Crypto market outlook and beyond
First attempt at doing a brief post about things to watch out for in todays financial market, if theres anything else you want covered in the future let me know and I’ll add or take away irrelevant bits. Most important point to note: This is all my own personal research and thoughts on what it could mean: NFA disclaimer!
Firstly, and the most obvious is that today is the first trading day in the US after 4th July holiday. As has has pointed out (and is serious food for thought) is that the 4th July 3 day weekend is a massive deal in America for obvious reasons. Now, interestingly, with the current cost of living crisis the 4th July should serve as an indicator to see public sentiment, i.e. How much were Americans and the average Joe spending over the holiday period. To my knowledge they love a good BBQ, beers as well as a ton of fireworks to mark this holiday. Not to mention inter-state travel to spend time at the lake with family. So, to see this data post-holidays will provide a great insight into where, if at all, money is going. If they aren’t spending it on a patriotic bank holiday, they certainly aren’t spending it on crypto.
The US dollar is still pushing its two-decade highs and it looked for a while like it might be dropping, this proved to just be a retracement and its continued it push upward.
Looking towards TradFi, the Bank of England is due to release a financial stability report anytime now which looks at things such as ‘could borrowers continue to make repayments on their mortgage should rates rise to X amount’.
In the December ’21 report, cryptoassets were spoken about at length and with the Chancellor stating publicly about wanting to make London the cryptoasset capital of the world it stands to reason this could form in this report too.
The last report was not exactly favourable and it seemed the FPC were more focused on the risks crypto posed as it became intertwined with traditional finance.
The US will also be posting durable goods data which is usually a pretty good indicator on which way the markets will move, durable goods refers to If the economy is doing well, there is a rise in the sale of durable goods as there is overall positivity in the economy, and consumers are able to afford them. When there is an economic recession, consumers demonstrate low confidence, and the sale of durable goods and stock values decreases. The durable goods orders report helps in two important ways:
- The report helps in evaluating the durable goods industry and the economy in general.
- Household finance is directly affected by the economic situation. A fall in the sale of durable goods is usually an indicator of an economic downturn
We also need to be careful when making any trading decisions following the US holiday as Low-liquidity “out-of-hours” holiday trading increases the potential for volatile price moves up or down.
Indian based exchanges are also showing a huge slowdown in trade, this is likely a knock on effect of the tax changes in which traders now pay 30% CGT as well as 1% of every trade they make.
The Euro Central Bank are also scheduled to meet again this month to discuss cryptocurrency and how to ‘harmonise’ it. It is possible they could take the approach Germany did in utilising anti money laundering laws to control crypto, which isn’t necessarily a bad thing in my opinion.
Bitcoin and the Nasdaq are still showing that their fate is very much intertwined as can be seen below, for me, this is a good thing for now. As we can rest comforted that its not crypto taking a battering alone, its most tech.