The Daily Cryptomenon
This analysis was written at 9:00 am GMT +3, on 23.07.2021
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The European Central Bank decision was the main risk event yesterday, however, it wasn’t really as impactful as one would have expected. The market is currently now switching gears from the failed ECB event towards the US infrastructure spending bill, which will have an effect on the price of the USD. EURUSD is still falling, and the result was a death cross, which means there’s more negativity in the instrument’s future.
Gold is also suffering from the strength of the USD as it falls from the highs and seems to be on the verge of breaking below a crucial support. Bitcoin is starting to exhibit increased bullishness as a certain analyst is expecting that the BTC Super Cycle is far from done.
With that said, let’s find out how the markets are doing on July 23rd, 2021.
Bitcoin's Recovery Began
After a significant rebound from the downturn earlier this week, the cryptocurrency ship has slowed down. When crypto assets lose momentum, investors' hopes for recovery begin to bloom. Bitcoin broke the $32,000 mark, but failed to break the $33,000. Bitcoin closed at the stubborn resistance level of $33,000 after solid support of $32,000. Short-term technical indicators show that the flagship cryptocurrency is in the hands of the Bulls.
In addition, obstacles were overcome at the level of the simple moving average of 100 (as SMA seems to have more buy orders), while the Bulls are concerned about the upward trend in the next few trading days to $34,000. The bullish momentum of the Moving Average Convergence Divergence (MACD) indicator confirms the continued upward trend. In addition to the recent buy signal, MACD has crossed the midline, making the bullish outlook more confident. Therefore, Bitcoin may rise above $33,000 and may close at above $34,000 USD on the same day.
In some positive news, an analyst predicts that the BTC super cycle is still in its infancy. A trader under the pseudonym Daan Crypto believes that the first 4 Bitcoin cycles can be broken down into cycles that have minor corrections and are easy to reach new highs. The current cycle may be more explosive, with a sharp spike in the middle. Bitcoin recently hit an all-time high of $64,000 and has experienced a bear market for several months. After this period, cryptocurrencies should recover and return to record highs before the end of the year. According to the forecast for December 2021, if the cryptocurrency market can break through what traders call a “short-term bearish period,” it should show signs of recovery.
Current Market Sentiment:Cautiously Bullish
EURUSD Retreats on Death Cross
The EUR/USD is still under pressure near 1.1770 and remained unchanged on the day before Friday's European session. With the European Central Bank (ECB) bearish bias and increasing COVID-19 woes, sellers are in control. However, there’s some optimism in the markets as the release of key indicators in Germany, the Eurozone and the United States, are giving traders some hope.
US lawmakers are still arguing as Joe Biden’s infrastructure spending bill was rejected in the first debate, but there’s hope that the bill can be approved by the House of Representatives. According to Bloomberg, the U.S. Congressional Budget Office (CBO) stated that “U.S. legislators may not raise or suspend the debt ceiling until October or November.” Although the risk catalyst poses a challenge to the dollar Bulls, the European Central Bank is willing to accept a change in the rate because of inflationary tensions. The willingness to accept changes in interest rate benchmarks gives sellers hope.
However, it should be pointed out that Australia and the United Kingdom are bravely optimistic about the growing concerns of the coronavirus and the gradual recovery of Delta COVID-19 cases. Germany’s Purchasing Managers’ Index may currently be mixed, with the services sector driving the overall data, but the Eurozone data may strengthen and help the region’s currencies. Doubt about the effectiveness of the European Central Bank, because Germany supports contraction, which in turn may limit the recovery of the euro/dollar. After that, the US Purchasing Managers Index may release weak data next week and weaken the Fed’s actions, which may be moderate.
Current Market Sentiment:Bearish
Gold's Fall Increases on USD Strength
As the test for levels below $1,800 continued to be challenged, as gold returned to a loss after a temporary reversal on Thursday. In the case of uneven stock market activity in Asia, the Asia-Pacific region still has concerns about Covid, which has promoted the demand for security in the US dollar. Interestingly, as the optimism of the stimulus plan continues to put pressure on gold prices, US Treasury yields are still rising.
US President Joe Biden’s infrastructure bill is expected to be passed on Monday after voting on Wednesday. In terms of economic data, all attention is focused on the Eurozone and US manufacturing and service PMI initial values, which indicates that the global economy is recovering. This will have a major impact on the willingness to take risks, which will have a major impact on the price of gold. The recent improvement in market sentiment seems to be helping gold buyers regain control of the bullish declining wedge pattern.
Looking ahead, market participants will pay attention to the preliminary signs of July activity indicators from major Western countries, namely the United Kingdom, the United States and the European Union (EU). Although these numbers will not come as a surprise when they fall, as the virus returns, gold buyers expect any strong positive success.
Current Market Sentiment:Cautiously Bearish
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