Daily Market Analysis from NordFX

[Stan NordFX]

Forex and Cryptocurrency Forecast for August 19 – 23, 2024

EUR/USD: Wall Street Triumphs Over the Dollar

● The Dollar Index (DXY) fell throughout the beginning of the week, while the EUR/USD pair rose. This was due to the after-effects of the "Grey Friday" on August 2 and the "Black Monday" on August 5, which we covered in detail in our previous review. The EUR/USD pair reached a local high of 1.1046 after the release of the US Consumer Price Index (CPI) for July on Wednesday, August 14. The data showed that annual inflation had fallen to 2.9%, below both the previous reading and the forecast of 3.0%. The Core Consumer Price Index (Core CPI), which excludes volatile food and energy prices, rose by 3.2% year-on-year in July compared to 3.3% in June.
● This decrease in inflationary pressure, despite the CPI still being above the Fed's target level of 2.0%, has strengthened the argument that the regulator may lower interest rates at its September meeting. Analysts had already considered such a move highly likely, given other indicators pointing to a slowdown in the US economy. Among these indicators are the lowest Manufacturing Business Activity Index in eight months and the rise in unemployment to 4.3%. According to strategists at Principal Asset Management, the current CPI data "eliminate any obstacles related to persistent inflation that could have prevented the Fed from beginning a rate-cutting cycle in September."
(Remember that the Federal Reserve started raising interest rates to combat inflation, which reached 9.1% in July 2022, a record high in many decades. As a result of this tightening (QT), after a year, in July 2023, the rate reached a 23-year high of 5.50%, where it remains to this day).
After the release of inflation data on August 14, stock indices (S&P500, Dow Jones, Nasdaq) rose. The DXY reached a minimum but then slightly strengthened, as the CPI figures were far from radically changing the situation.
● Thursday, August 15, brought another batch of important data from the US. After declining by -0.2% in June, retail sales in July exceeded the forecast of 0.3% and rose by 1.0%. This marked the fastest growth since the beginning of 2023. Market participants also closely monitored the US labour market data following the disappointing figures of "Black Friday." This time, the data was positive: initial jobless claims for the week amounted to 227K, which was lower than both the previous figure of 234K and the forecast of 236K. Additionally, the world's largest retailer, Walmart, reported increased revenue and raised its profit forecast.
Weak consumer spending typically leads to layoffs and higher unemployment, which reduces people's ability to spend. In contrast, the growth in retail sales and Walmart's performance indicate a revival in the consumer market. Yes, the US economy's growth is still slowing, but fears of a recession, if not entirely gone, have at least significantly diminished.
These news events, on the one hand, dispelled the spectre of a recession but, on the other, reinforced confidence in a Fed rate cut in September. As a result, the DXY rose alongside Wall Street stock prices. It is quite rare for a safe-haven asset to rise in parallel with investor risk appetites, but that's exactly what happened this time. However, it was the stock indices that held back the dollar's bull rally, preventing it from strengthening further. In the end, the pressure on the dollar from the stock exchanges was so strong that the EUR/USD pair turned north and ended the week at 1.1027.
● According to forecasts, the Fed is expected to lower interest rates by a total of 95-100 basis points (bps) by the end of the year. Currently, the US Central Bank is inclined to cut the rate by 25 bps in September. However, if the August labour market report disappoints traders again, the FOMC (Federal Open Market Committee) may be forced to lower the rate by 50 bps at once—from 5.50% to 5.00%, which could significantly weaken the US dollar's position.
As of the evening of August 16, at the time of writing this review, 60% of analysts favoured the dollar's strengthening and the pair's movement to the south, while 40% supported the euro's strengthening. In technical analysis, all 100% of trend indicators and oscillators on the D1 chart point to the north, although 20% of the latter are in the overbought zone. The nearest support for the pair is located in the 1.0985 zone, followed by 1.0950, 1.0890-1.0910, 1.0825, 1.0775-1.0805, 1.0725, 1.0665-1.0680, and 1.0600-1.0620. Resistance zones are found in the areas of 1.1045, 1.1100-1.1140, 1.1240-1.1275, 1.1350, and 1.1480-1.1505.
● In the upcoming week, on Tuesday, August 20, the Eurozone inflation figures (CPI) will be released. The following day, the minutes of the latest FOMC meeting will be published. On Thursday, August 22, business activity indicators (PMI) will be released for various sectors of the German economy, the Eurozone as a whole, and the United States. Additionally, the traditional weekly statistics on initial jobless claims in the United States will be published on that day. Also on Thursday, the Annual Economic Symposium in Jackson Hole (USA) will commence, running through Saturday. This important event, dedicated to monetary policy issues, has been held since 1981 and brings together Central Bank leaders and leading economists from many countries around the world.


GBP/USD: The British Pound Gains Strength


● The dynamics of the GBP/USD pair were naturally influenced not only by macroeconomic statistics from the US but also by economic data coming out of the UK. Last week saw a considerable amount of such data.
The acceleration of the pound's growth occurred against the backdrop of strong unemployment figures from the UK, which exceeded expectations. On Tuesday, August 13, it was revealed that the unemployment rate fell in June, reaching 4.2%. This represents a significant improvement compared to May, when the rate was 4.4%. Given that the forecast predicted a rate of 4.5%, this data made a strong impression on the market. Such a decrease in unemployment indicates positive changes in the labour market and could be a sign of economic stabilization, contributing to increased investments.
● The following day, on Wednesday, August 14, consumer inflation data was released. The Office for National Statistics reported that the CPI rose for the first time this year to 2.2% year-on-year. This increase followed two consecutive months of remaining at the Bank of England's (BoE) target level of 2.0%. Although the result was slightly below the forecast of 2.3%, the pound experienced only a minor and brief decline against the dollar, as markets raised the probability of a 25 bps rate cut by the BoE in September from 36% to 44%.
It is worth noting that inflation in the UK reached a 41-year high of 11.1% in October 2022. This was driven by a sharp rise in energy and food prices following Russia's invasion of Ukraine, as well as labour shortages due to COVID-19 and supply chain disruptions. However, thanks to a well-thought-out monetary policy, price pressures were significantly reduced, and consumer inflation in the UK is now lower than in the Eurozone and the US. However, the Bank of England expects the CPI to rise, reaching approximately 2.75% by the end of the year, as the impact of the sharp drop in energy prices in 2023 fades. According to BoE economists, the CPI is expected to return to the target of 2.0% only in the first half of 2026.
According to some experts, much (if not all) of the GBP/USD pair's behaviour will depend on the pace of monetary policy easing by the Fed and the BoE. If the US interest rate is lowered aggressively while the Bank of England delays similar measures until the end of 2024, the bulls on the pound may have a good opportunity to push the pair towards the 1.3000 level.
● On Thursday, August 15, the British currency continued to strengthen following the release of strong GDP data. The UK's Office for National Statistics (ONS) reported that the economy grew by 0.6% quarter-on-quarter in the second quarter. On an annual basis, growth reached 0.9% compared to 0.3% in the previous quarter. According to analysts, these figures confirm the trend of the country's economic recovery after the recession, despite the impact of widespread strikes and poor weather, which slowed consumption in June.
● The GBP/USD pair closed the week at 1.2944. Economists at Scotiabank expect further growth towards the 1.2950-1.3000 range. As for the average forecast, 30% of experts support Scotiabank’s view, 50% anticipate a strengthening of the dollar and a decline in the pair, while the remaining 20% remain neutral.

Regarding technical analysis on the D1 chart, similar to the EUR/USD situation, all 100% of trend indicators and oscillators point to the north (with 15% of the latter indicating overbought conditions). In case the pair falls, it will encounter support levels and zones around 1.2900, followed by 1.2850, 1.2795-1.2815, 1.2750, 1.2665-1.2675, 1.2610-1.2620, 1.2500-1.2550, 1.2445-1.2465, 1.2405, and 1.2300-1.2330. If the pair rises, it will face resistance at 1.2980-1.3010, followed by 1.3040, 1.3100-1.3140, 1.3305, and 1.3425.
● In the upcoming week, the calendar highlights Thursday, August 22, when, along with business activity data from the Eurozone and the US, similar PMI figures from S&P Global for the UK will be published. At the very end of the workweek, on Friday, August 23, a speech by the Governor of the Bank of England, Andrew Bailey, is expected.

