Daily Market Analysis from NordFX

Forex and Cryptocurrency Forecast for 06 – 10 May 2024

EUR/USD: What's Wrong with the US Soft Landing?

The headline of our last review stated that inflation remains stubborn, and the US GDP is slowing. Newly arrived data have only confirmed these assertions. A crucial inflation measure that the Federal Reserve follows – the Personal Consumption Expenditures Price Index (PCE) – increased from 2.5% to 2.7% in March. The ISM Manufacturing Sector PMI surpassed the critical level of 50.0 points, dropping from 50.3 to 49.2 points. It is important to remember that the 50.0 threshold separates economic growth from contraction. In such circumstances, neither raising nor lowering the interest rate is advisable, which is exactly what the FOMC (Federal Open Market Committee) of the US Federal Reserve decided. At its meeting on Wednesday, 01 May, the committee members unanimously left the rate unchanged at 5.50%, marking the highest rate in 23 years and unchanged for the sixth consecutive meeting.

This decision matched market expectations. Thus, greater interest was on the press conference and comments from the regulator's leadership after the meeting. The head of the Fed, Jerome Powell, stated that inflation in the US is still too high and further progress in reducing it is not guaranteed as it has not shown signs of slowing in recent months. According to him, the Fed is fully committed to returning inflation to the 2.0% target. However, "I don't know how long it will take," Powell admitted.

The outcomes of the FOMC meeting appear neutral except for one "dovish pill." The regulator announced that from June, it would reduce the amount of Treasury securities it redeems from its balance sheet from $60 billion to $25 billion per month. This tightening of the money supply is not yet a shift to quantitative easing (QE) but a definite step towards reducing the scale of quantitative tightening (QT). It must be noted that this did not make a strong impression on market participants.

Besides fighting inflation, the Fed's other main goal is maximum employment. "If inflation remains persistent and the labour market strong, it would be appropriate to delay lowering rates," Powell stated. Following his remarks, the market anticipated the important US Bureau of Labor Statistics (BLS) report, which was to be released on Friday, 03 May. This document disappointed dollar bulls as the number of people employed in the non-agricultural sector (NFP) in the US only grew by 175K in April, significantly lower than both the March figure of 315K and market expectations of 238K. The employment report also showed an increase in unemployment from 3.8% to 3.9%. The only solace for Powell and other Fed officials was the reduction in wage inflation – the annual growth rate of hourly earnings slowed from 4.1% to 3.9%.

European economy. Consumer Price Index (CPI) in Germany increased from 0.4% to 0.5% on a monthly basis. Retail sales also increased, from -2.7% to +0.3% year-on-year. Germany's GDP also moved into positive territory, rising in Q1 from -0.3% to 0.2%, exceeding the forecast of 0.1%. Regarding the Eurozone as a whole, the economy looks quite healthy – it is growing and inflation is falling. Preliminary data for Q1 shows GDP rising from 0.1% to 0.4% year-on-year and from 0.0% to 0.3% quarter-on-quarter. Core inflation (CPI) fell from 1.1% to 0.7% on a monthly basis and from 2.9% to 2.7% year-on-year, not far from the target of 2.0%.

This suggests that the European Central Bank (ECB) may begin to lower interest rates earlier than the Fed. However, it is still too early to make final conclusions. If based on the derivatives market, the probability of the first rate cut for the dollar in September is about 50%. Some economists, including analysts from Morgan Stanley and Societe Generale, even suggest that the Fed might postpone the first rate cut until early 2025.

After the release of the weak employment report in the US, the week's maximum was recorded at 1.0811. However, everything then calmed down a bit and the last point was placed by EUR/USD at 1.0762. As for the forecast for the near future, as of the evening of 03 May, 75% of experts expect the dollar to strengthen, 25% – its weakening. Among the oscillators on D1, the opposite is true: only 25% are on the side of the reds, 60% – are coloured green, 15% – in neutral gray. Among the trend indicators, there is a balance: 50% for the reds, just as much for the greens. The nearest support for the pair is located in the zone 1.0710-1.0725, then 1.0650, 1.0600-1.0620, 1.0560, 1.0495-1.0515, 1.0450, 1.0375, 1.0255, 1.0130, 1.0000. Resistance zones are located in the areas 1.0795-1.0805, 1.0865, 1.0895-1.0925, 1.0965-1.0980, 1.1015, 1.1050, 1.1100-1.1140.

No events as important as those of the past week are anticipated. However, the calendar still highlights Tuesday, 07 May, when revised retail sales data in the Eurozone will be released, and Thursday, 09 May, when the number of unemployment benefit claims in the US is traditionally made known.

GBP/USD: Will the Pair Fall to 1.2000?

Not the pound but the dollar defined the week for GBP/USD. This is evidenced by the fact that the pair completely ignored the forecast of the Organisation for Economic Co-operation and Development according to which the UK will face the slowest economic growth and the highest inflation among the G7 countries, excluding Germany, this and next year. It is expected that the UK's GDP in 2024 will decrease from 0.7% to 0.4% and in 2025 – from 1.2% to 1%.

Commenting on this rather sad forecast, the UK Finance Minister Jeremy Hunt stated that the country's economy continues to fight inflation with high interest rates, which put significant pressure on the pace of economic growth.

Like other central banks, the BoE faces a tough choice – to prioritize fighting inflation or supporting the national economy. It is very difficult to sit on two chairs at once. Economists from the investment bank Morgan Stanley believe that the divergence in monetary policy between the Bank of England and the Fed could put serious pressure on GBP/USD. In their opinion, if markets decide that the Fed will refrain from lowering the rate this year and the BoE begins a softening cycle (by 75 basis points this year), the pound may once again test the 1.2000 level.

The pair ended the week at 1.2546. The median forecast of analysts regarding its behaviour in the near future looks maximally uncertain: a third voted for the pair's movement south, a third – north, and just as many – east. Regarding technical analysis, among trend indicators on D1, 35% point south and 65% look north. Among the oscillators, only 10% recommend selling, the rest 90% – buying, although a quarter of them give signals of the pair's overbought.

The pair will encounter resistance at levels 1.2575-1.2610, 1.2695-1.2710, 1.2755-1.2775, 1.2800-1.2820, 1.2885-1.2900. In case of a fall, it will meet support levels and zones at 1.2500-1.2520, 1.2450, 1.2400-1.2420, 1.2300-1.2330, 1.2185-1.2210, 1.2110, 1.2035-1.2070, 1.1960, and 1.1840.

If last week the dynamics of GBP/USD were mainly determined by news from the US, much will depend on what happens in the UK during the upcoming week. Thus, on Thursday, 09 May, a meeting of the Bank of England will take place, where a decision on further monetary policy, including changes in interest rates and the planned volume of asset purchases, will be made. And at the very end of the working week, on Friday, 10 May, data on the country's GDP for Q1 2024 will be released.

USD/JPY: A Truly Crazy Week


At its meeting on 26 April, the members of the Bank of Japan (BoJ) Board unanimously decided to leave the key rate and the parameters of the QE program unchanged. There was no harsh commentary expected by many on the future prospects. Such inaction by the central bank intensified pressure on the national currency, sending USD/JPY to new heights.

