possible fall below $18,000, the "fair value" of the coin should be about $30,000.
Recall that Yusko said last year that the price of the asset could soar to $250,000 by 2026. He also suggested that the market cap of BTC will be equal to the market cap of gold, as this digital asset has become a “perfect store of value” and is on its way to replacing the precious metal.

- Crypto trader and investor Bob Loukas agrees that halvings are driving market trends. And after bitcoin hits a new all-time high, the digital asset market, in his opinion, could plunge into a “true crypto winter” in 2026.
According to the Bob Lucas model, bitcoin market movements can be measured in cycles of 16 years, consisting of four micro cycles of 4 years each. In this case, the cycles must be counted from one local low to another. “In theory, bitcoin’s 2026 lows could form below the 2022 lows. Although, it’s hard to believe,” the investor said.
Recall that halving is a two-fold reduction in the reward to miners for a mined block in the blockchain embedded in the bitcoin code. Initially, miners received 50 BTC, this amount decreased to 25 BTC on November 28, 2012, to 12.5 BTC on July 9, 2016, to 6.25 BTC on May 11, 2020. The next reward cut to 3.125 BTC is expected in 2024 at block number 840,000.

- According to the results of July, receipts in cryptocurrency investment products amounted to $474 million (the maximum since the beginning of the year), $81 million for the week from July 23 to July 29. The influx continued for the fifth week in a row. Such data is provided by CoinShares experts. On the other hand, trading activity remains low. The volume of transactions with crypto products at the end of the last reporting week amounted to $1.3 billion, which is almost half the average since the beginning of the year ($2.4 billion).

- Jurrien Timmer, a macroeconomist at one of the largest American holding companies Fidelity, said that bitcoin and ethereum are comparable in terms of their market share and level of dominance in crypto industry with such a tech giant as Apple. “According to Metcalfe's law, the larger an ecosystem becomes, the more its value grows exponentially. Apple is an example. [...] The more iPhones and other devices it sells, the more exponentially it grows. And it grows until it becomes so powerful that a giant abyss forms around it, which cannot be overcome even if something much better than the iPhone is invented tomorrow,” the expert is sure.
Trimmer believes that other crypto projects will continue to compete with the two leading digital assets, but will not be able to win against the giant ecosystems of BTC and ETH.

- Pantera Capital CEO Dan Morehead believes the digital asset market has nearly bottomed out. There are still companies that are in the process of liquidation in bankruptcy court. However, the largest defaults have already occurred in May and June, when the pressure on the industry reached its peak. “I think we are really close to the end of the market crisis. The market has been falling for eight months now. We observed the most severe manifestations of the crisis in November, May and June. It seems that we have seen everything that we should have,” said the CEO of Pantera Capital.


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 August 08 - 12, 2022


EUR/USD: Unexpected Positive News from the US

EUR/USD has been moving sideways in the 1.0100-1.0270 channel for almost three weeks. Timid attempts to break through the upper or lower border of the channel have ended in failure each time. Could it be the summer holiday season to blame? Most likely, the reason is the unexpected economic statistics from the US and the vague prospects that have caused the market confusion.

The US Manufacturing Business Activity Index (ISM) published on Monday, August 01 turned out unexpectedly to be higher than the forecast, 52.8 against 52.0. The index of business activity in the services sector from Markit, which became known on Wednesday, August 03, showed an increase to 47.3 against 47.0 points. The same indicator, but from the US official departments (ISM) also showed an increase to 56.7 points (55.3 a month ago, forecast 53.5). Does it turn out that not everything is so bad in the US economy, it has a serious margin of safety, even despite high energy prices and an aggressive rate hike by the Fed?

Recall that the FOMC (Federal Open Market Committee) meeting of the US Federal Reserve took place on July 27, at which the key interest rate was raised by another 75 basis points (bp). Fed Chairman Jerome Powell, speaking at the end of the meeting, tried to convince everyone that the regulator still retains a hawkish attitude. And that the Fed is ready to accelerate the pace of interest rate hikes if necessary. However, the markets did not believe Powell and reacted to the results of the FOMC meeting with a turn towards the stock market.

Some experts do not rule out that the peak of inflation in the US has already passed. The main driver of its growth was high energy prices as noted above. However, the Core Consumer Price Index, although it is at high levels, has already decreased by 0.6% since March.

The labor market is also doing well. Unemployment in the US has been holding at 3.6% since March, which is a very good indicator. And it became even less in July, 3.5%. And such an important indicator as NFP, the number of new jobs outside the US agricultural sector, which was published on Friday, August 5, with a forecast of 250K, actually reached 528K. And this despite the fact that it was 372K a month earlier.

Jerome Powell said that he did not believe in a recession, as the labor market and a number of sectors of the economy are quite strong. And that the risk of continued high inflation is more significant than the risk of a recession. However, if inflation goes down, and the country's GDP does not show convincing positive dynamics, the scale may tilt towards easing the Fed's monetary policy. It was previously predicted that the key rate could reach 3.4% as a result of monetary restriction, by the end of this year, and rise even higher, up to 3.8% by the end of 2023. The market is currently preparing for the fact that the FOMC may raise the rate not by 0.75%, but by only 0.50% in September, it will stop raising rates altogether in November, and it will return to the quantitative easing (QE) program altogether in 2023.

While the economic situation in the US looks better than expected, according to the latest data, it has definitely worsened in Europe. Retail sales in Germany fell to minus 8.8% on an annualized basis, while they showed an increase to +1.1% a month ago. On the whole, the picture in the Eurozone is just as gloomy: the same indicator fell from +0.4% to -3.7% (against the forecast of -1.7%). This is due to the fact that the population lacks an understanding of what awaits them in the near future. People are afraid of further price increases, primarily because of problems with the supply of energy from Russia. And the possibility of an escalation of the Russian-Ukrainian armed conflict into the EU does not inspire optimism. There is no need to talk about the fear of Russia's use of nuclear weapons.

After the publication of positive data from the US labor market on Friday, August 05, the dollar strengthened somewhat, and the EUR/USD pair closed the five-day period at 1.0180. Like a week ago, 45% of experts vote for the fact that it will still break through the lower border of the channel 1.0100-1.0270, 45% show it the way to the north and 10% - further to the east. As for the oscillators on D1, 25% side with the bears, 60% side with the bulls, and 15% have taken a neutral position. The signals are clearer among trend indicators: 90% look south and only 10% look north.

