The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 20.08.2021
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The overall market has seen some increase in volatility, especially since it’s still digesting the latest news from the FOMC meeting minutes. The instruments are still under the influence of the USD, as any movement by the leading currency is directly translated into the other instruments. So, for the time being, that seems to be the case for the overall market and one can expect more volatility to come.
With that said, let’s find out how the markets are doing on August 20th, 2021.
Bitcoin Attempts Move to $50,000
Bitcoin dropped to $44,000 this week, leaving investors in shock. Previously, the flagship cryptocurrency rebounded from the support level of $45,000, narrowing the gap to $48,000. At the time of writing, BTC is trading at a price slightly higher than $47,000. On the other hand, Bitcoin needs to break through the $48,000 mark to pave the way for the $50,000 level. As investors get used to trading BTC above $50,000, more buying orders are expected.
The 200-day Simple Moving Average (SMA) is in line to offer the much-needed support. When the RSI narrowed the gap at 70, the bullish control of the price was strengthened. It is important to understand that once the 12-day EMA returns above the 26-day EMA, the Moving Average Convergence Divergence (MACD) sell signal may disappear. Perhaps a transaction price higher than $48,000 will increase the influence of the Bulls on the market and lay the foundation for the price to move further north. At the same time, the outlook is bullish as the number of exits from Bitcoin exchanges has soared.
When relying on the stock exchange, one can assume that investors have a long-term plan to stick to. Will Clemente called it “one of the sharpest drops of exchange inventories in Bitcoin’s history.” The well-known network analysis platform Glassnode recently confirmed a large-scale release in August. The market has transitioned through a number of phases that show an exchange flow dominance over the past year, while the last outflow dominance was seen in late 2020.
Current Market Sentiment:Bullish
EURUSD Rebound is Capped Below 1.1700
The EUR/USD rebounded from the 2021 low to 1.1686 and rose by 0.10% before the European session on Friday. The consolidation may be related to the decline of the US dollar from its highest level since November 2020. The Dollar Index (DXY) was able to set a multi-day high during the Asia session, however, it’s currently down by 0.05% to 93.52 at press time.
Optimism is emerging as the United Kingdom promotes vaccinations for children aged between 12-17, and the United States’ encourages re-vaccinations. This also coincides with the willingness of Western leaders to join in on the attempt of helping the struggling Asia-Pacific countries with vaccines. According to Reuters news, the Japanese cabinet has approved a 9.27 billion yen ($84.50 million) emergency budget to help the country's Self-Defense Forces provide medical assistance during the coronavirus pandemic.
With the current negative conditions that relate to the Pandemic, the latest EURUSD consolidation is likely to fade away, which in turn highlights COVID-19 headlines as the main catalyst for the movements of the currency pair. For the most immediate basis, the German Producer Price Index (PPI) for July can direct the currency’s movements.
Current Market Sentiment:Bearish
Gold Hovers Near $1,800
After testing a high of $1,794.85 during the overnight trading session, Gold prices fell on Friday and the US Treasury yields rebounded from their lows after the previous day’s sell-off. Investors seek some bottom buying in the safe-haven asset amid increased Delta variant cases of the coronavirus and the latest Fed’s meeting minutes. The rising U.S. Treasury yields endorse the opportunity cost of holding precious metals, which in turn decreases the price of the yellow metal.
The Unemployment claims report from the US showed that the number of people applying for unemployment benefits in the United States has dropped for the first time. The one-and-a-half year low of 348,000 for the week that ended on August 14 was lower than the market expectations of 363,000. This also affected the price of gold, alongside the fluctuations in the stock market that impacted the world’s largest gold exchange-traded fund (ETF) SPDR Gold Trust’s gold holdings dropped by 2.04 tonnes to 1,015.10 tonnes.
Simultaneously, while worries about the prevalence of Delta COVID-19 variant and its impact on global recovery increase, the decline in precious metal prices has been brought under control as demand rises to near the lowest level. Gold prices extended the gains from the low of $1,667.78 made on August 9 and touched the high of $1,705.56. The instrument has started a move that swung back and forth, with hopes to move back above $1,830.
Current Market Sentiment:Consolidation
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