A significant part of the previous review was devoted to discussing how much the yen would need to weaken before Japanese financial authorities moved from observation and soothing statements to real active measures. USD/JPY had long surpassed levels around 152.00, where intervention occurred in October 2022 and where a reversal happened about a year later. This time, strategists from the Dutch Rabobank called 155.00 a critical level for the start of currency interventions by the Ministry of Finance and the Bank of Japan. The same mark was mentioned by 16 out of 21 economists surveyed by Reuters. Others forecasted similar actions at levels of 156.00 (2 respondents), 157.00 (1), and 158.00 (2). We suggested raising the forecast bar to 160.00, and as a reversal point, we indicated 160.30. And we were right.

Firstly, on Monday, 29 April, when the country celebrated the birth of Hirohito (Emperor Showa), USD/JPY continued its cosmic epic and updated another 34-year high by reaching 160.22. Thus, in just two days, it rose by more than 520 points. The last time such an impressive surge was observed was 10 years ago.

However, the situation did not calm down there. On the same day, a short powerful impulse sent the pair back down by 570 points to 154.50. Then followed a rebound, and late in the evening on 01 May, when the sun was already rising over Japan the next day, another crash occurred – in just one hour, the pair dropped 460 points, stopping its fall near 153.00. This movement occurred after relatively mild decisions by the Fed, but the cause was clearly not this, as other major currencies at that moment strengthened against the dollar much less. For example, the euro by 50 points, the British pound – by 70.

Such sharp movements in favour of the yen were very similar to the currency interventions of the BoJ in 2022. Although there was no official confirmation of intervention by the Japanese authorities, according to estimates by Bloomberg, this time on the intervention on Monday, 29 April, 5.5 trillion yen was spent, and on 01 May, according to calculations by the Itochu Institute, another 5 trillion yen.

And now the question arises: what next? The effect of the autumn interventions of 2022 lasted a couple of months – already at the beginning of January 2023, the yen began to weaken again. So it is quite possible that in a few weeks or months, we will again see USD/JPY around 160.00.

The BoJ's statement following the latest meeting stated that "the prospects for economic and price developments in Japan are extremely uncertain" and "it is expected that relaxed monetary policy will be maintained for some time." There is currently no need to raise the interest rate as core inflation is significantly and sharply decreasing, it has fallen from 2.4% to 1.6%. Especially since tightening monetary policy could harm the country's economy. The growth rate of GDP remains close to zero. Moreover, the public debt is 264% of GDP. (For comparison: the constantly discussed US public debt is half that – 129%). So the mentioned "some time" in the statement of the regulator may stretch for many months.

It is appropriate to recall BoJ board member Asahi Noguchi, who recently stated that the pace of future rate increases is likely to be much slower than global counterparts, and it is impossible to say whether there will be another increase this year. So a new strengthening of the yen is possible only in two cases – thanks to new currency interventions and thanks to the start of easing monetary policy by the Fed.

According to Japanese MUFG Bank economists, interventions will only help buy time, not initiate a long-term reversal. Bloomberg believes that the intervention itself will be effective only if it is coordinated, particularly with the USA. According to forecasts by analysts of this agency, this year USD/JPY may rise to approximately 165.00, although overcoming the mark at 160.00 may take some time.

After all these crazy ups and downs, the past week ended at a level of 152.96. The experts' forecast regarding its nearest future, as in the case with GBP/USD, gives no clear directions: a third are for its rise, a third – for its fall, and a third have taken a neutral position. Technical analysis instruments are also in complete disarray. Among the trend indicators on D1, the distribution of forces is 50% to 50%. Among the oscillators, 50% point south (a third are in the oversold zone), 25% look north, and 25% – east. Traders should keep in mind that due to such volatility; the magnitude of slippage can reach many dozens of points. The nearest support level is located in the area of 150.00-150.80, then follow 146.50-146.90, 143.30-143.75, and 140.25-141.00. Resistance levels are 154.80-155.00, 156.25, 157.80-158.30, 159.40, and 160.00-160.25.

No significant events regarding the state of the Japanese economy are expected next week. Moreover, traders should keep in mind that Monday, 06 May is another holiday in Japan – the country celebrates Children's Day.

CRYPTOCURRENCIES: BTC-2025 Target – $150,000-200,000

In the last review, we wondered where bitcoin would fall. Now we know the answer: on 01 May, it fell to the mark of $56,566. The last time the main cryptocurrency was valued this low was at the end of February 2024.

Bearish sentiments apparently arose because the trading volumes of new ETFs in Hong Kong turned out to be significantly lower than expected. Optimism in this regard has dried up. Against this backdrop, there began a withdrawal of funds from exchange-traded BTC-ETFs in the USA. Analysts from Fidelity Digital Assets, a leading issuer of one of these funds, noted a growing interest in selling and locking in profits from the side of long-term hodlers. For this reason, Fidelity revised its medium-term forecast for bitcoin from positive to neutral. According to CoinGlass monitoring, liquidations of long positions reached $230 million per day. Another negative factor for the market is called the geopolitical escalation in the Middle East, as a result of which investors began to flee from any high-risk assets. Instead, they began to invest capital in traditional financial instruments. In light of these events, the main beneficiaries in March-April were the dollar and US Treasury bonds, as well as precious metals.

Analysts from Glassnode hope that bullish sentiments will still prevail since the market prefers to "buy on the fall." However, they admit that the loss of support in the area of $60,000 may lead to further collapse of the BTC rate. Co-founder of CMCC Crest Willy Woo called support from short-term holders at the mark of $58,900 critical. After its breach, in Woo's opinion, the market risks transitioning to a bearish phase.

So, last week, both these lines of defense of the bulls were broken. What's next? In Glassnode, as a bottom, they call the level of $52,000. The founder of venture company Pomp Investments Anthony Pompliano believes that the price will not fall below $50,000. Another expert – Alan Santana does not exclude a failure to $30,000. All these forecasts indicate that in the coming months, investors may not see new historical maximums of BTC.

For example, legendary trader, analyst, and head of Factor LLC Peter Brandt with a probability of 25% admitted that bitcoin has already formed another maximum (ATH) within the current cycle. This happened on 14 March at the height of $73,745. The expert referred to the concept of "exponential decay." The latter describes the process of decreasing the amount of growth by a constant percentage over a certain period. "Bitcoin has historically traded within approximately a four-year cycle, often associated with halvings. After the initial bullish rally, there were three more, each being 80% less powerful than the previous one in terms of price growth," the specialist explains.

"In my analysis, I estimated the probability [of such a scenario] at 25%. But I trust more the report that I published in February. […] Building a cycle 'before/after halving' suggests that the current bullish trend will reach its peak in the range of $140,000–160,000 somewhere in the late summer/early fall of 2025," Peter Brandt clarified.

CEO of Quantonomy Giovanni Santostasi doubted the correctness of applying the theory of exponential decay in this particular case. "We have three data points if we exclude the period before [the first] halving and actually only two if we consider the ratios. This is not enough for any meaningful statistical analysis," Santostasi commented on the assumption expressed by Brandt. According to his own model of power dependence, the peak of the fourth cycle falls approximately in December 2025 at the level of ~$210,000.