USD/JPY: A Very Quiet Week

● The past week was surprisingly calm for the USD/JPY pair. Some activity was observed with the release of several Japanese economic indicators on Thursday, August 15. According to preliminary data, the country's economy grew by +0.8% in Q2 (market expectations were +0.5%). This was a significant improvement, as GDP had declined by -0.6% in Q1 2024. Similarly, in annual terms, GDP growth reached +3.1% after a contraction of -2.3% in the previous quarter.
Consumer spending rose for the first time in five quarters, increasing by 1.0% in April-June. This was driven by an increase in average wages in the country by more than 5% following spring negotiations between companies and trade unions, marking the largest increase in over 30 years.
● After the release of this data, the USD/JPY pair showed a slight increase, but then retraced downward, ending the workweek at 147.60. The analysts' forecast for the near term is as follows: one-third expect the pair to move upward, one-third anticipate a decline, and the remaining third have taken a neutral stance. Among trend indicators on the D1 chart, 75% are coloured red, and 25% are green. Among oscillators, 50% align with the red, 25% with the green, and the remaining 25% are in neutral grey.
The nearest support level is in the 146.55-146.90 zone, followed by 145.39, 143.75-144.05, 141.70-142.15, 140.25-140.60, 138.40-138.75, 138.05, 137.20, 135.35, 133.75, 130.65, and 129.60. The nearest resistance is located in the 148.20 zone, followed by 149.35, 150.00, 150.85, 151.95, 153.15, 154.20, then 154.85-155.20, 156.80-157.20, 157.70-158.25, 158.75-159.00, 160.20, 160.85, and 161.80-162.00, with further resistance at 162.50.
● No significant events or macroeconomic data releases related to the state of the Japanese economy are scheduled for the upcoming week.


CRYPTOCURRENCIES: Bitcoin's Snake Trend

● Unlike the first ten days of August, the past week was relatively calm. Bitcoin, of course, continued to react to US macroeconomic data, but unlike stock indices and the dollar, the reaction of the leading crypto asset was rather muted. The BTC/USD pair moved in a narrow sideways channel, slightly undulating between resistance at $62,000 and support at $58,000. (Two timid attempts to break below this support don't really count).
● According to analysts, at the current price of bitcoin, many public mining companies are in a difficult financial position. This is due to both the increased complexity of computations and the drop in revenues following the halving. Miners faced another blow on the last day of July. It is important to note that the mining difficulty is adjusted every two weeks based on the total power of the mining equipment in use. This adjustment is necessary to maintain the block mining speed at roughly one every 10 minutes. On July 31, the difficulty increased by 10.5%—the largest jump since October 2022.
As a result, according to Ki Newbie trader Ju, CEO of the analytical firm CryptoQuant, the average cost of mining one bitcoin is currently around $43,000. While this figure is lower than the current price of BTC, it does not take into account the repayment of loans previously taken out for the construction of data centres and the purchase of equipment, as well as various overhead and administrative expenses.
Experts at TheMinerMag, based on financial reports for Q2, calculated the total cost of the coins mined in July for leading mining companies. It turns out that companies like Marathon Digital and Riot are operating at a loss. However, they continue to accumulate digital gold reserves, Currency carry trade on its future price increase.
● It's worth noting that Marathon Digital is currently the largest miner in the world, with a market capitalization of $4.44 billion. According to company representatives, Marathon views bitcoin as its "primary strategic treasury asset." In addition to mining, Marathon is also increasing its reserves by "applying a multifaceted strategy for purchasing bitcoins." Just recently, the company bought additional digital gold worth $249 million, issuing bonds maturing in 2031 to finance the purchase. The average purchase price was around $59,500 per coin, bringing Marathon's total holdings to over 25,000 BTC (approximately $1.48 billion). This significant investment reflects the company's confidence in the continued price growth of the leading cryptocurrency.
● Another major player exuding confidence is MicroStrategy, which has announced the potential addition of up to $2 billion to its already massive bitcoin portfolio. According to the company's financial report, in the second quarter, it acquired 12,222 BTC for $805.2 million, bringing its total bitcoin holdings to 226,500 coins (worth more than $13 billion at current prices).
Over the past four years, MicroStrategy has invested approximately $8.4 billion in BTC, yielding a profit of more than $5 billion. As a result, the company's stock price has increased by 995% since 2020. Interestingly, Arkham has even created a dedicated portal to track MicroStrategy's bitcoin purchases. The potential injection of another $2 billion into BTC will undoubtedly attract significant attention from market participants.
● Data from the analytics firm Glassnode also confirms that large investors have shifted towards long-term accumulation of bitcoins. The Accumulation Trend Score (ATS) metric, which evaluates changes in market balances, has recorded the highest possible value of 1.0. This indicates significant bitcoin accumulation in recent times. Previously, PitchBook reported that venture capital investments in the crypto industry increased by 2.5% from April to June, marking the third consecutive quarter of positive capital inflows.
● According to experts at Santiment, renewed market excitement could push bitcoin back to the $70,000 zone, with a subsequent achievement of a new all-time high at $75,000 in the short term. The analyst known as TheScalpingPro also believes that despite the recent dip, bitcoin is capable of a bullish rally. In his view, the leading cryptocurrency is forming a classic parabolic curve, often associated with a strong upward momentum. This curve suggests that within a 6-12 month horizon, BTC could experience rapid growth with a potential target of around $180,000, followed by a sharp correction.
Another analyst, TheMoonCarl, suggests that a decisive breakout and consolidation above the $60,000 resistance could lead to a rise to $125,000. This forecast is based on the formation of a "cup and handle" pattern. TheMoonCarl cited BTC's price movement in 2021 as an example, noting that if bitcoin reaches the $70,000 level, the next target could be $125,000.
● CryptoQuant holds a different view, believing that in the short term, bitcoin does not show signs of recovery. The high volatility of cryptocurrencies, the decline in stocks of leading technology companies associated with artificial intelligence, such as Nvidia, Google, and Microsoft, combined with rising geopolitical tensions, are pushing investors to seek safer investments, such as physical gold. On Wednesday, August 13, the price of gold reached another all-time high of $2,477, and according to some experts, this precious metal has a strong chance of rising to $3,000 by the end of the year.
● Long-term forecasts for bitcoin remain extremely impressive, ranging from total collapse to soaring to the Moon and beyond—to the edges of the Solar System. For instance, the digital asset management company VanEck has released a new forecast that outlines three potential price levels for BTC, depending on market development and the global adoption of bitcoin as a reserve asset. According to the base scenario, by 2050, the flagship cryptocurrency could reach $3 million per coin. In the bearish scenario, the minimum value of BTC would be $130,314. However, if VanEck's bullish scenario comes to pass, in 26 years, one bitcoin could be worth $52.4 million, nearly 900 times more than its current value.
● Unfortunately, as of the evening of Friday, August 16, at the time of writing this review, the BTC/USD pair has yet to reach $50 million or even $3 million and is trading at $59,300. The total cryptocurrency market capitalization stands at $2.08 trillion (down from $2.11 trillion a week ago). The Crypto Fear & Greed Index has dropped from 48 to 27 points, shifting from the Neutral zone into the Fear zone.
● In conclusion, a few words about… copyrights. This is precisely what we want to secure for ourselves. Let us explain. Everyone knows that an upward trend is called bullish, and a downward trend is bearish. But what do we call a sideways trend? No name? Now, take a look at the BTC/USD chart from this week: does it remind you of anything? Yes, it’s like a snake slithering and winding along the ground. This is why we propose calling the sideways trend from now on the "Snake Trend," and we officially request that the authorship of this term be attributed to us.



