Weekly Forex Forecast and Cryptocurrencies Forecast

[Stan NordFX]

– Former Goldman Sachs CEO Raoul Pal predicted significant growth for bitcoin and the cryptocurrency market in Q4 2024. Speaking on the podcast "The Wolf Of All Streets," the financier noted that risky assets like bitcoin usually rally during US presidential elections. "The final quarter of an election year is a real ‘banana zone’ for all assets. It’s always like that," Pal optimistically stated, adding that the ‘banana zone’ for cryptocurrencies in the autumn is much more pronounced than, for example, for the Nasdaq index.

– MicroStrategy founder Michael Saylor is convinced of the potential for the first cryptocurrency to grow to $10 million, supported by China and other factors.
He believes that in the future, governments, especially China, will fully accept the first cryptocurrency and integrate it into state infrastructure.
Calling bitcoin a "perfect asset," the entrepreneur explained that digital gold acts as a "corporate machine" that will allow companies to "live forever." He is confident that firms investing in bitcoin can last longer than those "mired in corporate ailments of the past." "The average lifespan of a corporation is about 10 years. […] We’re talking about eliminating corporate mortality; we’re talking about easily increasing economic viability by ten, a hundred, or maybe a million times," added the MicroStrategy founder.
Saylor also called all economic tools that appeared before bitcoin outdated. "Before Satoshi Nakamoto, economics was a pseudo-science. All economists before Satoshi tried to develop economic laws using shells, glass beads, bits of paper, and credit instruments," the businessman emphasized.
Recall that MicroStrategy is one of the world's largest holders of bitcoin. In June 2024 alone, it purchased 11,931 BTC.

– Founder and CEO of tech giant Dell Group Michael Dell expressed interest in bitcoin in correspondence with Michael Saylor. The situation has caused a stir in the cryptocurrency community for several reasons. Dell was among the top 10 richest people in the world in 1999 and 2000. He periodically appeared in the top 20 afterward. At the same time, the entrepreneur himself has positively commented on the digital industry. In 2021, he publicly stated that blockchain technology is highly undervalued. His company, Dell Technologies, accepted bitcoin as a payment method from 2014 to 2017. However, this option was later removed due to "low demand," as explained by the company. Now, the billionaire posted a statement on his page regarding the value of bitcoin and published another note on this topic.

– Ahead of the US presidential election, former cryptocurrency advisor Carole House has returned to work with Joe Biden’s team. "It is an honour for me to return to the Biden administration, where I hold the position of special advisor on the White House National Security Council," House wrote on her LinkedIn. In 2022, Carole House co-authored Biden’s executive order on cryptocurrencies and digital assets. Her return to the White House signals an improvement in the US president’s attitude towards cryptocurrencies.

– Matt Hougan, CIO of Bitwise, which manages cryptocurrency funds, cited three reasons why long-term investments in both bitcoin and ethereum have advantages over investments in bitcoin alone. These are: 1. portfolio diversification, 2. the ability to profit from vastly different ecosystems, and 3. economic benefits.
Given the difference in capitalization levels between bitcoin and ethereum, Matt suggests investing 75% of capital in BTC and 25% in ETH. According to the report, from May 2020 to May 2024, the return on such an investment portfolio was 3% higher annually than one in which bitcoin alone accounts for 100%.
However, Hougan acknowledges that in the short term, a portfolio consisting solely of bitcoin outperforms a diversified one. Additionally, investing solely in bitcoin carries less risk due to its higher market capitalization and features such as limited coin issuance and gradual reduction of inflation to zero.


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

 

[Stan NordFX]

Forex and Cryptocurrency Forecast for 01 – 05 July 2024​

EUR/USD: Inflation in the US – Everything is Going According to Plan

Last week, specifically on Thursday, 27 June, the dollar received support from positive macroeconomic data from the US. The Department of Commerce reported that according to the final estimate, the US GDP grew by 1.4% in Q1, against the forecast of 1.3%. (According to the current Fed forecast, the country's real GDP will expand by 2.1% in 2024). Labour market statistics were also optimistic – the number of initial jobless claims in the US amounted to 233K, lower than both the forecast of 236K and the previous figure of 239K. Durable goods orders did not disappoint either, rising by 0.1% in May against the forecast of a decline of -0.1%. Against this backdrop, the DXY dollar index rose to 106.10, approaching April highs, and EUR/USD dropped to 1.0685.

However, the main events of the week were scheduled for Friday, 28 June, the last trading day of Q2. It is worth noting that the cash flows typical for the end of the quarter and the adjustment of trading positions at this time usually increase market volatility and can even cause chaotic movements in major currency pairs. Additionally, intrigue was added by the fact that on this day, the Bureau of Economic Analysis of the USA was to publish data on the Personal Consumption Expenditure (PCE) index for May. This indicator is the Fed's preferred inflation gauge and therefore influences decisions regarding interest rate changes.

According to preliminary estimates, the markets expected that the core index would decrease from 2.8% to 2.6% year-on-year and from 0.3% to 0.1% month-on-month. If this forecast were to come true, it would have strengthened expectations of an imminent easing of the American regulator's monetary policy. On the eve of the publication, market participants predicted that the first Fed rate cut would occur in September, with another one in November or December.

However, there was also an alternative scenario. On Wednesday, 26 June, Fed Board member Michelle Bowman stated that if the disinflation process in the US stalls, the regulator would have no choice but to resume tightening policy (QT).

The actual figures matched the forecasts exactly – core PCE decreased from 2.8% to 2.6% year-on-year and from 0.3% to 0.1% month-on-month. It is obvious that this result was already priced in, so it did not produce a "wow" effect on market participants, and after a brief dip, DXY returned to current levels.

The dollar was also supported by the President of the San Francisco Federal Reserve Bank, Mary Daly, who commented on the PCE data: "The Fed has not yet made a decision, but the PCE data is good news. [...] There is evidence that policy is sufficiently tight. [...] It takes more time for the policy to work. [...] If inflation remains stable or decreases slowly, rates will have to be raised longer."

As for the European Central Bank (ECB), unlike its overseas counterpart, it has already started the easing process (QE). At its meeting on 06 June, it already lowered the euro rate by 25 basis points (b.p.) to 4.25%. And as ECB representative Olli Rehn stated on 26 June, the market forecast for two more rate cuts in 2024 seems "reasonable". These words from Rehn signalled tolerance towards inflation spikes in the Eurozone, which is a negative factor for the common European currency.

The final point of the week, month, and quarter was set by the EUR/USD pair at 1.0713. The analyst forecast for the near future as of the evening of 28 June is as follows: 65% of expert votes were given for the pair's decline, 20% for its growth, and another 15% remained neutral. In technical analysis, 80% of trend indicators on D1 sided with the dollar and turned red, while 20% preferred the euro. Among oscillators, 75% were on the dollar's side, with the remaining 25% taking a neutral position. The nearest support for the pair is located in the zone of 1.0665-1.0670, followed by 1.0600-1.0615, 1.0565, 1.0495-1.0515, 1.0450, and 1.0370. Resistance zones are found around 1.0740-1.0760, then 1.0815, 1.0850, 1.0890-1.0915, 1.0945, 1.0980-1.1010, 1.1050, and 1.1100-1.1140.

The upcoming week will be rich in macroeconomic statistics. On Monday, 01 July and Tuesday, 02 July, preliminary data on such an important indicator as the consumer price index (CPI) in Germany and the Eurozone will be released, respectively. Speeches by ECB President Christine Lagarde and Fed Chair Jerome Powell are also scheduled for 01 and 02 July. In addition, on Monday and Wednesday, business activity indicators (PMI) in various sectors of the US economy will be known. But this is not the end of the flow of important information. Late in the evening of 03 July, the minutes of the last FOMC (Federal Open Market Committee) meeting of the Fed will be published. On Wednesday, 03 July, and Friday, 05 July, we will be flooded with statistics from the US labour market, including the unemployment rate and the number of new jobs created outside the agricultural sector (NFP). Traders should also keep in mind that 03 July is a short day in the US, and 04 July is a full holiday as the country celebrates Independence Day. And looking a bit further ahead, we remind you that early parliamentary elections will be held in France on Sunday, 07 July, the result of which could greatly affect the common European currency.

GBP/USD: Focus – On 04 July Elections

General parliamentary elections will be held not only in France but also in the United Kingdom, scheduled for Thursday, 04 July. Announcing this event, Prime Minister Rishi Sunak stated that he is proud of the "achievements of his government [Conservatives]". "Economic stability is the foundation of any success," he added, noting that the UK economy is still growing and inflation has returned to normal levels.

Despite Sunak's assurances, in May 2024, the monitoring company Ipsos reported that 84% of the population are "dissatisfied with how the government is managing the country". Current election forecasts based on public opinion polls show that 21.3% may vote for the Conservatives, 41.9% for their opponents, the Labour Party, and the rest for other parties.

It must be noted that the government of Rishi Sunak has several real achievements. On 19 June, data on consumer inflation (CPI) was published, and overall, the picture turned out to be quite good. The consumer price index month-on-month remained at the previous level of 0.3%, lower than the forecasted 0.4%. Year-on-year, the CPI decreased from 2.3% to 2.0%, reaching the Bank of England's (BoE) target for the first time since October 2021. The core index (Core CPI), which excludes volatile components such as food and energy prices, also showed a significant decrease from 3.9% to 3.5% year-on-year.

According to the report from the Office for National Statistics (ONS), presenting the final data on 28 June for Q1 2024, the UK economy grew by 0.7%, higher than the previous value and forecast of 0.6%. Year-on-year, real growth was 0.3%, exceeding the previous value and expectation of 0.2%. This was the best dynamic since Q4 2021.

If the UK parliamentary elections on 04 July and the inflation report on 17 July do not bring significant surprises, the markets predict that the BoE will start lowering rates at its nearest meeting on 01 August. According to ING bank strategists, "we still forecast that the Bank of England will start lowering rates in August and will begin to signal this in its speeches as soon as the general elections on 04 July are over". In their opinion, the likelihood of rate cuts by the Bank of England is much higher than those by the Fed, which will put pressure on the pound sterling. TDS company analysts, on the other hand, give the following forecast: "We believe a rate cut of 15 b.p. is expected in August, and about 50 b.p. in total for 2024". In several other market participant forecasts, it is also mentioned that by November, the reduction could be around 30 b.p.

GBP/USD ended the past five-day period exactly where it started – at 1.2644. The analyst forecast ahead of the parliamentary elections is unequivocal – 100% side with the dollar and expect the British currency to weaken. Regarding technical analysis on D1, there is also a clear advantage on the dollar's side. Trend indicators are in favour of the dollar at 65% to 35% red to green. Oscillators are 100% pointing south, with 20% signalling the pair is oversold. In case of further decline, the pair's levels and support zones are 1.2610-1.2620, 1.2540, 1.2445-1.2465, 1.2405, 1.2300-1.2330. In case of the pair's growth, it will meet resistance at levels 1.2675, 1.2700, 1.2740-1.2760, 1.2800-1.2820, 1.2860-1.2895, 1.2965-1.2995, 1.3040, and 1.3130-1.3140.

As for the events of the upcoming week, all investor attention is focused on the elections on 04 July. The next important event, as mentioned, will be the publication of the fresh inflation report in the United Kingdom on 17 July.

continued below...

 

[Stan NordFX]

USD/JPY: Another Peak Conquered

Last week, 75% of analysts expecting new currency interventions voted for the USD/JPY pair's retreat south, while the remaining 25% pointed north. The minority, as is often the case with the Japanese currency, turned out to be right: no interventions occurred, and the pair reached another peak – 161.28.

Frankly, there's nothing to comment on here – everything has been discussed dozens and hundreds of times. The problem of the yen's weakening lies in the ultra-loose monetary policy of the Bank of Japan (BoJ). And as long as it does not decisively turn towards tightening, the national currency will continue to lose its positions. Of course, for a while, the Ministry of Finance and the Central Bank can support its exchange rate with currency interventions. But spending billions and billions on something that disappears like ripples on water after a few days – is there any point in that? Can this be called monetary policy?

If inflation falls in major competing countries, in Japan, it rises. According to data published on Friday, 28 June, the Consumer Price Index (CPI) in Tokyo for the year ending in June rose to 2.3% compared to 2.2% for the previous period. The core CPI inflation (excluding volatile food prices) also increased to 2.1% year-on-year, which is higher than both the forecast of 2.0% and the previous value of 1.9%. Another core CPI index for Tokyo (excluding food and energy prices) decreased in June to 1.8% year-on-year compared to the previous value of 2.2%.

Of course, these are not jumps that warrant sounding a loud alarm – all indicators are "hovering" around the target 2.0%. This allows Japanese officials to pause, without changing the vector of their monetary policy, and to limit themselves to verbal "interventions". Thus, Japan's Finance Minister Shunichi Suzuki once again stated that he is "deeply concerned about excessive and unilateral movements in the Forex market" and expressed hope that "trust in the Japanese currency is maintained". Suzuki's colleague, Cabinet Secretary Yoshimasa Hayashi, delivered almost the same speech word for word. However, he added that the authorities "will take appropriate measures regarding excessive currency movements", hinting at another currency intervention.

This hint from Yoshimasa Hayashi scared 60% of experts who voted for the pair's southward movement and yen strengthening, 20% pointed north, and 20% took a neutral position. The opinion of the indicators is unambiguous, as they have never heard of interventions. Therefore, all 100% of trend indicators and oscillators on D1 are green, although a quarter of the latter are in the overbought zone. The nearest support level is around 160.25, followed by 159.20, 158.65, 157.60-157.80, 156.60, 155.45-155.70, 154.50-154.70, 153.60, 153.00, 151.90-152.15, 150.80-151.00. The nearest resistance is in the 160.85 zone, followed by 161.30 and 162.50.

In the upcoming week, the calendar highlights Monday, 01 July. On this day, the Tankan Large Manufacturers Index will be published. No other important macro statistics regarding the state of the Japanese economy are planned for the coming days.

continued below...

 

[Stan NordFX]

CRYPTOCURRENCIES: Causes and Consequences of "Black Monday" on 24 June

Monday, 24 June, presented investors with a very unpleasant surprise – on this day, bitcoin's price fell below $60,000 for the first time since 03 May, reaching $58,468 at one point. Ethereum, in turn, fell below $3,250. Analysts highlight several reasons for the active sell-offs, noting that they reflect overall instability in global financial markets and uncertainty about monetary and regulatory policies in several leading countries, especially China and the US. However, there are also more specific factors that contributed to the development of the bearish trend.

