Market
BTC failed to defend the $65,000 and trend lines and continued to decline. Last weekend, altcoins suffered a serious decline as the risk of war between Israel and Iran increased. Most open interest has disappeared. That’s why I prefer BTC trading and the market is starting to look cleaner and clearer to me.
BTC is being tested on the first important point. The $60,000 level is a psychologically important point. There was a temporary breakout this morning, but it quickly bounced back. Although it is too early to judge the decline to be over, the market appears to be preparing for a rebound. 1-hour and 4-hour bullish divergences are occurring. If the market does not rebound, we will see another move to lower the level, and it is expected to be quite fast. Ultimately, I predict a possible rebound to the $65,000 level.
$58,000 is the most important level I see and if it collapses, I honestly don’t know how far BTC will fall. If such an outcome were to occur, it would certainly be difficult for the market for several weeks or months.
Let’s look at it from an order book perspective. The spot market continued to intervene little by little in the decline of BTC. Whenever BTC rebounds, there are traces of a selling wall. The spot buy orders seen last week still exist in the $60,000-$55,000 range. Additionally, buy orders are occurring at the same level in the futures market. This may all be a fake order, but considering market expectations and everything else, this level is definitely in demand.
Funding has been completely reset. Now many of the bulls in the market have disappeared. The cleaning was completed regardless of the market rebound. Positive. These situations are also a signal of a local bottom in the short term, as market overheating is in the process of being resolved.
The decline of BTC and the rise of BTC.D completely destroyed altcoins. BTC is still in range, but altcoins have seriously collapsed. There is still potential for further BTC.D upside, but I believe it is a local top.
USDT.D is associated with typical risk aversion signals in the crypto market. The previous resistance level has been broken and resistance has now turned into support. Unless there is a decline below that level, we are likely to remain in a sideways move or slightly bearish trend.
The dollar continued to rise on the back of the geopolitical issue of the Israel-Iran war. In particular, currencies such as KRW lost more value, moving at around 1% per day. It reflects the complex macro situation of the market. Currently, it is testing a trend line that has been running since 2023 and has made a downward reversal today. This led to some recovery in other currencies as well. If it breaks through this level and continues to rise, Q2 will definitely not be good. I don’t want to imagine such a situation.
10Y is a key level of 4.8-5.0% as mentioned in X. A sustained rise to that level would clearly not be good for the risk asset market.
SPX continued its strong decline, falling for four consecutive trading days for the first time this year. As a result, a CTA sell trigger is likely to occur. However, if geopolitical risks do not arise again, we expect a slight rebound from 4980 or the current level. However, as seen in last week’s analysis, the stock market appears to be entering a correction period.
Powell this week again emphasized the risk of inflation and again dismissed the possibility of a rate cut. I said at the beginning of this year that there would likely be a rate cut in July, but I have now revised my view and am expecting either one rate cut in Q4 this year or no rate cut this year. There is a possibility that the “higher for longer” stance will be maintained for a long time than expected. It is judged that the current sticky inflation is unlikely to show a rapid and sustained decline up to the Fed’s target of 2%.
RRP has continued to decline since 2023, providing a good defense against the Fed’s QT. However, it is expected to increase in the second quarter. April is tax season, and the government will likely reduce the amount of new bond issuance because it has secured those taxes. Market attention now shifts to the QRA on May 1.
Powell: “The recent data have clearly not given us greater confidence and instead indicate that it is likely to take longer than expected to achieve that confidence” that inflation will return to 2%.
I don’t trust seasonality 100%, but if you look at the seasonality of the presidential election period, April and May tend to be weak on average. Currently, market liquidity is not lacking at all and the economy is judged to be strong, so if the market is difficult in the second quarter, I think there is a high possibility that it will strengthen again from the third quarter. I hope you can endure the current dizzying market conditions.
As macro risks increase and markets become more unstable, people begin to prefer puts. This is not a strange phenomenon at all in unstable market conditions. However, like other data, the options market also appears to have quite high fear levels. This doesn’t mean it’s creating an immediate rally, but it feels like it’s giving strength to the possibility of a market rebound.
Most of the data clearly speaks of a local bottom… Let’s keep watching to see if macro risks will gain more traction!
There were two large trades this week.
- May $80,000-September $90,000 Call Calendar 1875 Contract
- June $70,000 call > $75,000 call rollup (not exact, but looks like a rollup given the decrease in OI)
NFA DYOR 🙂
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