NordFX Analytical Group
 

Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

[Stan NordFX]

CryptoNews

– Following the stock market crash on "Black Monday," August 5th, the World Gold Council (WGC) decided to examine the behaviour of various asset classes and explain why bitcoin should not be considered "the new gold."
First, the WGC highlighted volatility. For instance, the weekly volatility of physical gold in 2024 was 13.83%, while for bitcoin, it was 53.62%. "Gold and bitcoin are at opposite ends of the volatility spectrum," WGC analysts write, emphasising that gold has always played the role of a safe-haven asset on a global level. As for bitcoin, it is more of an indicator of how widely blockchain technology is used, so its behaviour resembles that of tech company stocks.
As an example, WGC experts suggest considering the correlation with the S&P 500 index in 2022. Based on this, they conclude that the onset of the Russia-Ukraine conflict "underscored gold's role as a safe-haven asset protecting investors from risks," which differentiates it from the leading cryptocurrency.
Furthermore, the WGC modelled the impact of adding these assets to an investment portfolio in a range of 2.5% to 10%. The Council concluded that gold reduces volatility and improves returns, even when its share in the portfolio is increased. However, the situation with bitcoin is different: the higher its share, the greater the risk of losses.

– According to data from the cryptocurrency exchange Crypto.com, the number of cryptocurrency holders grew by 6.4% in the first half of 2024, from 580 million people to the current 617 million. Meanwhile, the number of Ethereum holders increased by 9.7%, from 124 million to 136 million. Among holders of the first cryptocurrency, the growth was 5.9%: 314 million compared to 296 million at the end of December 2023.
According to Crypto.com analysts, the broader adoption of ETH followed the Dencun update in March. The hard fork resulted in some second-layer ETH blockchain protocols reducing transaction fees by 99%.
Key factors for bitcoin included the April halving, the launch of the Runes protocol, and the approval of spot BTC ETFs, which attracted over $14 billion in institutional investment.

 – Considering the current consolidation, crypto market participants are focusing on how bitcoin will trade in the short to medium term. Given that the leading cryptocurrency ended July in the red, it cannot be ruled out that August will also close with losses. According to PricePredictions' Artificial Intelligence, on August 31st, the coin will trade at $53,766, and in the last decade of September, it will approach $48,000.

–  The analyst known as Crypto Banter disagrees with AI. He pointed out that the Stochastic RSI momentum indicator is entering the investment zone, signalling the possibility of adding BTC to investors' portfolios. Crypto Banter also highlights bitcoin's Fear and Greed Index levels as important indicators for identifying potential market bottoms and profitable entry points. In his observations, current conditions suggest that now is an optimal time to open long positions on BTC, which is fluctuating within key support and resistance levels of $56,000 and $62,000, respectively.

– In China, cryptocurrency trading and mining are banned by law. However, according to the CEO of the analytics platform CryptoQuant, Ki Newbie trader Ju, miners from China account for 54% of global cryptocurrency mining. Additionally, according to a TechFlow survey, for 25% of respondents, crypto trading is the most important source of income and the main occupation in life.
49.14% of Chinese people consider themselves experienced experts in the digital market, while the remaining 50.86% regard themselves as beginners. More than half of the respondents admitted to experiencing a significant level of anxiety when dealing with cryptocurrencies. At least 60% admitted to being superstitious, and 40% reported praying to the "god of prosperity" before engaging in market transactions.
70% of respondents prefer to trade on the cryptocurrency exchanges Binance and OKX. In addition to bitcoin, respondents named Ethereum, Solana, BNB, and the meme coin PEPE as the most profitable assets.

– The personal account of MicroStrategy founder Michael Saylor holds bitcoins worth $1 billion. He revealed this figure himself in a recent interview with Bloomberg. However, four years ago, it was known that the businessman owned more than 17,000 coins.
Saylor is known for his commitment to bitcoin. And this is well-founded—over the past four years, MicroStrategy has invested about $8.4 billion in this asset, bringing its reserve to 226,500 coins, which has yielded a profit of more than $5 billion. As a result, the company's shares have risen in value by 995%. During the same period, the leading cryptocurrency has appreciated by approximately 500%.

– The Ripple (XRP) token is displaying a bullish signal, pleasing the bulls of this altcoin. Technical indicators point to an inverted "Head and Shoulders" pattern on the daily chart of the altcoin, with the second shoulder almost ready to form.
Since the court ruling in the case between the SEC (the U.S. Securities and Exchange Commission) and Ripple, the XRP token has been correlating with major cryptocurrencies such as bitcoin, Ethereum, and Solana. Leaning on the $0.55 support, it has been trading in a narrow sideways trend along with the aforementioned assets since the 50% decline that followed the court ruling. As a result, Ripple has recently begun to form the base of the second shoulder in the bullish pattern with a potential risk-to-reward ratio of 1:2.

– The U.S. Federal Reserve and the Treasury-controlled Financial Crimes Enforcement Network (FinCEN) have proposed amendments to the Bank Secrecy Act, equating the "rights and obligations" of the dollar and cryptocurrencies. After revising the definition of "money" in this Act, federal supervisory authorities will be able to impose new reporting requirements on financial institutions to track all domestic and cross-border cryptocurrency transactions. The amendments, if approved by Congress, are scheduled to take effect in September 2025.

– The author of the bestseller "Rich Dad Poor Dad," financier Robert Kiyosaki, believes that people are wrong to turn to the U.S. Federal Reserve for support, as this institution consists of highly educated but poor employees. "The Fed cannot save you," the entrepreneur declares. "It's time to save yourself. Buy more gold, silver, bitcoin, and stop listening to highly educated poor people."
Kiyosaki predicts that in the face of the upcoming market downturn, the prices of precious metals will rise several times over. And bitcoin, in his opinion, may become the most effective protection against "theft of savings by authorities and bankers." Recall that he previously stated that key technical indicators point to a stock market crash, and against this backdrop, the price of "digital gold" could easily reach $10 million per BTC.

– Michael Van De Poppe, CEO of MN Trading, is convinced that bitcoin will reach a new peak this autumn. The main driver for its growth will be institutional investors, who actively bought the coin when its price dropped. The analyst also believes that the recent correction could trigger a strong rally in September or October of this year, as long as bitcoin itself stays above the $57,000 mark.
Approximately the same timeline for the start of the bull rally was predicted by the analyst known as Rekt Capital. He suggested that about 160 days after the halving, bitcoin will enter a parabolic phase. According to his calculations, this should happen at the end of September 2024.

– Matthew Sigel, Head of Digital Assets Research at VanEck, is also optimistic. He believes that bitcoin will approach its all-time high immediately after the U.S. presidential election: "A typical seasonal pattern is observed where the first cryptocurrency usually struggles between one and three months after the halving," he writes. "Thanks to the influx of liquidity, bitcoin should soon show growth."
The analyst pointed to the weakening of the forced sales factor and predicts that bitcoin will follow gold. According to VanEck's top executive, in 2025, financial markets will be influenced by a monetary policy easing, and because of this, BTC will surpass its all-time high.
According to Matthew Sigel, regardless of who becomes the next U.S. president, the market should be prepared for four years of reckless fiscal policy, and it is during this period that the first cryptocurrency will reach its peak values.
Let us remind you that the digital asset management company VanEck recently released a new forecast for bitcoin. It envisages three possible BTC price levels depending on the development of the market and the adoption of bitcoin as a reserve asset worldwide. According to the base scenario, by 2050, the flagship cryptocurrency could reach $3 million per coin. In the bearish scenario, the minimum BTC price will be $130,314. If the VanEck bullish scenario comes true, in 26 years, 1 bitcoin will be worth $52.4 million.