The nearest support for the EUR/USD pair is the 1.01500 zone, then 1.0100-1.0120, then, of course, there is the 1.0000 level. After it is broken, the bears will target the July 14 low at 0.9950, even lower is the strong 2002 support/resistance zone. 0.9900-0.9930. The next serious task for the bulls will be to break through the 1.0200 resistance, after which they need to rise to the 1.0250-1.0270 zone. The next target is a return to the 1.0400-1.0450 zone, followed by the 1.0520-1.0600 and 1.0650-1.0750 zones.

As for the forthcoming events, the publication of data on the US consumer market (CPI) on Wednesday, August 10 should be noted. This package will be supplemented on Thursday and Friday: August 11 - Producer Price Index (PPI) and August 12 - Consumer Confidence Index of the University of Michigan in the USA. As for the news from Europe, the value of the Harmonized Consumer Price Index in Germany will become known on August 10.

GBP/USD: Bank of England: No Sensation Happened

The main event of the week could have certainly been the meeting of the Bank of England (BOE) on Thursday August 04. It could have been, but it wasn't. Some investors had hoped that the regulator would take a desperate step and raise the rate by 150 bp at once. In this case, it would overtake the current dollar rate (2.50%), which would be a weighty argument in favor of strengthening the British currency. However, the sensation did not happen. The Bank of England raised the rate by 50 bp, bringing it to 1.75%, which had been previously taken into account by the market in quotes.

The minutes of the Monetary Policy Committee (MPC) meeting of the Bank of England turned out to be quite boring as well. If any of its 9 members wanted to raise the rate by 75 bp, it would be taken as a positive development for the pound. And vice versa: the desire to raise the rate by only 25 bp. would put additional pressure on the British currency. But, as is clear from the minutes, all 9 members of the Committee voted unanimously for raising the rate exactly by 50 bp.

The revised economic forecasts turned out to be quite gloomy, and BOE management's post-meeting statements were hazy dovish. According to the head of the Bank of England Andrew Bailey, the current rate hike by 50 bp does not mean that the bank will do the same at each subsequent meeting. “Interest rates will not go back to where they were before the financial crisis,” said Andrew Bailey vaguely. “And we don’t know what normal interest rates will be in the future.” BOE chief economist Hugh Pill added to the haze saying that "the equilibrium level of interest rates is very uncertain."

As a result of the absence of any benchmarks, the GBP/USD pair, having fluctuated between the levels of 1.2064 and 1.2214, returned to the center of this range on Thursday, August 04. On Friday, on the news from the US labor market, it fell to a strong support of 1.2000, and finished at 1.2070.

According to a third of analysts, the past week did not bring anything good to the pound, and therefore the pair will continue its fall. The opposite point of view is also held by a third of the experts, another third remains neutral. The readings of the indicators on D1 are as follows. Among the trend indicators, the ratio is 90% to 10% in favor of the red ones. Among the oscillators, only 35% side with the bears, 25% indicate growth, 40% have taken a neutral position.

The nearest support is located at the level of 1.2000-1.2025, followed by the zone 1.1875-1.1925. Below is the level of 1.1800, the low of July 14 is 1.1759, then 1.1650, 1.1535 and the lows of March 2020. in the zone 1.1400-1.1450. As for the bulls, they will meet resistance in the zones and at the levels of 1.2100-1.2130, 1.2170-1.2215, 1.2245, 1.2280-1.2325 and 1.2400-1.2430.

In terms of macro news coming out of the UK, Friday 12 August could be marked next week. Data on the country's GDP and production in the UK manufacturing industry will be published on this day.

continued below...
 
USD/JPY: High Volatility, Neutral Outlook

Looking at the chart, the 134.60-137.00 range is quite attractive for both bulls and bears on the USD/JPY pair. It traded in it from mid-June to early July, and it returned to it at the end of last week. Having started on Monday August 01 from the level of 133.31, the pair reached the local bottom at the level of 130.37 the next day. This was followed by a reversal and the dollar began to actively win back losses. As a result, the last chord sounded at a height of 135.00.

As for the prospects of the Japanese currency, the experts' forecast looks quite neutral, as in the cases of previous pairs. 45% of them are waiting for a new breakthrough of the pair to the north, another 45% hope for a continuation of the downtrend, the remaining 10% talk about a side corridor. The picture is somewhat different in the readings of indicators on D1 and is rather multidirectional. Trend indicators have a ratio of 85% to 15% in favor of green ones. Oscillators have the opposite: 60% look to the north, 40% to the east, while the number of supporters of the downtrend is 0%.

The values of possible slippage and ranges of support/resistance zones have sharply increased due to the ultra-high volatility of the pair. Supports are located at the levels and in the zones 134.75, 134.25, 132.60-133.15, 131.50, 130.40, 128.60 and 126.35-127.00. Resistances are 136.35-137.00, 137.45, 137.90-138.40, 138.50-139.00, followed by the July 14 high of 139.38 and round bull targets¬ of 140.00 and 142.00.

No major events regarding the Japanese economy are expected this week. The only thing to keep in mind is the public holiday on Thursday August 11, when Japan celebrates Mountain Day. This is the youngest public holiday; it was established in 2014 at the initiative of environmental and tourism organizations in order to support the citizens' love for the nature of their country and give the Japanese "the opportunity to get to know the mountains and feel the grace emanating from them."

CRYPTOCURRENCIES: Influencers Talk about a Very Long Crypto Spring


The price of bitcoin fell to $17,597 on June 18, in line with December 2020 levels and almost 75% below its all-time high of $68,918. The BTC/USD pair slowly crept up from that moment on, demonstrating a series of rising lows and highs over 7 weeks. Moreover, the volatility of the pair gradually increased: if it was about $3,150 at the beginning, it exceeded $4,000 by the end of July.

Disputes have not subsided about what happened on June 18 over the past month and a half: did bitcoin find the bottom? Or is it just the middle of the crypto-winter, and the real frosts are yet to come?

At the time of writing, Friday evening, August 05, the total capitalization of the crypto market is $1.089 trillion ($1.098 trillion a week ago), and the Crypto Fear & Greed Index is still in the fear zone, at a level of 31 points (39 a week ago). The BTC/USD pair is trading in the $22,900 zone.