In mid-June, the German government began selling off a huge amount of bitcoins (about 50,000 BTC) confiscated in January. Panic sentiment sharply intensified after the announcement on 24 June that creditor payments for the bankrupt crypto exchange Mt.Gox would begin in early July. The total amount of funds to be distributed among former clients is 162,100 BTC, roughly $10 billion. Bitcoin responded to this news with an 8% drop. It’s no surprise – such a volume of coins flooding the free market can seriously knock down prices. In the derivatives market, long positions worth $177 million were forcibly liquidated, and the total financing rate for futures contracts turned negative for the first time in June, indicating that sales exceeded purchases.

It is precisely on the expectations of Mt.Gox debt payments that the flagship crypto asset's quotes reached the lowest level in the past eight weeks last Monday. In this situation, two things are encouraging. Firstly, the deadline for repayment falls on 31 October, and it's possible that payments will be made in parts over four months rather than all at once. And secondly, there is hope that not all creditors will rush to convert their bitcoins into fiat, but will hold onto them, hoping for price growth.

In addition to the above, BTC miners exerted some downward pressure on the market. It became known that their coin reserves reached a 14-year low, as they had to sell a significant amount of BTC due to the April halving to cover operational expenses. Recall that the cost of mining bitcoin, according to JPMorgan analysts, is $53,000. Historically, this cost level is a strong support for BTC/USD. However, even in March, JPMorgan did not rule out that after the halving, bitcoin could temporarily fall to $42,000.

In the absence of positive signals, the demand for spot bitcoin ETFs continues to decline, major market participants slow down their activity, and start to take profits. This also pressures the prices. CEO of investment company CryptoQuant Ki Young Ju calculated that over the past two weeks, bitcoin whales and miners set a record by selling coins worth $1.2 billion.

According to 10x Research, all last week, US spot BTC ETFs recorded investor outflows, and on 21 June, net outflow exceeded $105 million. 10x Research believes that bitcoin will now need to find a new price range to stabilize the decline and then find growth catalysts. In the medium term, according to 10x Research analysts, it is not worth expecting BTC to return above $70,000.

Popular analyst Matthew Hyland noted that the combined bitcoin balance on centralized exchanges reached a multi-year low. In theory, this could be seen as a bullish signal, but the crypto market leader is not yet eager to show an upward trend. Naturally, the publication of key US economic data could serve as a vector for further cryptocurrency movements. If the Fed takes its first step in easing its monetary policy in September, it could support risky assets, including bitcoin. According to Cryptology experts, the chances of bitcoin reaching a new all-time high by the end of September are quite high, and what is happening now is a phase of accumulation.

Despite the current decline, many investors remain optimistic, citing the cyclical nature of the crypto market. They also do not forget about the US elections. For example, former Goldman Sachs CEO Raoul Pal predicted significant bitcoin and cryptocurrency market growth in Q4 2024. In an episode of The Wolf Of All Streets podcast, the financier noted that risky assets like bitcoin usually rally against the backdrop of US presidential elections. "The final quarter of an election year is a real 'banana zone' for all assets. It always is," Pal optimistically stated, noting that the "banana zone" for cryptocurrencies in autumn is much more pronounced than, for example, for the Nasdaq index.

Bitcoin was also supported by billionaire Michael Saylor. His company, MicroStrategy, is one of the largest bitcoin holders in the world, with 205,000 BTC on its balance sheet. Despite the negative trend, it increased its reserves by another 11,931 BTC (over $700 million) in the past month alone. Saylor is convinced of the first cryptocurrency's ability to grow to $10 million with support from China and other factors. He believes that in the future, governments, especially China, will fully embrace the first cryptocurrency and integrate it into the state infrastructure. The entrepreneur declared all pre-bitcoin economic instruments obsolete. "Before Satoshi Nakamoto, economics was a pseudoscience. All economists before Satoshi tried to develop economic laws with shells, glass beads, pieces of paper, and credit instruments," the businessman wrote, calling bitcoin a "perfect asset."

In previous reviews, we already wrote that the launch of exchange-traded spot ETFs on Ethereum could give a certain boost to the digital asset market. On 25 June, SEC (US Securities and Exchange Commission) Chairman Gary Gensler noted that the registration process for new ETFs is "going smoothly," and the approval date depends on how quickly applicants submit adjusted S-1 forms. Bloomberg analysts call 02 July the expected approval date for new products. Reuters, citing anonymous sources, reports that a consensus has been reached between fund managers and the SEC in negotiations, and only the "final touches" remain.

Co-founder of venture company Mechanism Capital Andrew Kang stated that after the approval of ETH-ETF, Ethereum's rate could correct by 30%, falling to $2,400. In his opinion, at this stage, the main altcoin attracts much less attention from institutional investors compared to bitcoin. Based on this, ETH-ETF will attract only 15% of funds compared to what BTC-ETF received at the start.

Kang noted that to increase Ethereum's attractiveness among investors, its ecosystem needs to be positioned as a decentralized financial settlement layer, a global computer, or a Web3 application store. At the same time, it will be difficult to sell new ideas for Ethereum's application to funds, as the asset is perceived by investors as an overvalued stock of a large technology company.

Significantly more positively views the future of Ethereum Matt Hougan, CIO of Bitwise, a company managing cryptocurrency funds. In his opinion, the appearance of a long-awaited exchange product is undoubtedly a positive factor, and the net inflow of investments into ETH-ETF over the first 18 months will amount to $15 billion. In his analysis, he relies on the experience of Canada and the EU, where in similar products the inflow ratio for Ethereum and Bitcoin is approximately 1 to 4 (i.e., 25%). In other words, if in the first quarter of work for spot Bitcoin-ETF the total inflow was $26.9 billion, for Ethereum it is expected to be at the level of $6.7 billion. In this case, in three months of work, the leading altcoin could rise to $4,400-5,000.

CEO of SkyBridge Capital Anthony Scaramucci believes that the price of Ethereum could rise even higher, reaching $10,000-12,000. Regarding bitcoin, the entrepreneur allows for its growth to $170,000-250,000. The main driver, in his opinion, will be the further institutional acceptance of cryptocurrency. Scaramucci called the approval of spot exchange ETFs an important regulatory barrier breakthrough for attracting new capital. Thanks to this, in his opinion, the share of digital gold in the portfolios of major players will soon be about 3%.

As of the evening of Friday, 28 June, BTC/USD is trading at $60,190, and ETH/USD is in the $3,390 zone. The total crypto market capitalization is $2.24 trillion ($2.34 trillion a week ago). The bitcoin Fear & Greed Index (Crypto Fear & Greed Index) has dropped from 63 to 47 points over the past 7 days, moving from the Greed zone to the Neutral zone.

In conclusion, here is another observation from Matt Hougan. The CIO of Bitwise presented three reasons why long-term investments in both bitcoin and Ethereum are more advantageous compared to investing only in bitcoin. These are: 1. portfolio diversification 2. the opportunity to earn on very different ecosystems and 3. economic benefit.

Considering the difference in the capitalization levels of bitcoin and Ethereum, Hougan believes that 75% of the capital should be invested in BTC and 25% in ETH. According to calculations, over the period from May 2020 to May 2024, the yield of such an investment portfolio is 3% per annum higher than one that only contains bitcoin. However, Hougan acknowledges that in the shorter term, a portfolio including 100% BTC outperforms a diversified one. Moreover, investing only in bitcoin carries fewer risks due to its higher market capitalization and features such as limited coin issuance and a phased reduction in the inflation rate to zero.

NordFX Analytical Group


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 #cryptocurrencies #bitcoin #stock_market

 

[Stan NordFX]

June Results: Gold Brings Astronomical Profits to NordFX's Top 3 Traders

The brokerage firm NordFX has summarised the trading performance of its clients for June 2024. Additionally, the social trading services PAMM and CopyTrading, as well as the income generated by the company's IB partners, have been evaluated.

- The leader of the month is a trader from South Asia, account No. 1773XXX, with a profit of USD 82,933. This impressive "astronomical" result was achieved through trades in gold (XAU/USD), a favourite instrument among NordFX's most successful traders.
- In second place, with a result of USD 59,135, is another representative from South Asia, account No. 1771XXX, who also achieved success through the "golden" pair XAU/USD.
- A trader from West Asia, account No. 1774XXX, secured third place with earnings of USD 58,653 from gold transactions in June.

In NordFX's passive investment services, the following developments were noted:

- In the PAMM service, several startups caught attention due to their activity. AI Scalping Master High Risk showed a 100% profit in exactly 100 days, and Zenix 786 achieved a 72% profit in 99 days. These results are impressive, but the maximum drawdown for both managers was also significant – 46% and 36%, respectively. Therefore, the "High Risk" note in the name of the first account is not just words but a warning that trading in financial markets is risky. Investors must exercise maximum caution when entrusting money to any manager.

- In CopyTrading, we continue to monitor the performance of the signal yahmat-forex, which recently celebrated its anniversary. Over 372 days, the provider of this signal managed to show a yield of 467% with a maximum drawdown of 47%. Among startups, the signal AA Strategy is notable, with a profit of 299% in just two months, though it also had a drawdown of more than 63%.

When considering subscribing to a signal, besides profit and drawdown, we advise paying attention to the manager's own capital. For example, in the case of AA Strategy, it is only USD 142. Now imagine you subscribe to this signal with the same lot (1:1), but your starting capital is not USD 142 but USD 425, which is three times more. In this case, your drawdown would be only 21% of the deposit, though the profit would also decrease from 299% to approximately 100%. However, doubling your capital in just two months is still quite impressive.

It should be noted here that the purpose of this explanation is not to convince you to subscribe to this particular signal but to remind you of the basic rules of money management and ways to reduce financial risks.

Among NordFX's IB partners, the top three are as follows:
- The first place is held by a partner from West Asia, account No. 1645XXX, who was credited with a reward of USD 34,454 in June;
- In second place is a partner from South Asia, account No. 1565XXX, who received a commission of USD 5,962;
- Completing the top three is another representative from South Asia, account No. 1576XXX, who earned USD 5,429 for the month.


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

 

[Stan NordFX]

CryptoNews of the Week

– To continue the rebound from June's lows, bitcoin needs to surpass the $65,000 mark. This level corresponds to the acquisition cost of coins bought by short-term investors, according to CoinDesk. Analysts at Blockware Intelligence observed that the value of digital gold fell below the cumulative cost of short-term holders for the first time since August 2023. "Last summer, under similar circumstances, the price remained in a sideways trend for another two months before surging again," the specialists added.
A similar cost metric for hodlers (long-term holders) is less than $20,000. For this market participant category, the current 15-18% drop from the all-time high (ATH) on March 14 is a routine event. "During the 2017 cycle, bitcoin experienced 10 pullbacks of 20% or more. This is a healthy correction of a bull market. Volatility provides opportunities for strategic capital placement for those with a long-term horizon," commented Blockware experts.

– According to Fundstrat analyst Tom Lee, the bitcoin sell-off in June was partly caused by nervousness over the payments to 20,000 creditors of the Mount Gox (Mt.Gox) crypto exchange, which blocked about $9 billion in cryptocurrencies when it declared bankruptcy 10 years ago. Research by K33 indicates that the anticipation of this event recently exerted significant pressure on digital asset prices. However, Lee believes that the influence of these repayments will gradually weaken and predicts a new major rally that will drive bitcoin's price to $150,000 by the end of the year.

– The level of bullish sentiment on networks like X, Reddit, Telegram, 4Chan, and BitcoinTalk has significantly decreased, with traders losing confidence in the markets. Analysts at Santiment view this as one of the factors indicating a local bottom. According to expert data, trader sentiment was most optimistic in April before the halving. However, over the past three months, the bullish narrative has weakened due to bitcoin's inability to reach a new ATH. Bearish calls have also been slowly decreasing, suggesting a decline in market participant interest. "We interpret this as crowd fear and apathy—a potential signal of the lower boundary," noted Santiment. At the same time, discussions about holding cryptocurrency have increased, which may be a positive signal.

– "Bears still control the situation, but bitcoin is heavily oversold," says analyst Willy Woo. According to him, the markets will correct the oversold condition, but this does not imply a rise in fundamental demand and does not guarantee a continued bull trend. Woo emphasized that breaking the RSI resistance line on bitcoin's daily chart will create a "technical but not fundamental recovery."

– DigitalX Analyst Pratik Kala predicted consolidation and low volatility in the cryptocurrency market in July. "Bitcoin is looking for the next major catalyst for upward movement. It is not yet on the horizon, but everything will change as the US elections approach," he said. Jag Kooner, Head of Derivatives at Bitfinex, noted in an interview with Decrypt that changes in regulatory policy and the release of macroeconomic statistics could play a decisive role in trend development. The expert suggested a scenario where economic data is worse than expected. This could weaken traditional markets and increase interest in bitcoin and other cryptocurrencies as alternative investments. "Historically, during economic downturns, investors often turn to digital gold as a means of capital preservation," noted Kooner.

– Quinn Thompson, CEO of the cryptocurrency hedge fund Lekker Capital, believes that the current "excessively bearish" sentiments will gradually change. Catalysts for the growth of the crypto market will include the US presidential elections, increased liquidity from the Federal Reserve, and the launch of spot exchange-traded funds (ETFs) on Ethereum. According to Thompson, by November, bitcoin's price will reach $100,000, and Ethereum's price will reach $7,000. He also mentioned the IPO planned by Circle, the company issuing USDC stablecoins. Another reason for bitcoin's growth could be the increase in mining profitability.
The founder of Lekker Capital believes that the pressure from the sale of coins received by Mt.Gox creditors (162,100 BTC) is already priced in by the market. The same applies to the movement of bitcoins confiscated by the German authorities (about 50,000 BTC). The founder of Galaxy Digital, Mike Novogratz, agrees with Thompson. Recently, he made a similar forecast, predicting that bitcoin's price will reach $100,000 by the end of 2024.

– Some analysts believe that bitcoin could see a strong rebound in the coming weeks. The founder of MN Trading, Michael van de Poppe, suggested that the bulls start to dominate at the $60,000 zone. According to his forecasts, a reversal will occur "next week with the upcoming listing of the Ethereum ETF."
Another expert, Ali Martinez, noted that in previous years when June ended with a downtrend, there was a sharp rise the following month: historically, bitcoin gained an average of 7.42%. Nevertheless, July could be more challenging than usual due to the sale of bitcoins by the German government and the upcoming Mt.Gox creditor payments. Jonathan De Wet, Chief Investment Officer at ZeroCap, expects the asset to fall to the "key support level" around $57,000 in the coming weeks as payouts to Mt.Gox's affected clients begin.