Note that not only Giovanni Santostasi, but also many other participants in the crypto market, are counting on the continuation of the bull rally and reaching a new ATH. For example, the aforementioned Anthony Pompliano believes that within 12-18 months, the coin is waiting for growth to $100,000 with chances to reach $150,000-200,000. Analyst at Glassnode James Check hopes that at this stage, the BTC rate will reach $250,000. And Peter Brand himself in the mentioned February report called $200,000 as a potential landmark. At the same time, economists from QCP Capital believe that it is necessary to wait at least two months before assessing the effect of the past fourth halving. "The spot price grew exponentially only 50-100 days after each of the three previous halvings. If this pattern repeats this time, bitcoin bulls still have weeks to build a larger long position," their report states.

According to CEO of Morgan Creek Capital Mark Yusko, the appearance of exchange-traded BTC-ETFs has led to a significant change in demand. However, the full effect of this is yet to be felt. According to the businessman, the main capital flows will come from baby boomers, i.e., those born between 1946 and 1964, through pension accounts managed by investment consultants. The capital of baby boomers is estimated at $30 trillion. "I believe that within 12 months, $300 billion will flow into the crypto sphere – this is 1% of 30 trillion dollars. In fact, this is more money than has ever been converted into bitcoins in 15 years," Yusko shared his forecast, adding that the inflow could potentially increase the capitalization of the crypto market to $6 trillion.

Another forecast was given by specialists from Spot On Chain. According to their words, the analytical model developed by them is based on an extensive data set. In particular, it takes into account halvings, interest rate cycles, the ETF factor, venture investors' activity, and sales of bitcoins by miners. Using the artificial intelligence platform Vertex AI from Google Cloud, Spot On Chain obtained forecasts for the BTC price for the years 2024-2025.

During May-July, the price of the first cryptocurrency, according to their calculations, will be in the range of $56,000-70,000. This period is characterized by increased volatility. In the second half of 2024, with a probability of 63%, BTC will rise to $100,000. "This forecast signals the prevailing bullish sentiments in the market, which will be facilitated by the expected reduction in interest rates [by the US Federal Reserve]. This may increase the demand for risky assets such as stocks and bitcoin," representatives of Spot On Chain explained.

According to their words, there is a "convincing probability" of 42% that in the first half of 2025, digital gold will overcome the $150,000 mark, as the first cryptocurrency usually updates the historical maximum within 6-12 months after each halving. If we take the whole of 2025, the chances of growth to $150,000 increase to 70%.

Thus, as follows from the forecasts presented above, the main target range for bitcoin in 2025 is at the height of $150,000-200,000. Of course, these are just forecasts and not at all a fact that they will come true, especially if we take into account the opinion of the "funeral team" consisting of Warren Buffett, Charlie Munger, Peter Schiff, and other ardent critics of the first cryptocurrency. Meanwhile, at the time of writing this review, on the evening of Friday, 03 May, BTC/USD, taking advantage of the weakening dollar, grew to $63,000. The total capitalization of the crypto market is $2.33 trillion ($2.36 trillion a week ago). The Bitcoin Fear & Greed Index showed a serious drop – from 70 to 48 points and moved from the Greed zone to the Neutral zone.


NordFX Analytical Group
 

Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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April Results: A British Pound Trade Nets NordFX Client Over $25,000 in Profit

Brokerage firm NordFX has summarized the trading performance of its clients for April 2024. The efficacy of social trading services, PAMM and CopyTrading, as well as the earnings of the company’s IB-partners were also evaluated.

- This month’s highest profit was earned by a client from South Asia, account number 1765XXX, who made $26,757 from trading the GBP/USD pair.
- The second place in the TOP-3 was taken by their compatriot, account number 1751XXX, with earnings of $16,976 from gold trades (XAU/USD).
- The third step of the April podium was claimed by a trader from East Asia, account number 1609XXX, who traded not physical but digital “gold”: bitcoin. It was the BTC/USD pair transactions that enabled them to profit by $14,301.

The passive investment services at NordFX showed the following trends:

- In the PAMM service, we continue to monitor the account named Kikos2. Opened on November 18 last year, now after 162 days of operation, it shows a fantastic profit of 1161%. While this result is impressive, the aggressive trading strategy has also led to a substantial drawdown of 58%. Unrelenting statistics demonstrate that even more conservative trading can lead to a complete loss of funds. Therefore, investors must always exercise utmost caution and only risk the money whose loss will not disrupt their normal life. We will continue to monitor and see what happens with this account in May. 

- In CopyTrading, we have previously highlighted the signal yahmat-forex, which has shown a return of 415% over 312 days with a maximum drawdown of 37%. Another interesting signal called NordFXSrilanka has made a profit of 39% in 113 days, specifically since January 6, 2024. While not as impressive as yahmat-forex, its notable advantage is a very small drawdown: just about 9%.

Among the IB-partners of NordFX, the TOP-3 are as follows:
- The largest commission reward of $22,732 was credited to a partner from Western Asia, account number 1645XXX.
- The next is a partner from South Asia, account number 1682XXX, who received $5,224.
- Finally, rounding out the top three is their compatriot, account number 1565XXX, who was rewarded with $3,614.

***

As we conclude this month, it is important to note that NordFX clients now have yet another excellent opportunity to enhance their financial portfolio. In the 2024 super lottery, 202+4 cash prizes totaling $100,000 will be awarded. Participating in the lottery and securing a chance to win one or even several of these prizes is quite simple. For more details, visit the NordFX website.


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex and Cryptocurrency Forecast for April 29 - May 3, 2024

EUR/USD: Inflation Persists, US GDP Growth Slows

The US economy remains the most powerful on the planet. Moreover, its share of global GDP has reached a nearly two-decade high of 26.3%. According to the IMF, from 2018, the European Union's share decreased by 1.4%, Japan's by 2.1%, while the United States increased by 2.3%. China's GDP is 64% of the American figure, down from 67% five years ago. As a result, the dollar remains the undisputed leader among G10 currencies, with no contenders for its throne in the foreseeable future. The strength of the national economy, coupled with a robust labour market, allows the Federal Reserve to focus on combating inflation, aiming to reduce it to the target 2.0%. According to Jerome Powell, head of the US Central Bank, easing monetary policy under current conditions would have far more negative consequences for the economy than maintaining it tight over a long period. Against this backdrop, the likelihood of a dollar interest rate cut at the Fed's June meeting, according to the FedWatch Tool, fell to 15%. Market participants believe that, at best, a decision to change the current policy may be taken in September. Some economists, including analysts from Morgan Stanley and Societe Generale, even suggest that the Fed may delay the first rate cut until early 2025. Such forecasts led to the US currency rising to five-month highs in mid-April against the euro, British pound, Australian, and New Zealand dollars, with USD/JPY once again reaching a 34-year price record and the DXY index climbing to 106.42.

However, that was in mid-April. For the last ten days of the month, the DXY was under bearish pressure, pushing EUR/USD upward. Jerome Powell stated that decisions on rate cuts are not made in advance but depend entirely on macroeconomic statistics. The statistics released in the last few days looked ambiguous, causing doubts that the US economy could maintain its previous positive dynamics. Tuesday's statistics on April 23, regarding US business activity and core durable goods orders, disappointed investors. Preliminary data from S&P Global showed that the Business Activity Index (PMI) in the US services sector unexpectedly fell from 51.7 to 50.9 points. The manufacturing sector's indicators were even worse, where the PMI crossed the threshold, separating progress from regression. In April, this indicator fell from 51.9 to 49.9 (forecast 52.0). These data alone are not as significant as labor market or inflation reports, but two days later, on April 25, they were supplemented by equally disappointing US GDP data. The preliminary estimate showed that US economic growth in Q1 was only 1.6%, lower than the forecast 2.5% and previous 3.4%. Compared to the same quarter in 2023, GDP growth decreased from 3.1% to 3.0%. Against this backdrop, the DXY, and with it EUR/USD, underwent a correction, with the pair rising to 1.0752.  