According to Arcane Research analysts, if bitcoin holds the $20,700 level, the price will soon be in the $27,000-$28,000 range. But “if bitcoin falls below $20,700, it will mark a falling low. This is a bearish signal in the context of technical analysis.” Arcane Research emphasized that much depends on the dynamics of the US stock market, with which the price of bitcoin is closely correlated. The dynamics of the Fed's key rate also plays an important role. “Rising interest rates increase the cost of capital and thus cause stock prices to fall. Tech stocks are declining the most. As the degree of institutionalization has increased, bitcoin has become closely associated with traditional financial markets,” the researchers explained. According to them, if the stock market continues to fall, the downtrend of digital gold will continue. (Note that the S&P500 is currently trading around the important support/resistance zone of 4.100-4.150. But according to Goldman Sachs, the US stock market is headed for another big sell-off.)

Glassnode is also unsure about the continuation of bitcoin's recovery momentum. The rise in prices of BTC and Ethereum in recent days has not been accompanied by a fundamental improvement in the readings of on-chain indicators. And this does not give confidence in a fundamental change in the market situation, the company's analysts believe.

The number of active bitcoin addresses remains within the downtrend channel. With the exception of brief bursts during periods of capitulation, network activity remains subdued. This indicates a small influx of new demand. Similar trends are observed in the Ethereum blockchain. Despite the recent powerful price movement, the network load in terms of the number of transactions has been systematically decreasing since May 2021 to the lowest levels since the summer of 2020.

There has been a surge in activity in recent weeks, which analysts have associated with the consolidation of coins in wallets. They explained that they would change their mind if this trend proved sustainable. Glassnode experts had previously warned that it might take additional time to form a solid foundation. This is evidenced by long-term indicators such as URPD. To increase the chances of a market reversal, it is important to see the transition of speculative coins into the category of “held by long-term investors” (in other words, the “age” of coins from the moment of purchase must exceed 155 days).

Bank of America estimated the volume of withdrawn bitcoins from cryptocurrency platforms to cold wallets at ~$508 million, Ethereum at ~$381 million (data from July 2 to August 1). The first asset has risen in price by 19% over this period, the latter - by 56%. However, the conclusions of the bank's specialists look more optimistic than those of their colleagues from Glassnode. So, in their opinion, the increase in the outflow of cryptocurrencies from exchanges and the growth in net inflows into stablecoins signal a bullish market momentum. At the same time, Bank of America noted the “easing of pressure from sellers” and the transition of the initiative to buyers of digital assets. Experts also pointed to the sustainability of the trend, even despite the fact that the Fed raised key rates by 0.75% on July 27.

Trader and investor Bob Loukas, like many other members of the crypto community, agrees that halvings are driving market trends. The next one is expected in 2024 at block number 840,000. And after bitcoin hits a new all-time high, the digital asset market, according to Bob Lucas, may plunge into a “real crypto winter” in 2026.

According to his model, bitcoin market movements can be measured in cycles of 16 years, consisting of four micro cycles of 4 years each. In this case, the cycles must be counted from one local low to another. “Although it’s hard to believe, in theory, bitcoin’s 2026 lows could form below the 2022 lows,” the investor said.

Mark Yusko, managing partner at Morgan Creek Digital, agrees with the narrative that the main cryptocurrency goes through speculative cycles. In his opinion, BTC is now in the "spring" part of the cycle and forms the basis for the next "summer" bull run, which should occur shortly before the 2024 halving. “In my opinion, the crypto spring has begun,” Yusko writes. "If we look at the last two cycles, we will see the same number of days in the cycle where spring began, and winter ended. The crypto spring can last for months, and we don't need a bull market right now. When we get to the crypto summer, we will see the next bull run and it should happen in anticipation of the next halving in 2024.”

According to Morgan Creek Digital CEO, the current structure of the bitcoin market points to the process of reaching the bottom. “I am not ready to say unequivocally so far whether the bottom has been reached,” the investor said. “But if you look back, you can see that bitcoin has made several higher lows and highs. […] This is a pretty good bullish trend, and a crypto spring is possible.”

Mark Yusko also believes that the current price of the first cryptocurrency is unfair. In his opinion, despite the forecasts of experts about a possible fall below $18,000, the "fair value" of the coin should be about $30,000 at the moment, and it could soar to $250,000 by 2026.

Anthony Scaramucci, founder and managing partner of SkyBridge Capital, like Mark Yusko, thinks that after the collapse caused by the bankruptcy of Three Arrows, Celsius and Voyager, the worst of the “bearish” moments for the crypto sector is over. And he also points to 2026, warning that the term of investments in digital assets should be at least 4 or 5 years. As for the “fair value” of bitcoin, it, in his opinion, should now be in the region of $40,000.

Another top manager, Pantera Capital's CEO, Dan Morehead, shares a similar opinion. Like his colleagues, he believes that the digital asset market has almost bottomed out. There are still companies that are in the process of liquidation in bankruptcy court. However, the largest defaults have already occurred in May and June, when the pressure on the industry reached its peak. “I think we are really close to the end of the market crisis. The market has been falling for eight months now. We observed the most severe manifestations of the crisis in November, May and June. It seems that we have seen everything that we should have,” said the CEO of Pantera Capital.


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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CryptoNews of the Week


- Bitcoin Core team member Matt Corallo called the maximalists of the first cryptocurrency an “endangered species” and urged them to stop attacking other projects. According to him, the “most vocal proponents” are attacking other communities counterproductively instead of promoting the “greatness and uniqueness” of digital gold. In his opinion, in the context of the current policy of confronting projects in the crypto community, many of the Ethereum community (as with Ripple before) will begin to set regulators against bitcoin, relying on ecology.

- Law enforcement agencies of the Republic of Kazakhstan conducted a special operation, as a result of which the gang that controlled cryptominers was neutralized. 23 people were detained during several raids. Weapons, black bookkeeping, as well as more than 6,000 items of mining equipment worth about $7 million were seized during the searches. It is reported that the criminals made a profit of $300-500 thousand per month due to the activities of the mining farms under their control.