– Jesse Powell, co-founder and CEO of the crypto exchange Kraken, donated $1 million to Donald Trump's campaign "mostly in ETH." He noted that he supported "the only major party candidate advocating for cryptocurrency." "Despite enormous efforts by the bipartisan Congress to establish clear rules, the White House under [current US President Joe] Biden has stood aside and allowed a campaign of uncontrolled regulation through coercion. This approach reduces the US's competitiveness as other major economies around the world propose clear rules for regulating digital assets," Powell wrote. Previously, the head of Kraken called the SEC (Securities and Exchange Commission) "the main drag" and warned businesses to "flee the US."
The founders of the bitcoin exchange Gemini, brothers Cameron and Tyler Winklevoss, also donated $2 million in bitcoin to Trump. However, according to Bloomberg, part of the funds was returned due to exceeding the maximum amount.
Recall that in June, Trump declared himself the "crypto president" and criticized the Democrats' attempts to regulate the industry while promising to protect mining in the US and worldwide.

– As of the end of June, the number of crypto ATMs worldwide reached 38,278 units. This figure is approaching the December 2022 peak of 39,541 devices, according to Coin ATM Radar data. In 2023, the sector lost 2,861 units, shrinking by approximately 11.5%. However, since the beginning of 2024, 2,564 new bitcoin ATMs have been installed, increasing the total number by 17.8%.
The US remains the undisputed leader, accounting for 82% (31,968) of the total number of crypto ATMs. In second place is Canada with 7.7% (3,028). In April, Australia reached the third position with 2.8% (1,107).


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

 

[Stan NordFX]

Forex and Cryptocurrency Forecast for 08 – 12 July 2024​

EUR/USD: The US is Not Very Good, Europe is Not Very Bad

On Friday, June 5, the Dollar Index (DXY) hit a three-week low, while the euro showed its largest weekly gain against the dollar in a year. This was due to the US not performing as well as expected and Europe not faring as poorly.

Disappointing private sector employment statistics from ADP (150K versus the forecasted 163K and previous 157K) and an increase in repeated jobless claims (238K versus 234K) for the ninth consecutive week indicate a cooling labour market. The slowdown in business activity in the service sector, the fastest in four years, and the drop in the ISM Index from 53.8 to 48.8 points, below the threshold of 50.00, suggest that the US economy is not as smooth as the Federal Reserve (Fed) would like.

The FOMC's June meeting minutes mentioned that monetary policy should be ready to respond to economic issues, a sentiment echoed by Fed Chairman Jerome Powell. Consequently, this gloomy macroeconomic data increased the likelihood of a monetary expansion cycle and interest rate cuts in September from 63% to 73%. Derivatives are almost certain that there will be two 25 basis point (bp) cuts in 2024, lowering the rate from 5.50% to 5.00%. This caused US Treasury yields and the DXY to drop, while stock indices and EUR/USD rose. The S&P500 set its 33rd record this year, and EUR/USD reached a high of 1.0842 on July 5.

The euro was also bolstered by the situation in France. The left-wing "New People's Front" (NFP) and the government bloc "Together for the Republic" (Ensemble) joined forces to prevent the right-wing from gaining power, which might end successfully. If the right-wing "National Rally" (RN) does not gain an absolute majority in the new parliament after the second round of elections, there will be no confrontation with the EU or Frexit (analogy with British Brexit).

Polls indicate the right-wing will secure 190 to 250 out of 577 seats, while 289 are needed for an absolute majority. The second round of elections will be held on Sunday, July 7, which might cause gaps in euro pairs on Monday.

Last week, the euro was also supported by the European Central Bank, or rather, by the minutes of its June Governing Council meeting. On one hand, 25 out of 26 Council members voted for a 25 basis point rate cut. However, this decision was made with several caveats concerning still high wage growth rates and the persistence of inflation, which resists and does not want to drop to the target level of 2.0%.

Preliminary June data showed that the CPI decreased only by 0.1% from 2.6% to 2.5%, and the Core CPI remained at 2.9% (y/y), above the consensus forecast of 2.8%. ECB officials fear the CPI might rise due to geopolitical tensions, supply chain disruptions, raw material and energy price increases, and other factors. This almost rules out a rate cut at the ECB Governing Council meeting on July 18 and suggests only one act of monetary expansion in the second half of 2024.

Key US labour market data released at the end of the week on Friday, July 5, could change the dollar's position and the EUR/USD dynamics. According to the Bureau of Labour Statistics (BLS), non-farm payrolls (NFP) increased by 206K in June, lower than May's 218K but above the forecast of 190K. Other data showed the unemployment rate rose from 4.0% to 4.1%, and wage inflation dropped from 4.1% to 3.9% (y/y).

After the publication of this data, EUR/USD ended the week at 1.0839. However, this does not mean it will start the next week at this level. Traders are closely watching the French elections and the political situation related to the November US presidential elections. Biden's interview with ABC News at 00:00 GMT on Saturday, July 6, when markets are closed, could also impact dollar pairs.

As of the evening of July 5, analysts' forecasts for the near future are as follows: 55% predict the pair will rise, 45% foresee a fall. In technical analysis, all trend indicators and oscillators on D1 are in favour of the euro, although a quarter indicate the pair is overbought. The nearest support is in the 10790-10805 zone, followed by 1.0725, 1.0665-1.0680, 1.0600-1.0620, 1.0565, 1.0495-1.0515, 1.0450, and 1.0370. Resistance zones are at 1.0890-1.0915, 1.0945, 1.0980-1.1010, 1.1050, and 1.1100-1.1140.

Notable events in the upcoming week include Jerome Powell's testimony in the US Congress on July 9 and 10, updated CPI data for Germany and the US on Thursday, July 11, and US initial jobless claims. The week will end with Germany's retail sales data and the US Producer Price Index (PPI) and the University of Michigan Consumer Sentiment Index.

GBP/USD: The Pound Gained with the Labour Party

The pound sterling and British stocks rose after the opposition centre-left Labour Party secured a convincing victory in the parliamentary elections. The British currency achieved a weekly gain of 1% – the best in the last seven weeks.

According to Reuters, the Labour Party won 337 out of 650 seats, indicating a majority in the House of Commons. UK Prime Minister Rishi Sunak conceded defeat and congratulated his opponents on their victory. In turn, Labour Party leader and Prime Minister-elect Keir Starmer declared that from today "we are embarking on a mission of national renewal and starting to rebuild our country." Starmer will replace Sunak as Prime Minister, ending 14 years of Conservative rule.

The markets responded positively to the national election results. The pound became the only component of the DXY to strengthen (by 0.2%) this year. "Apart from the weakening of the dollar," commented Singapore's DBS Bank, "the markets warmly welcomed the victory of the opposition Labour Party. This will put an end to years of political and economic uncertainty under Conservative leadership following the Brexit referendum in 2016. Labour leader Keir Starmer, while he is alive, has ruled out the possibility of the UK joining three blocs – the EU, the single market, and the customs union. […] However, Labour may seek more favourable trade agreements by aligning with EU rules in specific sectors such as agriculture, food, and chemicals."

"As for monetary policy," continued DBS strategists, "the OIS market assesses a 62.4% probability of the Bank of England (BoE) cutting the rate by 25 basis points to 5.0% at the meeting on August 1." However, DBS believes this will not significantly harm the pound, provided that expectations for a Fed rate cut in September increase.

The final note of the five-day period saw the GBP/USD pair at 1.2814. Specialists from another Singaporean bank, UOB, believe the likelihood of the pound strengthening has increased. They note that a strong resistance level is in the area of last month's high of 1.2860. The median forecast for the near term is as follows: 35% of analysts expect further pound strengthening and pair growth, 50% foresee a decline, and the remaining 15% are neutral. As for technical analysis on D1, 100% of trend indicators are green. Among the oscillators, 90% are green, a third of which are in the overbought zone, and the remaining 10% are neutral grey. In case of further decline, the pair will find support levels and zones at 1.2735-1.2750, 1.2680, 1.2655, 1.2610-1.2625, 1.2540, 1.2445-1.2465, 1.2405, and 1.2300-1.2330. In case of growth, the pair will meet resistance at levels 1.2850-1.2860, followed by 1.2895, 1.2965-1.2995, 1.3040, and 1.3130-1.3140.

Among the events of the coming week, the publication of UK GDP data for May on Thursday, July 11, stands out. The next important event, as previously mentioned, will be the publication of a fresh inflation report in the United Kingdom on July 17.

continued below...

 

[Stan NordFX]

USD/JPY: Back to 1986

The yen lost over 12% against the dollar this year due to the large interest rate differential between Japan and the US. It continued to lose ground in the first half of the past week, reaching a new 38-year high of 161.94 on Wednesday, July 3, but failed to break above 162.00 due to disappointing US statistics.

Until Friday, Japanese officials largely refrained from discussing possible interventions. According to several experts, they may fear the wrath of the United States following sharp remarks from American authorities regarding recent similar actions. However, on July 5, Finance Minister Shunichi Suzuki once again stated that the authorities would closely monitor the state of the stock and currency markets. A week earlier, he expressed that he was "deeply concerned about excessive and unilateral movements in the forex market" and hoped that "confidence in the Japanese currency remains."

OCBC Bank economists noted that "USD/JPY will follow US Treasury yields and the dollar. A reversal in USD and a Fed rate cut or a BoJ signal to normalize (rate hike or accelerated balance sheet reduction) is needed for a downward reversal, none of which seem to be happening." OCBC concluded that the path of least resistance for USD/JPY might still be upward unless there is intervention. "Intervention, at best, is a tool to slow the yen's depreciation, not to reverse the trend," they added.

The week ended with USD/JPY at 160.78. UOB Group analysts noted that the pair's upward momentum is starting to weaken, but only a break below 160.45 would indicate that the USD will not strengthen further. If the pair breaks above 162.00, the next level to watch is 163.00. OCBC economists see further targets for USD/JPY at 164.00 and 164.90, with support at 160.20, 158.10 (21 DMA), and 156.90 (50 DMA).

Many traders remain cautious, fearing another intervention by Japanese authorities. 65% of analysts expect another intervention and a southward movement of the pair, while the remaining 35% point north. Among trend indicators on D1, only 10% point south, with the rest looking north. Oscillator indicators are 25% red and 75% green.

No significant macroeconomic data is expected for Japan in the upcoming week.

CRYPTOCURRENCIES: Back to February 26

The last five days of June gave investors hope that the black streak was over. But alas! On the first day of July, the bulls' strength waned, and BTC/USD turned south again, easily breaking support around $60,000 and plummeting to a local bottom at $53,543, a level last seen on February 26.

A long time ago, in 1961, the 35th President of the United States, John Fitzgerald Kennedy, uttered a phrase that became famous: "Victory has a thousand fathers, but defeat is an orphan." So, the current victory of the bears over the bulls also has many "fathers," although not a thousand. Several factors influenced the decline of the crypto market.

Firstly, investor disappointment that bitcoin failed to reach a new all-time high (ATH) after the April halving. Due to the halving of their reward, BTC miners were forced to sell a significant amount of their coins to cover operational costs. It was reported that their reserves reached a 14-year low. Downward pressure was also exerted by the German government, which began selling a large amount of bitcoin (about 50,000 BTC) seized by the police from a pirate site in January.

Sales intensified sharply after the announcement on June 24 that creditor payments from the bankrupt crypto exchange Mount Gox (Mt.Gox) would start in early July. These assets had been blocked, and now 20,000 former clients are to receive a total of 162,100 BTC (about $9 billion). According to a K33 study, the anticipation of this event put significant pressure on digital asset prices. Traders assumed that most recipients would be inclined to sell their tokens, given that BTC's price had risen exponentially since 1994. Real panic ensued when test transactions were observed on wallets associated with Mt.Gox.

According to Quinn Thompson, CEO of the crypto hedge fund Lekker Capital, the market has largely accounted for the German government's actions and Mt.Gox creditor payments. Thus, this negative pressure is expected to gradually weaken, as noted by Fundstrat analyst Tom Lee.

Another disappointment was the anticipated launch of Ethereum exchange spot ETFs last week, which did not materialise. The US Securities and Exchange Commission (SEC) rejected the applicants' S-1 form submissions, requesting additional adjustments by July 8. Therefore, approval may occur closer to mid-month or later, if at all. As a result, investors withdrew a record $119 million over the past two weeks, the highest since August 2022, making Ethereum an outsider in the crypto market.

Overall, global cryptocurrency exchange-traded funds recorded a third consecutive week of outflows, losing a total of $1.2 billion in investments. Most of the losses came from US spot Bitcoin ETFs, with about half of the inflows coming from retail investors, who typically lack long-term planning and patience. Many whales also began to take profits due to the absence of positive signals. The stock market also played against digital assets. In the last two months, both the S&P500 and Nasdaq Composite consistently hit record highs, prompting some investors to shift their funds from cryptocurrencies to stocks.

Despite the current gloomy outlook, many experts remain cautiously optimistic about the future. MN Trading founder Michaël van de Poppe believes an upward reversal will occur with the upcoming listing of Ethereum ETFs. Another expert, Ali Martinez, noted that in previous years, when June ended in a downtrend, there was a sharp rise the following month: historically, bitcoin gained an average of 7.42%. However, he believes July may be more challenging than usual due to the shock from Germany's bitcoin sales and Mt.Gox creditor payments.

Santiment analysts observed that both bullish and bearish sentiments in X, Reddit, Telegram, 4Chan, and BitcoinTalk networks are waning, indicating traders' loss of interest in trading. "We interpret this as fear and apathy among the crowd – a potential bottom signal," Santiment noted. "At the same time, there is increased talk about holding cryptocurrencies, which could be a positive sign."

"Bears still control the situation, but bitcoin is heavily oversold," said analyst Willy Woo. He believes markets will correct the oversold condition, but at this stage, it does not indicate fundamental demand growth or guarantee a sustained bullish trend. Woo emphasized that a breakout of the resistance line on the daily bitcoin RSI chart will create a "technical but not fundamental recovery."

According to Blockware Intelligence experts, bitcoin needs to overcome the $65,000 level to develop a rebound. This level corresponds to the acquisition cost for short-term investors. Currently, the digital gold prices have dropped below the total cost of short-term holders for the first time since August 2023. "Last summer, under similar circumstances, the price remained in a sideways trend for another two months before breaking out again," added Blockware Intelligence specialists.