It should be recalled that the US inflation data released on April 10 showed that the Consumer Price Index (CPI) reached 3.5% year-on-year, the highest in six months. On Friday, April 26, the Bureau of Economic Analysis reported that inflation measured by the change in the Personal Consumption Expenditures (PCE) Price Index in March rose to 2.7% (year-on-year). The core PCE, which excludes volatile food and energy prices, instead of the expected decrease to 2.6%, remained at the previous level of 2.8%. Thus, on the one hand, we see that inflation is resistant and does not want to go down, and on the other hand, we observe a slowdown in GDP growth. According to our forecasts, faced with such a crossroads, the Fed will still not deviate from its previous path and will choose to fight price growth. Moreover, the decrease in GDP in Q1 should not overly alarm the regulator, as the US economy had been expanding at 2% and more for seven consecutive quarters, despite the aggressively tight monetary policy of the Fed. Moreover, recent labor market data looks very positive. The number of initial unemployment claims decreased from 212K to 207K (forecast 214K) – a minimum since February.

On Tuesday, April 23, the same day as in the US, preliminary data on business activity came out from the other side of the Atlantic. In Germany, the Manufacturing PMI rose from 41.9 to 42.2, and in the services sector – from 50.1 to 53.3, the Composite Index – from 47.7 to 50.5. Regarding the Eurozone as a whole, a positive dynamic was also noted. Thus, the Business Activity Index in the services sector rose from 51.5 to 52.9 points, the Composite Index from 50.3 to 51.4. The exception was the Manufacturing PMI (a decrease from 46.1 to 45.6). As for forecasts about the start of easing monetary policy by the European Central Bank, the emphasis is still on June. This was once again confirmed by the president of the German Bundesbank and a member of the ECB's Governing Council, Joachim Nagel, who stated on April 24 that a rate cut in June does not necessarily imply a series of rate cuts. In other words, in June – yes, there will be a cut, what happens next – is still unknown.

All of the above indicates that the fundamental indicators are still on the side of the dollar. The EUR/USD correction is likely to be limited and will not be powerful or prolonged. Last week, the pair closed at 1.0692. According to economists from the Singapore-based United Overseas Bank, it is unlikely to have the strength to break through the resistance at 1.0765. As for the forecast for the near future, as of the evening of April 26, 50% of experts expect the dollar to strengthen, 35% – its weakening, the remaining 15% maintained neutrality. Among the trend indicators on D1, 65% are on the side of the bears, 35% – are coloured green. Among the oscillators, a third are on the side of the bears, a third – on the side of the greens, and a third – are painted in neutral gray. The nearest support for the pair is located in the zone of 1.0680, then 1.0600-1.0620, 1.0560, 1.0495-1.0515, 1.0450, 1.0375, 1.0255, 1.0130, 1.0000. Resistance zones are located in the areas of 1.0710-1.0725, 1.0740-1.0750, 1.0795-1.0805, 1.0865, 1.0895-1.0925, 1.0965-1.0980, 1.1015, 1.1050, 1.1100-1.1140.

 The coming week promises to be quite turbulent and volatile as it is filled with various important events. On Monday, April 29, preliminary data on consumer inflation (CPI) in Germany will be released. The next day, another batch of German statistics will be released, including GDP and retail sales figures. On the same day, we will learn the preliminary volume of GDP and the level of inflation in the Eurozone as a whole. On Wednesday, May 1, Germany and many other EU countries will have a holiday – Labor Day. However, the United States will continue to work on this day. First, the ADP report on employment levels in the private sector of the country and indicators of business activity in the manufacturing sector will be published. The most important event will undoubtedly be the meeting of the FOMC (Federal Open Market Committee) of the US Federal Reserve on Wednesday, May 1, and the subsequent press conference of the management of this regulator. In addition, on Friday, May 3, we traditionally await another batch of very important statistics from the American labor market, including the unemployment rate and the number of new jobs created outside the agricultural sector (NFP), as well as revised data on business activity (PMI) in the US services sector.

GBP/USD: US PCE Hindered the Strengthening of the Pound

The preliminary statistics on business activity in the United Kingdom released on Tuesday, April 23, were mixed. The PMI in the manufacturing sector of the country crossed from above to below the growth/fall boundary, and with a forecast and previous value of 50.3 points, it actually fell to 48.7. In the UK services sector, on the other hand, there was growth in April – the indicator rose from 53.1 to 54.9 (market expectations 53.0). As a result, the Composite PMI reached 54.0 (52.8 a month earlier). However, all these figures did not attract much attention from investors.

On April 22, GBP/USD fell to 1.2300. The bulls on the pair took advantage of the dollar's overbought condition to return it to the lower boundary of the medium-term corridor of 1.2500-1.2800 in which it had been moving since the end of November last year. However, they did not have enough strength to consolidate within the corridor. The two-week maximum was recorded at 1.2540, after which, pushed by US PCE, the pair went down again and ended the five-day period at 1.2492.

According to specialists from United Overseas Bank, as long as the support at 1.2420 is not broken, there is still a possibility of the pound breaking through the 1.2530 mark. The next resistance, according to them, is at 1.2580. The median forecast of analysts regarding the behaviour of GBP/USD in the near future looks maximally uncertain: 20% voted for the movement of the pair to the south, the same amount – to the north, and the majority (60%) simply shrugged their shoulders. As for technical analysis, the trend indicators on D1 point south 65% and 35% look north. Among the oscillators, the picture is mixed: 25% recommend selling, 25% – buying, and 50% are in the neutral zone. In case of further decline of the pair, it will encounter support levels and zones at 1.2450, 1.2400-1.2420, 1.2300-1.2330, 1.2185-1.2210, 1.2110, 1.2035-1.2070, 1.1960, and 1.1840. In case of growth, the pair will encounter resistance at levels 1.2530-1.2540, 1.2575-1.2610, 1.2695-1.2710, 1.2755-1.2775, 1.2800-1.2820, 1.2885-1.2900.

No significant statistics on the state of the UK economy are planned for the week.

USD/JPY: Reached the Moon, Next Target – Mars?


We called the previous review "Higher and Higher". Now, it is worth asking at what altitude will this flight into space end? When will the Bank of Japan (BoJ) finally decide on a radical change in its monetary policy?

At the meeting on April 26, the members of the Japanese Central Bank unanimously decided to keep the key interest rate at the previous level of 0.0-0.1%. Moreover, the regulator removed from the statement the reference that it is currently buying JGB bonds for about 6 trillion yen per month. The statement after the meeting states that "the prospects for the development of the economy and prices in Japan are extremely uncertain," "if inflation rises, the Bank of Japan will likely change the degree of easing of monetary policy," however, "it is expected that the eased monetary policy will be maintained for some time."

