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Written By: Marcus Wang
Edited by: Charmyn Ho
The past week was widely regarded as a defining one for near-term equity outlook, with the November CPI print and Federal Reserve’s December rate decision under the spotlight. It turns out that the CPI print surprised to the downside, reinforcing the narrative of peak inflation, while the dot plot from December’s FOMC meeting dashed hopes of a rate drop in 2023. After a roller-coaster week, equities ended up in red, painting a negative outlook for the near term as recession concerns began circling again.
This week, we saw mixed performances in the cryptocurrency market. The BTCUSDT pair closed the week with a 1.2% increase, while ETH underperformed with a mild 0.5% decrease week-on-week. It is worth noting that the 30-day correlation between Bitcoin and Nasdaq Composite has remained negative, where the largest cryptocurrency does not follow as closely as it did early this year.
Bitcoin broke out from the current consolidation channel that has formed since November this week, reaching a monthly high of $18.4k, which turned out to be short-lived and instead faced tremendous resistance at the 100-day EMA of $18.8k. Bitcoin sits at $17.5k as of the time of writing, seeing support at the level of $17k, the lower end of the consolidation channel and the 20-day EMA level. Nonetheless, the hope remains that Bitcoin may test $18k resistance again. With stable futures open interests in terms of BTC, the weighted average funding rate of Bitcoin across major crypto exchanges remained at a positive level throughout the week, denoting a positive sentiment from investors.
Furthermore, the annualized daily basis between Bitcoin spot and futures has increased from a deep negative level to a neutral level as of the time of writing, showing signs of flipping from a bearish backwardation to a bullish contango pattern. Lastly, the weekly asset flow metrics from Bitcoin publicly traded investment products revealed a slight positive inflow last week, suggesting an improved sentiment from institutional investors.
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Similarly, ETH broke out to a monthly high at $1,350 on Wednesday but has since retraced most gains. Ether saw support at the 20-day EMA of $1,270, which is similar to the support level indicated by a trendline that has formed in late November. However, failing to stay above this trendline, may send ETH another leg down to the $1,200 support level.
On a more positive note, the weighted average funding rate of ETH across major crypto exchanges remained positive throughout the week, with elevated open interests. From the technical perspective, Fibonacci retracement, an indicator of support and resistance levels, suggests that ETH has to flip above $1,300 first to resume its bullish trend.
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