The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 06.08.2021
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Markets are only focused on the NFP (NonFarm Payroll) data from the US end, set to come out later on in the day. This data is considered extremely important, especially with the divergence that’s currently present in the FED. Market participants are simply not willing to venture into the market, until they have more data to move on. A good figure will increase the strength of the USD, meaning a hawkish FED, while a bad figure will do the opposite.
With that said, let’s find out how the markets are doing on August 6th, 2021.
Bitcoin Rises Above $40,000
Bitcoin price hovered around $38,000 this week, as the calls for additional losses near the $35,000 level were cancelled many times. Looking back at last week, the flagship cryptocurrency ended with improved bullish sentiment, with an uprise to $42,500. Nonetheless, a correction soon occurred on Monday. Ever since, Bitcoin has been grappling with increased overhead pressure. Meanwhile, the bellwether cryptocurrency teeters slightly above $40,000 while bulls look toward a potential rally.
In a recent Twitter post, Fidelity's Director of Global Macro, Jurrien Timmer, expressed his point of view, suggesting an optimistic outlook for Bitcoin and gold. He emphasized that Bitcoin is a potential asset class: “Like gold, it seems to have grown up in the 1970s.” During this period, gold was widely known as a commodity, but its volatility and popularity was very high, which often brought investors up to 20 times the return. During that time, gold was also suffering drawbacks similar to Bitcoin, but due to the “scarcity and network effects”, cryptocurrencies have more room for appreciation.
The current price of Bitcoin is $40,200. TheMoving Average Convergence Divergence (MACD) indicator shows that buyers are relatively in control of this market. If the MACD rises above the midline, the probability of the next rebound will increase significantly. However, the RSI (Relative Strength Index) shows that the Bears also have a strong presence, as the indicator is moving lower towards the midline, demonstrating a rise in the downward pressure.
Current Market Sentiment:Bullish
EURUSD Bears Eye 1.1800
After a six-day downtrend aimed at Friday's European session, the EUR/USD is still under pressure close to its weekly lows. However, since the Bears took a breather around 1.1823 as of this writing, the major currency pairs fell by 0.10% on the same day. EURUSD has suffered from a double whammy that came in the form of COVID updates and US Stimuli disappointment. The negative factor may also be triggered by the market's concerns about US employment data, as well as the anxiety over US employment data, considering the recently escalating chatter over tapering and rate hike.
In addition to COVID-19 concerns and expectations about currency tightening, US senators are postponing votes on Biden’s infrastructure bill until the weekend, and are also supporting the U.S. dollar. Senate Majority Leader Chuck Schumer concluded the $1 trillion infrastructure package debate, as per Reuters, so the time of voting on this bill remains unclear.
Although this risk aversion in the market is favouring the EURUSD sellers, US employment data in July will indicate the near-term direction, especially with how the Fed is currently divided. With that said, the pair can extend the downturn in case the headline jobs report match upbeat forecasts, but a negative surprise could help consolidate the latest losses. In addition to the US NFP data, we should also pay close attention to the headlines of German industrial production, as well as any information concerning COVID and the US stimulus packages.
Current Market Sentiment:Bearish
Gold Falls to $1,800
Goldfell and is currently trading around the $1800 support level, almost down 0.18% on the day, while maintaining a breakthrough of key support during the Asian session on Friday. The U.S. dollar and cautious sentiment seem to be beneficial to sellers lately. After the number of applicants for unemployment benefits rose several times last week, risk enthusiasts are unexpectedly optimistic about this data in the United States.
However, concerns about the imminent downturn and disappointment over the shift in ADP employment, which is usually a precursor to the actual NFP figure, have weakened optimism. It’s worth noting that the multi-day highs of coronavirus readings from the United States, China, and Australia are also challenging market sentiment and putting pressure on gold prices, which supports the demand for the U.S. dollar as a safe haven.
Given the risk sentiment and the strengthening U.S. dollar, gold may continue to be under pressure before the key US employment data is released, but any disappointment in the employment report may reverse the recent decline in gold. Since June 29th, gold has continued to break through the upward trend line and 100-DMA. With the downward momentum line and the MACD signal bullish, it has brought hope to sellers.
Current Market Sentiment:Bearish
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