The market predictably reacted to such decisions of the Japanese Central Bank with another Japanese candle on the chart of the USD/JPY pair. The maximum was recorded at 158.35, which corresponds to the peak values of 1990. There were no currency interventions to save the national currency, which many market participants feared. Recall that strategists from the Dutch Rabobank called the level of 155.00 critical for the start of such interventions by the Ministry of Finance of Japan. The same mark was called by 16 out of 21 economists surveyed by Reuters. The rest predicted such actions at levels of 156.00 (2 respondents), 157.00 (1), and 158.00 (2). USD/JPY has long exceeded the levels at which the intervention took place in October 2022 and where the market turned around about a year later. It now seems that 158.00 is not the limit. Perhaps it is worth raising the forecast bar to 160.00? Or immediately to 200.00?

USD/JPY ended the past week at 158.32. The forecast of analysts regarding the near future of the pair looks as follows: fear of currency interventions still prevails over 60% of them, while the remaining 40% are waiting for the continuation of the flight to Mars. Technical analysis tools clearly have no concerns about interventions. Therefore, all 100% of trend indicators and oscillators on D1 point north, although a third of the latter are in the overbought zone. The nearest support level is located in the area of 156.25, then 153.90-154.30, 153.10, 151.00, 149.70-150.00, 148.40, 147.30-147.60, 146.50. And it is practically impossible to determine resistance levels. We only note the reversal maximum of April 1990, 160.30, although this target is quite conditional.

No significant events regarding the state of the Japanese economy are expected in the coming week. Moreover, traders should keep in mind that Monday and Friday in Japan are holidays: April 29, the country celebrates the birthday of Hirohito (Emperor Showa), May 3 – Constitution Day.

CRYPTOCURRENCIES: Where Will Bitcoin Fall?

As expected, the fourth halving took place in the bitcoin network at block [You must be registered and logged in to see this link.] on April 20. The reward for finding a block was reduced from 6.25 BTC to 3.125 BTC. Recall that halving is a halving of the reward size for miners for adding a new block to the bitcoin blockchain. This event is embedded in the code of the first cryptocurrency and occurs every 210,000 blocks – until the moment when the mining of 21 million coins (presumably in 2040) ends the emission of cryptocurrency. It should be noted that the fourth halving will provide for the mining of approximately 95% of the entire bitcoin emission, about 99% of all coins will be mined by 2033-2036. Then, the emission will gradually move towards zero.

In the previous review, we promised to tell how the market would react to this important event. We promised – we report: the market reaction is close to zero. For several days after the halving, there was no growth in volatility. The price of bitcoin slowly and lazily moved first upward, reaching $67,269 on April 23, and then returned to where it began its weekly journey: to the $64,000 zone. It seems that market participants froze in anticipation of who would be the first to start buying or, conversely, selling the main cryptocurrency massively.

According to experts from Bitfinex, the post-halving supply restriction stabilizes the price of the first cryptocurrency and may contribute to its growth. "The reduction in the pace of bitcoin issuance after halving, which will amount to $30-40 million per day, contrasts sharply with the daily net inflow of $150 million into spot ETFs. This emphasizes a significant demand and supply imbalance, which may contribute to further price growth," stated the Bitfinex report.

However, analysts from QCP Capital believe that bitcoin optimists will have to wait at least two months before assessing the effect of the past fourth halving. "The spot price grew exponentially only 50-100 days after each of the three previous halvings. If this pattern repeats this time, bitcoin bulls still have weeks to create a larger long position," their report stated.

Anthony Pompliano, the founder of the venture company Pomp Investments, believes that within 12-18 months, the coin is expected to grow to $100,000, with chances of reaching $150,000-200,000. However, before moving to a bull rally, BTC/USD, in his opinion, is waiting for a correction down. At the same time, Pompliano believes that the price will not fall below $50,000. "I think we have already crossed this Rubicon," – he wrote.

The possible upcoming decline of the main cryptocurrency is probably a topic currently much more discussed than its subsequent growth. Many agree that bitcoin coins will appreciate in the long term. But how will quotes behave in the more foreseeable future? Fidelity Digital Assets, the leading issuer of one of the spot BTC ETFs, has already revised its medium-term forecast for bitcoin from positive to neutral. The reason for abandoning optimistic sentiments is several worrying trends in the crypto market. Fidelity analysts noted the growing interest in selling from long-term hodlers. Among them, there is currently a large percentage of profitable addresses, as noted in the company's report. This means that holders may want to lock in profits and start selling BTC. On the other hand, on-chain data indicates that small investors, on the contrary, continue to accumulate the first cryptocurrency. Since the beginning of the year, the number of addresses on which BTC is stored for at least $1,000 has increased by 20% and reached a new historical maximum. "Such a trend may indicate the growing dissemination of bitcoin and its acceptance among 'average' users," – Fidelity noted.

Specialists from CryptoQuant examined the SOPR indicator readings for these categories of investors and made conclusions similar to those of their colleagues from Fidelity. Investments in Bitcoin by "new" whales (owners of coins "aged" less than 155 days) almost doubled the indicator of "old" large players (more than 155 days). At the same time, the increased value of the metric showed that the profits of the "old" hodlers significantly exceed the indicators of the "newcomers". And if the "old-timers" move to fix profits, this may lead to the formation of price peaks. An analysis of the current picture, according to CEO of CryptoQuant Ki Young Ju, also speaks of the need to exercise caution in anticipation of possible corrections and increased volatility.

Recall that earlier, specialists from JPMorgan noted that digital gold is in a state of overbought. And co-founder of CMCC Crest Willy Woo noted that if the price of the first cryptocurrency falls below the support level of short-term holders at $58,900, the market risks moving into a bearish phase.

As of the evening of Friday, April 26, the BTC/USD pair is trading in the region of $63,950. The total capitalization of the crypto market is $2.36 trillion ($2.32 trillion a week ago). The Bitcoin Fear & Greed Index remained in the Greed zone, although it rose from 66 to 70 points.

Finally, in conclusion of the review, our long-forgotten crypto-life-hacks column. It turns out that in order to become a crypto millionaire, it is enough to have a marker and a piece of paper. The possibility of such a way of enrichment was proven by Christian Langlois, also known as Bitcoin Sign Guy. This guy made headlines in many news outlets after showing a notebook sheet with the inscription "Buy Bitcoin" behind the back of the Chair of the Federal Reserve System Janet Yellen. At that moment, the head of the Fed was giving testimony about the state of the US economy. This image instantly spread across the network and became one of the symbols of the emerging crypto industry.

For his misdemeanour, the 22-year-old intern Langlois was disgracefully expelled from the hearings. But after this episode was shown on television, enthusiasts sent 7 BTC to his crypto wallet to thank the guy for his bold move. Four years ago, Christian sold 21 copies of the "cult" sheet at an average price of 0.8 BTC, earning another 16.8 BTC. Thus, his total earnings reached 23.8 BTC, which is more than $1.5 million at the current exchange rate.

And a few weeks ago, Langlois was offered another 5 bitcoins for the original, but he refused to sell the sheet. Nevertheless, Christian liked the idea of further monetizing the self-created object of "artistic and historical heritage", and he decided to sell it at an auction, directing the proceeds to finance his startup Tirrel Corp. On April 25, 2024, the auction house Scarce.City reported that the lot, which became a popular meme, was sold for 16 BTC (more than $1 million).


