Mapping crypto's path: Earnings, bond auctions, and signs to watch

Tensions in the Middle East have cooled, which is positive. Let's now dive into the important aspects that will likely affect and govern the markets this week. 

We have a busy week ahead of next week's Fed meeting, which includes earnings, bond auctions, and macro data. 

Crypto has responded positively in the last week, especially when you look at the performance of the equity markets. Things look good here, and we'd suggest exercising patience and letting your Spot bags work for you. 

It is a big week, leading into a Fed week next week. Remember, the macro governs all, but with the positive catalyst of the halving, we could be on for a really nice market on the other side of June.

TLDR

• The market update covers cooling tensions in the Middle East, which is positive, and crypto's recent gains mirroring the equity markets.
• This week's key focus is the earnings reports from major tech companies like Tesla. Although expectations are low, this could still impact equities and Bitcoin.
• Several U.S. bond auctions are scheduled, and the market's demand will indicate views on future interest rate moves and affect bond yields.
• Friday's Core PCE inflation data is highly anticipated, with a lower year-over-year reading of 2.6% expected to be positive for markets, but volatility is likely around the release.
• On-chain metrics like the MVRV Z-Score suggest Bitcoin is in a mid-cycle phase, with the potential for the range-bound situation to continue for weeks.
• Keep an eye on the Big Caps crypto indexes for breakouts that signal the altcoin season.

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 R.R. trading tool to help you quickly understand our analysis. These are not signals, and they are not financial advice.

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Tech earnings

This week begins with the 'Magnificent 7' earnings, with Tesla up first tomorrow. The expectations going into this aren't too high, with the expectations for Tesla earnings actually very low. 

But, overall, we should see that earnings are still ok (not great, but not terrible either). This shouldn't be overly negative on equities. I (Tom) think Bitcoin can be immune to any potential earnings weakness with the halving narrative over-strengthening potentially slightly weaker Mag-7 earnings. 

This week's U.S. bond auctions + Friday's data 

This week, there is a 2-Year Bond Auction on Tuesday, a 5-Year Bond Auction on Wednesday, and a 7-Year Bond Auction on Thursday. 

In these auctions, there are a lot of issuances the market has to eat up, i.e., the U.S. is issuing debt (to finance itself), and it's looking for buyers of their debt. Recent auctions have been ok, and with the market seemingly at an inflection point here due to inflation remaining sticky and the labour market holding up, pushing rate cuts much further out, maybe not even in 2024, do we see buyers step in at these auctions? 

They may not step in to buy them because pushing interest rate cuts out to 2025 should raise Bond Yields, lowering the price of bonds. Hence, there may not be a huge demand at the upcoming bond auctions this week. 

The markets, in general, may look to this week's bond auctions for guidance on the overall markets going forward. Remember, rising Bond Yields are historically negative for equities. 

In terms of data, the key data this week is on Friday when we get PCE. The expectation is for Core PCE YoY to come at 2.6%, which would be lower than the 2.8% last month's reading. If we got this, the markets would likely react positively to it. 

This would also be supported if the Month-on-Month data came in at 0.2%. If the MoM data comes in hotter, 0.3% or higher, markets may react negatively. 

Expect volatility around the data release on Friday. 

MVRV and indexes resets 

One of the key on-chain metrics we cover in terms of identifying where the current market is in terms of the larger overall cycle is the MVRV Z-Score. 

The chart below shows that the MVRV has moved up, but it's nowhere near an overvalued territory, which would indicate a bull market top. 

Currently, the metric suggests we're mid-cycle and that Bitcoin can stay range-bound for a few more weeks, potentially even another month or two, price-action-wise. This should give us confidence that there is likely still a long way to go in this bull market cycle phase.

Looking at the Big Caps Indexes with and without SOL, we can see that both broke below key levels on last week's major move lower following the Iranian missiles. 

However, both are now putting in hidden bullish divergences with the Big Caps Index with SOL, bouncing off a horizontal support level. It'll be interesting to see how these continue to play out. If/when these indexes decide to break out to the upside again, that'll likely be the major altcoin season we're after. It's key to keep watching these as indicators. 

Big caps index with SOL

Big caps index without SOL

BTC

Honestly, there are no real changes from the analysis we put out and predicted several weeks ago now. 

Bitcoin is still in this larger bull flag, even though we had a slight deviation above it. Now, price is well back into the flag. We've also seen the major Yellow Buy Box fill between $59,200 and $60,700, and a perfect bounce so far from that level. 

Our expectations remain the same... continued range-bound price action for Bitcoin, with price potentially breaking out of the bull flag and to the upside in the back half of May/early June.

Cryptonary's take 

So, this week, we have Big Tech earnings and Inflation data on Friday, along with some large US Bond (debt) auctions. A lot is going on, whilst Bitcoin is range-bound price-wise in its bull flag. 

Overall, this suggests that we should stay patient in Spot positions. We'll see how this week plays out, as there are quite a few moving parts. Hopefully, that'll give us a clearer picture going into next week's Fed meeting. But Bitcoin is doing well, all things considered. We're at $66k and forming a zoomed-out bull flag that may break out in late May/early June. 

This is a positive setup. The best play here is likely to stay in Spot positions and not take on a lot of leverage while we watch for incoming events and data. 

Let the bullish market do the work for you.