The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 17.05.2021
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The markets are clearly in turmoil as they try to digest the most recent fundamental and technical news. Bitcoin is in the forefront of it all with the latest news of how Tesla might be dumping its BTC holdings, which sent the digital currency spiraling downwards reaching $42,000.
EURUSD seems to be moving higher as the instrument digests the most recent economic news from the US allowing the instrument to hover near 1.2150. Gold, on the other hand, has hit a 3-month high as Chinese buyers appear to have reentered the market, as well as the recent dismal economic news from the US spurring the yellow metal to continue the move higher.
With that said, let’s find out how the markets are doing on May 17th, 2021.
Tesla to Ditch Bitcoin
The cryptocurrency market was in turmoil over the week, however, the focus was definitely on bitcoin and how the entire market continued to react to Tesla’s announcements. BTC had tried to move higher above $50,000 before the weekend started, but that was short-lived and the effect was a massive drop towards $42,000, breaking through several supports such as $46,000. Market participants were quick to call out Elon Musk for the recent crash in the digital currency.
The first news about Tesla stopping all BTC payments for its vehicles, citing the high energy consumption during mining as well as the transaction processing. However, the company did pledge that it would keep its holding in Bitcoin until mining moves away from fossil fuel and embraces sustainable energy. That said, a recent tweet from Elon Musk agreeing with a tweet from @CryptoWhale, yet it’s unclear if he’s agreeing with what the tweet said, or confirming what the tweet said. Either way, that was another nail in the coffin of BTC which continued to fall.
With all the negativity flying around this instrument, it’s only natural that we see the instrument drop the way it did, furthermore, the technical indicators are not denying it. Take the MACD (Moving Average Convergence Divergence), the indicator is showing increased bearish impulses, and the way the MAs and histogram are structured, a drop below $40,000 is definitely not ruled out. However, one analyst isn’t giving up hope and is seeing bitcoin reaching $125,000 by the end of 2021.
Current Market Sentiment:Bearish
EURUSD Falls as USD Strengthens
As the European session gets ready to kick off at the start of this week, we are seeing the EURUSD fall towards 1.2130 as the USD appears to be regaining some of its strength. In doing so, the currency major pair consolidates gains earned during the previous two-day run-up. Although Friday’s downbeat US Retail Sales and Michigan Consumer Sentiment Index, not to forget Industrial Production, saved the Fed policymakers from another laborious day. Market players reassess the US central bank’s rejection to tapering and/or rate hike odds afterward.
Moreover, comments from China’s National Bureau of Statistics (NBS) suggesting economic recovery remains uneven, mainly due to the recently sluggish Retail Sales and Industrial Production, also weigh on the sentiment. Elsewhere, the United Nations (UN) rejection to any direct meddling in Gaza, due to the US as per China, joins the coronavirus (COVID-19) woes in Asia and uneven vaccinations, not to forget covid variant woes in the West, to exert additional downside pressure on the previous optimism.
The market’s attention will be given to the Fedspeak. Fed’s Vice Chairman Richard Clarida is likely to reiterate his cautious optimism while defending the no policy adjustments, in absence of which the EUR/USD may witness further downside towards short-term key support. It should, however, be noted that the Fedspeak suggesting the need for “multiple data of more months” for any policy adjustments seem justified, which in turn keeps bears cautious.
Current Market Sentiment:Cautiously Bearish
Gold Remains Above $1,800
Gold has finally cracked the barrier at $1,846 to clinch fresh three-month tops at $1,855, starting out a fresh week this Monday. Gold extended the bullish momentum into the third straight session, shrugging off the latest bounce in the USD across its main competitors. Concerns over uneven economic recovery in China help underpin the sentiment around gold, as more buyers can be seen coming from that country, allowing more demand to push the instrument higher.
The recent strength in the gold price can be attributed to the resurgent dovish Fed expectations, in light of the downbeat US Retail Sales data released last Friday. Dismal US data tamed rising inflation fears, weighing heavily on the Treasury yields, aiding the non-yielding gold. Gold traders now look forward to the FOMC minutes due for release on Wednesday for fresh direction. In the meantime, the broader market sentiment and Fedspeak will continue to influence gold prices.
Currently, the instrument is battling against the mentioned resistance at $1,855 as it hasn’t seen this level since February. Technically, the instrument is favored to continue moving higher as per the MACD and RSI. The latter, however, is showing signs that the instrument is heading into overbought territory should the $1,855 break. MACD, on the other hand, is showing more bullish behaviour with the histogram and MAs printing in the positive territory above the midline.
Current Market Sentiment:Consolidating
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