- The number of cryptocurrency ATMs worldwide has increased to 39,015, according to the Coin ATM Radar service. The figure was 25,154 a year ago. The United States holds the leading position by a wide margin: 87.9% of the total number of bitcoin ATMs are concentrated there. Canada ranks second with 6.3%.

– Bitcoin is trading at a significant discount in a sustained bull market. This was stated by Mike McGlone, senior strategist at Bloomberg Intelligence. “The first cryptocurrency hit an all-time low in July compared to its 100-week moving average,” he explained.
The analyst emphasized the high importance of the stock market, with which bitcoin shows a noticeable correlation, and mentioned the key role of the US Federal Reserve, which is pursuing aggressive rate hikes in 2022. This could potentially create barriers to risky assets, including cryptocurrencies and stocks. At the same time, Mike McGlone urged not to try to fight the Fed.

- Some on-chain indicators signaled the passing of the capitulation period and an improvement in investor sentiment in July. This is stated in an analytical report by ForkLog. Against the background of consolidation and the subsequent smooth recovery of the price of bitcoin, the Puell Multiple indicator began to exit the deep oversold zone. The Net Unrealized Profit/Loss (NUPL) metric has moved into the hope/fear zone and is heading towards optimism. The MVRV Z-Score crossed the upper boundary of the deep oversold zone at 0.1 on July 28. This is another signal about the passage of the "bottom" of the market cycle.

- An analyst with the nickname Guy noted that the release of economic data expected this month could have a significant impact on the crypto markets. According to him, 3 important factors can interrupt the current uptrend. The first is the US Personal Consumption Expenditure Index (PCE). “PCE data for July will be released on August 26. Given that PCE is the Fed's favorite inflation indicator, a high value could lead to markets collapse in anticipation of an aggressive rate hike."
The second factor is the US gross domestic product for the second quarter: “Revised GDP data for the second quarter will also be published on August 26. Pay attention to them. If these figures are revised upwards, that is, in fact, the US will no longer be in a technical recession, this may push the Fed to raise interest rates even more.”
And finally, the third factor is the annual economic symposium at Jackson Hole, where US financial authorities, prominent figures from Central banks and a number of other sectors discuss global economic problems. The symposium will take place from August 25 to 27, which coincides with the release dates of the two above-mentioned statistics.
These factors could influence the decisions of Fed Chairman Jerome Powell, which will have a cascading effect on the crypto market. “If the statistics turn out to be unimportant, and Powell is not in the best mood, then the crypto market will have a bad time. Although there are chances that he will keep his thoughts to himself long enough for the cryptocurrency market to continue its recovery rally.”

- Mike Novogratz, CEO of investment company Galaxy Digital, said that bitcoin is unlikely to rise above $30,000 anytime soon. He noted in an interview with Bloomberg that he does not observe an influx of institutional investors into the first cryptocurrency at the moment. The billionaire himself “would be happy” if BTC stopped for a while in the range of $20,000 to $30,000.
(Note that a recent survey of institutional investors by Cumberland showed that the majority of respondents expect bitcoin to rise to $32,000 by the end of the year.)
As for ethereum, Mike Novogratz believes that this altcoin could reach the $2,200 mark, given the momentum leading up to the upgrade to change the consensus algorithm from Proof-of-Work (PoW) to Proof-of-Stake (PoS), which is expected in end of September.

- Ethereum co-founder Vitalik Buterin believes that the market has not yet taken into account the upcoming transition of the network to Proof-of-Stake, which should take place in September. “Once the merger actually happens, I expect investor sentiment to improve,” he said. “In my opinion, […] the main impact on the ETH rate will be provided after the completion of the merger process.”

- The World Tourism Organization at the UN has included El Salvador in its list. According to the President of the country Nayib Bukele, it was bitcoin that helped the significant growth of the tourism industry. The head of state stressed that only a few countries managed to return tourism indicators to pre-pandemic levels. The adoption of bitcoin as legal tender, as well as the creation of a "bitcoin beach", has attracted tourists from all over the world to El Salvador. The President also noted the growth of domestic tourism due to the decrease in crime. Nayib Bukele presented statistics from the search giant Google: El Salvador is marked on the map as a country with "higher than expected" tourist activity.
Morena Valdez, Minister of Tourism of El Salvador, said earlier that tourism in the country has grown by 30% thanks to bitcoin. At the same time, cryptocurrency enthusiasts stay in El Salvador for a longer period and spend more money. If the daily expenses of a tourist in the country ranged from $113 to $150 earlier, they exceed $200 now.

- The American cryptocurrency exchange Coinbase and the largest investment company BlackRock entered into a partnership agreement last week. BlackRock manages over $10 trillion in assets at the moment. Based on this, a popular crypto analyst under the nickname InvestAnswers believes that the influx of funds into cryptocurrencies from BlackRock clients could push the BTC rate to $773,000.
“If BlackRock places 0.5% of its assets in BTC, then, taking into account the leverage, the capitalization of bitcoin will increase by $1.05 trillion, which means the price will rise to $75,000. And this, I think, is very likely. If BlackRock clients stake 1% of their holdings, then the capitalization will increase by $2.1 trillion, and bitcoin will reach $173,000. And if BlackRock places 5% of its assets, the bitcoin rate will reach $773,000. Although I think this is too aggressive, it may be possible within 3-5 years,” the analyst wrote. (It should be noted here that InvestAnswers calculations are correct only for investments with a leverage of 1:21 or more).

- According to Sam Bankman-Fried, CEO of the FTX crypto exchange, crypto winter is probably coming to an end, and spring is just around the corner. “I think we've already seen the worst. There's still a little more to go, but it's not that bad,” said the multi-billionaire, better known as SBF. “Some bitcoin miners might have some problems, but I think we are talking about a few hundred million dollars in total pain, not billions.”
However, the SBF’s spring forecast was not without a “but”: “If Nasdaq is left to fall another 25%, and if interest rates do rise to 7%, and if we are in a recession for two and a half years […], bitcoin could drop to $15,000 or $10,000,” said the CEO of FTX.
The crypto winter froze a number of once-thriving companies such as Three Arrows Capital, Terraform Labs and Voyager Digital, but FTX survived the cold. Commenting on the incident, its head said that the recession "became a healthy weed" for the industry.