[Stan NordFX]

Forex and Cryptocurrency Forecast for September 02 – 06 2024

EUR/USD: Dollar Takes the Offensive

● Since the beginning of July, the DXY dollar index had been declining, reaching an eight-month low of 100.51 on 27 August. The primary reason for this negative trend was the concern about a potential slowdown in the U.S. economy. According to the markets, to support the economy, the Federal Reserve (Fed) was expected to begin easing its monetary policy (QE) and aggressively cutting interest rates. As early as July, several members of the Federal Open Market Committee (FOMC) were ready to vote for a rate cut. However, they refrained from doing so, deciding to wait until September to make a decision based on more up-to-date macroeconomic indicators. A 25 basis points (bps) rate cut at the FOMC meeting on 18 September is almost universally anticipated. Moreover, the likelihood of a 50 bps cut reached 35% last week. The futures market also estimated that the total reduction in the cost of dollar borrowing by the end of the year would amount to 95-100 bps. As a result, such actions by the U.S. central bank were expected to lead to a sharp increase in risk appetite and exert additional pressure on safe-haven assets, including the U.S. currency.
In light of forecasts for a U.S. economic slowdown, market participants began discussing a reduction in divergence with the Eurozone and the UK. Consequently, the euro and pound became the main beneficiaries, as clearly reflected in the EUR/USD and GBP/USD charts. However, as the ancient wisdom goes, all good things must come to an end. Life, like the stripes of a zebra, alternates between good and bad times. Thus, after a period of gains, the euro and pound have now entered a darker phase. (Although, to be honest, it’s not entirely dark, just somewhat grey).
● It turns out that things are not so bad in the U.S. After all. According to preliminary data released on Thursday, 29 August, the country's GDP grew by 3.0% in Q2, surpassing both the forecast of 2.8% and the previous figure of 1.4%. On the same day, labour market statistics showed that the number of initial jobless claims in the United States remained virtually unchanged, standing at 231K compared to the forecast of 232K and the previous figure of 233K. Additionally, the Core Personal Consumption Expenditures (Core PCE) Price Index, a key inflation indicator, remained steady in August at 2.6% year-over-year, in line with the July figure and slightly below the forecast of 2.7%.
● From all the figures mentioned above, it is clear that fears of an economic slowdown and a cooling U.S. labour market are greatly exaggerated. It is also premature to declare a final victory over inflation, just as it is too early to assume that the Fed will cut interest rates by 100 basis points by the end of the year. As Raphael Bostic, President of the Federal Reserve Bank of Atlanta, wisely pointed out, it would be undesirable to find ourselves in a situation where, after easing monetary policy, we need to tighten it again. As another saying goes, "haste makes waste."
The idea that there is no need to rush is further supported by the replacement of the elderly Joe Biden with Kamala Harris in the presidential race. For the first time since April of last year, the Wall Street Journal's polls show the Democratic candidate's rating, albeit slightly, surpassing that of Republican Donald Trump. Therefore, forecasts of a U.S. economic recession should also be postponed for the time being. In this context, Citigroup economists believe that September will be a period when the potential outcome of the presidential election could become a source of significant volatility. However, regardless of how candidate ratings fluctuate, this factor of uncertainty will continue to support the dollar as a safe-haven currency.
● All the above suggests that the markets may be significantly overestimating the speed and scale of QE from the Federal Reserve. On the other hand, they may be underestimating the European Central Bank's (ECB) resolve to take similar actions.
It is worth recalling that on 6 June, the pan-European regulator cut the interest rate by 25 basis points to 4.25%. Many assumed that after this move, the ECB would pause and observe the Fed's actions (where the rate stands at 5.5%). However, it is possible that such expectations are misguided. The weakness of the German economy and other Eurozone countries should push the ECB towards more active steps in the direction of QE. (Macroeconomic data released on Tuesday, 27 August, showed a decline in Germany's GDP by -0.1% quarter-on-quarter, compared to +0.2% in Q1). Inflation is also falling sharply: Germany's Consumer Price Index (CPI), according to preliminary data, decreased from +0.3% to -0.1% month-on-month. The same trend is evident across the Eurozone as a whole: according to data published on Friday, 30 August, the CPI here dropped year-on-year from 2.6% to 2.2%. This is very close to the target level of 2.0%. Therefore, it is quite possible that at its meeting on 12 September, the ECB, when choosing between fighting inflation and supporting the economy, may opt for the latter and cut the rate by another 25 basis points.
● It appears that market participants have taken our arguments into account. At least, after surging to 1.1201, the EUR/USD pair returned to its 19 August levels by the end of the week, finishing the five-day period at 1.1047. (The GBP/USD pair demonstrated similar dynamics, where this reversal could also mark the first step in a trend shift from north to south).
The median forecast for EUR/USD in the near term is as follows: 75% of analysts are in favour of further dollar strengthening and a decline in the pair, while 25% expect it to rise. In technical analysis on D1, 25% of oscillators are coloured red, 35% green, and the remaining 40% are neutral grey. Among trend indicators, 35% have sided with the reds, while 65% voted for the greens. The nearest support for the pair is located in the zones of 1.0985-1.1015, 1.0880-1.0910, 1.0780-1.0825, 1.0725, 1.0665-1.0680, and 1.0600-1.0620. Resistance zones are found in the areas of 1.1090-1.1105, 1.1170-1.1200, followed by 1.1230-1.1275, 1.1350, and 1.1480-1.1505.
● The upcoming week promises to be quite eventful, interesting, and volatile. Starting from Tuesday, 3 September, through Thursday, 5 September, data on business activity (PMI) across various sectors of the U.S. economy will be released. Additionally, on 4, 5, and 6 September, we can expect a wave of U.S. labour market statistics, including key indicators such as the unemployment rate and the number of new non-farm jobs created (NFP). As for the Eurozone, Thursday, 5 September, will be noteworthy for retail sales data in the region. And at the very end of the workweek, on 6 September, the Eurozone GDP volume will be announced. Moreover, traders should keep in mind that Monday, 2 September, is a holiday in the U.S. as the country observes Labour Day.


