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.
All Eyes on Key Data and the Markets' Reaction
Afternoon all,Markets are coming into the week having pulled back after last week’s Jackson Hole. The takeaway was clear enough: rates will fall, but slowly, and the Fed isn’t rushing. That sets the tone for the days ahead, as the markets will look at the macro data, along with Nvidia Earnings.
The key macro data this week is Core PCE on Friday. Core PCE is the Fed’s preferred inflation gauge, and expectations are for it to come in in-line, so any upside surprise will 'rock the boat' and worry the FED and therefore markets. On Thursday, GDP (second estimate) and jobless claims will give us a read on growth and labour, whilst Nvidia Earnings will give us an indication of whether the AI-driven tech boom is likely to continue for more quarters.
Should the data remain in line (no upside surprises) and we see Nvidia report positively with positive future guidance, then we'll likely see a recovery and bounce in risk assets, with Bond Yields likely remaining flat as the market continues to price in a September FED cut. The market is increasingly moving towards a 25bps cut in September, although there is very low pricing for a 50bps cut in September. In our view this is good.
Scenario 1: 25bps cut:
This is our baseline. A 25bps cut would suggest a gradual easing cycle towards neutral = positive for growth and therefore risk assets.
Scenario 2: 50bps cut:
Not our base case, and it'd only become more likely should we see a weak jobs figure in early September. A 50bps cut in September would suggest a more material weakening in the labour market, a FED that is behind the curve, and a potential deterioration in growth = bad for risk assets.
Our base case is for a gradual easing cycle and for the FED to cut by 25bps in September.
For now, BTC is trapped between $116.6k resistance and $110–112k support. It either reclaims the top end and squeezes higher, or it fails, and we get a retest lower, with the likely level being between $107k-$108k.
ETH is showing a similar structure, with key support at $4,170–4,330. Lose that, and $3,970 comes into play. SOL continues to hold structure above $185, but if that gives way, $172 is the next level. HYPE is holding strong in the mid-$40s with an attempt at $50.00 and a breakout beyond that looking likely in the short-term. AURA continues to consolidate between $0.116 and $0.145, whilst price squeezes into the main downtrend line. A breakout of the downtrend line likely swiftly sees the price move back to $0.177-$0.186.
This isn’t a week to chase. Our approach is simple: identify the ranges, stay patient, and accumulate at the bottom of the ranges on price pullbacks.
Cryptonary's Take: We remain in a bull market, with recent price action likely being a take-profit environment following the large move up post Jackson Hole (which can be expected in a low-volume summer period), although we're still in a dip-buying environment. We are buyers of BTC into $108k-$112k, and we're buyers of ETH between $3,970-$4,330.
Tomorrow, we will dive into a more detailed Market Update covering all the above and more.
BTC chart:
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