- Despite the decline in the price of the first cryptocurrency in 2022, the number of addresses with a balance of 1 BTC and more is growing steadily (+9.4% since the beginning of the year). The indicator reached a historical high of 891.009 at the end of July. The situation is even more pronounced with balances of more than 1 ETH, the number of which has grown by 15.7% over seven months.
This trend indicates the desire of investors to accumulate. Analytical resource The Balance posted a report stating that 39% of US investors began to invest more in cryptocurrencies. According to the author of the report, these Americans are looking for new areas of investment to maintain their savings amid economic uncertainty. Among millennials and Gen Z investors (aged 41 and younger), almost 50% prefer cryptocurrencies. Among investors of generation X and older, they are just under a third.


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 August 15 - 19, 2022


EUR/USD: Weak Inflation Weakens Dollar


EUR/USD has been moving sideways in the 1.0100-1.0270 channel for more than three weeks. Attempts to break through its upper or lower border ended in failure each time. Even very strong data on the US labor market, which came out in the first week of August, did not help the dollar. Recall that unemployment in the US has remained at 3.6% since March, which is a very good indicator. And it became even lower in July, 3.5%. And such an important indicator as NFP, the number of new jobs created outside the agricultural sector, with a forecast of 250K, actually reached 528K. And this despite the fact that it was 372K a month earlier.

The sideways movement continued until Wednesday, August 10, when the pair moved sharply higher, turning the 1.0270 level from resistance to support. And the point here is not the strengthening of the euro, but the weakening of the dollar. The position of the American currency deteriorated after the release of the US inflation report. The consumer price index (CPI) with a forecast of 0.2% in July turned out to be at the level of 0.0% (1.3% a month earlier). It decreased from 9.1% to 8.5% (forecast 8.7%) on an annualized basis. Instead of the expected 0.5%, the base CPI grew by only 0.3% in July (0.7% a month earlier).

All these figures indicate clearly that inflation, the war against which the Fed launched, is declining. Of course, this is not a final victory, but the success of the American Central Bank is obvious. Therefore, it may soften its monetary policy somewhat and not raise interest rates as aggressively as it has done in the past two months.

Speaking at the end of the July meeting of the FOMC (Federal Open Market Committee), Fed Chairman Jerome Powell tried to convince everyone that the regulator is still hawkish. And that, if necessary, the Fed is ready to accelerate the pace of rate hikes. However, even then the markets did not believe Powell and reacted by turning towards the stock market. And now the inflation data has become another argument in favor of the fact that the FOMC may raise the rate not by 0.75%, but only by 0.50% in September, stop raising rates altogether in November, and return to the quantitative easing program altogether in 2023.

Of course, this is just a forecast so far. More precisely, not even a forecast, but just expectations. But it was them that continued to push stock indices S&P500, Dow Jones, Nasdaq up, and did not allow the EUR/USD pair to fall again to the parity of 1.0000. Not yet.

EUR/USD ended the past week at 1.0260, returning to the medium-term sideways channel of 1.0100-1.0270. 45% of experts vote for the fact that it will go further down, and maybe even break through the lower border of the channel. 35% show it the way to the north and 20% - to the east. As for the oscillators on D1, 40% are colored red, 40% are green, and 20% are neutral gray. There is complete balance among the trend indicators: 50% look south and 50% look north.

The nearest support for the pair is the level 1.0220, then there are zones 1.01500-1.0200 and 1.0095-1.0120. The bears' main target is, of course, 1.0000. If this key level is broken, the bears will target the July 14 low at 0.9950, even lower is the strong 2002 support/resistance zone of 0.9900-0.9930. The next serious task of the bulls will be a breakout of the upper border of the channel 1.0270, then there is a high of the past week in the area of 1.0364-1.0368, the next target is a return to the zone 1.0400-1.0450, then there are zones 1.0520-1.0600 and 1.0650-1.0750.

The coming week will be full of all sorts of economic statistics. Thus, the ZEW Economic Sentiment Index in Germany will be published on Tuesday, August 16. there will be preliminary data on Eurozone GDP (Q2) on Wednesday, August 17, as well as data on retail sales in the US. The minutes of the last FOMC meeting will be published on the same day. We are waiting for data on European inflation (CPI) on Thursday, August 18, as well as on the labor market, home sales and manufacturing activity in the United States.

GBP/USD: GDP Falls, Forecasts Remain Gloomy

GBP/USD reacted to the US inflation data released on Wednesday, August 10, with a jump north by almost 200 points to the height of 1.2276. True, it failed to stay there, and the last chord sounded at around 1.2135. Even the global rise in risk sentiment did not help the pound. The main reason is the gloomy economic prospects for the UK economy and no less gloomy forecasts of the Bank of England.

UK GDP data for both June and Q2 were released on Friday, August 12. The June contraction turned out to be less than expected: -0.6%, while the forecast was -1.2%. The fall in GDP in April-June amounted to -0.1% against the expected -0.2% and +0.8% in Q1. Accordingly, the annual figure was 2.9% against the forecasted 2.8% and 8.7% in Q1. All these data turned out to be slightly better than expected. But, despite this, the slide of the economy into recession is an obvious fact, and the only question that remains is the depth and duration of such a fall.

According to 55% of analysts, the last week did not bring anything good to the pound, and therefore the pair will continue its fall. The opposite point of view is also held by only 15% of experts, the remaining 30% remain neutral. The readings of the indicators on D1 are as follows. As for the trend indicators, the ratio is 85% to 15% in favor of the red ones. Only 25% of the oscillators side with the bears, 35% indicate growth, 40% have taken a neutral position.

The nearest support is located at 1.2100, followed by zones and levels 1.2045-1.2065, 1.2000, 1.1875-1.1925 and 1.1800. Below is July 14 low of 1.1759, then 1.1650, 1.1535 and March 2020 lows in the zone 1.1400-1.1450. As for the bulls, they will meet resistance in the zones and at the levels 1.2160-1.2200, 1.2275-1.2325 and 1.2400-1.2430.

The main event of the coming week is likely to be the release of UK inflation data (CPI) on Wednesday August 17. Also noteworthy on the calendar is Tuesday August 16, when UK labor market data comes in, and Friday August 19, when July retail sales in the country become known.