CRYPTOCURRENCIES: The Fed, a Cup Handle, and the Banana Season of Madness



● Inflation is one of the key indicators influencing the monetary policy and interest rate decisions of the U.S. Federal Reserve. These, in turn, are among the primary factors determining the attractiveness of cryptocurrencies for investors. A recent example of this was the dovish speech by the head of the U.S. Central Bank, Jerome Powell, at the Annual Economic Symposium in Jackson Hole, USA, on 23 August. Powell did not rule out a series of interest rate cuts for the remainder of the year. The market reacted to this with a plunge in the DXY Dollar Index to 100.60 and a nearly 7% surge in the BTC/USD pair, from $60,800 to $65,000.
However, the rally did not continue. The eight-day period of net inflows into spot BTC ETFs, during which they attracted over $756 million, ended on Tuesday, 27 August. On that single day, more than $127 million flowed out of cryptocurrency funds. As a result, the BTC/USD pair plummeted and found support only in the $58,000 zone. Naturally, the leading cryptocurrency dragged the altcoin market down with it.
● According to analysts at QCP Capital, the trigger for the market crash was the uncertainty among participants regarding the future of the leading cryptocurrency. As a result, traders were quick to lock in profits. In this situation, while the market sentiment remains bullish, QCP Capital believes that a rapid rise in BTC prices should not be expected for now. Signals of renewed interest in BTC from large institutional investors are necessary to resume active growth. Michael van de Poppe, the head and founder of MN Trading, also believes that bitcoin has not yet fully escaped the "range of lows" between $61,000 and $62,000. In his view, a decisive breakout from this range is essential to confirm a rally toward BTC's all-time high.
Analysts at Glassnode agree with their colleagues. They believe that in the short term, BTC is unlikely to surpass the $70,000 mark. However, according to their observations, "both on-chain indicators and perpetual contracts show that the period of equilibrium is coming to an end, with the beginning of increased volatility and trading volume," which could allow the asset to break out of its narrow price corridor.
● Samson Mow, a bitcoin maximalist and a well-known figure in the crypto industry, has raised concerns by drastically reducing his BTC price forecast by a factor of ten. Just recently, in July, Mow declared that the leading cryptocurrency would reach $1 million within a year. However, in a new comment, he stated that "as long as bitcoin's price remains below $0.1 million, the coins are being sold at a discount." This comment has led the crypto community to believe that he may have lost faith in a powerful bull rally. The $0.1 million mark refers to $100,000, which means that anything below this figure is considered a discounted price, and $100,000 is what Mow now sees as the fair value of bitcoin. (For reference, Samson Mow is a crypto investor, entrepreneur, blogger, and television host. He was the CEO of the blockchain company Pixelmatic and the Chief Strategy Officer at Blockstream. He is currently the CEO of JAN3 and Pixelmatic.)
Another influencer, Anthony Scaramucci, CEO of SkyBridge Capital, shares a similar view on the "fair" value of bitcoin. He continues to uphold his forecast that digital gold will rise to $100,000, driven by spot BTC-ETFs. However, he has now cautioned that reaching this target may be delayed from the end of 2024 to 2025 due to regulatory uncertainty and the increasing prevalence of crypto fraud. "I could be wrong about the timing, but not the actual outcome. I genuinely believe that bitcoin will reach $100,000; it just might take longer," he wrote.
● Renowned macroeconomist Henrik Zeberg is convinced that a recession in the United States is inevitable, potentially arriving as early as Q4 of this year. Moreover, he believes it will be the worst since the Great Depression of 1929. According to Zeberg, the upcoming bear market will unfold in two stages: a deflationary phase followed by stagflation, with an intermediate rebound as the Fed intervenes in 2025. After this, there will be a "blow-off top," where prices skyrocket to unsustainable levels before plummeting rapidly.
Alongside this forecast, Zeberg has revised his target figures for stock indices and bitcoin upwards. According to his BlowOffTop business cycle model, the price of the leading cryptocurrency should rise to $115,000-$120,000 by the end of 2024. However, the economist cautions that this surge will be short-lived.
Arthur Hayes, former CEO of the crypto exchange BitMEX, also weighed in, suggesting that a reduction in Federal Reserve interest rates might temporarily diminish the appeal of traditional financial instruments, causing speculative investors to focus more closely on cryptocurrencies. However, Hayes warns that this rate reduction "will have only a short-term effect, much like sugar provides a quick burst of energy." He believes that assets like bitcoin are likely to benefit from the increased liquidity in financial markets, but overall, the Fed's decision could further exacerbate inflationary pressures.
● Shifting from fundamental to technical analysis, the forecast by the analyst known as MetaShackle is noteworthy. He suggests that bitcoin's continued consolidation within an increasingly narrow price range makes its breakout inevitable. On a larger scale, this range acts as the "handle" of a 3-year "cup." "BTC is forming a massive 'Cup and Handle' on the daily/weekly chart. Such a formation has never been seen before in the history of cryptocurrencies, and it will surely lead to an incredible run to levels that will shock the world," writes MetaShackle.
The "Cup and Handle" pattern is a bullish chart formation in trading. It typically consists of a rounded bottom (the cup), followed by a slight downward drift (the handle), indicating a potential upward breakout. The "largest cup and handle in cryptocurrency history," as described by MetaShackle, begins with bitcoin's peak in November 2021 at $69,000. This was followed by a bear market that consolidated over the next two years, forming a cup with a bottom at $15,500. The opposite rim of the "cup" is marked by a new all-time high in March 2024 at $73,800. After this, the "cup" formation was completed, and the "handle" phase began. This next phase has been ongoing for six months, consolidating with a slight downward trend.
Traders use this model to determine price targets by measuring the depth of the "cup" and projecting that distance upwards from the breakout point of the "handle." According to MetaShackle's calculations, BTC could rise from the bottom by 761% and soar to $130,870.
Another well-known analyst, Gert van Lagen, also believes that the chart shows bitcoin transitioning from a downtrend to an uptrend. Bitcoin is currently moving around the "handle," he notes, "on the verge of entering the banana zone," signifying a period when BTC and altcoins experience explosive price growth. Previously, Real Vision's Jamie Coutts stated that the leading cryptocurrency is about to "enter a season of madness." According to Coutts, by the end of the year, bitcoin's price could exceed $150,000.
Two weeks ago, we mentioned another analyst, Rekt Capital, who predicted a surge in the first cryptocurrency's value in October. His forecast was based on a different pattern forming on the BTC/USD chart: a "bull flag," where the breakout height equals the height of the flagpole.
● At the time of writing this review, on the evening of Friday, 30 August, the BTC/USD pair is trading around the $59,100 zone. The total market capitalization of the crypto market stands at $2.07 trillion, down from $2.24 trillion a week ago. The Crypto Fear & Greed Index has risen from 27 to 34 points, but it remains in the Fear zone.
● And finally, some encouraging statistics. According to consulting firm Henley and Partners, the number of bitcoin millionaires (those holding more than $1 million in BTC) has increased by 111% since January 2024, reaching 85,400 individuals. If we consider not only the holders of the flagship asset but crypto millionaires in general, the number is even higher: 172,300 people. This represents a 95% increase compared to a year ago when the figure was 88,200. The number of individuals with digital assets worth $100 million or more has grown by 79% to 325 people. Six new members have joined the ranks of crypto billionaires, bringing the total to 28.

NordFX Analytical Group

Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

[Stan NordFX]

August 2024 Results: Three NordFX IB Partners Earned Over $77,000 in a Month


The brokerage company NordFX has summarized the trading performance of its clients for August 2024. Additionally, the social trading services, CopyTrading and PAMM, along with the profits earned by the company’s IB partners, were evaluated.

● In August, the top, "golden" spot on the podium was claimed by a client from South Asia, account No. 1782XXX, who earned 142,908 USD from trading gold (XAU/USD).
– The second place was secured by a trader from Western Asia, account No. 1785XXX, who also traded the XAU/USD pair, earning 32,471 USD.
– The TOP-3 is rounded out by a client from East Asia, account No. 1609XXX, with a profit of 24,196 USD. However, unlike the top two leaders, this impressive result was achieved through bitcoin (BTC/USD) trading.

● The situation in NordFX's passive investment services is as follows:
– A month ago, in our CopyTrading review, we mentioned the signal Bro, which, at that time, had increased the initial deposit by a staggering 554% in just 6 days (!). However, we cautioned that such exceptional results could only be achieved through highly aggressive trading, which also meant the risk of losing the entire investment was extremely high. This warning proved to be well-founded, as by 13th August, the deposit losses had reached 100%. Thus, Bro lasted only three weeks before ceasing to exist.
This is precisely why it is essential to consider not only profit but also drawdown. For this reason, we continue to monitor the signals NordFXSrilanka and Quiet_trade_USD. Of course, their profits may not seem as impressive at first glance, but they still far exceed the interest rates on USD bank deposits. Thus, NordFXSrilanka has shown a growth of 48% over 236 days with a maximum drawdown of less than 10%. Quiet_trade_USD has achieved a profit of approximately 15% since the end of February this year, with a moderate drawdown slightly exceeding the same 15%.
– On the PAMM service showcase, a startup Gold24 has already appeared. The name of this account speaks for itself – trading is conducted exclusively on NordFX's popular XAU/USD pair. The number "24" in the name could signify 24-carat purity (pure gold without any alloys), or perhaps it indicates that trading on the pair is conducted 24 hours a day. We consider both possibilities equally likely. Regardless, in just three months of operation, the manager of this account has achieved a profit of 73% with a maximum drawdown of 31%.
 
● The TOP-3 NordFX IB partners received the following commissions in August:
– The highest commission of 36,691 USD was awarded to a partner from South Asia, account No. 1576XXX.
– The second place goes to another partner from the same region, account No. 1678XXX, who earned 27,244 USD.
– Finally, the TOP-3 is completed by yet another partner from South Asia, whose account No. 1678XXX differs only in the last three digits. His commission amounted to 13,690 USD.
 
Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

[Stan NordFX]

Forex and Cryptocurrency Forecast for September 09 – 13, 2024

EUR/USD: Markets Await ECB and Fed Meetings



● If the US economy is growing, investors buy up dollars to invest in the US stock market. As a result, the DXY Dollar Index rises. But as soon as the dark shadow of an impending recession falls over the rosy picture, the countdown begins. Moreover, an economic slowdown signals to the Fed that it's time to ease monetary policy (QE) and lower interest rates.
The next Fed meeting is very soon: on 18 September. Back in July, several FOMC (Federal Open Market Committee) members were ready to vote for a rate cut. However, they left it unchanged, deciding to wait until early autumn and make a decision based on more up-to-date macroeconomic indicators. In fact, hardly any market participants doubt that the borrowing cost will be cut by 25 basis points. But what if the decision is postponed again? Or, conversely, the rate is cut by 50 basis points at once? The result will depend, among other things, on the data that Fed officials received last week.
● It seems that the US economy is not facing a deep recession. However, no spectacular surge should be expected either. Data released on 3 and 5 September showed that the Manufacturing PMI stood at 47.2 points, which is higher than the previous figure of 46.8, but below expectations of 47.5. This indicator remains below the key 50.0 threshold, which separates growth from contraction. The services sector, on the other hand, performed significantly better, with activity reaching 55.7 compared to the previous value of 55.0 and the forecast of 55.2.
As for the labour market, the number of initial jobless claims for the week fell from 223K to 227K (forecast 231K).
At the very end of the workweek, on Friday, 6 August, the US Department of Labor's Bureau of Labor Statistics report showed that the number of new jobs created outside the agricultural sector (Non-Farm Payrolls) increased by 142K, below the forecast of 164K but significantly higher than July’s figure of 89K. (It's important to note that the latter figure was revised downwards from 114K to 89K.) Unemployment in the US dropped to 4.2% last month from 4.3% in July.
Average hourly earnings in the private sector increased by 0.4% (m/m) in August compared to the previous month, reaching $35.21 per hour. Wage inflation rose to 3.8% from 3.6% in July.
● These figures did not provide any clear advantage to either bulls or bears. The recently released aggregate GDP data for the 20 Eurozone countries also had little impact on market sentiment. According to Eurostat, the Eurozone economy grew by 0.6% year-on-year in Q2, which was in line with both the forecast and the previous figure. On a quarterly basis, growth was 0.2%, compared to the forecast and the previous value of 0.3%.
● As a result, following the release of the US Department of Labor report on 6 September, the EUR/USD pair first hit a weekly high of 1.1155, then dropped to 1.1065, rose again, dropped once more, and ultimately finished the five-day period at 1.1085. Expert opinions on its short-term performance were divided as follows: 40% of analysts voted for a strengthening of the dollar and a decline in the pair, while 60% predicted its rise.
In technical analysis on D1, the majority of trend indicators favour the bulls, with 85% on the green side and 15% supporting the red. Among oscillators, 40% are painted green, 35% red, and the remaining 25% are neutral-grey.
The nearest support for the pair is located in the 1.1025-1.1040 zone, followed by 1.0880-1.0910, 1.0780-1.0805, 1.0725, 1.0665-1.0680, and 1.0600-1.0620. Resistance zones are found around 1.1120-1.1150, then 1.1180-1.1200, 1.1240-1.1275, 1.1385, 1.1485-1.1505, 1.1670-1.1690, and 1.1875-1.1905.
● As for the economic calendar, the upcoming week promises to be quite eventful. On Tuesday, 10 September, Germany's Consumer Price Index (CPI) data will be released. The inflation theme will continue the following day with the publication of the US CPI figures. On the same day, debates between US presidential candidates Kamala Harris and Donald Trump are scheduled.
On Thursday, 12 September, the European Central Bank (ECB) will hold a meeting to decide on interest rates and the overall direction of its monetary policy. Naturally, the press conference and comments from ECB leaders following the meeting will be of great interest.
Additionally, Thursday will bring the usual release of initial jobless claims figures, along with the US Producer Price Index (PPI). The five-day period will conclude on Friday the 13th with the release of the University of Michigan’s US Consumer Sentiment Index.

CRYPTOCURRENCIES: "Fainting Spell" and "Heat Death" for Bitcoin, "Sewer" for Altcoins

● September has only just begun, but it is already justifying its title as a bear month, one of the worst for investors. Historical data indicates that the average decline in bitcoin's price during this first autumn month was 6.18%. The optimism of chart analysis enthusiasts has thus far not helped the BTC/USD pair. The base of the bullish "flag" continues to sag downward sadly. The formation of the "cup and handle" is also not completing, after which bitcoin was expected to soar to $110,000 by the end of the year. There has been no surge so far, but bearish forecasts are becoming more and more…
● According to Ecoinometrics, bitcoin has lost its lead among high-capitalisation assets in terms of RAROC (Risk-Adjusted Return on Capital). The first cryptocurrency was surpassed by shares of graphics processor developer Nvidia, while gold is now closely trailing behind BTC. Nvidia's shares have risen by 142% since the start of 2024, while bitcoin has only gained 35% during the same period. Ethereum lags even further behind, with an increase of just 5%.
Peter Schiff, President of Euro Pacific Capital and a well-known bitcoin critic, noted that while the first cryptocurrency has risen in price since the beginning of the year, the real growth occurred only in the first two months, driven by the hype surrounding the launch of spot BTC-ETFs in the US. "If you didn’t buy bitcoin at the beginning of January, you have no profit. In fact, the vast majority of people who bought bitcoin this year, either directly or through ETFs, are losing money," stated the "gold bug" Schiff.
He emphasised that physical gold has steadily increased in value throughout 2024, and the hopes of crypto-enthusiasts that BTC would surpass this precious metal or match it in market capitalisation are becoming increasingly elusive. Schiff added that while he is open to new developments, he has yet to encounter any convincing argument that would change his strongly negative stance on bitcoin. The businessman is confident that sooner or later the price of digital gold will collapse to zero, bankrupting all holders of this cryptocurrency.
● The investor known by the pseudonym Nick Crypto Crusade painted an equally bleak picture of the digital asset market. In his publication titled "The Bull Rally is Cancelled, and Altcoin Season Will Never Begin," he noted that ordinary traders are in a state of pessimism, as they don't believe a bull season is coming anytime soon, and sell off their bitcoins whenever the price approaches $70,000. In his view, the current situation resembles the events of 2022, when the market was dominated by a bearish trend, and no one could see light at the end of the tunnel. Nick Crypto Crusade concluded that people are leaning towards the idea that bitcoin will drop to $40,000 or even lower, and that an altcoin season will never start.
A similar forecast was made by former BitMEX CEO Arthur Hayes. He outlined a scenario in which BTC could fall to $50,000, while altcoins could collapse entirely, landing in the "sewer." Hayes attributed this to changes in the Federal Reserve’s balance sheet under the Reverse Repo Program (RRP). A higher RRP balance effectively removes liquidity from the financial system, keeping money inactive on the balance sheet of the US central bank and preventing it from being reinvested or used for borrowing. According to Hayes, "As soon as RRP started to rise to $120 billion, bitcoin fainted."
● Experts from the Outlier Ventures platform have stated that halving has ceased to have an impact on bitcoin. In their view, 2016 was the last year when the reduction in miner rewards had a fundamental effect on the price of the first cryptocurrency. CryptoQuant also looked into the past and noted that the number of active wallets is currently as low as it was in 2021. "We are observing a decrease in overall network activity, with fewer transactions, which may reflect a decline in interest in using the bitcoin blockchain. This sense of disinterest is negatively affecting the price, coinciding with low trading volume figures," summarise the CryptoQuant experts.
● Charles Hoskinson, the founder of Cardano and co-founder of Ethereum, stated that the crypto industry no longer needs bitcoin. According to him, bitcoin has turned into a religious symbol, which dooms its ecosystem. "98% of the changes in the industry are happening outside of the first cryptocurrency," writes Hoskinson. "The hash rate of the digital gold blockchain will decrease, and it will slowly transition to heat death."
As an example, the Cardano founder referred to the situation with the Windows operating system, which stopped innovating, leading users to switch to Android and iOS devices. Hoskinson noted that he had repeatedly urged bitcoin developers to adopt innovations, but the community ignored his initiatives.
● Given the above, one might ask: Is everything really so bad, and are there no more hopes for growth? As the ancient Greek philosopher Diogenes of Sinope once said, hope dies last. Therefore, it's always worth hoping for the best. The aforementioned Arthur Hayes is quite optimistic about the long-term development of the crypto market, as he expects the US Federal Reserve to ease its monetary policy.
Of course, the recent price declines have scared off many small crypto holders and short-term speculators, who have started selling off their reserves. On the other hand, large investors have continued to accumulate. According to the analytics firm Santiment, this category includes wallet holders with between 10 and 10,000 BTC. Due to this redistribution, whales now control nearly 67% of the total circulating supply of coins. The fact that major investors are accumulating digital gold suggests their positive expectations for its future price growth.
● A similar conclusion, based on other metrics, is drawn by Willy Woo, one of the most popular figures in crypto analysis. He pointed out that long-term bitcoin holders currently control over 14 million BTC, or 71% of the circulating supply. In his view, such significant accumulation by HODLers is a positive sign of market stabilization. Willy Woo noted that bears are gradually starting to lose their dominance.
The Fed's interest rate decision on 18 September will, of course, be crucial. However, according to Woo, the first cryptocurrency is likely to remain in a sideways trend throughout September. Unless extraordinary events occur over the next few weeks, significant changes in bitcoin's price can be expected only at the beginning of October. According to Willy Woo, predictions from some experts that BTC could surpass the $65,000 mark in the short term are unlikely to come true. Reaching a new all-time high (ATH) may take a few more months, possibly happening by the end of the year.
● In their report, specialists from the crypto exchange Bitfinex also highlighted the impact of the US Fed's rate decision on bitcoin's price. The exchange's analysts believe that "a 25 basis point cut will likely signal the start of a loosening cycle, which could lead to a long-term increase in bitcoin’s price as liquidity grows and recession fears ease." However, if the rate is cut by 50 basis points, it could trigger an immediate price spike, followed by "a correction as recession fears intensify."
Bitfinex analysts do not rule out that, as a result of increased volatility during this period, the BTC/USD pair could temporarily lose 15-20% of its value.
● At the end of the week, bitcoin and the crypto market as a whole experienced another bearish attack. The crash followed the decline of the S&P 500 stock index, largely driven by bad news related to Nvidia. The US Department of Justice's Antitrust Division is conducting a major investigation into the company, which significantly alarmed investors with stakes in AI.
As of the time of writing, on the evening of Friday, 6 September, the BTC/USD pair is trading around $52,650. The total cryptocurrency market capitalization has fallen below the psychologically important level of $2.0 trillion, now standing at $1.87 trillion (compared to $2.07 trillion a week ago). Bitcoin's Crypto Fear & Greed Index has plummeted from 34 to 22 points, moving from the Fear zone into Extreme Fear territory.