Pratik Kala, a DigitalX analyst, predicts consolidation and low volatility for the crypto market in July. He stated, "Bitcoin is looking for the next major catalyst to move up. It's not visible on the horizon yet, but things will change as the US elections approach." Quinn Thompson from Lekker Capital also believes that the current "overly bearish" sentiments will gradually shift. He sees the US presidential elections as a growth catalyst for the crypto market, along with increased liquidity from the Fed and the launch of spot ETH ETFs. Another reason for growth could be the increased profitability of mining. Thompson predicts bitcoin will reach $100,000 and Ethereum $7,000 by November.

Galaxy Digital founder Mike Novogratz shares Thompson's view, recently forecasting bitcoin will hit $100,000 by the end of 2024. Tom Lee of Fundstrat expects an even higher figure of $150,000.

As of writing this outlook on the evening of Friday, July 5, BTC/USD is trading at $56,400 and ETH/USD at $2,975. The total crypto market capitalization is $2.06 trillion ($2.24 trillion a week ago). The market lost about $625 billion over the last 30 days. The Crypto Fear and Greed Index dropped from 47 to 29 points in 7 days, moving from the Neutral zone to the Fear zone.


NordFX Analytical Group


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 #cryptocurrencies #bitcoin #stock_market

 

[Stan NordFX]

CryptoNews of the Week

– Many members of the crypto community believe that bitcoin has already reached its local bottom. For example, this forecast is supported by an analyst known as MartyParty. In his opinion, this is indicated by the fact that the main cryptocurrency has fallen to levels that barely cover the costs of its mining.
MartyParty believes that the behaviour of bitcoin can be predicted using the Wyckoff method. However, the analyst is confident that it is important to consider the impact of the upcoming US presidential elections. MartyParty overlaid the Wyckoff distribution on the BTC price curve to show the expected trajectory of the cryptocurrency, considering the potential reaction to the election outcome. According to his calculations, the peak of bitcoin's growth may be recorded in June 2025.
Ryan Lee, the Chief Analyst at Bitget Research, also shared a positive forecast in a conversation with BeInCrypto. He noted that on the weekly chart, BTC is near the lower boundary of the Bollinger Bands. Such behaviour of the cryptocurrency, in his observations, indicates that the coin has reached its local bottom.

– However, many in the crypto community predict further declines for bitcoin. For instance, a trader known as AltstreetBet does not rule out the coin falling to $47,000, with the bearish trend continuing until the end of the year. A similar forecast was given by analyst Inmortal. He noted the similarity between BTC's behaviour and its trajectory in 2019. If history repeats itself, bitcoin will be able to grow only at the beginning of 2025.

– The correction of the first cryptocurrency may continue until it reaches $44,000. This opinion was expressed by legendary Wall Street trader and head of Factor LLC, Peter Brandt. The expert questioned whether bitcoin has completed the "double top" pattern on the daily chart. According to his calculations, the upper level of this model is around $72,000, and the lower level is at $43,970.
It is worth recalling that a "Double Top" is a chart pattern that signals a medium- or long-term trend reversal from bullish to bearish. It forms when the price of an asset reaches a peak twice with subsequent pullbacks.

– Popular analyst known as Dave the Wave gave a forecast similar to Peter Brandt's. He warned his 146,700 followers on social media platform X that bitcoin might be reflecting the price movement seen at the beginning of 2017. In this case, according to the logarithmic growth curve (LGC) model, the dip could lead to $44,000, followed by a parabolic surge. (The LGC model aims to predict the lows and highs of BTC's long-term cycle by filtering out short-term volatility).
According to the analyst, downward volatility is an integral part of a bull market. "Bitcoiners have to take the good with the bad... technically we are still in a bull market… And although one can be confident in ultimate victory, there may be a fall along the way."
Dave the Wave emphasizes that a deep corrective movement will benefit bitcoin in the long term. According to his forecast, the dip will allow BTC to rise by 400%, reaching $220,000 by the end of 2025.

– Benjamin Cowen, founder and head of ITC Crypto, also commented on the BTC price drop. In his opinion, digital gold is near a critical level. The movement of the two-week trend strength indicator (RSI) will soon show whether the price will go up (as in 2013 and 2016) or down (as in 2019). "I keep playing these games, trying to figure out what year it is now, but then I tell myself it's 2024, and [bitcoin] must be doing something different than before," the expert emphasized.

– Peter Schiff, a fierce opponent of cryptocurrencies and president of Euro Pacific Capital, pointed to the lack of institutional demand for bitcoin. "Pumpers blame the price drop on sales related to [payments to creditors of the bankrupt crypto exchange] Mt. Gox. This is partly true, but the liquidation also exposes the myth of institutional demand. If it existed, buyers would have jumped at the chance to buy Mt. Gox bitcoins," said the entrepreneur.

– According to a document published on Monday, June 8, the Republican Party of former US President Donald Trump has officially adopted a platform aimed at supporting innovation in the crypto sphere, reflecting Trump's and his fellow party members' interest in digital assets. "Republicans will end the Democrats' illegal and un-American repression in the crypto field and oppose the creation of a Central Bank digital currency," the document states. "We will protect the right to mine and the right of every American to self-custody their bitcoins [and] conduct transactions without government oversight and control."

– Katie Stockton, Managing Partner at Fairlead Strategies, confirmed in an interview on CNBC that the current drop in bitcoin prices is due to the beginning of payments to clients of the Mt. Gox exchange, which went bankrupt ten years after the hack. In her opinion, the long-term upward trend remains, and the BTC price drop is short-term: "In the second half of the year, more volatility is likely to be observed. The upward trend will remain, but more correction phases will occur."
Katie Stockton emphasized that bitcoin should be considered a long-term investment with significant growth potential akin to a call option. However, if the first cryptocurrency's price drops to $40,000, this could threaten the long-term bullish trend.

– Michael Saylor, co-founder and former CEO of MicroStrategy, stated that the decline in the first cryptocurrency's value would not affect the asset's attractiveness among investors. As evidence, he showed a table comparing the price dynamics of various asset classes over several years. Among them were bitcoin, gold, emerging market stocks, emerging market bonds, and treasury bonds. The best results were shown by bitcoin, young company stocks (U.S. Growth index), and the Nasdaq 100 index. From 2011 to 2024, the price of bitcoin increased by 18,881%, while during the same period, the Nasdaq 100 index rose by 931%, and gold by 59%. Earlier, Michael Saylor predicted bitcoin's growth to $10 million, declaring that the first cryptocurrency would offer economic immortality for corporations.

– According to Forbes, citizens of Argentina, a country with the highest level of cryptocurrency adoption in the Western Hemisphere and inflation of about 300%, prefer buying and holding digital assets. Forbes cites the latest study by analytical company SimilarWeb, according to which out of 130 million visitors to the 55 largest global crypto exchanges, approximately 2.5 million were from Argentina.
According to Maximiliano Hinz, head of the Latin American division of the crypto exchange Bitget, "Argentinians do not play lotteries with meme coins and do not try to get rich on the next hot token. Instead, they buy and hold Tether (USDT) stablecoins. This is an abnormal market where many people just buy USDT and do nothing else with it." Newly elected Argentine President Javier Milei stated that the country is moving towards a "regime of competing currencies" where every citizen will choose which assets to use for payments. However, according to Forbes, none of the five largest crypto exchanges represented in Argentina - Binance, eToro, BingX, HTX, and Bitget - have been registered with the National Securities Commission (CNV).


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

 

[Stan NordFX]

Gold as an Investment: Detailed Analysis and Price Forecasts for 2025-2050​

Since ancient times, gold has remained a crucial element of global economies. Its unique properties have made it not only valuable as jewellery but also a reliable means of preserving wealth. Today, this metal constitutes a significant part of both investor portfolios and central bank reserves. This review analyses the dynamics and reasons for changes in the price of gold and presents forecasts from leading banks and experts regarding the XAU/USD pair in the medium- and long-term perspectives.

Gold Price: From Ancient Times to the 20th Century

Ancient Times. Gold mining and usage began in the 4th millennium BC. One of the first civilizations to actively use this metal was ancient Egypt, where it was mined from around 2000 BC. The importance of gold in ancient Egypt is hard to overestimate – it was considered "the flesh of the gods" and used in all aspects of life, from religious ceremonies to burial rites, in making vessels and statuettes, jewellery, and home decor, as well as a means of payment. Gold’s resistance to corrosion made it a symbol of immortality and strength.

Exact data on the value of gold in ancient civilizations is hard to find, but it is known to have been one of the most valuable commodities, used not only for trade but also for wealth storage. For example, in Babylon in 1600 BC, one talent of gold (about 30.3 kg) was worth approximately 10 talents of silver (about 303 kg).

In the late 8th century BC, in Asia Minor, gold was first used as coinage. The first pure gold coins with stamped images are attributed to the Lydian King Croesus. They were of irregular shape and often minted only on one side.

Antiquity. In antiquity, gold continued to play a key role in the economy and culture. The Greeks mined gold in various places, including the region of Troy, where, according to myth, the deposit was a gift from the god Zeus. For the ancient Greeks, gold symbolized purity and nobility and was used to create unique artworks and jewellery.

In classical Athens (5th century BC), one gold drachma was worth about 12 silver drachmas. During the time of Alexander the Great (4th century BC) and the subsequent Hellenistic kingdoms, the gold-to-silver ratio varied but generally stayed within the range of 1:10 to 1:12. (Interestingly, this ratio has now grown to about 1:80). Alexander the Great issued gold staters weighing about 8.6 grams, highly valued coins often used for large international transactions.

Middle Ages. In the Middle Ages, gold remained a vital element of the economy. In the Byzantine Empire, the solidus gold coin, weighing 4.5 grams, was used for international trade. In medieval Europe, gold also played a significant role, especially after the discovery of large gold deposits in Africa. In 1252, the gold florin was introduced in Florence and used throughout Europe. In England, the gold sovereign appeared in 1489.

What could one buy with such a coin? In England in the 11th-12th centuries, a sovereign could purchase a small piece of land about one acre or a part of a farm. In the 13th century, a gold coin could buy several heads of cattle, such as two cows or several sheep.

Gold was also used to acquire weapons or armour. For example, a good quality sword might cost about one coin. One gold coin could also pay for a skilled craftsman’s work for several months. For instance, such money could order the construction or repair of a house. Additionally, it could buy a large amount of food, such as a year's supply of bread for a family.

Modern Times. During the Age of Exploration, gold came to the forefront again. After the discovery of America, Spanish conquistadors brought vast quantities of gold to Europe. In the 17th-18th centuries, gold became the basis for the formation of monetary systems in Europe. By 1800, the price of one troy ounce of gold (31.1 grams) in Britain was about £4.25. Therefore, one troy ounce of this metal could buy a small plot of land in some rural areas or pay rent for housing for 8 months. It could also order the tailoring of four men's suits or pay for elementary school education for several years.

19th Century. The 19th century was marked by the Gold Rush, especially in California and Australia. This led to a significant increase in gold production and, consequently, a relative decrease in its price. In 1870, the price of one troy ounce of gold was about $20. Starting in 1879, the US monetary system was based on the so-called "gold standard," which tied the amount of paper money to the country’s gold reserves, and $20 could always be exchanged for a troy ounce of this precious metal. This price level remained until the early 20th century.

20th Century: $20 – $850 – $250

1934. It had been 55 years since the adoption of the "gold standard" when, during the Great Depression, US President Franklin D. Roosevelt enacted the "Gold Reserve Act." According to this document, private ownership of gold was declared illegal, and all precious metals had to be sold to the US Treasury. A year later, after all the gold had been transferred from private ownership to the state, Roosevelt raised its price by 70% to $35 per troy ounce, allowing him to print the corresponding amount of paper money.

For the next four decades, gold prices remained stable at around $35 until 1971, when another US President, Richard Nixon, decided to abandon the "gold standard" altogether, delinking the dollar from gold. This decision can be considered a turning point in the history of the modern world economy. Gold ceased to be money and began to be traded on the open market at a floating exchange rate. This completely freed the US government’s hands, allowing it to print infinite amounts of fiat currency, and the price of precious metals to grow exponentially.

By the end of 1973, the price of precious metals had already reached $97 per ounce and continued to rise amid economic instability and inflation, reaching $161 in 1975 and $307 in 1979. Just a year later, amid high inflation and political instability (including the Soviet invasion of Afghanistan and the Iranian revolution), XAU/USD reached a record level of $850 .

1982. After reaching this peak, there was a rollback to $376 in 1982, linked to rising interest rates in the US and stabilizing economic conditions. Political and economic changes in the world, such as the end of the Cold War and the development of global financial markets, stabilized the gold market, and until the mid-1990s, XAU/USD traded in the range of $350-$400. By 1999, the price had fallen to $252 per ounce, due to rising stock markets, low inflation, and decreased demand for gold as a safe-haven asset.

First Quarter of the 21st Century: From $280 to $2450

2000s. At the beginning of the 2000s, the price of gold was about $280 per troy ounce. However, it began to rise following the dot-com bubble burst and sharply increased during the global financial crisis, reaching $869 in 2008. This growth was driven by economic instability, falling stock markets, declining confidence in the dollar, and increased demand for gold from investors seeking safe-haven assets. By the end of 2010, the gold price continued to rise, reaching $1421. In September 2011, it reached a record level of $1900 per ounce. This rise was due to the European debt crisis and concerns about global economic instability. However, the dollar began to strengthen, inflation expectations fell, and stock markets rose, leading XAU/USD to turn south, falling to $1060 by the end of 2015.

After this, another reversal occurred, and the pair headed north again. In 2020, the price reached a new record level of $2067. The primary driver here was the COVID-19 pandemic, which prompted massive monetary stimulus measures (QE) by governments and central banks, primarily the US Federal Reserve. The historical maximum to date was reached in May 2024 at $2450, aided by geopolitical instability in the Middle East, Russia’s military invasion of Ukraine, and expectations of interest rate cuts by the Federal Reserve, ECB, and other leading central banks.

continued below...

 

[Stan NordFX]

Why Gold?

Mid-2024. Before moving on to gold price forecasts, let's answer the question: what exactly makes this yellow metal valuable?

Firstly, note its physical and chemical properties. Gold is chemically inert, resistant to corrosion, and does not rust or tarnish over time, making it an ideal asset for value storage. It has an attractive appearance and lustre that does not fade over time, making it popular for making jewellery and luxury items. It is also relatively rare in the Earth’s crust. Limited availability makes it valuable since demand always exceeds supply.

Next, follow the economic factors, which are perhaps more important in the modern world. Gold is traditionally used as a means of preserving capital. We have already mentioned that in times of economic instability and geopolitical tension, investors often turn to gold to protect their savings from depreciation. Naturally, in such a situation, its price is influenced by the level of inflation and related monetary policies of central banks, including interest rate changes and quantitative easing (QE) or tightening (QT) programmes.