USD/JPY: Yen: Hope for Better but a Very Distant Future

The dynamics of USD/JPY last week was similar to the dynamics of EUR/USD reversed. (This is logical, since here the dollar moves from the position of the base currency to the position of the quote currency). Having started on Monday, August 8 from 135.00, the pair went down sharply on Wednesday, August 10 on the basis of US inflation data, reached the local bottom at 131.72 on August 11, then reversed and finished at 133.45.

Those who are ready to open long-term positions will probably be interested in the forecast of analysts from Westpac, one of the largest banks in Australia, one of the Big Four, and the second largest bank in New Zealand. They believe that the current level of USD/JPY can be justified. Japan is favored by economic growth in Asia and the continuing downward trend in energy prices. And given the possible easing of the monetary policy of the US Federal Reserve, according to Westpac strategists, the pair may fall to 123.00 by the end of 2023.

The end of 2023 is quite far away, more than 16 months. As for the forecast for the near future, the opinions of experts are divided as follows. 45% of analysts expect the pair to rise, another 25% hope for the strengthening of the yen and the continuation of the downtrend, the remaining 30% speak of a side corridor. The readings of indicators on D1 give a bit different picture. Trend indicators have a ratio of 65% to 35% in favor of the red ones. Oscillators are 15% north, 40% south, and the remaining 45% east.

Supports for the pair are located at the levels and in the zones 133.00, 132.50-132.85, 131.75-132.00, 131.00, 130.40, 128.60 and 126.35-127.00. Resistances are 134.00, 134.40-134.60, 135.30-135.60, 136.35-137.00, 137.45, 137.90-138.40, 138.50-139.00, and finally the July 14 high at 139.38.

As for the events of the upcoming week, it is worth paying attention to Monday, August 15, when the preliminary volume of Japan's GDP for Q2 2022 will be known. According to forecasts, it may grow from negative -0.1% to +0.6%. This is the main macroeconomic indicator of market activity, which assesses the rate of growth or decline of the country's economy. Its growth is usually a positive, bullish, factor for the national currency.

continued below...
 
CRYPTOCURRENCIES: August 26: a Terrible Day on the Calendar

The crypto community continues to wonder if the crypto market has bottomed out or if a new price collapse awaits us. Before moving on to the next batch of forecasts, let's start with some statistics.

So, the price of bitcoin fell to $17,597 on June 18, which is in line with the level of December 2020 and almost 75% below the all-time high of $68,918. If we measure from the beginning of 2022, the main cryptocurrency started at $47,572 on January 01, and its fall was 63% by June 18. After that, BTC/USD crept up slowly, demonstrating a series of rising lows and highs over 8 weeks. However, as the chart shows, bearish resistance sharply increased above $24,000 and the upward momentum began to fade rapidly. So, the weekly maximum was at a height of $24.264 on July 20, $24.435 on July 29, and, finally, $24.891 on August 11. That is, growth was only about 2.5% over the past 3 weeks.

At the time of this writing, Friday evening, August 12, the total capitalization of the crypto market is $1.155 trillion ($1.089 trillion a week ago), and the Crypto Fear & Greed Index is still in the fear zone, at a level of 42 points (31 weeks ago). BTC/USD is trading at $24,100, about 50% lower than at the beginning of the year.

Despite this price reduction, the number of addresses with a balance of 1 BTC has grown by 9.4% since the beginning of 2022. The indicator reached a historical high of 891.009 at the end of July. The situation is even more pronounced with addresses with a balance of more than 1 ETH, the number of which has grown by 15.7% over seven months. This trend indicates the desire of investors to accumulate. For example, according to the analytical resource The Balance, 39% of US investors began to invest more in cryptocurrencies, wanting to keep their savings.

Is it worth buying the flagship cryptocurrency now? Bloomberg Intelligence Senior Strategist Mike McGlone believes bitcoin is currently trading at a significant discount in a sustained bull market. “The first cryptocurrency hit an all-time low in July compared to its 100-week moving average,” the expert explained.

Mark Yusko, managing partner of Morgan Creek Digital, also says that the current price of the first cryptocurrency is unfair, and should be around $30,000. And according to Anthony Scaramucci, CEO of SkyBridge Capital, the “fair value” of BTC should now be around $40,000. PlanB, the creator of the once-popular Stock-to-Flow model, has the bar even higher at $55,000.

All these influencers have their own models and their own justifications. However, one must keep in mind that “fair price” is a rather relative concept. And perhaps the fairest is the current market value. That is, how much sellers are ready to sell now, and buyers are ready to buy a particular asset for.

Some on-chain indicators signaled the passing of the capitulation period and an improvement in investor sentiment in July. This is stated in an analytical report by ForkLog. Against the background of consolidation and the subsequent smooth recovery of the price of bitcoin, the Puell Multiple indicator began to exit the deep oversold zone. The Net Unrealized Profit/Loss (NUPL) metric has moved into the hope/fear zone and is heading towards optimism. The MVRV Z-Score crossed the upper boundary of the deep oversold zone at 0.1 on July 28. This is another signal about the passage of the "bottom" of the market cycle.

According to Sam Bankman-Fried, CEO of the FTX crypto exchange, crypto winter is probably coming to an end, and spring is just around the corner. “I think we've seen the worst already,” said the multi-billionaire, better known as SBF. “Some bitcoin miners might have some more problems, but I think we are talking about a few hundred million dollars in total pain, not billions.”

However, SBF’s crypto spring forecast was not without a “but”: “If Nasdaq is left to fall another 25%, and if Fed interest rates do rise to 7%, and if we are in recession for two and a half years […] , bitcoin could fall to $15,000 or $10,000,” said the CEO of FTX.

Mike McGlone of Bloomberg Intelligence also looks cautiously towards the US Central Bank. The analyst emphasizes the key role of the US Federal Reserve, which is pursuing aggressive rate hikes in 2022. This could potentially create barriers to risky assets, including cryptocurrencies and stocks. At the same time, Mike McGlone urges not to try to fight the Fed.

Risky assets will have to pass the next serious test at the end of August. An analyst with the nickname Guy noted that the release of economic data expected this month could have a significant impact on the crypto markets. According to him, 3 important factors can interrupt the current uptrend. The first is the US Personal Consumption Expenditure Index (PCE). “PCE data for July will be released on August 26. Given that PCE is the Fed's favorite inflation indicator, a high value could lead to markets collapse in anticipation of an aggressive rate hike."