CRYPTOCURRENCIES: "Playful" Solana and Ripple Forecasts

● Former Goldman Sachs executive and now CEO and Co-Founder of Real Vision, Raoul Pal, believes that gaming applications using cryptocurrencies are on the verge of a breakthrough. The transition from Web2 to Web3 will be a major catalyst for change in both the gaming industry and the blockchain space. As a result, we may witness an explosive surge in user interest in such applications in the coming months. According to Raoul Pal, this will trigger a wave of large-scale trading in crypto-assets used in these games. Solana is expected to play a leading role in this development, as a significant number of new tokens are being created on its network.
● Despite Ripple's victory over the SEC (U.S. Securities and Exchange Commission), XRP has been unable to solidify its position above the critical resistance level of $0.60 (currently priced at $0.5069). However, according to some analysts, the altcoin could still end the year with moderate price growth, potentially reaching $0.66 per coin. Experts at CoinCodex suggest a target of $1.10. But even this is not the limit—XRP maximalists do not rule out the possibility of the token reaching $1.50 by the end of the year. Their forecast is based on XRP's "unique position in the financial sector, considering its focus on cross-border payments and partnerships with major financial institutions."



NordFX Analytical Group

Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

[Stan NordFX]

Forex and Cryptocurrency Forecast for September 16 – 20, 2024

EUR/USD: Storms and Tempests on September 18, 19, and 20



● The past week can be divided into two parts – from September 9 to 11, and from the 12th to the 13th. Initially, the dollar strengthened, then it lost ground. The trend shift occurred after data released on Wednesday, September 11, indicated a slowdown in US inflation and the labour market.
According to the US Department of Labor's report, consumer prices (CPI) in August rose by an average of 2.5% year-on-year, the lowest figure since February 2021. By comparison, the annual inflation rate in July was 2.9%. Thus, in just a month, the rate of consumer price growth slowed by 0.4%. It’s worth noting that the country's annual inflation rate has been declining for several months. For instance, by the end of July, CPI growth had already fallen to its lowest since March 2021. And although 2.9% is not yet the target 2.0%, it’s a far cry from the 9.1% seen two years ago. The light at the end of the tunnel is becoming visible. The same cannot be said for the labour market. Let’s recall that the Bureau of Labor Statistics report on September 6 showed that the number of new jobs created outside the US agricultural sector (Non-Farm Payrolls) was only 142K, compared to the expected 164K. The number of initial unemployment claims, published on September 12, was also somewhat disappointing. With a previous figure of 228K and a forecast of 227K, the number actually rose to 230K. The difference is small, of course, but the trend is still negative.
The market reacted to all this data in a very logical way. Before its release, the probability of a 25 basis point (bps) cut in the federal funds rate at the FOMC (Federal Open Market Committee) meeting of the US Federal Reserve on September 17-18 was 87%. Afterward, it dropped to 55%. Meanwhile, the chances of a 50 bps cut jumped from 13% to 45%. The thinking goes: the economy needs saving, and the fight against inflation can wait. However, we still believe that the Fed will exercise caution and start with a quarter-point cut rather than half a percent.
● On the news mentioned above, the EUR/USD pair was unable to break through the 1.1000 support level. After wavering near it, the pair reversed and moved upwards. While the market's reaction to the US Department of Labor's statistics was logical, the euro's strengthening following the European Central Bank (ECB) meeting is harder to explain.
On Thursday, the ECB resumed its monetary easing cycle (QE), which had been paused in July. The key interest rate was lowered from 4.25% to 3.65%, a cut of 0.6%. Why 0.6% and not a round 0.5% remains a mystery. But this is not the main point. What matters is that such a move should have weakened the euro. Yet, the opposite happened. The reason for this is likely ECB President Christine Lagarde, who, at the post-meeting press conference, did not give the slightest hint that the QE cycle could continue in October.
Despite the possible inflation slowdown in September, a rise is forecast towards the end of the year. The ECB expects inflation to be at 2.5% by the end of 2024, 2.2% in 2025, and only below the target 2.0% at 1.9% by the end of 2026. So why continue cutting rates so drastically when they are already quite low? Christine Lagarde even admitted that while the June cut had been planned in advance, the decision to ease monetary policy at the July meeting was, in fact, deemed hasty.
After Madame Lagarde's speech, the futures market reduced the likelihood of further ECB monetary easing in October from 40% to 20%, which led to the rise in EUR/USD. Derivatives now expect the US Federal Reserve to lower rates by 25 basis points 10 times over the next 12 months, while only 7 similar moves are expected from the ECB. This could lend strength to the bulls on this pair.
● As a result, the EUR/USD closed the past week at 1.1075, almost exactly where it began. Experts’ opinions on its short-term performance are divided as follows: 25% of analysts support a stronger dollar and a decline in the pair, 50% favour its rise, while the remaining 25% maintain a neutral position. However, the medium-term outlook paints a different picture. Here, 70% are in favour of the US dollar, while only 30% are against it.
In technical analysis on D1, the trend indicators show an overwhelming majority supporting the bulls, with 80% in the green camp and 20% siding with the bears. Among oscillators, the picture is more mixed: 25% are green, 40% are red, and the remaining 35% are neutral (grey).
The nearest support for the pair is in the 1.1000-1.1025 zone, followed by 1.0880-1.0910, 1.0780-1.0805, 1.0725, 1.0665-1.0680, and 1.0600-1.0620. Resistance zones are located around 1.1100, then 1.1135-1.1150, 1.1190-1.1200, 1.1240-1.1275, 1.1385, 1.1485-1.1505, 1.1670-1.1690, and 1.1875-1.1905.
● As for the upcoming week, the calendar will be packed with important economic events that will undoubtedly lead to increased volatility. On Tuesday, September 17, US retail sales data will be released. On Wednesday, September 18, key inflation indicators such as the Consumer Price Index (CPI) for the UK and the Eurozone will be made public. On the same day, the US Federal Reserve's FOMC will announce its decision on interest rates. Following the Fed meeting, similar meetings will be held by the Bank of England (BoE) on September 19 and the Bank of Japan (BoJ) on September 20. Naturally, besides the specific decisions, traders and investors will pay close attention to the statements and comments from the heads of these three central banks regarding future monetary policy.

