The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 23.04.2021
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The risk sentiment in the market is very risk-off especially with a slew of PMI data being released today and the latest Bloomberg report highlighting higher taxes to be imposed on the 1%ers in the US. Bitcoin suffered huge losses as the events of the day began to take effect on the instrument. Looking at the EURUSD, the ECB event yesterday did little to affect the common currency as the focus shifts towards the PMI data as well as vaccine updates. Gold has attempted to continue moving higher, but the momentum higher is being challenged by the $1,800 as market participants watch out for US Treasury price dynamics.
With that said, let’s find out how the markets are doing on April 23rd, 2021.
Bitcoin Bloodshed Continues
Bitcoin had displayed incredible recovery signs on Thursday, with investors eyeing liftoff to $60,000. However, the flagship cryptocurrency hit a snag at $56,000, allowing correction to come into play. The breakdown ignored a double-bottom pattern at $51,300, allowing the Bears to extend the movement lower beneath $50,000. Note that JP Morgan Chase & Co. analysts had warned earlier this week that Bitcoin lacked the momentum to continue with the uptrend. The analysts cited reduced institutional demand for the bellwether cryptocurrency.
At the time of writing, Bitcoin trades at $49,400 amid a rising overhead pressure. Investors are mainly in panic mode that could have emanated from a rumor that the United States is considering increasing taxes on capital gains. The President, Joe Biden, has been reported to be interested in tighter regulations in the cryptocurrency industry. For that reason, a proposal is ready for tabling in Congress. According to people privy to the report, the proposed tax rate would double from the current to 43.4%.
Meanwhile, BTC Bulls battle to secure higher support to regain ground above $50,000. The MACD hints at the bearish outlook lasting longer. While the RSI on the four-hour chart reinforces the narrative, support is envisioned at $48,000 to allow Bulls to shift the focus upward. However, if lost, Bitcoin will be looking towards $44,000.
Current Market Sentiment: Bearish
EURUSD Defends 1.2000 Support
The common currency is showing some bullish pressure, early Friday, as it attempts to continue to climb above 1.2021. While consolidation in the market sentiment seems to favor the quote’s latest recovery, traders remain cautious ahead of the key PMIs for April and ECB President Christine Lagarde’s speech. Not only expectations that Johnson & Johnson will get the US Centers for Disease Control and Prevention (CDC) approval to restart its vaccine distribution, but Canada’s recent strong prodding may also portray vaccine optimism.
Market participants chose to ignore the upbeat US data as well as the ECB’s cautious optimism as market sentiment dropped amid fears of higher capital gains tax in the US. Previously, what was challenging the mood could really have been the coronavirus (COVID-19) conditions in Asia and geopolitical tension concerning China, Russia and some of the Middle East nations.
Although risk catalysts are likely to keep the driver’s seat, EUR/USD traders will also closely observe the preliminary activity numbers for April to confirm the ECB’s cautious optimism. Even if the German and Eurozone PMIs manage to surpass downbeat forecasts, ECB President Lagarde needs to repeat the previous day’s statement around 14:30 GMT to keep the buyers hopeful.
Current Market Sentiment: Consolidation
Gold Unable to Break Above $1,800
Gold is attempting a tepid bounce after falling 1% on Thursday amid a sharp recovery staged by the USD. Risk-aversion gripped the markets as a Bloomberg report explained that the Biden administration is proposing higher taxes on the wealthy to pay for its social plan. Flight to safety lifted the safe-haven greenback at the expense of stocks and gold. However, the losses in the yellow metal were limited by the sell-off in Treasury yields as well.
The focus now remains on the dynamics in the yields and the dollar for fresh trading impetus. However, as the market digests the news coming from all directions, let’s take a look at how the resistance support structure is forming. Currently, the instrument shows bullish pressure as it seeks to recapture the $1,790. Breaking above this level would seek the $1,795 level. Further up, buyers will seek validation to move above $1,800.
On the other side of the spectrum, gold is likely finding some support around $1,785 as a cluster of supports is found around there, any lower as the $1,780 will come into play which might play a major role in testing the Bears’ commitments to the downside.
Current Market Sentiment: Cautiously Bullish
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