NordFX Analytical Group
 

Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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Forex and Cryptocurrency Forecast for 22 – 26 April 2024

EUR/USD: A Pause After the Rally


Last week, 60% of analysts adopted a neutral stance in their previous forecast and were proven absolutely correct. EUR/USD had a calm week, even boring at times, moving along the 1.0650 mark within the narrow corridor of 1.0600-1.0690. Market participants were recuperating from the rally of the preceding days, with dollar bulls counting profits and bears licking their wounds. The American currency reached five-month highs against the euro, British pound, Australian, and New Zealand dollars, while USD/JPY once again set a 34-year price record, and the DXY index climbed to 106.42.

The macroeconomic data from the U.S., unmistakably inflationary in nature, started making an impact on March 8 with the employment report. NonFarm Payrolls exceeded expectations at 275K, compared to the previous 229K and the forecast of 198K, propelling the dollar upwards. Another boost came on April 10 with fresh U.S. inflation data showing a year-on-year Consumer Price Index (CPI) increase of 3.5%, the highest in six months, which quashed any expectations of a rate cut in June, sending the Dollar Index soaring.

Last week's macroeconomic figures only reinforced the image of a robust U.S. economy with a tight labour market. The number of unemployment benefit claims stayed at a relatively low level of 212K, and the manufacturing activity indicator hit its highest mark in two years. Retail sales data released on April 15 almost doubled the forecast at 0.4%, actually coming in at 0.7% month-on-month, following a 0.9% increase in February, with a year-on-year increase of 4.0%. These figures indicate that both manufacturers and consumers have well adapted to the high interest rates. Employment and income levels are sufficiently high, increasing the likelihood of price rises.

In this context, there is no reason for the Fed to start a cycle of monetary easing in June, especially since inflation is still far from the 2.0% target. Market participants are now expecting the first rate cut by 25 basis points in September, with another similar cut by the end of the year. These forecasts were confirmed by John Williams, the head of the New York Federal Reserve, who noted that the latest inflation data were disappointing and that there was no urgent need to cut interest rates. Consequently, U.S. Treasury yields and the dollar are rising, while stock indices such as the S&P 500, Dow Jones, and Nasdaq are on the decline.

Attempts by EUR/USD bulls to initiate a rebound were halted on April 18 at the 1.0690 level after Francois Villeroy de Galhau, Vice-President of the ECB and head of the Bank of France, confirmed that the European regulator would likely cut rates in June if there were no significant surprises. Even hawkish figures like Robert Holzmann, head of Austria's central bank, agreed with these dovish forecasts.

The pair closed the five-day period at 1.0656. Fundamental indicators still favour the dollar, and although a correction northward for the pair cannot be ruled out, it is unlikely to be substantial or prolonged. For the immediate future, as of the evening of April 19, 80% of experts anticipate further strengthening of the dollar, with the remaining 20% expecting a bounce upwards. Among trend indicators on D1, 90% are red, and 10% are green. All oscillators are red, though 15% of them are in the oversold zone. The nearest support for the pair is found at 1.0600-1.0620, followed by 1.0560, 1.0495-1.0515, and 1.0450, down to 1.0375, 1.0255, 1.0130, and 1.0000. Resistance zones are at 1.0680-1.0695, 1.0725, 1.0795-1.0800, up to 1.0865, 1.0895-1.0925, 1.0965-1.0980, and 1.1015, reaching up to 1.1050 and 1.1100-1.1140.

The upcoming workweek can be termed a week of preliminary data. On Tuesday, April 23, preliminary business activity data (PMI) will be released for various sectors of the economy in Germany, the Eurozone, and the USA. On Thursday, April 25, preliminary U.S. GDP figures for Q1 2024 will be released. This will be followed by the usual data on initial unemployment claims and, on April 26, data on personal consumption expenditures in the country.

GBP/USD: CPI Disappoints BoE

Last week's macroeconomic statistics from the United Kingdom were less than favourable. Unemployment unexpectedly rose to 4.2% from a forecast of 4.0%. Claims for unemployment benefits surged from 4.1K to 10.9K, although this was notably below the market's expectation of 17.2K.

The bigger surprise came from the inflation indicators released on Wednesday, April 17. General inflation (CPI) decreased from 3.4% to 3.2% year-on-year, and core inflation dropped from 4.5% to 4.2%, against a market expectation of 4.1%. The monthly CPI remained steady at 0.6%. Unexpectedly high food prices and a sharp increase in housing costs at 3.8% month-on-month contributed to the inflation surprise. Volatile items such as books and video games also saw significant price rises; book prices experienced the largest monthly increase ever recorded at 4.9%, while video games prices increased by 2.3%.

"Overall, this is not what the Bank of England (BoE) would have wanted to see," analysts at TD Securities commented. BoE Governor Andrew Bailey quickly reassured the public, stating, "We are virtually at the same inflation level as in February and I expect the data next month to show a significant drop." He also mentioned that the oil price hike had not been as steep as expected, and the impact of the Middle East conflict was less than feared.

Indeed, the price rise in airline tickets, which are significantly influenced by fuel costs, was just 0.1% month-on-month. Given the early Easter this year, this increase seems quite mild. However, BoE Monetary Policy Committee member Megan Greene expressed concerns about how energy prices and other supply shocks might affect inflation expectations in the future.

Recall that a week earlier, Megan Greene, in her column in the Financial Times, stated that inflation risks in the United Kingdom remain much higher than in the USA, and that 'markets are mistaken in their predictions regarding rate cuts [for the pound].' 'Markets have come to believe that the Fed will not start lowering rates so soon. In my view,' she wrote at the time, 'rate cuts in the United Kingdom should also not be expected anytime soon.' Following such remarks, just as with the dollar, markets anticipate no more than two rate cuts from the Bank of England this year, each by 25 basis points.

Last week, GBP/USD opened at 1.2448 and closed at 1.2370, failing to breach the key 1.2500 level. Analysts are divided on the pair's future movement: 80% foresee a further decline, while 20% predict a rebound. All D1 trend indicators and oscillators point downwards, though a third are signalling oversold conditions. If the pair falls further, support lies at 1.2330, 1.2185-1.2210, 1.2110, 1.2035-1.2070, 1.1960, and 1.1840. In case of a rise, resistance will be encountered at 1.2425, 1.2515, 1.2575-1.2610, 1.2695-1.2710, 1.2755-1.2775, 1.2800-1.2820, and 1.2885-1.2900.

The upcoming week will see the release of preliminary business activity data (PMI) for the United Kingdom almost simultaneously with Germany and the Eurozone on Tuesday, April 23. No other significant economic data from the United Kingdom is expected this week.

USD/JPY: Higher and Higher...

Last week, USD/JPY once again reached a 34-year high, peaking at 154.78. This level was last seen in 1990. According to economists at the Singapore-based United Overseas Bank (UOB), the pricing dynamics continue to suggest further strengthening of the dollar. "The upside risks remain as long as the dollar stays above 153.75, our strong support level," they wrote. "Should the price break above 155.00, focus will shift to 155.50." Meanwhile, strategists from the Dutch Rabobank believe that reaching 155.00 could significantly increase the risk of currency interventions by the Japanese Ministry of Finance to protect the yen from further weakening. According to the results of a survey published by Reuters, nearly all respondents (91%) believe that Tokyo will intervene at some point to stop further weakening of the currency. Sixteen out of twenty-one economists expect interventions in the USD/JPY at the level of 155.00. The rest predict similar actions at levels of 156.00 (2 respondents), 157.00 (1), and 158.00 (2).

