With raging USD strength, weak equity markets and crypto holding up surprisingly well, traders are looking at bond markets clearly signalling an upcoming recession. In today's Morning Note we analyse the Pound Sterling collapse and see what's next for global FX markets.
The information contained here is for general information only. It should not be taken as constituting financial advice. Stormrake is not a financial adviser. You should consider seeking independent financial advice prior to making any personal investments.
GBP/USD collapsing
In the last 3 months, Bitcoin has held value against the USD far better than the GBP. This indicates a slight shift in sentiment with Bitcoin showing the true value of a neutral network with money that can be sent/spent any time and any where without a single third party involved.
We also need to note that the currency wars are escalating, that continued escalation is what will eventually lead to Bitcoin decoupling from traditional markets and can be seen as a potentially bullish catalyst.
US bonds flash worst inversion in history
BTC/USD key levels
To keep it simple, a downside break of $18,549 USD where we trade lower than that key level for a couple of days will lead to a breakdown in Bitcoin. The next support level comes in at the local lows of $17,647, expect those levels to be defended aggressively with a strong bid coming in to keep the market structure intact. For a move higher, we would like to see Bitcoin close above $19,560 before it has a sustained towards $20,554, this is where it can meet a fair bit of overhead resistance and start to stall.
ETH/USD key levels
Ethereum continues to show the most weakness across the top 20 crypto assets by market cap. This is most likely a combination of overextended "Sell the news" event combined with a pretty bleak macro environment. For a large sell off to get triggered, we would like to see a break and daily close below the $1,241 USD level. Should a break of $1,241 occur, then we should anticipate a move towards $1,111. For a move to the upside, we would like to see a strong bullish reclaim of $1,333, preferably with 1 hourly candle ripping through the overhead resistance. This would set us up quite nicely towards a run between $1,422 and $1,500 respectively.
Context is key
The US stock market has almost all but retraced its entire bear market relief rally and is less than 0.5% away from printing fresh lows. As shown in the image above, it's almost impossible to find a reliable safe haven as there is deep red across multiple industries. What is important to note here is the relative strength of Bitcoin and the wider crypto markets whilst keeping in mind this savage US stock sell off is occurring. This should give beaten up crypto investors hope that a potential decoupling is underway but be cautious not to celebrate too early, we're not in the clear yet.
No Advice Warning
Disclaimer
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