The second factor is the US gross domestic product for the second quarter: “Revised GDP data for the second quarter will also be published on August 26. Pay attention to them. If these figures are revised upwards, that is, in fact, the US will no longer be in a technical recession, this may push the Fed to raise interest rates even more.”

And finally, the third factor is the annual economic symposium in Jackson Hole, where US financial authorities discuss global economic problems. The symposium will take place from August 25 to 27, which coincides with the release dates of the two above-mentioned statistics.

These factors could influence the decisions of Fed Chairman Jerome Powell, which will have a cascading effect on the crypto market. “If the statistics turn out to be unimportant, and Powell is not in the best mood, then the crypto market will have a bad time. Although there are chances that he will keep his thoughts to himself long enough for the cryptocurrency market to continue its recovery rally.”

A recent Cumberland Institutional Investor Survey found that the majority of respondents expect bitcoin to rise to $32,000 by the end of the year. Mike Novogratz, CEO of Galaxy Digital investment company, named a slightly smaller figure. In his opinion, the coin is unlikely to rise above the $30,000 level in the near future. The billionaire himself “would be happy” if BTC stopped for a while in the range of $20,000 to $30,000.

The most optimistic forecast this time was given by a popular analyst under the nickname InvestAnswers. The American cryptocurrency exchange Coinbase and the largest investment company BlackRock entered into a partnership agreement last week. BlackRock manages over $10 trillion in assets at the moment. Based on this, InvestAnswers believes that the influx of funds in cryptocurrencies from BlackRock clients could push the BTC price to $773,000.

“If BlackRock places 0.5% of its assets in BTC, then, taking into account the leverage, the capitalization of bitcoin will increase by $1.05 trillion, which means the price will rise to $75,000. And this, I think, is very likely. If BlackRock clients stake 1% of their holdings, then the capitalization will increase by $2.1 trillion, and bitcoin will reach $173,000. And if BlackRock places 5% of its assets, the bitcoin rate will reach $773,000. Although I think this is too aggressive, it may be possible within 3-5 years,” the analyst wrote. (It should be noted here that InvestAnswers calculations are correct only for investments with a leverage of 1:21 or more).

And in conclusion of the review, a few words about the main altcoin, ethereum, which is recovering much faster than bitcoin. The BTC/USD pair has risen by about 40% over the past eight weeks, while ETH/ USD has grown by almost 120%. Most experts attribute this bull rally to the upcoming change in the consensus algorithm from Proof-of-Work (PoW) to Proof-of-Stake (PoS), which is expected at the end of September. The head of Galaxy Digital, Mike Novogratz, believes that the altcoin can reach the $2,200 mark even before this event. But according to ethereum co-founder Vitalik Buterin, the best is yet to come, after the network transitions to Proof-of-Stake. “Once the merger actually happens, I expect investor sentiment to improve,” he said. “In my opinion, […] the main impact on the ETH rate will be provided after the completion of the merger process.”


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
 
Forex and Cryptocurrencies Forecast for August 22 - 26, 2022


EUR/USD: Back to 1:1 Parity

EUR/USD has been moving sideways in the 1.0100-1.0270 channel for more than three weeks. All attempts to break through its upper or lower border ended in failure. This movement continued until August 10, when, after the publication of data on inflation in the US, the pair went up sharply, turning the level of 1.0270 from resistance into support. However, the bulls' joy was short-lived. Just two days later, the pair returned to the channel, broke through its lower border on Thursday, August 18, and ended the week at 1.0039.

So, as most experts expected, the dollar and the euro approached the parity of 1.0000 again. There are two main reasons explaining the next reversal of the pair to the south. The first is the drop in the market's risk appetites. Inflation and the energy crisis in Europe are on the rise. The consumer price index (CPI) rose there in annual terms from 8.6% to 8.9% in July. So far, there is no way out of the energy crisis caused by the sanctions imposed on Russia because of its invasion of Ukraine. The Chinese economy is not encouraging either: the volume of industrial production (y/y) fell from 3.9% to 3.8% over the month, which is much lower than the forecasted 4.6%. The volume of retail sales fell from 3.1% to 2.7% as well (against the forecast of 5.0%). Against this background, the People's Bank of China lowered the base lending rate on the yuan sharply, from 3.70% to 2.75%.

The second reason lies in the positive macroeconomic statistics from the US and investors' confidence in the strength of the country's economy. It is known that the main "whales" that now determine the Fed's monetary policy are the state of the labor market and inflation. Unemployment in the US has been holding at 3.6% since March, which is a very good indicator. And it became even lower in July, 3.5%. And such an important indicator as NFP, the number of new jobs created outside the agricultural sector, with a forecast of 250K, actually reached 528K. And this despite the fact that it was 372K a month earlier. As for inflation, the figures look quite good here as well. The consumer price index (CPI) with a forecast of 0.2% in July turned out to be at the level of 0.0% (1.3% a month earlier). It decreased from 9.1% to 8.5% (forecast 8.7%) on an annualized basis. Instead of the expected 0.5%, the base CPI grew by only 0.3% in July (0.7% a month earlier).

All these figures indicate clearly that inflation, the war against which the Fed launched, is declining. Of course, this is not a final victory, but the success of the American Central Bank is obvious. Therefore, it may soften its monetary policy somewhat and not raise interest rates as aggressively as it has done in the past two months. It was this logic that played against the dollar, pushing EUR/USD up to 1.0368 on August 10. However, everything returned to normal soon. Fed chief Jerome Powell assured everyone that the regulator remains hawkish. The markets made the same conclusion from the minutes of the July meeting of the FOMC (Federal Open Market Committee) published on Wednesday, August 17.

It is expected that the American Central Bank may raise the rate from the current 2.5% to 4.0% by the end of 2022 - the beginning of 2023, and possibly to 5.0%, after which it will hold it in order to bring inflation down to the target level of 2%. This means that the dollar will be strong enough for a long time to come. This forecast pushed up the USD DXY Index again. Following this, the yield of US government bonds and securities of other developed countries began to grow, and stock indices (S & P500, Dow Jones and Nasdaq), cryptocurrencies and other risky assets rushed south. Having believed in the rate hike and the prospects for the dollar, investors even began to get rid of such a protective asset as gold: the quotes of XAU/USD were falling throughout the past week.