Investors use gold to diversify their portfolios and reduce risks. Gold has high liquidity, allowing it to be quickly and easily converted into cash or goods and services worldwide. This makes it attractive not only for investors but also for central banks, which hold significant gold reserves as part of their international reserves. This helps them maintain national currency stability and serves as a guarantee in case of financial crises. For example, the Federal Reserve holds nearly 70% of its foreign reserves in gold.

Forecasts for the Second Half of 2024 and 2025

Gold price forecasts for the end of 2024 and 2025 vary, but most analysts from leading global banks and agencies agree that its price will rise. UBS strategists predict an increase to $2500 per ounce. J.P. Morgan also targets $2500 in the medium term, provided the Federal Reserve cuts rates and economic instability persists.

Goldman Sachs has revised its forecasts and expects the price to reach $2700 per ounce in 2025. Bank of America economists initially forecasted $2400 for 2024 but also revised their forecast upwards to $3000 by 2025. The primary condition for growth, according to the bank, is the start of active rate cuts by the US Federal Reserve, which will attract investors to gold as a safe-haven asset.

Citi specialists agree with this figure. "The most likely scenario in which an ounce of gold rises to $3000," they write in an analytical note, "besides the Federal Reserve rate cut, is the rapid acceleration of the current but slow trend – the de-dollarization of central banks in developing economies, which will undermine confidence in the US dollar."

Rosenberg Research analysts also mention a figure of $3000. The consulting agency Yardeni Research does not rule out that due to a possible new wave of inflation, XAU/USD could rise to $3500 by the end of next year. The super-bullish forecast was given by TheDailyGold Premium magazine editor Jordan Roy-Byrne. Based on the "Cup and Handle" model, he stated that a breakout is coming, and with it a new cyclical bull market. "The current measured target for gold," writes Roy-Byrne, "is $3000, and its logarithmic target is somewhere between $3745 and $4080."

Forecasts to 2050

Most major banks and financial data providers typically offer only short- and medium-term forecasts. The main reason is that markets can be very volatile, and small changes in supply or demand factors and external events can lead to unexpected price fluctuations, casting doubt on prediction accuracy.

Despite this, there are different scenarios and long-term price forecasts for gold for 2030-50. Economist Charlie Morris, in his work "Rational Case for Gold by 2030," forecasts a price of $7000 per ounce. Another specialist, David Harper, predicted that the price of gold could reach $6800 by 2040. This scenario, according to Harper, describes reasonable growth with a return rate of about 7.2% per year.

Regarding a 25-year horizon, Josep Peñuelas, a research professor at the Centre for Ecological Research in Barcelona, warned that by 2050, the world might run out of key metals, including gold. However, other futurist theories are more optimistic. According to renowned investor and writer Robert Kiyosaki, gold has existed since time immemorial and, being "God’s money," is likely to become the primary form of currency in the future. In his book "Fake," Kiyosaki argues that ultimately, gold, along with bitcoins, could destroy paper currencies and become the foundation of the global financial system.


NordFX Analytical Group


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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[Stan NordFX]

CryptoNews of the Week

– This week, bitcoin rose above $65,000, returning to its trading position from 20 June. BTC's price recovery is driven by renewed capital inflow into spot bitcoin ETFs, which purchase cryptocurrency to back their shares. By the end of the trading session on 16 July, they had acquired 6,470 BTC worth approximately $422 million. Capital inflow into these funds has continued for eight consecutive trading days. According to CoinShares, from 8 to 14 July, a total of about $1.7 billion was invested in all cryptocurrency investment products, including US spot ETFs. Of this, $260 million was attributed to BlackRock's IBIT fund. Since the beginning of 2024, the funds have received $17.8 billion, already surpassing the entire inflow of 2021, which was the peak year for the previous bull market cycle.

– Bitcoin is a legitimate financial instrument for investment during times of heightened fear, according to BlackRock's CEO Larry Fink on CNBC. He stated that he "was a proud skeptic, but studied [bitcoin], learned about it," and now acknowledges that he was previously mistaken about the asset.
Fink highlighted that the first cryptocurrency offers an opportunity to invest in "something outside the control of any one country." "I'm not suggesting there are no abuses, as with everything else, but it's a legitimate financial instrument that allows you to have possibly uncorrelated, non-connected types of income," Fink added.

– Panic over payouts to creditors of the bankrupt crypto exchange Mt.Gox has subsided. While this may not have helped, it certainly did not hinder the rise in digital asset prices.
Approximately 65,000 BTC are expected to be distributed among Mt.Gox creditors soon, and all these coins could be put up for sale. However, Ki Young Ju, CEO of CryptoQuant, claims that fears about seller pressure are overrated and will not derail the ongoing bull rally.
CoinMetrics analysts also believe that the market should "absorb" Mt.Gox creditors liquidating their assets if the payouts are conducted orderly and spread over weeks, depending on current market depth and trading volumes. Even if creditors massively dispose of their returned assets, well-known analyst Alex Krüger estimates that the maximum bitcoin price drop will not exceed 10%.

– Bloomberg Senior ETF Analyst Eric Balchunas reported that trading of the long-awaited spot ETH-ETFs in the US will commence on 23 July. "The SEC (Securities and Exchange Commission) finally reached out to issuers asking for final [forms] S-1 to be returned on Wednesday [17 July], then requested activation [permission] for the launch on Tuesday, 23 July," the expert wrote. He added that this will happen if there are no "last-minute unforeseen issues." Sources in two potential Ethereum ETF issuers confirmed Balchunas' information.

– Peter Brandt, head of Factor LLC, gave a forecast for Ethereum ahead of the launch of spot ETH-ETF trading in the US. Previously, this legendary trader and analyst, who correctly predicted the 2018 crypto winter and many other market movements, repeatedly criticised ETH. Now, in his opinion, this altcoin is on the verge of significant growth. Brandt believes that Ethereum has found support near the lower edge of a rectangle that took over four months to form, and its next target will be levels above $5,600.
Trader Yoddha supported the positive forecast, noting that prolonged consolidation could give the leading altcoin the strength needed for active growth. According to his calculations, the cryptocurrency has prospects for moving above $10,000. The peak of Ethereum's growth, he believes, will be recorded in 2025. As for the current ATH (all-time high), it was recorded on 7 November 2021 at $4,856.

– Currently, Ripple (XRP), not Ethereum, has emerged as the growth leader among major altcoins, showing a weekly increase of about 35%. The catalyst for this surge was the announcement by traditional derivatives trading centres CME and CF Benchmarks of Indices and base rates for Ripple, which could promote institutional acceptance of this token.

– Analyst Benjamin Cowen is confident that bitcoin's dominance level (percentage of the total market value of all cryptocurrencies) is crucial for investors. He notes a significant trend: since late 2022, bitcoin's dominance has been steadily increasing. As of July 2024, it stands at 54.5%. Cowen believes that stricter government spending control in the US favours bitcoin over riskier altcoins. While the potential approval of ETH-ETF may provide Ethereum with short-term growth, bitcoin will continue to increase its share of the total cryptocurrency market capitalisation, possibly reaching 60% by December 2024.

– Wall Street Journal journalists reported that data on Donald Trump's election campaign funding indicates he has managed to attract donations from several significant figures in the crypto industry. They sent about $3 million to his campaign accounts. Among them were the creators of the Gemini trading platform, the Winklevoss twins, and Kraken exchange co-founder Jesse Powell.
Despite the relatively small amount, these cryptocurrency donations received extensive coverage in the US media. This strengthened voters' perception that Trump is friendly to the digital asset sector. Furthermore, in June, the politician promised that if he wins the upcoming presidential election, he will provide relief to miners. He positioned himself as someone ready to establish clear legislation for the industry and stop hindering the development of blockchain and cryptography technologies with repressive measures. This stance helped him gain many supporters among crypto enthusiasts who actively support the Republican leader's campaign.

– Former BitMEX CEO Arthur Hayes called the actions of the Winklevoss twins and Jesse Powell a mistake. In his opinion, Trump's pro-cryptocurrency statements seem insincere. "Trump's position is a calculated move to gain support from the population that owns cryptocurrencies, not a genuine belief in the advantages of digital assets. Most likely, under different political circumstances, Trump would change his stance. His primary goal now is to secure votes, not to protect the crypto industry," Hayes explained. According to him, Trump, being a shrewd politician, will say whatever people want to hear to get their votes. However, there are no guarantees these promises will be fulfilled.

– Analysts at Bernstein positively assessed the "Trump factor" for bitcoin miners. They suggest that in the current conditions, the quotations of companies in this segment will shift to growth, and their shares should be bought. "The Goldilocks scenario for mining is becoming more realistic: more chances for favourable political changes, the US becoming a dominant centre for bitcoin and next-generation chip mining, and the industry gaining recognition as an energy interconnector and becoming a reliable partner for AI data centres," Bernstein experts predict.

– However, the noise from mining has caused health problems for Texas residents. This state hosts 10 of the 34 major bitcoin mining companies in the US. Some miners, such as Marathon Digital and Hut 8, relocated there in 2021 when China imposed restrictions on the industry. Other companies chose Texas due to relatively low electricity costs. Hut 8 called the state "one of the lowest in local wholesale electricity prices in North America."
However, it turns out that the influx of miners into Texas has negatively impacted the state's residents. Specifically, due to the high noise level of 91 decibels produced by bitcoin mining rigs, some patients have been diagnosed with hearing loss. The noise from miners is comparable to the sound of a lawnmower or chainsaw, and according to the Hearing Health Foundation, sounds exceeding 70 decibels lead to severe problems, especially with prolonged exposure. Other health issues reported by Texas residents include sleep disturbances, dizziness, tremors, and even fainting.

– The artificial intelligence (AI) ChatGPT-4o from OpenAI selected three digital assets to buy in 2024 for long-term investment. The AI considered key factors such as "price dynamics over time, technological innovations, market acceptance, and potential for future growth." Based on these criteria, ChatGPT formed a relatively conservative long-term portfolio, including bitcoin, Ethereum (ETH), and Polkadot (DOT).
According to the AI, bitcoin is a worthy candidate due to its price dynamics, technological progress, relatively broad acceptance, and some regulatory recognition. As for Ethereum, it was chosen for its technological innovations, particularly its transition to proof of stake (PoS), ecosystem growth, and network effects arising from blockchain popularity. Polkadot's inclusion in the top three is of particular interest. ChatGPT considers it a valuable investment based on its network compatibility and scalability, as well as a strong development team and dedicated community. The AI model also highlights Polkadot's work on parachains as significantly useful technology.


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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[Stan NordFX]

Forex and Cryptocurrency Forecast for 22 – 26 July 2024​

EUR/USD: FOMC - Are Surprises Expected on 31 July?

This review will begin somewhat unusually, not from the start, but from the end of the past work week. On the evening of 18 July and the morning of the 19th, system administrators and users encountered non-functional servers and PCs running Windows. These systems began displaying the "blue screen of death" (BSOD) and entered an endless reboot loop. This global Microsoft outage affected many countries, including the USA, the UK, Spain, Germany, Turkey, and Australia. Many users in China also experienced the "blue screens of death." Critical computer systems, including those of emergency services, hospitals, police, airports, railways, broadcasters, internet providers, telecom companies, and other organisations such as banks and exchanges, either ceased functioning or started malfunctioning. Consequently, the situation in financial markets at that moment became almost force majeure.

The cause of the outage was identified as a software update from cybersecurity firm CrowdStrike, which conflicted with a new Windows update released simultaneously. Microsoft stated that they had identified the problem and were taking easing steps. However, the duration of this work remains unclear.

Now let’s move on to the more "traditional" news of the week and discuss the chances of monetary policy easing. On Thursday, 18 July, the European Central Bank (ECB) held a meeting, and the day before, Eurostat published consumer inflation (CPI) data. According to the statistical office's final assessment, annual inflation decreased to 2.5% last month from 2.6%, in line with market expectations. The core indicator, Core CPI, which excludes food and energy, remained at 2.9%. It’s worth noting that it had shown a downward trend for nine months (from August 2023 to April 2024), reaching 2.7%. However, in May, it accelerated to 2.9% and remained at that level in June. Another inflation indicator, the Producer Price Index (PPI), registered at -0.2% month-on-month (forecast -0.1%) and -4.2% year-on-year (forecast -4.1%).

Commenting on these figures, ECB President Christine Lagarde stated that the regulator had made progress on the path to disinflation, as key inflation indicators are "moving in the right direction." However, she indicated that the ECB would not lower rates in July but did not rule out further steps towards monetary policy easing (QE) at the autumn meetings.

Of course, she knew what she was talking about: on the following day, at its meeting, the European Central Bank (ECB) kept the key interest rate unchanged at 4.25%. At the concluding press conference, Madam Lagarde did not say anything new. She pointed out the weakness of the European economy, noting that the risks to economic growth were leaning towards the downside. Regarding persistently high inflation, Ms. Lagarde reiterated that the ECB's decisions remain data-dependent. While she did not signal an imminent easing of monetary policy, she stated that the decision on the rate at the Governing Council meeting on 12 September remains "open."

The risk-averse market atmosphere and Christine Lagarde's dovish and vague comments prevented EUR/USD from continuing its move towards 1.1000, sending it down to the 1.0900 zone. On Friday morning, ECB Governing Council member and President of the Bank of France, François Villeroy de Galhau, stated that uncertainty regarding economic growth had increased compared to a few months ago. He added that the market's expectations regarding the ECB's rate forecast were justified. His colleague on the Governing Council, the head of the Central Bank of Lithuania, Gediminas Simkus, also agreed with the market's prediction of two more 25 basis points (bps) rate cuts by the end of 2024.

Such dovish sentiments from European officials could have exerted significant downward pressure on EUR/USD, but similar rhetoric is also coming from their counterparts across the Atlantic. The next FOMC (Federal Open Market Committee) meeting of the Federal Reserve is scheduled for Wednesday, 31 July. According to economists at Goldman Sachs, amid a sharp drop in U.S. inflation from 4.3% to 2.6%, the steepest decline since 1984, and a surge in unemployment from 3.6% to 4.1%, the regulator could begin gradually lowering the rate at this meeting. However, most FOMC officials, including Fed Chair Jerome Powell, assert that the time for easing monetary policy has not yet arrived and that it is necessary to wait for new data. They suggest that any changes could be discussed in September.

Currently, the probability of a rate cut for the dollar in September stands at 96%, while for the euro, it is slightly lower at 80% (considering the 25 bps cut that occurred in June).