Strengthening the national currency could involve tightening monetary policy by the Bank of Japan (BoJ), whose next meeting is scheduled for Friday, April 26. At its last meeting on March 19, the Japanese regulator made an unprecedented move by raising the rate from -0.1% to +0.1%, the first increase in 17 years. Asahi Noguchi, a BoJ board member, indicated that any future rate increases would likely occur at a much slower pace compared to recent tightenings by other global central banks. He noted that it would take a significant amount of time for a positive rate cycle to become firmly established, making it uncertain whether there will be another rate increase this year.

A Reuters poll showed that no economists expect a rate hike by the BoJ before the end of June. However, 21 out of 61 respondents believe that rates could be raised in the third quarter, and 17 out of 55 anticipate a fourth-quarter hike. Of a smaller sample of 36 economists, 19% think a July hike is possible, but October is the most likely time for an increase, with approximately 36% expecting it. In contrast, 31% believe the BoJ might take action in 2025 or later.

The pair closed the week at 154.63. Rabobank experts currently see the dollar being supported by demand for safe assets amid escalating Middle East tensions. A de-escalation between Israel and Iran could help temper the rise of the American currency. The median forecast surprisingly aligns with predictions for the two previously mentioned pairs: 80% of analysts expect further weakening (downward movement for this pair indicates a strengthening dollar), while 20% anticipate a rebound. All D1 trend indicators and oscillators point upwards, with 50% in the overbought zone. The nearest support level is around 154.30, with further support at 153.90, 153.50, 152.75, 151.55-151.75, 150.80-151.15, 149.70-150.00, 148.40, 147.30-147.60, and 146.50. Identifying resistance levels remains challenging after the pair's recent peaks, with the nearest resistance at 154.75-155.00, followed by 156.25. Additional benchmarks include the June 1990 monthly high around 155.80 and the April 1990 turnaround peak at 160.30.

Besides the aforementioned BoJ meeting, consumer inflation data for the Tokyo area will also be published on Friday, April 26. No other major events regarding the Japanese economy are expected next week.

CRYPTOCURRENCIES: Will China's BTC-ETF Ignite the Market?

This analysis is prepared just hours before the 'hour X': the scheduled halving on Saturday, April 20. We will detail the market's reaction to this significant event next week. Meanwhile, let's focus on the events leading up to it.

In the days leading up to the halving, the leading cryptocurrency did not bring joy to investors. Starting on April 8, the price of bitcoin was on a downward trajectory. The weekly decline in BTC was the largest in the past eight months, and in dollar terms, it was the steepest since the FTX exchange collapse in November 2022. Following bitcoin, other major altcoins also plummeted, losing about a third of their value. The local minimum for BTC/USD was recorded on April 17 at around $59,640. At that moment, analyst and co-founder of venture company CMCC Crest, Willy Woo, warned that if the price of bitcoin fell below the short-term holders' support level at $58,900, the market might enter a bear phase. However, this did not occur, and the price returned to around $62,000.

Analysts at CryptoQuant believe that the recent crash was necessary to reset unrealized trader profits to zero—a typical signal of a bottom in bull markets. Willy Woo suggested that "current bearish sentiments are actually a bullish sign," and that the next level where major short liquidations would occur is between $71,000 and $75,000. Renowned trader RektCapital reassured investors, stating that a price drop before the halving is a normal trend. "There is no need to panic, as this drop has occurred in all cycles. Don’t think that it’s different this time," he emphasized.

There were, however, other theories about the recent price drop. According to one, the fall in bitcoin was helped by the escalation of conflict in the Middle East and an attack by Iran on Israel. CEO of Galaxy Digital, Mike Novogratz, speculated that bitcoin could reach a new all-time high if the conflict in that region subsided. In this context, he urged world leaders to take control of the situation to prevent a further decline in prices for all financial assets, including cryptocurrency.

In contrast, Michael Saylor, president of MicroStrategy, believes that geopolitical tension will actually benefit bitcoin, suggesting that "chaos is good for bitcoin." Logically, this makes sense: cryptocurrency was born in response to the economic crisis of 2008, making it an alternative means of capital preservation during upheavals. (Note that MicroStrategy, with 205,000 BTC on its balance sheet, is the largest public holder of bitcoin and naturally interested in its price increase.)

OpenAI's ChatGPT did not overlook the international situation either. This Artificial Intelligence believes that if the crisis between Israel and Iran intensifies, the price of the main cryptocurrency will only slightly decrease, and this will be a short-term reaction. More severe impacts would likely be on assets like stocks. Bitcoin, however, is expected to quickly recover its position. ChatGPT, like Michael Saylor, anticipates that an initial drop will be followed by a bullish rally as investors look for a safe haven, potentially driving "digital gold" to a new historical high of $75,000. If the escalation in the Middle East becomes protracted and leads to a series of smaller conflicts, ChatGPT predicts the volatility range for bitcoin could expand: with an initial fall to $55,000 followed by a surge to $80,000.

It is worth noting that the discussed drop in BTC/USD occurred against the backdrop of a noticeable strengthening of the American currency. This was not only due to the dollar's role as a safe-haven asset amid geopolitical tension but also because of a postponement in market expectations regarding the timing of the Fed's easing of monetary policy. After the inflation data published on April 10, market participants decided that the first rate cut would not happen in June but in September, causing the Dollar Index (DXY) to surge sharply. Naturally, the strengthening of one asset in a currency pair led to the weakening of the other: the principle of leverage is irrefutable.

Now, a few words about what awaits the main cryptocurrency after the halving. This year, 75% of the investment influx has been provided by the newly launched spot bitcoin ETFs in the U.S. Their combined balance now totals $12.5 billion, with the U.S. accounting for over 95% of the global inflow into exchange-traded crypto funds. The interest in ETFs has been so strong that BlackRock's fund became the fastest-growing in history.

According to CryptoQuant analysts, the reserves of bitcoin on exchanges will last only a few months at the current rates. Total available exchange reserves have decreased by more than 800,000 BTC and have reached their lowest level in the history of two-year observations. As of April 16, they stand at about 2 million BTC. Assuming a daily influx into spot BTC-ETFs of about $500 million, which at current prices equates to approximately 8,025 coins, it would take just nine months to completely deplete these reserves.

The results of calculations using the Stock-to-Flow (S2F) model, which demonstrates the relationship between an asset's usage and its reserves, show that after the halving, the bitcoin S2F coefficient will reach 112 points. This is nearly twice the S2F for gold (60 points), indicating that by January 2025, bitcoin will become a more scarce commodity than the most popular precious metal.

In such a scenario, another powerful new driver could emerge. Following the U.S., similar investment inflows into cryptocurrency could be provided by spot ETFs in China. According to insider information from Bloomberg, the SEC of Hong Kong could make a positive decision on launching such funds within the next few days. And perhaps the predictions by ARK Invest's CEO, Cathy Wood, and author Robert Kiyosaki, who expect the price of bitcoin to reach $2.3 million per coin by 2030, are not so far from the truth.

As of the evening of Friday, April 19, BTC/USD is trading around $64,150. The total market capitalization of the crypto market stands at $2.32 trillion, down from $2.44 trillion a week ago. The Crypto Fear & Greed Index has dropped from 79 to 66 points, moving from the Extreme Greed zone to the Greed zone.

