Daily News | PMI Higher Than Expected, US Indices Plunged, Crypto May Suffer The Same Fate

2022-12-06, 02:23

Fundamental & Technical Outlook:

Macro
🥂 Good morning, today is Tuesday, Dec. 06, 2022.

TL;DR
🔹 BTC and ETH fell following an optimistic US PMI report that implied a pessimistic future for the US economy as the labor market remained unwantedly robust, which some analysts and the majority of speculators see as a sign that the Fed may raise the interest rate to 5%.

🔹 This week, traders anxiously await Friday’s US Producer Price Index -- one of the final pieces of data Fed officials will see before their Dec. 13-14 policy meeting.

🔹 The topic of the Day: Andre Cronje Re-emerges: Fantom (FTM) Outperforms Even DOGE

🔹 Happenings of the Week: Coca-Cola to release a collection of 10,000 World Cup NFTs; Twitter’s Web app shows a potential new ‘Twitter Coin’ and Musk noted Twitter will need crypto payment; Silvergate stock down 8.5% on Monday, or 53% in the past month…

As of Dec. 05 23:11 UTC,

⚡️ Bitcoin (BTC) 24-Hour Change: 16,964 (-0.93%)

⚡️ Ether (ETH) 24-Hour Change: 1,258 (-1.66%)

PMI Jumped, US Yields Surged, and Pessimism Returned

Both Bitcoin and Ether slipped below their respective closest resistance zone after rising above it during yesterday’s Asian session following optimism for China’s potential reopening. The reversal occurred around the time when US markets opened. For a more detailed take on BTC and ETH, scrolled down to the technical analysis section of this article.

US equities kicked off the week with losses and bond yields climbed as a US services gauge (ISM Non-Manufacturing PMI) unexpectedly rose, fueling speculation the Federal Reserve will keep its policy tight to tame stubborn inflation. Asian equities are poised to fall Tuesday following this pessimism coming from American participants, implying crypto may face the same fate.

According to the Institute for Supply Management, the ISM Services PMI unexpectedly jumped to 56.5 in November, rebounding from a more than 2-year low of 54.4 in October and beating market forecasts of 53.3. Business activity increased faster (64.7 vs 55.7) and employment rebounded (51.5 vs 49.1), prompted by a new fiscal period and the holiday season.

US treasuries slumped across the curve, driving 10-year yields to 3.6%. Swaps showed higher expectations on where the Fed terminal rate will be, with the market indicating a peak above 5% in the middle of 2023. The current benchmark sits in a range between 3.75% and 4%.

According to the latest MLIV Pulse survey by Bloomberg, 28% of 291 respondents expect defaults to jump significantly if US rates peak at or below 5%, which is about where the market bets the Fed will stop hiking. Another 63% see defaults surging if rates peak above 5%.

This week, traders are awaiting Friday’s US Producer Price Index -- one of the final pieces of data Fed officials will see before their Dec. 13-14 policy meeting. If you’d like us to cover some of this macro data, or to expand upon technical analysis, feel free to drop a message in our Reddit community.

💡 Today's Markets at Dec. 05 23:10 UTC

BTC +1.39%; Ether +3.03%.

Asia: Japan +0.15%; Hong Kong +4.51**%**; China +1.76%; India +0.03%.

Europe: London -0.01%; Paris -0.67%; Frankfurt -0.56%.

US Spot Indices: Dow -1.40%; S&P -1.79%; Nasdaq -1.93%.

US Index Futures: Dow -1.37%; S&P -1.77%; Nasdaq -1.70%.

US Two-year Treasury up 12bps at 4.398%.

US Ten-year Treasury up 9bps at 3.583%.

UK Ten-year Government down 5bps at 3.095%.

US Dollar Index +0.62% at 104.88.

FX in 24hrs: GBP: -0.76%; EUR: -0.31%; JPY: +1.61%; CNY: -0.83%.

Gold -0.02% at 1,768; Brent Crude -1.51% at 85.57.

🗓 Catalysts this week

Monday: US ISM Non-Manufacturing PMI

Tuesday: Australia RBA Interest Rate Decision, Canada Balance of Trade, US Balance of Trade, Canada PMI

Wednesday: Australia GDP, China Balance of Trade, India RBI Interest Rate Decision, Canada BoC Interest Rate Decision

Thursday: Australia Balance of Trade

Friday: China Inflation Rate, US Producer Price Index, US Michigan Consumer Sentiment

🏦 BTC
BTC Weekly timeframe:
Major Level: 13,965 (Monthly High of Jun. 2019)
Closest support zone: 16,845 - 16,430
Key resistance level: 17,085 - 17,715

Analysis as of Dec. 06 - Dec. 11 Session.