So, if nothing happens on 31 July, the Fed rate will remain at 5.50%. Since the ECB rate is 4.25%, this gives a certain advantage to the American currency. If risk aversion continues to dominate the market, it will create additional pressure on EUR/USD.

The pair ended the past week at 1.0883. As of the evening of 19 July, the analysts' forecast for the near term is as follows: 55% of their votes are for the pair's rise, and 65% for its fall. In technical analysis, 80% of trend indicators still favour the euro, while 15% have switched to the dollar. Among oscillators, 85% are green, with 15% turning neutral. The nearest support for the pair is at the 1.0865 zone, followed by 1.0790-1.0805, 1.0725, 1.0665-1.0680, 1.0600-1.0620, 1.0565, 1.0495-1.0515, 1.0450, and 1.0370. Resistance zones are located around 1.0890-1.0915, 1.0945, 1.0980-1.1010, 1.1050, and 1.1100-1.1140.

In the upcoming week, data on retail sales volumes in Germany will be released on Monday, 22 July. Wednesday, 24 July, can be called PPI Day, as a stream of preliminary data on business activity in various sectors of the economies of Germany, the Eurozone, and the USA will be released. On Thursday, we will learn about the state of the American economy in Q2, with GDP figures for this period becoming available. Additionally, the traditional number of initial jobless claims in the United States will be published on this day. The last working day of the week is expected to be very volatile, as on Friday, 26 July, the USA will release the Core CPI inflation figures, which are a key reference for the Federal Reserve's monetary policy decisions.

continued below...

 

[Stan NordFX]

GBP/USD: Bank of England – Are Surprises Expected on 1 August?

Our previous review of GBP/USD was titled "Pound Wins with Labour," and indeed, it has. Over the past week, the pair reached a high of 1.3043, rising to levels last seen a year ago in July 2023. In our view, this surge was driven more by political speculations surrounding the opposition's rise to power and the change of government in the UK than by economic indicators. What this reshuffle will actually deliver remains to be seen and assessed. For now, it is merely an opportunity to profit from new Prime Minister Keir Starmer's promises of a "national renewal."

The current macroeconomic statistics for the United Kingdom, published over the past week, did not provide much cause for optimism. Inflation data released on Wednesday, 17 July, was slightly higher than expected. The headline CPI came in at 2.0% year-on-year (market expectations were 1.9%), and the core CPI reached 3.5% (forecast was 3.4%). Although these figures are close to forecasts, they show that UK inflation remains stubborn and is resisting the Bank of England's (BoE) efforts.

On Friday, 19 July, the Office for National Statistics (ONS) published retail sales data for the UK, which also turned out to be disappointing. On a monthly basis, sales fell by -1.2% in June, following a rebound of 2.9% in May. Markets had predicted a decline of only -0.4%. The core retail sales indicator, excluding automotive fuel sales, fell by -1.5% month-on-month, compared to the previous jump of 2.9% and a forecast of -0.5%. The annual volume decreased by -0.2% in June, against a May growth of +1.3%, while the core figure declined by 0.8% year-on-year, compared to +1.2% the previous month.

In light of these data, the British currency began to lose ground, and GBP/USD ended the past week at 1.2912. Specialists at Singapore's UOB Bank believe that "the upward momentum has significantly weakened, and the pair's growth has come to an end." In their opinion, "the pound has likely entered a consolidation phase and will trade between 1.2850 and 1.3020 for some time."

Of course, much will depend on what happens at the BoE meeting on 1 August. The last rate change was a year ago, on 3 August 2023, when it was raised by 25 basis points to 5.25%. Now, according to analysts at Commerzbank, "the next Bank of England decision should be very interesting." They write, "We still lean towards the Bank of England soon making its first rate cut. However, whether this happens in August or September, the key point is that with the persistently high levels of core inflation and inflation in the services sector, a significant rate cut is unlikely. Therefore, in the medium term, the pound sterling should continue to receive good support.".

For now, the median forecast of experts for the near term is as follows: only 20% of analysts expect further strengthening of the pound and a rise in the pair, 60% predict a decline, and the remaining 20% have taken a neutral stance. As for the technical analysis on D1, 75% of trend indicators are green, and 25% are red. Among oscillators, 75% are green, 10% are neutral grey, and only 5% are red.

In the event of further declines, the pair will encounter support levels and zones at 1.2850-1.2860, followed by 1.2780-1.2800, 1.2610-1.2625, 1.2540, 1.2445-1.2465, 1.2405, and 1.2300-1.2330. In the case of a rise, resistance levels are expected at 1.2990-1.3005, followed by 1.3040, 1.3100-1.3140, 1.3265-1.3300, 1.3375, 1.3315, 1.3555-1.3640, and 1.3750.

The release of preliminary business activity (PPI) data for the UK economy on Wednesday, 24 July, stands out among the events of the upcoming week. No other significant macroeconomic data releases are expected in the coming days. The next important event, as previously mentioned, will be the Bank of England meeting on Thursday, 1 August.

USD/JPY: Bank of Japan – Are Surprises Expected on 31 July?

According to strategists from ING, USD/JPY "delivered a bundle of surprises this week, retreating to the 155/156 area." Frankly, the surprise for us was not the yen's strengthening, but these words from ING experts. After all, what's so surprising about it? In our reviews, we have repeatedly warned about possible currency interventions by Japan's financial authorities. And here they are.

Economists estimate that on Thursday and Friday, 11 and 12 July, the Bank of Japan (BoJ) purchased about 6.0 trillion yen to support the national currency. On Wednesday, 17 July, USD/JPY came under pressure again, likely due to another currency intervention. Analysing the BoJ's account movements, economists believe that the intervention on that day amounted to around 3.5 trillion yen. Whether this will have a lasting effect is a big question. Recent years' experience with similar actions shows that the effect is only short-term. This time, specialists from Germany's Commerzbank called the BoJ's interventions "spitting against the wind." Just two days later, on 19 July, after bouncing off a local low of 155.35, the pair surged to 157.85, jumping by 250 points.

"Aside from the disappointing business activity index in the services sector," analysts at Commerzbank observe, "which showed a reduction in activity in May, the foreign trade data was also unconvincing. One of the reasons for this was the weakening of imports, which does not bode well for the domestic economy."

"Bank of Japan must continue to hope that the unfavourable factor related to US interest rates will significantly weaken in the coming months, allowing the yen to stabilize without the need for constant defensive measures," the economists at Commerzbank conclude, likely referring to regular currency interventions as the "defensive measures."

In Tokyo, calls are growing louder that a weak yen has long outlived its usefulness. Investors trading short yen in carry trade strategies also have to contend with unwelcome currency interventions. Moreover, while the Bank of Japan's resources to support the yen are substantial, they are not unlimited. With this in mind, BoJ Governor Kazuo Ueda stated last month that the regulator might raise interest rates at the meeting on 31 July. Additionally, the Japanese currency received unexpected support from US presidential candidate Donald Trump, who stated in an interview with Bloomberg that an undervalued yen exerts negative pressure on the US manufacturing sector.

On 31 July, both the Fed and the BoJ will hold meetings. If the actions or accompanying comments from the Bank of Japan are more hawkish, it could provide a new driver for USD/JPY to decline. For instance, ING does not rule out the possibility that the pair could reach 153.00 by the end of the year.

The pair ended the past week at 157.45. Evaluating the near-term prospects, 40% of experts voted for the pair moving south and the yen strengthening, while the remaining 60% took a neutral stance. Among oscillators on the D1 chart, 100% are in favour of the Japanese currency, although 15% are in the oversold zone for the pair. The trend indicators present a more mixed picture: 60% point to the yen's strengthening, while 40% suggest an upward rebound.

The nearest support level is located around 155.35-155.70, followed by 154.50-154.70, 153.60, 153.00, 151.85-152.15, and 150.80-151.00. The nearest resistance is in the 158.25 zone, followed by 158.75, 160.20, 160.85, 161.80-162.00, and 162.50.

In the upcoming week, Friday, 26 July, stands out on the calendar. On this day, the Consumer Price Index (CPI) values for the Tokyo region will be published. No other significant macroeconomic statistics related to the state of the Japanese economy are scheduled for release in the coming days.

continued below...

 

[Stan NordFX]

CRYPTOCURRENCIES: Surprise – Market Capitalisation Increases by $370 Billion in a Week

This week, bitcoin surged above $65,000, reaching a high of $67,490. This is the level it traded at on 17 June. Subsequently, the German government began liquidating crypto holdings confiscated by its police, causing BTC/USD to plummet. Over the past few days, Germany sold 50,000 BTC for approximately $3 billion, with the latest tranche of 3,846 BTC sold on 12 July.

Now, the market has digested the negative impact of this sell-off. The price of BTC is recovering amidst renewed capital inflows into spot bitcoin ETFs. According to Coinshares, from 8 to 14 July, about $1.7 billion flowed into all cryptocurrency investment products, including US spot ETFs. Of this, $260 million went to BlackRock's IBIT fund. Since the beginning of 2024, funds have received $17.8 billion, surpassing the total for 2021, which was the peak year for the previous crypto bull cycle. Not only American but also Hong Kong bitcoin ETFs are seeing inflows, attracting a record $37 million on 15 July alone.

Evaluating the inflow into spot ETFs, BlackRock CEO Larry Fink declared on CNBC that bitcoin is a legitimate financial instrument suitable for investment during times of heightened fear. Fink admitted that he "was a proud skeptic, but I’ve studied [bitcoin], and learned about it," and now acknowledges that he was wrong about the asset in the past.

The head of BlackRock emphasized that the first cryptocurrency offers an opportunity to invest "in something that is outside of any country’s control." He noted, "I’m not saying that there aren’t abuses, like in anything else, but it’s a legitimate financial instrument that can potentially provide non-correlated, unconnected types of returns."

The next phase following the sale of 50,000 German BTC will be the return of 142,000 BTC to former clients of the bankrupt crypto exchange Mt. Gox, which collapsed 10 years ago. Concerns arise from the fact that bitcoin has increased in value 130-fold during this time, and naturally, many recipients may want to convert their tokens to fiat immediately. However, not all Mt. Gox coins will be distributed to creditors in July. According to Arkham Intelligence, the first tranche of 45,000 BTC will be distributed to creditors through the Kraken exchange in the next one to two weeks. Overall, the pressure from Mt. Gox sales is not expected to exceed 75,000 coins by the end of the year.

Thanks to this information, panic among market participants has subsided. However, some analysts still believe that these payouts could push bitcoin's price down to $50,000. CoinShares predicts that if all 45,000 BTC are sold within 24 hours, the price could drop by 19% from current levels. Well-known analyst Alex Krüger estimates that the maximum price drop will not exceed 10%.

CryptoQuant CEO Ki Young Ju argues that fears about seller pressure are overestimated and will not disrupt the ongoing bull rally. He suggests that if the same volume is released over 30 days, the market will hardly notice it. Analysts at CoinMetrics also believe that the market should "absorb" the Mt. Gox creditors liquidating their assets if the sales are spread out over time, taking into account the current market depth and trading volumes.

At present, it is difficult to predict how aggressively former Mt. Gox clients will dispose of their unexpected digital windfall. However, most influencers agree that even if there is a negative effect, it will be short-lived. Katie Stockton, managing partner at Fairlead Strategies, confirmed in a CNBC interview that the long-term upward trend remains intact, and that bitcoin should be viewed as a long-term investment with significant growth potential.

Michael Saylor, co-founder and former CEO of MicroStrategy, stated that a decline in the value of the first cryptocurrency will not affect its attractiveness to investors. As evidence, he presented a table comparing the price dynamics of various asset classes over several years, including bitcoin, gold, emerging market stocks, emerging market bonds, and treasury bonds. The best performers were bitcoin, young company stocks (U.S. Growth index), and the Nasdaq 100 index. From 2011 to 2024, bitcoin's value increased by 18,881%, while the Nasdaq 100 index grew by 931% and gold by 59%. Michael Saylor has previously predicted that bitcoin could reach $10 million in the future.

Analyst Benjamin Cowen also conducted a historical analysis. He examined the key parameter for investors: bitcoin's dominance level (percentage of the total market capitalization of all cryptocurrencies). Cowen notes a significant trend: since the end of 2022, the dominance of the flagship cryptocurrency has been steadily increasing. From 38% in late November 2022, it rose to 54% by July 2024. Cowen believes that stricter government control over spending in the U.S. favours bitcoin compared to riskier altcoins. While potential approval of an ETH-ETF might provide Ethereum with short-term growth, bitcoin will continue to increase its share of the overall crypto market capitalization, potentially reaching 60% by December 2024.

The highly anticipated launch of spot Ethereum ETFs is undoubtedly expected to be a significant event for the industry. Bloomberg's senior exchange analyst Eric Balchunas reported that these trades will begin in the US on 23 July. "The SEC (Securities and Exchange Commission) finally approached issuers on Wednesday [17 July], requesting them to return final [forms] S-1 and then request effectiveness [approval] for a Tuesday, 23 July launch," the expert wrote. He did caution, however, that this is contingent upon the absence of any "last-minute unforeseen issues." Balchunas' information was confirmed by sources at two potential issuers of the ETH-ETFs.

Peter Brandt, head of Factor LLC, has provided a forecast for Ethereum ahead of the launch of ETH-ETF trading. Previously, this legendary trader and analyst, known for accurately predicting the crypto winter of 2018 and many other market movements, has often criticized ETH. However, now he believes this altcoin is on the brink of significant growth. Brandt suggests that Ethereum has found support near the lower boundary of a rectangle formation, which took over four months to develop, and its next target will be levels above $5,600.

This positive outlook is supported by the trader known as Yoddha. He noted that the prolonged consolidation could provide the main altcoin with the strength needed for active growth. According to his calculations, Ethereum has the potential to move to levels above $10,000. Yoddha believes the peak growth for Ethereum will be recorded in 2025. As for the current all-time high (ATH), it was recorded on 7 November 2021, at $4,856.

Despite Ethereum's prospects, the leader in growth over the past few days has been Ripple (XRP). From 5 to 17 July, the coin saw an increase of approximately 47%. The catalyst for this surge was the traditional derivatives trading centers – CME and CF Benchmarks – announcing indices and reference rates for Ripple, which could facilitate institutional acceptance of this token.

In such a situation, the decision of OpenAI's ChatGPT-4o artificial intelligence, which was tasked with selecting three digital assets worth buying in 2024 for long-term investment, was surprising. The AI was guided by key factors such as "price dynamics over time, technological innovations, market adoption, and potential for future growth." Based on these criteria, ChatGPT created a relatively conservative long-term portfolio that included Bitcoin (BTC), Ethereum (ETH), and not Ripple, but Polkadot (DOT).