As for the near future of the EUR/USD pair, at the time of writing the review, on the evening of August 19, only 15% of experts speak in favor of its growth, a little more indicate the way for it to the south - 25%, the remaining 60% refrain from forecasts. The readings of the indicators on D1 give much more definite signals. 100% side with the bears both among trend indicators and among oscillators. However, a third gives signals of it being oversold among the latter.

Apart from the support at 1.0030, the immediate target for the EUR/USD pair is, of course, the 1.0000 level. After it is broken, the bears will target the July 14 low at 0.9950, even lower is the strong 2002 support/resistance zone 0.9900-0.9930. The immediate target for the bulls is a return to the zone 1.0070-1.0100, then resistance and zones 1.0120, 1.0150-1.0180, 1.0200 and 1.0250-1.0270 follow. More distant targets are located in the zones 1.0400-1.0450, 1.0520-1.0600 and 1.0650-1.0750.

Upcoming events include the release of the German and Eurozone Manufacturing PMIs on Tuesday, August 23. The volume of orders for capital goods and durable goods in the US will be known the next day. There will be a whole series of events on Thursday, August 25. Firstly, this is the publication of data on German GDP for Q2. Then, the publication of the minutes of the ECB meeting on monetary policy. And finally, four important events in the US that could seriously affect the current trend of the dollar. Data on GDP for Q2 and on unemployment will be published on August 25, and the Personal Consumption Expenditure Index (PCE), which is called "the Fed's favorite inflation indicator," will become known on August 26. The release of all these statistics will coincide with the annual economics symposium in Jackson Hole on August 25-27. The US financial authorities discuss the most important economic issues there, and these indicators are sure to influence their decisions.

GBP/USD: Gloomy Forecasts for the Pound Continue to Come True

GBP/USD rushed down again after US Federal Reserve officials pointed to a further sharp increase in interest rates. It was further accelerated by speeches by a number of Fed officials, including the head of the Federal Reserve Bank of St. Louis James Bullard and his colleague from the Federal Reserve Bank of San Francisco Mary Daley. One can conclude from their hawkish attitude that the dollar interest rate will probably be increased by 75 basis points (bp) in September for the third time in a row. At the same time, the head of the Kansas City Fed, Esther George, said that the regulator would tighten monetary policy until it was completely sure that inflation was on the decline.

Statements by US officials caused GBP/USD to drop 344 points in five days from 1.2135 to 1.1791 from 1.2135 and end the week slightly higher at 1.1830. The pound was not helped even by the unexpected growth of retail sales in the UK in July by 0.3%. UK shoppers spent more than expected thanks to online sales promotions. The rest of the macro statistics came out ambiguous. The average wage rate, with a forecast of 4.5%, was 5.1%, and the number of applications for unemployment benefits fell from 28.8K to 10.5K over the month. However, despite some improvements in the labor market, inflation in the UK exceeded the expected 9.8% and reached 10.1% (against 9.4% a month earlier). According to the forecast of the Bank of England, the recession in the country will probably begin in Q4 and may last more than a year.

GBP/USD fell to its lowest level in the last 5 weeks and, according to 30% of analysts, may continue to fall. Corrections to the north are also expected by 30%, the remaining 40% of experts remain neutral. The indicator readings on D1 look exactly the same as those of the EUR/USD pair: all 100% are colored red, while 30% of the oscillators signal that the pair is oversold. Immediate support is at 1.1800, followed by July 14 low at 1.1759, followed by 1.1650, 1.1535 and March 2020 lows in the zone 1.1400-1.1450. As for the bulls, they will meet resistance in the zones and at the levels of 1.1875-1.1925, 1.2000, 1.2050-1.2075, 1.2160-1.2200, 1.2275-1.2325 and 1.2400-1.2430.

With regard to the economic statistics of the United Kingdom, there will be data on business activity in various sectors of the country's economy on Tuesday, August 23. The values of the Business Activity Index in the manufacturing sector, the service sector, as well as the Composite Index (PMI), which reflects the level of activity of purchasing managers in both sectors of the UK economy, will become known.

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USD/JPY: Japan's GDP Grows, Yen Rate Falls

The growth of the DXY Index, which shows the ratio of the US dollar to a basket of six other major foreign currencies, as well as the growth of US Treasury yields, has evidently affected the dynamics of USD/JPY. The pair, starting from 133.45, rose to the height of 137.22 during the weekly trading session, and set the last chord at 136.81.

The data released on Monday, August 15, made the prospects for monetary tightening by the Bank of Japan even more uncertain. If this world's third largest economy fell by 0.1% in Q1, it showed a steady growth of 0.5% in Q2 (slightly less than the expected 0.6%). On an annualized basis, the Japanese economy, with a forecast of +2.5%, actually grew by 2.2% (there was a contraction of -0.5% in the previous quarter).

GDP is the main macroeconomic indicator of market activity that assesses the rate of growth or decline of a country's economy. Usually its growth is positive bullish, factor for the national currency. Usually, but not in these times, when the attractiveness of a particular currency is determined by the size of interest rates. And according to this parameter, the yen is far behind the US dollar.

According to economists from the international financial group Nordea, “The continuation of the Fed's policy of tightening monetary policy, along with most other G10 central banks, will keep pressure on the Japanese yen. […] Without any change in monetary policy from the BOJ, which we do not expect for the foreseeable future, the door will be open for the Japanese yen to hit 140 against the dollar again.” At the same time, according to the strategists of another bank, the Australian Westpac, the pair may drop to 123.00 in the longer term, by the end of 2023.

If we move on to the median forecast for the near term, it looks like this: 20% of analysts expect the pair to rise, 35% hope for the yen to strengthen and return to the downtrend, the remaining 45% talk about a side corridor. Trend indicators on D1 have 100% pointing north. As for oscillators, 90% are looking in the same direction, while 25% are in the overbought zone. The remaining 10% of the oscillators point east. Supports for the pair are located at the levels and in the zones 135.55-136.00, 134.00-134.25, 132.85-133.00, 131.75-132.00, 131.00. Resistances are 137.45, 137.90-138.40, 138.50-139.00, and finally the July 14 high at 139.38. Bulls' next targets are 140.00 and 142.00.

No significant statistics on the Japanese economy are expected to be released this week.

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