Note: It turned out I was wrong and BTC did close within the closest resistance zone ($17,085) on the weekly timeframe, albeit barely. Despite this, Monday had been a roller coaster ride for the largest crypto. The initial rise was fueled by optimism for China’s potential reopening and last Friday’s robust US jobs report.

But it didn’t last long. Once again, American participants’ sentiment dominated global markets, and BTC was no exception. This week we may see BTC shred some of the gains it made last week, but it’s just as likely we see it move up and down above the $16,430 threshold (Monthly Fibonacci Extension Zone measured from Apr. 2020 - May. 2020).

BTC Weekly Resistance zones
17,085 - 17,715
17,875 - 18,245
18,890 - 19,085

BTC Weekly Support zones
16,845 - 16,430
16,185 - 16,010
15,525 - 15,200

BTC Daily Timeframe:
Closest support zone: 16,875 - 16,635
Closest resistance zone: 16,990 - 17,205
Key Level: 15,952 (Weekly Close Between Nov. 02 - 09, 2020)

Dec. 05 22:06 UTC Update:
Bitcoin (BTC) was trading at $16,960, or -0.81% in a 24hr period.

Note: The sluggish performance continues for the fifth day as BTC trades within a tight range between $17,205 - $16,875. The closest S&R zones, likewise, continue to extend their strength well into Tuesday's trading session.

BTC Daily Resistance zones
16,990 - 17,205
17,370 - 17,575
17,645 - 17,805

BTC Daily Support zones
16,875 - 16,635
16,300 - 16,010
15,860 - 15,780

🌐 ETH
Weekly Timeframe
Major Level - 757 (Monthly High of Dec. 2020)
Closest support zone: 1,265 - 1,220
Key resistance zone: 1,280 - 1,330

Analysis as of Dec. 06 - Dec. 11 Session.

Note: Unlike Bitcoin, Ether wasn’t able to close within the closest resistance zone (or above $1,280), implying a choppy session ahead is likely this week.

But as mentioned in yesteday’s analysis, a positive note is that the price of Ether has maintained above the 38.2% ($1,240) monthly Fibonacci Retracement level (measured from Oct. 2020 - Apr. 2021) throughout the past week, and although this is not a guarantee ETH won’t break below again, the last two times ETH hit this level it recovered at least 35% to the upside.

Keep in mind though, there’s always a chance ETH rebounds in the opposite direction to the 50% level ($965).

ETH Weekly Resistance zones
1,280 - 1,330
1,345 - 1,390
1,415 - 1,470

ETH Weekly Support zones
1,265 - 1,220
1,155 - 1,110
1,060 - 1,035

ETH Daily Timeframe
Closest support zone: 1,265 - 1,240
Closest resistance zone: 1,280 - 1,300
Key Level: 1,254 (Weekly close from Jan. 04, 2021 - Jan. 11, 2021)

Dec. 05 22:16 UTC Update:
ETH was trading at $1,257, or -1.40% in a 24hr period.

Note: Like its BTC counterpart, Ether has established a tight trading range between $1,300 - $1,240 in the past five days.

With $1,240 being the 38.2% Monthly Fibonacci Retracement Level, its significance is quite a big deal. The bulls will likely use this level to catapult ETH to higher resistance zones, but before that happens, ETH will inescapably follow the overall sentiment of global markets.

ETH Daily Resistance zones
1,280 - 1,300
1,310 - 1,330
1,350 - 1,375

ETH Daily Support zones
1,265 - 1,240
1,255 - 1,220
1,215 - 1,195

📌 Today's topic: Andre Cronje Re-emerges: Fantom (FTM) Outperforms Even DOGE

From Nov. 22 until today, FTM has rallied over 53%, while BTC, ETH, and DOGE were up 8.5%, 17%, and 35%, respectively.

The price boost for FTM came after the Fantom Foundation revealed its financial records. The documents showed that the organization has been obtaining steady gains and has 30 years of financial security without having to dispose of any of its FTM tokens.

On November 28, Andre Cronje, the Architect of Fantom Foundation, said that Fantom Foundation owned $340 million in digital assets and had produced more than $10 million in yearly income.

More on Fantom, the project is a layer-1 blockchain compatible with Ethereum Virtual Machine (and Ethereum Dapps). The network competes with the likes of Solana, Avalanche, and Polygon for Ethereum’s market dominance.