According to the AI, Bitcoin is a worthy candidate due to its price dynamics, technological progress, relatively broad adoption, and certain recognition by regulators. Ethereum was chosen for its technological innovations, particularly its transition to proof-of-stake (PoS), the growth of its ecosystem, and the network effects arising from the blockchain's popularity. Polkadot made it into the top three based on the network's interoperability and scalability, a strong development team, and a dedicated community. The AI model highlighted Polkadot's active work on parachain technology, emphasizing its high utility.

As of the evening of Friday, 18 July, BTC/USD is trading at $66,940, ETH/USD is around $3,505, and XRP/USD is at 0.5745. The total crypto market capitalization stands at $2.43 trillion, up from $2.06 trillion a week ago. The Crypto Fear & Greed Index has surged from 29 to 60 points over the past 7 days, moving from the Fear zone to the Greed zone.


NordFX Analytical Group


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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[Stan NordFX]

CryptoNews of the Week

– The rise in cryptocurrency prices is likely to be tactical and is not expected to mark the beginning of a prolonged upward trend, according to JPMorgan. The bank's experts noted that the current price of bitcoin significantly exceeds its mining cost ($43,000) and, compared to gold, appears overvalued relative to the "fair" price adjusted for volatility ($53,000). A significant upward deviation of prices from this latter parameter "limits the potential for long-term growth."
Analysts forecasted positive market dynamics in August, owing to the reduced impact of the sale of coins confiscated by German police and the distribution of coins among clients of Gemini and Mt.Gox. In this case, the price of bitcoin is expected to align with the trend in gold futures, where a recent rise has been observed. Experts also noted that both assets would benefit in the event of Donald Trump's victory in the upcoming U.S. presidential election.

– Bloomberg also reports that bitcoin miners and crypto companies, previously hindered from going public in the U.S., would benefit from a second term of Donald Trump’s presidency. The agency cites Christian Catalini, founder of the Cryptoeconomics Lab at the Massachusetts Institute of Technology, who stated, "Almost everyone in America would benefit if they chose to operate under the new rules once implemented."
In June, Trump met with miners, stating that bitcoin mining should become the "last line of defense against CBDCs." He added that he wants all remaining bitcoin to be "made in the USA."
Following Joe Biden's poor performance in the debates and a failed assassination attempt on Trump, the price of bitcoin rose by 10%, and shares of the two largest public miners, Marathon Digital and Riot Platforms, increased by 30%. Cipher Mining’s shares surged by nearly 50%. For the first time since the crypto market crash in 2022, industry companies are planning initial public offerings. USDC stablecoin issuer Circle filed for an IPO in January with a valuation of $33 billion. Crypto miner Northern Data, which is actively developing AI computing capabilities, is considering a U.S. listing, with a potential valuation of $16 billion. Kraken, the country's second-largest exchange, is also preparing for a stock market listing.

– U.S. President Joe Biden shocked the markets on Sunday, 22 July, when he announced his withdrawal from the presidential race. Some analysts suggested that this move could benefit bitcoin and other crypto assets, while others warned that investors should temper their excitement.
Analyst Josh Gilbert stated that Trump's increased chances of re-election represent "a huge boost for the asset class": "The longer we see Trump leading in the election odds, the more crypto assets will be worth following his victory." Gilbert explained, "It is hard to imagine Kamala Harris or another Democratic candidate overthrowing Trump's lead in the polls just three months before the end of this electoral race," but added, "a lot can happen during this period, so nothing can be ruled out."
Gary Black, managing partner of The Future Fund, shares a similar view. He warned his 433,000 followers on X that a Trump presidency victory is still far from certain. "Those who think that Trump/Vance will secure a decisive victory are getting ahead of themselves," Black wrote.

– Markus Thielen, the founder of 10x Research, suggested that the crypto-friendly Donald Trump might announce at the upcoming Bitcoin-2024 conference that he will make bitcoin a strategic reserve asset for the U.S. government. Currently, the government holds only 212,800 BTC, worth approximately $15 billion, whereas its gold reserves are around $600 billion. If the government were to double its bitcoin holdings, this would be "almost equivalent" to the price impact of the net inflow into bitcoin exchange-traded funds (ETFs) since the beginning of the year.

– U.S. Senator and Republican Party member Cynthia Lummis highlighted that during a recent major system outage at Microsoft, caused by a software update error from CrowdStrike, the bitcoin network remained unaffected, while other industries experienced complete chaos. The bitcoin blockchain and associated cryptocurrency services continued to operate without disruptions. The senator quoted the Latin phrase "Vires in Numeris," meaning "strength in numbers," underscoring that the primary cryptocurrency's network employs complex mathematical algorithms to ensure security and stable operation even in unpredictable technical circumstances.
Senator Lummis recently proposed backing the U.S. dollar with bitcoin to improve the country's financial system. She also voiced opposition to the introduction of a digital dollar, fearing it could compromise citizens' privacy..

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[Stan NordFX]

– Arthur Hayes, the former CEO of the cryptocurrency exchange BitMEX, warned that voters supporting cryptocurrencies may lose their influence on politicians after the presidential elections in November 2024. He suggested that if a regulatory framework for digital assets is not established before the elections, the newly elected president and their administration are likely to shift focus to other pressing issues. Geopolitics may overshadow discussions about cryptocurrencies, with the president's attention potentially diverted to international conflicts, particularly those involving Iran and Russia.
"The capital required to support laws aimed at developing cryptocurrencies may be redirected to addressing more urgent foreign policy issues. Therefore, regulatory clarity must be achieved now, before the political landscape changes after the elections," Hayes stated.

– At the beginning of the year, Nigel Green, CEO of deVere Group, predicted a rapid rise in bitcoin to $60,000, which proved accurate. He now believes that the demand for the leading cryptocurrency will continue to grow, and its price could reach $100,000 by the end of the year. "Bitcoin is likely the best asset for growth potential by the end of the year," writes the financier. "It is currently priced at $65,000, but many expect it to hit $100,000 by year-end. Is this possible? Certainly, because the number of bitcoins is limited. If demand for BTC increases, the price will go up. Bitcoin is not the same as the U.S. dollar, where the Federal Reserve can simply print more." Green also noted that the possible election of Donald Trump as President of the United States could further benefit bitcoin.

– Analyst and trader RLinda identifies the bullish flag pattern as a key indicator of a potential upward movement for bitcoin. This pattern, observable on both daily and weekly charts, is characterised by a sharp upward movement followed by a consolidation phase. RLinda expects that a breakout from this consolidation could continue the previous uptrend, with a potential target around $90,000.
Support and resistance levels are crucial in this analysis. The key support levels at $59,300 and $63,800 have shown strong buying interest and stability. High trading volumes at these levels reinforce expectations that they will hold during any potential pullbacks.
Critical resistance levels are marked at $67,250 and $71,754. Overcoming these resistance points is necessary for BTC to advance towards higher targets. The all-time high (ATH) at $73,743 is particularly significant, with a successful breakout potentially triggering further bullish momentum.

– Peter Brandt, head of Factor LLC, expressed skepticism that the price of bitcoin will exceed $71,000 and set a new record. He stated, "I try to be as honest as possible when identifying patterns. The current stagnation in the bitcoin market is incorrectly labeled as a flag (it has lasted too long); it actually represents a descending channel. Anything that lasts longer than 4-6 weeks is not a flag," wrote Brandt.
The flag pattern, which some analysts believe has emerged on the BTC/USD chart, is typically a precursor to a bullish rally. However, the descending channel mentioned by the veteran trader suggests a price decline. This pattern is characterised by lower highs and lows, which have been established since bitcoin reached its all-time high in March.
Based on the chart Brandt published, he believes that bitcoin's price will not surpass the resistance line around $71,000. If this scenario plays out, a bearish trend may ensue, potentially driving the price of the digital asset down to $51,000. The descending channel is slightly widening, indicating that price volatility is expected to increase over time.

– Analysts from the cryptocurrency market maker Wintermute predict that Ethereum could rise to a maximum of $4,300 in 2024. They believe that demand for this altcoin will be lower than expected, estimating that investment in these derivatives will range between $3.2 billion and $4.0 billion in the first 12 months following the start of trading. Under this scenario, the ETH price could increase by a maximum of 24% during 2024, reaching approximately $4,300.
In contrast, researchers at ASXN have made a more optimistic forecast. They predict that monthly capital inflows into Ethereum ETFs will range from $800 million to $1.2 billion. This suggests that by the end of the year, at least $6-7 billion will be invested in ETH-based exchange-traded funds, significantly exceeding the figures provided by Wintermute's analysts.

– The pace of Ethereum's potential bull rally will heavily depend on the capital inflow into ETH-ETFs shortly after trading begins. However, the launch of these products has not yet generated significant excitement in the cryptocurrency market, with investors responding cautiously to the event. Experts from QCP Capital reminded that after the launch of similar BTC-ETFs, bitcoin's price initially dropped to $38,000, but then hit historical highs two months later. (Although, it should be noted that the BTC halving may have played a significant role at that time.)
Currently, the options market suggests a potential decline in Ethereum's price in the near term. This expectation is reinforced by news of pressure from the U.S. government and the situation surrounding Mt.Gox. These factors add uncertainty and create additional challenges for ETH's growth. "As a result, ETH's price may remain stagnant or even decline until a new catalyst emerges," QCP Capital analysts suggest.
Experts also caution against underestimating the impact of political factors. As the U.S. elections approach, cryptocurrency market volatility may increase. Statements and actions by key political figures can create new opportunities or threats. Therefore, investors should be prepared for price swings and closely monitor news developments.


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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[Stan NordFX]

Forex and Cryptocurrency Forecast for July 29 – August 02, 2024​

EUR/USD: Europe is Not Doing Very Well, the US is Not Doing Very Badly

The main events in the currency market will unfold in the upcoming week, with meetings scheduled for Wednesday, 31 July, when the Bank of Japan and the Federal Reserve's FOMC (Federal Open Market Committee) will convene, followed by the Bank of England's meeting on Thursday, 01 August. Even if interest rates and other monetary policy parameters remain unchanged in all three cases, investors will closely listen to the statements made by regulators at the subsequent press conferences, trying to predict their next steps. Therefore, in anticipation of these events, we have focused more on the cryptocurrency market in this review, while still covering Forex.

In early July, one of our review headlines read: "The US is Not Doing Very Well, Europe is Not Doing Very Badly." This time, we have reversed the positions of the US and Europe, prompted by the macroeconomic statistics released last week.

Vladimir Lenin, the leader of the Communists who led the 1917 revolution in Russia, stated in one of his works that "politics is the concentrated expression of economics." In our view, the reverse is also true: not only does politics depend on economics, but economics also depends on politics. This is exemplified by the scales, with the current monetary policy of the Federal Reserve on one side, and the concerning prospects of Donald Trump’s return to the White House on the other.

The restrictive tariffs that Trump aims to implement in the trade war with Beijing will create new problems for the Chinese economy, which is already struggling. This, in turn, will negatively impact Europe, particularly Germany, which accounts for half of the EU's exports to China. Within just three months, Germany's business activity indicators have shifted from slowing growth to abandoning optimism about economic prospects. The recent Business Activity Index (PPI) values for Germany, released on Wednesday, 24 July, were all in the red zone, falling below both previous figures and forecasts. Both the manufacturing PPI and the composite PPI are below 50 points, indicating regression. These German indices have dragged down overall European metrics, which have also turned worryingly red. While the US economy is merely slowing down slightly, the recovery of the Eurozone risks being reversed.

The preliminary data on business activity in the United States, released on the same day, 24 July, showed that the PPI in the manufacturing sector decreased from 51.6 to 49.5 points, disappointing the market, which had expected a rise to 51.7. However, the same index in the services sector increased to 56.0, surpassing both the previous value of 55.3 and the forecast of 54.4.

The Composite Purchasing Managers' Index (PMI) rose to its highest level since April 2022. The real surprise, however, came from the US GDP data released on Thursday, 25 July. According to the Bureau of Economic Analysis' initial estimate, the Gross Domestic Product in Q2 2024 grew by 2.8% on an annualised basis. This followed a 1.4% growth in Q1, exceeded the market expectations of 2.0%, and confirmed the belief that the US economy will not fall into recession. Further details in the report showed that the core Personal Consumption Expenditures (PCE) price index increased by 2.9% on a quarterly basis, which was lower than the 3.7% growth recorded in the previous quarter, though slightly above the forecast of 2.7%.

The unrest that began on 17 July in the stock market (detailed in the cryptocurrency review) increased demand for the dollar as a safe-haven currency, strengthening it by more than 100 points. However, for the last three days of the trading week, EUR/USD moved within a narrow range of 1.0825-1.0870 in anticipation of next week's events, with the final note sounding at the 1.0855 mark.

As of the evening of 26 July, analysts' forecasts for the near future are as follows: 40% predict a rise in the pair, while 60% expect a decline. In technical analysis, 65% of trend indicators on the D1 chart remain in favour of the euro, while 35% support the dollar. Among oscillators, there is considerable confusion: 25% are in green, 35% are neutral-grey, and 40% are red, with a quarter of them signalling oversold conditions. The nearest support levels for the pair are at 1.0825, followed by 1.0790-1.0805, 1.0725, 1.0665-1.0680, 1.0600-1.0620, 1.0565, 1.0495-1.0515, and 1.0450, 1.0370. Resistance zones are located at 1.0870, 1.0890-1.0910, 1.0945, 1.0980-1.1010, 1.1050, and 1.1100-1.1140.

The upcoming week, as mentioned, promises to be very eventful, interesting, and volatile. On Monday, 29 July, retail sales volumes will be released, followed by preliminary data on GDP and consumer inflation (CPI) in Germany on 30 July. On the same day, GDP data for the Eurozone as a whole will also be published.

The key day will be Wednesday, 31 July. On this day, consumer inflation (CPI) data for the Eurozone will be released, followed by the FOMC meeting of the Federal Reserve. It is expected that the regulator will again leave the key interest rate unchanged at 5.50%. Therefore, market participants will be particularly interested in the FOMC's Economic Projections Summary and the subsequent press conference of the Fed leadership. The following day, Thursday, 01 August, final data on business activity (PPI) in various sectors of the US economy will be published.

Additionally, throughout the week (30, 31 July, 01 and 02 August), there will be a significant influx of labour market statistics from the United States, including key indicators such as the unemployment rate and the number of new non-farm jobs created (NFP).

