Macrovariables uncertainty lowers the market euphoria to 70%

BTC has again lost psychological support at 40k after a week in which it has retreated 12%. ETH has lost the psychological support of 3k with a weekly pullback of 11%.

As we have been explaining, the main cause is the fear of a recession and the measures of the US government. High inflation rates are forcing the Federal Reserve to raise rates and sell assets at a higher rate than expected (95 billion per month). BTC, although deflationary at its core, is a risky asset and investors typically divest from such assets first in the face of a recession threat.

After Biden’s ban on importing Russian oil, the price of energy rose 25% in the US, which led its CPI to 8.5%, one tenth more than expected (8.4%), more pressure on the FED.

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A good sign is the real estate market data, with very high prices, at 2007 levels and expected to continue rising (4.3%) that leads some investors to talk about a crisis like the one in 2008.

Another major threat affecting market psychology is the new variant of COVID XE, which in Xina (Shanghai) is already causing extraordinary measures and restrictions that may affect production, reduce exports and again increase prices and inflation. Its capacity for global contagion is unknown, but if its level of transmission is similar to previous strains, and the measures are equally ineffective and with an impact on the economy as beastly as we have seen these two years, the threat scares the market.

The other interesting chart to follow is the 2-year treasury yield which already exceeds the 10-year bond yield, a sign of a recession crossover with a 60% chance that we will enter recession this year and 98% within the next two years according to the historical series.

But while it seems that recession is inevitable, the question we have been asking for some time is: how will this affect BTC?

One of the charts we need to look at is the BTC Correlation with Nasdaq chart. Until BTC breaks this correlation, it will not prove that its intrinsic characteristics are greater than the exogenous variables that affect it, and as we see in this chart, we are at historical highs of correlation.

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This correlation explains two things, first the price behaviour of the last few days, second what we have been explaining for some time now, the institutional adoption is huge and growing, which causes this contradiction, sensitivity to macroeconomic movements and greater long-term robustness of the crypto system.

Some interesting signals:

  • Bank of America (nothing suspicious) announced this week in a report that BTC is being used as a investment coverage by investors, and this is very significant.
  • Long-term Hodlers remain unsold.
  • Volume remains too low to see a significant price rise.
  • BTC supply is drying up, we are at historic lows, which could be a sign of support in the price.
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Weekly market sentiment

With these last corrections the market sentiment has been affected, but not at a too high level. If a fortnight ago, when BTC reached 47k we had euphoria peaks passing 80%, this pullback has brought us to a weekly sentiment of 73% with a progressive decline without any clear panic peak until the 9th when we recorded a trend-breaking panic peak and the subsequent drop that started on the 11th in the morning and triggered a bit of panic sentiment in the afternoon. You can see it perfectly on the chart:

BTC has again lost psychological support at 40k after a week in which it has retreated 12%. ETH has lost the psychological support of 3k with a weekly pullback of 11%.

As we have been explaining, the main cause is the fear of a recession and the measures of the US government. High inflation rates are forcing the Federal Reserve to raise rates and sell assets at a higher rate than expected (95 billion per month). BTC, although deflationary at its core, is a risky asset and investors typically divest from such assets first in the face of a recession threat.

After Biden’s ban on importing Russian oil, the price of energy rose 25% in the US, which led its CPI to 8.5%, one tenth more than expected (8.4%), more pressure on the FED.

No hay texto alternativo para esta imagen

A good sign is the real estate market data, with very high prices, at 2007 levels and expected to continue rising (4.3%) that leads some investors to talk about a crisis like the one in 2008.

Another major threat affecting market psychology is the new variant of COVID XE, which in Xina (Shanghai) is already causing extraordinary measures and restrictions that may affect production, reduce exports and again increase prices and inflation. Its capacity for global contagion is unknown, but if its level of transmission is similar to previous strains, and the measures are equally ineffective and with an impact on the economy as beastly as we have seen these two years, the threat scares the market.

The other interesting chart to follow is the 2-year treasury yield which already exceeds the 10-year bond yield, a sign of a recession crossover with a 60% chance that we will enter recession this year and 98% within the next two years according to the historical series.

But while it seems that recession is inevitable, the question we have been asking for some time is: how will this affect BTC?

One of the charts we need to look at is the BTC Correlation with Nasdaq chart. Until BTC breaks this correlation, it will not prove that its intrinsic characteristics are greater than the exogenous variables that affect it, and as we see in this chart, we are at historical highs of correlation.

No hay texto alternativo para esta imagen

This correlation explains two things, first the price behaviour of the last few days, second what we have been explaining for some time now, the institutional adoption is huge and growing, which causes this contradiction, sensitivity to macroeconomic movements and greater long-term robustness of the crypto system.

Some interesting signals:

  • Bank of America (nothing suspicious) announced this week in a report that BTC is being used as a investment coverage by investors, and this is very significant.
  • Long-term Hodlers remain unsold.
  • Volume remains too low to see a significant price rise.
  • BTC supply is drying up, we are at historic lows, which could be a sign of support in the price.
No hay texto alternativo para esta imagen

Weekly market sentiment

With these last corrections the market sentiment has been affected, but not at a too high level. If a fortnight ago, when BTC reached 47k we had euphoria peaks passing 80%, this pullback has brought us to a weekly sentiment of 73% with a progressive decline without any clear panic peak until the 9th when we recorded a trend-breaking panic peak and the subsequent drop that started on the 11th in the morning and triggered a bit of panic sentiment in the afternoon. You can see it perfectly on the chart:

No hay texto alternativo para esta imagen

This has led us to a sentiment index that has dropped to 70 points in the last two days:

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But we are still a long way from the panic situations that we experienced earlier this year.

Health and crypto

This has led us to a sentiment index that has dropped to 70 points in the last two days:

No hay texto alternativo para esta imagen

But we are still a long way from the panic situations that we experienced earlier this year.

Health and crypto

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