CRYPTOCURRENCIES: Will the New US President Decide BTC's Fate?

● In our mid-week crypto market review, we were pleased to report some positive news from the analytics service Coinglass. According to their data, September 9 marked the end of the longest phase of capital outflows from US spot BTC-ETFs. The capitalisation of these funds had been declining since August 26, resulting in a loss of $1.2 billion. However, on Monday, September 9, bitcoin ETFs managed to attract $28.6 million in capital, breaking the streak of losses. But... the celebration was premature. By Wednesday, US-traded spot bitcoin funds recorded another outflow, ending the brief two-day inflow period, with losses totalling $43.97 million.
And here’s a bit more data: according to CryptoQuant, there has been a notable shift in bitcoin ownership dynamics over recent months. Short-term holders (those owning BTC for 155 days or less) have significantly reduced their positions, especially in July and August. Meanwhile, long-term holders have been increasing their holdings. Due to this redistribution, whales now control nearly 67% of the circulating supply of bitcoin and over 43% of ethereum reserves.
● Is this good or bad? Overall, the statistics seem rather contradictory. "The fact that short-term holders are not accumulating positions may indicate weak demand for bitcoin," notes CryptoQuant. However, they also suggest that the capital flow from weak hands (short-term holders) to strong hands (long-term holders) could set the stage for a potential market recovery, as increased accumulation by HODLers may stabilise prices. Nevertheless, as analysts at Santiment point out, unless whales (the primary target of BTC-ETFs) start buying bitcoin again, a bullish rally is unlikely in the near term.
● Evaluating the current situation, Greg Cipolaro, head of research at Bitcoin New York Digital Investment Group, urged bitcoin holders to be patient. In his view, September is unlikely to bring any surprises in terms of price growth for the leading cryptocurrency. The key factor influencing BTC, according to Cipolaro, will be the upcoming US presidential election on November 4. He believes the outcome of the election will be a pivotal event for the entire crypto market, regardless of who wins. However, Cipolaro declined to predict whether Donald Trump or Kamala Harris would emerge victorious. The analyst is also convinced that factors such as employment data, inflation levels, and even changes in the Fed's interest rate at its September 17-18 meeting will not have a lasting impact on bitcoin’s price.
● Greg Cipolaro's colleagues at 10x Research disagree with him. They believe that a potential 50 basis point rate cut by the Federal Reserve could negatively impact bitcoin and other cryptocurrencies.
"A sharp rate cut is a sign of economic concern, not confidence," say analysts at 10x Research. In their view, a 50 bps reduction in borrowing costs may signal that the regulator is struggling to address an impending downturn in the labour market. They argue that the community's expectations for bitcoin's price increase may go unfulfilled, as there are no clear growth catalysts, and the Fed is focused on balancing its efforts between combating unemployment and inflation.
● With only a few days left until the Federal Reserve meeting, there’s still over a month until the US presidential election. On September 10, the first debate between presidential candidates Donald Trump and Kamala Harris took place. Although cryptocurrencies were not mentioned, the debate outcome negatively impacted the prices of major digital assets. Before the debate, Trump held a slight lead in prediction markets. For example, on Polymarket, his chances of victory were at 53%, compared to Harris's 46%. However, after the debate, both candidates' odds levelled out at 49%. On another prediction platform, PredictIt, the difference was more pronounced: Harris's chances rose to 56%, while Trump's fell to 47%.
Since Trump portrays himself as a supporter of cryptocurrencies, while Harris has not yet taken a clear stance, the shift in balance had a negative effect on bitcoin and other digital assets. After the debate, the price of BTC dropped by about 3%. However, it soon recovered, as verbal sparring is far from the final vote outcome.
● It’s worth noting that the rhetoric of the US presidential candidates is quite different. Trump promises that the US will become the "world capital of bitcoin and cryptocurrencies." In contrast, Harris's programme avoids any mention of virtual assets. Based on this, experts at Bernstein have outlined their forecast for the crypto market. According to their predictions, bitcoin could test the $80,000 to $90,000 range if Donald Trump wins, and the $30,000 to $40,000 range if Kamala Harris becomes the next president. "While some crypto industry leaders harbour hopes for a more constructive policy from Harris, we expect a significant difference between the two outcomes. A Harris victory would maintain the challenging regulatory environment that has stifled market growth in recent years," Bernstein stated.
Analysts at Matrixport have also released a forecast on bitcoin's price following the election results. In their view, bitcoin will continue to rise regardless of the voting outcome. Matrixport noted that during Donald Trump's presidency from 2016 to 2020, bitcoin grew by 1,421%. Under Joe Biden, from 2020 to 2024, BTC’s price increased by 313%. "Bitcoin can continue to thrive regardless of who wins the presidential election in November and takes the White House," Matrixport analysts wrote. They believe the next president is likely to have a greater impact on cryptocurrency market regulation than on bitcoin’s price itself.
● Amidst this uncertain backdrop, a statement from MicroStrategy founder Michael Saylor sounded like a balm for bitcoin enthusiasts. Saylor predicted that bitcoin will soon increase in value by 70 times—reaching a staggering $3.85 million. The billionaire explained his forecast by highlighting the technological superiority of the leading cryptocurrency over other assets and its annual returns. Since MicroStrategy began purchasing BTC in August 2020, the cryptocurrency has delivered an average annual return of 44% to investors. In comparison, the S&P 500 index has grown by around 12% per year over the past four years.
Saylor is also confident that the future belongs to HODLers (long-term investors), who will ultimately outperform traders focused on short-term price fluctuations. In the long term, the billionaire forecasts that bitcoin could reach $13 million, though this would only happen by 2045. By 2050, he predicts that bitcoin’s market capitalisation will account for 13% of the world’s total capital (for reference, it currently stands at just 0.1%).
● As of the evening of Friday, September 13, at the time of writing, the BTC/USD pair surged sharply after a weakening of the US dollar, reaching the $59,900-60,000 zone. The total crypto market capitalisation rose slightly above the psychologically significant $2.0 trillion level, now standing at $2.10 trillion (compared to $1.87 trillion a week ago). Bitcoin's Crypto Fear & Greed Index increased from 22 to 32 points, shifting from the Extreme Fear zone into the Fear zone.
● And in conclusion, since we began our review with statistics, we'll end it with them as well. Specialists from Gemini conducted a survey among 6,000 respondents from the USA, the UK, France, and Singapore and found that among digital asset owners, 69% are men and 31% are women. But that's not all. According to Date Psychology, it turned out that the majority of women (77%) consider cryptocurrency enthusiasts unattractive. They perceive only those who collect Funko figures (toys dedicated to characters from movies, comics, cartoons, etc.) as worse. Perhaps this is because women view digital assets as unserious and project this attitude onto the men who are involved with them.
The most attractive to the female respondents were men who prefer hobbies such as reading, learning foreign languages, and playing musical instruments. However, as other surveys show, women working in the crypto industry achieve great success and often hold higher positions than their male colleagues. Draw your own conclusions, gentlemen!

NordFX Analytical Group

Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.