USD/JPY: "The Most Intriguing Pair in Forex"

While the dollar has recently been strengthening against the euro and the pound, the situation with the Japanese yen has been quite the opposite. This wasn't just a retreat of the US currency, but rather a panicked flight. On Friday, 19 July, strategists from ING, a major Dutch banking group, described the USD/JPY pair as a "bundle of surprises," retreating to the 155/156 range. A week later, they referred to it as "the most intriguing pair in Forex." This time, the minimum was recorded at 151.93, in the key zone of 151.80-152.00, which coincides with the highs of October 2022 and 2023.

The yen began its resurgence like a Phoenix on 11 and 12 July when the Bank of Japan (BoJ), to support the national currency, purchased an estimated ¥6.0 trillion. On 17 July, USD/JPY came under pressure again due to another currency intervention. Analysts, examining BoJ's accounts, estimated the size of this intervention at approximately ¥3.5 trillion.

Then came a new surge. It is worth noting that on 03 July, USD/JPY reached a high of 161.94, a level not seen in 38 years. Now, in just three weeks, it plummeted by 1,000 (!) points, triggering widespread liquidation of positions across all markets, affecting everything from the yuan to various asset classes, including Japanese stocks, gold, and cryptocurrencies.

On Thursday, 25 July, the yen's exchange rate against the dollar rose to its highest level in over two months. This time, the cause seems to be not the currency interventions of the Japanese central bank but the expectation that the interest rate gap between Japan and the US will narrow on 31 July. Swap markets are currently pricing in a 75% probability of a BoJ rate hike on Wednesday, compared to 44% earlier in the week. Moreover, economists at ING believe the BoJ might raise the rate by an unprecedented 15 basis points (bps) for Japan.

They note that "Tokyo's consumer price data showed that core inflation fell to 2.2% year-on-year in July (from 2.3% in June), but the BoJ's preferred measure, core inflation excluding fresh food, rose to 2.2% in July from 2.1% in June." Based on this, ING suggests a 50% chance that inflationary pressure in the services sector will continue to rise, which could lead the BoJ to increase the rate by 15 bps at the upcoming meeting and simultaneously reduce its bond purchase program.

If something like this occurs, macro strategists at State Street Global Markets believe that the resurgence of the Japanese currency could lead to a significant adjustment in global trading strategies in the foreign exchange market, particularly in carry trades. Carry trades involve borrowing in low-yielding currencies, such as the yen, to invest in higher-yielding currencies.

USD/JPY ended the past trading week at 153.75. According to analysts at State Street Global Markets, "the yen rally may continue ahead of the Bank of Japan meeting next week." As for the median forecast by experts for the near term, it is as follows: 20% expect the pair to move south, further strengthening the yen, 30% predict a rebound north, and the remaining 50% have taken a neutral stance. Among oscillators on the D1 chart, 90% favour the Japanese currency, with 20% indicating the pair is in the oversold zone, and the remaining 10% are neutral. Trend indicators show 85% favouring the strengthening of the yen, while 15% support the dollar. The nearest support level is around 151.80-152.00, followed by 149.20-149.50 and 146.50-147.25. The nearest resistance is located in the 154.70-155.20 range, followed by 157.20-157.40, 158.25, 158.75-159.00, 160.20, 160.85, 161.80-162.00, and 162.50.

Apart from the Bank of Japan meeting on Wednesday, 31 July, no other significant events, including the release of important macroeconomic statistics concerning the state of the Japanese economy, are scheduled for the coming days.

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[Stan NordFX]

CRYPTOCURRENCIES: Politics Engages with the Digital Market

As early as the mid-19th century, French writer Charles de Montalembert warned, "You may not be interested in politics, but politics is interested in you." This sentiment is vividly illustrated by recent developments in the market for risk assets, including cryptocurrencies.

The past week was disappointing for investors, although the troubles began earlier, on Wednesday, 17 July. On that day, the shares of some of the world's largest semiconductor manufacturers plummeted, causing the stock market to reach its worst condition in several months. This reaction was due to the tensions in US-China trade relations and comments from former (and possibly future) President Donald Trump regarding Taiwan. Shares of several semiconductor companies sharply declined under the weight of geopolitical tension, with some losing over 8% and a giant like Nvidia dropping by 6%. As a result, the S&P 500 Index fell by 1.39%, marking its largest drop since late April, and the tech-heavy Nasdaq fell by 2.77%, its worst performance since the end of 2022.

However, the troubles for the stock market did not end there. Exactly one week later, on Wednesday, 24 July, the US stock market closed with even greater losses. The S&P 500 and Nasdaq indices dropped by 3.6% and 2.3%, respectively, after Tesla's Q2 results revealed a profit decline of more than 40% compared to the previous year. Tesla's shares fell by more than 12% in just one day. Alongside Tesla, shares of Alphabet, Visa, Microsoft, Nvidia, and other technology companies also declined. The seven largest IT giants lost $770 billion in market capitalization in one day. This turmoil occurred amidst ongoing issues with Microsoft's global Windows system outage, which affected many sectors.

Naturally, such market dynamics impacted the riskiest of assets—cryptocurrencies. It's worth noting that the prices of both bitcoin and ethereum appeared quite strong at the start of the past week. However, they eventually succumbed to the pressure and also declined. In addition to global geopolitical factors, cryptocurrencies had their own specific reasons for this downturn.

The market was shocked when US President Joe Biden announced on Sunday, 22 July, that he would not seek re-election. This decision sparked a debate about how it might impact the digital assets market. Many analysts and influencers argue that only a victory by Donald Trump could provide a strong bullish impulse to the industry. This view is shared by experts at JPMorgan. Analyst Josh Gilbert stated, "The longer we see Trump leading in the election odds, the more valuable crypto assets will become after his victory." He further explained, "It's hard to imagine Kamala Harris or another Democratic candidate overthrowing Trump's lead in the polls just three months before the end of this election race.".

Trump's Republican ally, Senator Cynthia Lummis, suggested backing the dollar with bitcoin to improve the country's financial system. A similar approach was proposed by Markus Thielen, founder of 10x Research. He believes that Trump could announce at the upcoming Bitcoin-2024 conference that he plans to make bitcoin a strategic reserve asset for the US government. Currently, the government holds only 212,800 BTC, worth approximately $15 billion, compared to its gold reserves of around $600 billion. If the government were to double its bitcoin holdings, it would have an impact on the price nearly equivalent to the net inflow effect on spot BTC-ETFs since the beginning of the year.

Bloomberg reports that bitcoin miners and crypto companies, previously hindered from going public in the US, could benefit under a second Donald Trump presidency. The agency cites the opinion of Christian Catalini, founder of the Crypto-economics Lab at the Massachusetts Institute of Technology. He believes that "almost everyone in America will benefit if they choose to operate under new rules after they are implemented."

In June, Trump met with miners and expressed his desire for all remaining bitcoin to be "made in the USA." Following Joe Biden's poor performance in debates and an unsuccessful assassination attempt on Trump, the price of bitcoin rose by 10%, while shares of the two largest public miners, Marathon Digital and Riot Platforms, increased by 30%. Cipher Mining's stock prices gained nearly 50%. For the first time since the crypto market crash in 2022, companies in the sector are planning initial public offerings (IPOs). Stablecoin issuer USDC, Circle, filed for an IPO in January with a valuation of $33 billion. Crypto miner Northern Data, which is actively expanding its AI computing division, is considering listing in the US, with a potential valuation of $16 billion. Kraken, the second-largest exchange in the country, is also preparing to go public.

However, all of this is speculative and dependent on future developments. Josh Gilbert, while optimistic about Trump's influence on the cryptocurrency market, cautions that "a lot can happen between now and the election, so nothing is certain." Gary Black, Managing Partner of The Future Fund, echoed this sentiment, warning his 433,000 followers on X that a Trump victory is far from assured. "Those who think Trump/Vance will secure an easy win are getting ahead of themselves," Black wrote.

Arthur Hayes, the former CEO of the crypto exchange BitMEX, also expressed skepticism. He believes that voters who support cryptocurrency may lose influence over politicians once the presidential election is over in November 2024. If a regulatory framework for digital assets is not established before the election, the elected president and their administration may shift their focus to other pressing issues. Geopolitical concerns could overshadow discussions about cryptocurrencies, with the president's attention potentially diverted to international conflicts, particularly involving Iran and Russia. Hayes argues, "The capital needed to support laws promoting cryptocurrency development could be redirected towards addressing more urgent foreign policy issues. Therefore, regulatory clarity should be sought now, before the political landscape changes post-election."

continued below...

 

[Stan NordFX]

BITCOIN: Bullish Flag or Bearish Den?

Experts at JPMorgan note that the current bitcoin price significantly exceeds its mining cost (~$43,000) and appears overvalued compared to its "fair" price adjusted for volatility (~$53,000). According to JPMorgan, the substantial upward deviation from this fair price "limits the potential for long-term growth." However, they have forecasted positive market dynamics in August, attributed to the diminishing negative impact of the sale of coins confiscated by German authorities and the distribution of coins to clients of Gemini and Mt.Gox.

At the beginning of the year, Nigel Green, CEO of deVere Group, predicted that bitcoin would soon rise to $60,000, and his forecast proved accurate. Now, he believes that the demand for the leading cryptocurrency will continue to grow, potentially reaching $100,000 by the end of the year. "Bitcoin is likely the best asset in terms of growth potential by the end of the year," the financier writes. "Many are expecting it to reach $100,000 by year-end. Is this possible? Quite possibly, because the supply of bitcoin is limited. This means that if demand for BTC increases, so will the price. Bitcoin is not the same as the US dollar, where the Federal Reserve can simply print more."

Green also mentioned that the potential election of Donald Trump as US President could positively impact bitcoin's price.

Analyst and trader known by the nickname RLinda identifies the bullish flag pattern as a key indicator of potential upward movement for BTC. This formation, observed on both daily and weekly charts, is characterized by a sharp upward move followed by a phase of consolidation. RLinda anticipates that a breakout from this consolidation will continue the previous uptrend, potentially targeting around $90,000.

Support and resistance levels play a crucial role in this analysis. Key support levels at $59,300 and $63,800 have shown strong buying interest and stability. The high trading volumes at these levels reinforce the expectation that they will hold during any potential pullbacks. Critical resistance levels are noted at $67,250 and $71,754. Breaking through these resistance points is necessary for BTC to advance towards higher targets. The all-time high (ATH) at $73,743 is particularly significant; a successful breakout above this level could trigger further bullish momentum.

Peter Brandt, the head of Factor LLC, has entered into a debate with RLinda. The legendary trader expresses skepticism that bitcoin will surpass $71,000 and set a new price record. "I try to be as honest as possible in identifying patterns. The current stagnation in the bitcoin market should not be called a flag (it has lasted too long); it represents a descending channel. Anything that lasts longer than 4-6 weeks is not a flag," Brandt wrote.

According to some analysts, the flag pattern observed on the BTC/USD chart suggests an impending bullish rally. However, the descending channel that Brandt refers to indicates a potential decline in the coin's price. This pattern is characterized by lower highs and lows, established after BTC reached its all-time high in March. Based on the chart published by Brandt, he believes that bitcoin's price will not break the resistance line, which lies around $71,000. In this scenario, a bearish trend could begin, with the digital gold potentially dropping to $51,000. The descending channel is slightly widening, suggesting that price volatility may increase over time.

On Thursday, 25 July, the BTC/USD pair dropped to the support zone of $63,200-63,800 and encountered additional support from the 200-day moving average (DMA200). Following this, it reversed direction and started to move upwards. As of the evening of Friday, 26 July, it has nearly recovered its weekly losses and is trading at around $67,500. The total market capitalization of the crypto market has remained relatively stable at $2.42 trillion, compared to $2.43 trillion a week ago. The Bitcoin Fear & Greed Index has risen from 60 to 68 points over the past seven days, remaining in the Greed zone.

ETHEREUM: ETH-ETF – Disappointment Instead of Hope

On 23 July, the long-awaited spot ETFs for Ethereum were launched in the US, providing investors with access to the altcoin through traditional brokerage platforms. On the first day of trading, the turnover reached $1.1 billion, which was 24.4% of the turnover of BTC-ETFs, aligning with optimistic forecasts. However, trading volume isn't the only metric to consider. The net inflow of investments into ETH was significantly lower than that into bitcoin, with $107 million compared to $655 million, respectively, showing a sixfold difference.

The situation worsened as the initial enthusiasm for Ethereum ETFs quickly faded, causing ETH/USD prices to decline sharply, despite the trading volume surpassing $1.0 billion again. The decline was triggered by a significant outflow of funds from a single issuer, Grayscale's Ethereum Trust ETF (ETHE). According to SoSoValue, Grayscale's ETHE lost $484 million on the first trading day and nearly $327 million on the second day, totalling $811 million. In contrast, most other spot ETH-ETFs, including ETHA from BlackRock, ETHW from Bitwise, and FETH from Fidelity, showed growth in inflows. However, these inflows were insufficient to offset the losses from Grayscale's ETHE.

This situation mirrors the experience with Grayscale's GBTC fund in the early weeks following the launch of the bitcoin ETF. Both Grayscale funds were converted from trust to spot ETFs. If the outflow rate from ETHE matches that of GBTC, it could negatively impact all newly established ETH-ETFs.

Moreover, macroeconomic factors contributing to the (hopefully temporary) stock market downturn, the ongoing situation with Mt.Gox, and the lack of staking in ETFs, which deprives the altcoin of the advantage of passive income, also play a role. Additionally, Ethereum's practical applications are increasingly being outperformed by competitors such as Tron and Solana. Experts also remind us of the upcoming US elections, where statements and actions by key political figures could create new opportunities and threats for the market.

Analysts at cryptocurrency market maker Wintermute believe that demand for Ethereum will fall short of expectations, predicting investments in these derivatives will range between $3.2 billion and $4.0 billion in the first 12 months after trading begins. As a result, they expect Ethereum's price to rise to a maximum of $4,300 in 2024.

In contrast, researchers from ASXN offer a more optimistic forecast. They predict that the monthly capital inflow into Ethereum ETFs will range from $800 million to $1.2 billion, implying a total investment of at least $6-7 billion in these funds by the end of the year, significantly exceeding Wintermute's estimate.

Adding to the positive outlook, experts from QCP Capital noted that following the launch of similar BTC-ETFs, bitcoin's price initially fell to $38,000 but then surged to new all-time highs within two months, posting a 90% increase. (However, it is worth noting that the BTC halving may have played a significant role at that time.) The dynamics of Ethereum will become clearer in the near future. Currently, ETH/USD recorded a weekly low of $3,089 and, as of the evening of Friday, 26 July, is trading around $3,200.


NordFX Analytical Group


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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