The broadening out we predicted/expected last Thursday may happen faster than we initially expected.
So, we can look to potentially make more significant and substantial changes to our portfolio in the coming week or two.
Stay tuned if you want to maximise your gains for late Q3 and Q4 (which we expect to be explosive for crypto).
Remember, we do 2-3 Market Updates per week, so we try to give you guys as comprehensive an update as we possibly can to aid you and your portfolios as best we can.
Let’s go!
Key questions
- An unexpected political event sparked a sudden crypto rally, and it is reshaping the market landscape.
- Could this week's macro data and Fed speak hold the key to unlocking explosive gains in Q3 and Q4?
- Bullish divergences are pointing to a major Bitcoin breakout. What key level should traders be watching?
- How should you be adjusting your portfolio strategy, and what high-potential moves are we eyeing in the coming weeks?
- Is a seismic shift in crypto market dynamics on the horizon? Find out why late Q3 and Q4 could be game-changing for investors.
Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results. "One Glance" by Cryptonary sometimes uses the RR trading tool to help you quickly understand our analysis. These are not signals, and they are not financial advice.
This week's macro data
This week is relatively light on macro data, with the highlight points being 'Retail Sales' on Tuesday (tomorrow) and a plethora of Fed speak throughout the week. Retail Sales are an important data point as they will indicate whether the consumer is still holding up in terms of their actual spending.A weaker Retail Sales number would indicate a consumer becoming more conservative with their spending, which could mean future market weakness as spending is reduced. This is something to keep an eye on for tomorrow.
However, markets are only likely to move if the number comes in very weak. If it did, markets may move down slightly, but we wouldn't expect a large market move off of 'Retail Sales' data. Following 'Retail Sales', our focus is on the Fed speak we get throughout this week. The backdrop to this is that over the last few weeks, we have seen Inflation data come in considerably to the downside.
While we've seen slight further moderation in the labour market data, with the Unemployment Rate increasing to 4.1% and the number of Jobs added in the US constantly revised lower each month, prior month's data does set the Fed up to potentially begin cutting Interest Rates in July.
However, this Fed has consistently relied on forward guidance to tell the market its upcoming actions and then allow the market to price this in. This method now potentially works against the Fed, as if they cut rates in July (having not forward-guided it), this would look like panic from the Fed, and the market wouldn't take that too well.
But this does set up a cut in September and potentially further Interest Rate cuts at the November and December Fed Meetings, meaning 75bps of Interest Rate cuts in 2024—more than what the market is currently pricing. This week, we're looking for clues from Fed speakers on this.
- Are the Fed looking to cut Interest Rates in September? (most definitely).
- How on the table is the July Fed Meeting for a cut?
- Do any members give hints as to whether 50bps (2 cuts) or 75bps (3 cuts) in 2024?
Key things we're watching this week
Over the weekend, we continued to see a broadening out in the rally that we saw at the back end of last week in the Equities market - where small Caps caught a more significant bid. During the weekend, this also finally began to spill over into Crypto.However, the catalyst for this seemed to be when Trump survived the assassination attempt. This week, we're looking for a further continuation of the following:
- Russel 2000 Index (Small Cap companies) to continue/consolidate their move up.
- The Dollar Index to see further downside, and break below the $104.00 low.
- Bond Yields to consolidate at the lows, or even move lower.
- Bitcoin to consolidate around $63k or even break above this level.
- Alt coins and Meme's to outperform Bitcoin, for this we'll watch the BTC pairs.
Dollar Index Chart:
US 2Y Bond Yield:
Crypto price action
Following the broadening out in the traditional equity market, we saw a really positive move in crypto over the weekend. This mostly came from the Majors (BTC, ETH and SOL) and then some memes that are perhaps under-allocated but are good/mid-tier memes. These might include $POPCAT, $BILLY and $MICHI, although it can be argued that $POPCAT is of a much higher status than $BILLY and $MICHI.Last week, we were quite focused on the majors potentially seeing some upside due to bullish divergences forming on the Daily charts from oversold territory. These are usually rare occurrences and historically have a bias to play out to the upside, as we reported last week.
Educational: Bullish divergences are when prices fall to new lows whilst the oscillator prints a higher low. These formations indicate that bears are losing power, and we may be due for a relief rally/outright rally.
BTC
The bullish divergences have helped fuel Bitcoin’s bounce from the lows in the $53k area. Bitcoin is now breaking out of its downtrend line and squeezing up into the horizontal resistance line of $63,400. $63,400 is a key level for Bitcoin to reclaim, and it may prove to be a sticking point in the immediate short term.However, we do believe the tide is beginning to turn, and the broadening out effect in TradFi markets should continue and positively affect crypto. We expect this to result in positive price action for crypto and bitcoin going forward.
Cryptonary's take
Last week, we outlined that the inflation data was really key for markets in that it essentially confirmed to the markets that we are seeing disinflation and that the Fed does need to cut rates. The result of this was a broadening out of the rally in the S&P that positively impacted the Russell 2000 (Small-Cap companies) for the first time in a long while. Small-cap companies are positively impacted by Interest Rate cuts.Hence, we saw the rotation into small-caps from big-tech companies as more Interest Rate cuts were priced into markets following the positive inflation data. We then felt that this broadening out would spill over into crypto, positively affecting crypto and helping prices go higher.
However, we thought it might take a number of weeks for the confidence to come through and for us to begin to see it reflected in the price action. But, it seems the assassination attempt on former President Trump was enough for this broadening out to move to crypto.
This may have been due to the realisation that Trump now looks and feels like the favourite in this November presidential Election race, and a Trump win is likely to be positive for crypto. A few weeks became just a few days.
So, what are we looking to do from here?
From here, we believe we will see a continuation of the rally and a broadening out into high-quality memes and altcoins, even if there is a slight pullback in the coming days following the really positive weekend price action.
Therefore, in the coming week or two (possibly on a price pullback), we will begin building more memes and altcoin positions, as we expect to see outperformance there over the coming months.
A few months back (early April), we moved into the more consolidated barbell strategy portfolio. We're now looking to branch out again and make those first moves into becoming more risk-on again for what we believe will be a super positive late Q3 and Q4 Crypto market. Stay tuned for what coins we diversify into. LET'S GO!!!!
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