The non-profit firm, which currently employs over 40 staff according to RocketReach, has an annual salary burn rate of $7 million. Cronje expects Fantom’s coffers to last for another 30 years without touching its FTM stash.

Cronje is a prolific DeFi developer, credited with creating projects such as Yearn Finance, SushiSwap, and Cream V2. He deactivated his Twitter account after declaring departure from the crypto space in March.

His re-emergence comes as Fantom’s native asset flounders along with much of the crypto space. FTM is down more than 90% YTD, dropping from $2.25 to less than $0.20. FTM’s market cap is now less than $500 million, ranked 73rd by CoinGecko.

👁 Happenings of The Week (Dec. 03 - Dec. 05):

📣 Notables

🔹 SBF: “…once I have finished learning and reviewing what happened…I'm not sure that will happen by the 13th. But when it does, I will testify (before congress).” Congresswoman Maxine Waters countered SBF’s statement and said he knows enough to testify before the House Financial Services Committee.

🔹 Through MiCA, all EU member states will have the power to “bring down advertisements and websites for unauthorized crypto venues” -- unauthorized included all offshore crypto companies.

📣 Dec. 05

🔹 FTC told Bloomberg it is investigating several unnamed crypto companies for alleged deceptive advertising practices but didn’t provide any further details.

🔹 Nexus Mutual expects a $3 million loss from exposure to Orthogonal Trading’s $36 million default on Maple Finance. It now seeks to divest from the platform’s wETH pools. Maple Finance (MPL) dropped to $5.29 on Monday, down 24.7%.

🔹 Aave acquired Sonar, a social gaming application with web3 support, to integrate its decentralized identity platform, Lens Protocol.

🔹 Coca-Cola has teamed up with Crypto dot com to release a collection of 10,000 World Cup NFTs based on heatmaps from matches.

🔹 Code extracted from Twitter’s Web app shows a potential new ‘Twitter Coin’ and integration for crypto in Twitter’s “tipping” feature, and Musk noted Twitter will need crypto payments.

🔹 Silvergate stock (NYSE:SI) down 8.5% on Monday – now off 53% over the past month. CEO sought to calm its investors by citing "speculation – and misinformation – (are) being spread by short sellers and other opportunists trying to capitalize on market uncertainty.” The bank disclosed FTX deposits made up nearly 10% of its $11.9 billion in deposits from digital asset customers.

📣 Dec. 04

🔹 Reddit Collectible Avatar minting hits all-time high.

🔹 Some CEXes are cutting jobs as the bear market deepens. Sunday, Bybit CEO announced it will be reducing its workforce. Monday, Swyftx has announced 90 job cuts in its second round of layoffs.

🔹 Genesis owes $900 million to another group of assorted creditors on top of the earlier reported $900 million to customers of Gemini, which tallies up to $1.8 billion.

📣 Dec. 03

🔹 Crypto derivatives exchange LedgerX (formerly known as FTX US Derivatives) is for sale.

🔹 Crypto brokerage Genesis owned by Digital Currency Group (DCG) owes $900 million to customers of crypto exchange Gemini.

🔹 Web Browser Opera will roll out an NFT creation tool next January.

📣 This week’s fundraising activities include but are not limited to:

🔹 Crypto hardware wallet maker Ngrave aims to raise $15 million led by Binance Labs.

🔹 Cybersecurity startup Cyvers raised $8 million in a seed round led by Elron Ventures.

🔹 Uniswap-based perpetual options protocol Panoptic raised $4.5 million led by Gumi Cryptos Capital. The project aims to revolutionize decentralized crypto options trading the way Uniswap has for decentralized crypto spot trading.

📣 This week’s on-chain criminal activities include but are not limited to:

🔹 Infrastructure provider Ankr and stablecoin issuer Helio Protocol lost a total of $20 million in two attacks, according to on-chain analysis by security firm BlockSec. The first attack targeted a liquid staking token product run by Ankr, resulting in a loss of more than $5 million. In the second attack, someone acquired some 183,000 aBNBc tokens with 10 BNB ($2,900), which then were deposited into a BNB Chain-based stablecoin issuer Helio Protocol to drain funds. The attacker was able to borrow $16 million in the HAY stablecoin with a small amount of aBNBc collateral and subsequently swapped their HAY stablecoin for $15 million Binance USD (BUSD).

Author: Gate.io Researcher Peter L.
This article represents only the researcher's views and does not constitute any investment advice.
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