Finally, a bit of intriguing information for collectors. As it has been revealed, miners have begun active preparations for the "hunt" for the first "epic" satoshi to be mined after the current halving. Whoever mines it might receive a substantial sum, as the estimated value of this "collectible" digital coin could be several tens of millions of dollars. About two years ago, Casey Rodarmor, creator of the Ordinals protocol on the blockchain of the first cryptocurrency, developed a system for classifying the rarity of individual sats. With the launch of "inscriptions," it became possible to number and sell fractions of bitcoin similar to non-fungible tokens (NFTs). Rodarmor's scale varies from the first "unusual" satoshi in each block to the "mythical" – the very first in the history of the blockchain. One of the highest degrees of rarity is the "epic" sat, mined in the first block after each halving. It is possible that collectors might value such an asset even at $50 million. (Remember that a satoshi is one hundred millionth of a bitcoin (0.00000001), and at the current BTC price, the price of a regular, non-collectible sat is just $0.00064).


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Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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Forex and Cryptocurrency Forecast for 15 – 19 April 2024

EUR/USD: The Dollar Soars


Last week saw two significant events: the first shocked market participants, while the second passed without surprises. Let's examine the details in order.

Since mid-2022, consumer prices in the US have been declining. In July 2022, the Consumer Price Index (CPI) was at 9.1%, but by July 2023, it had fallen to 3.0%. However, in October, the CPI rose to 3.7%, then decreased again, and by February 2024, it had dropped to 3.2%. As a result, there was a general perception that inflation had finally been brought under control. The market consensus was that the Federal Reserve would soon begin to ease its monetary policy and start reducing interest rates in June. Two weeks ago, the likelihood of this move was estimated at 70%. The DXY index began to fall, reaching a local low of 103.94 on 9 April. However, the dollar bears' joy was short-lived, as fresh US inflation data released on Wednesday, 10 April, quickly changed the sentiment.

In annual terms, the Consumer Price Index (CPI) rose to 3.5%, marking the highest level in six months. The main drivers of this inflation increase were the rises in rental costs (5.7%) and transportation expenses (10.7%), which clearly caught the markets by surprise. The chances of a rate cut in June plummeted to zero, and the DXY dollar index soared, reaching a peak of 105.23 on the evening of 10 April. Alongside this, the yield on 10-year US Treasury bonds grew to 4.5%. As is typical in such scenarios, stock indices such as the S&P 500, Dow Jones, and Nasdaq declined, and the EUR/USD pair, after dropping over 150 points, fell to 1.0728.

Austan Goolsbee, President of the Chicago Federal Reserve Bank, stated that although the regulator is confidently moving towards its 2.0% inflation target, the Federal Reserve leadership still has much work to do to reduce inflation. His colleague, John Williams, President of the New York Fed, noted that the latest inflation data were disappointing and added that economic prospects remain uncertain.

As a result of these and other statements, it is now forecasted that the Fed will begin cutting interest rates only in September. Moreover, investors expect there will be only two rate cuts this year, not three. Some believe that there may not be any rate cuts at all in 2024. However, according to US President Joe Biden, the Fed should still lower the rate in the second half of this year. His insistent request is quite understandable on the eve of the presidential elections. Firstly, it would reduce the cost of servicing the country's enormous national debt, and secondly, it would symbolize a victory over inflation, giving Biden several additional points in the battle for the White House.

After the American inflation reaction, markets took a brief pause, awaiting the European Central Bank (ECB) governing council meeting on 11 April. The ECB has held rates steady at 4.50% since September 2023, which was in line with market expectations as forecasted by all 77 economists surveyed by Reuters. Thus, after some fluctuation, EUR/USD returned to its pre-ECB meeting level.

The ECB press release affirmed the council's firm intention to return inflation to a medium-term target of 2.0% and believed that the key rates contribute significantly to the ongoing disinflation process. Future decisions will ensure that the key rates remain at sufficiently restrictive levels as long as necessary.

It's worth noting that inflation in the 20 Eurozone countries was at 2.4% in March, slightly above the target of 2.0%. In February, the rate was 2.6%, and in January it was 2.8%. Economists surveyed by Reuters believe that inflation will continue to decrease in the coming quarters, but it will not reach 2.0% before the second quarter of 2025.

Christine Lagarde, the head of the European Central Bank (ECB), expressed a similar view during a press conference. However, she mentioned that since the Eurozone economy remains weak, to support it, the ECB will not wait for inflation to return to the 2.0% level at every point. Thus, Ms. Lagarde did not rule out that the regulator might start easing its monetary policy significantly before 2025. Strategists from the Italian bank UniCredit forecast that the ECB will cut rates three times this year, by 25 basis points each quarter. The pace of reduction could remain the same next year. Economists from Deutsche Bank also expect that the pan-European regulator will start cutting rates before the Federal Reserve and will do so at a faster pace. Consequently, the widening interest rate differential between the US and the Eurozone will contribute to the weakening of the euro.

This medium-term forecast was confirmed last Friday: EUR/USD continued its decline, reaching a local minimum of 1.0622 and closing the five-day period at 1.0640. The DXY index peaked at 106.04. As for the near-term outlook, as of the evening of 12 April, 40% of experts anticipate an upward correction of the pair, while the majority (60%) hold a neutral position. Among the oscillators on D1, only 15% are coloured green, and 85% are red, although a quarter of them are in the oversold zone. Trend indicators are 100% bearish. The nearest support levels for the pair are located in the zones 1.0600-1.0620, followed by 1.0495-1.0515, 1.0450, 1.0375, 1.0255, 1.0130, and 1.0000. Resistance zones are situated at levels 1.0680-1.0695, 1.0725, 1.0795-1.0800, 1.0865, 1.0895-1.0925, 1.0965-1.0980, 1.1015, 1.1050, 1.1100-1.1140.

Next week, on Monday, 15 April, US retail sales data will be released. On Wednesday, it will become clear what is happening with consumer inflation in the Eurozone. It is likely that the refined data will confirm the preliminary results, and the Consumer Price Index (CPI) for March will be reported at 2.4% year-on-year. On Thursday, we traditionally expect data on the number of initial jobless claims from US residents and the Philadelphia Fed Manufacturing Index.

GBP/USD: The Pound Plummets

On Friday, 12 February, the UK's GDP data indicated that the economy is on the path to recovery. Although production has declined compared to last year, the latest data suggests that exiting the shallow recession is quite likely. GDP has grown for the second consecutive month, with the Office for National Statistics (ONS) reporting a 0.1% increase in February on a monthly basis, with January's figures revised upwards to show a 0.3% growth from an earlier 0.2%.

Despite these figures, GBP/USD fell below the key 1.2500 mark due to crumbling hopes for an imminent Fed rate cut. Not even a statement from Bank of England (BoE) Monetary Policy Committee member Megan Greene, which highlighted that inflation risks in the UK remain significantly higher than in the US and that markets are mistaken in their rate cut forecasts, could change the situation. "Markets have leaned towards the Fed not cutting rates so soon. In my view, the UK will also not see rate cuts anytime soon," she wrote in her Financial Times column.

Following Greene's remarks, traders now expect no more than two rate cuts from the Bank of England this year, each by 25 basis points. However, this revised forecast did little to support the pound against the dollar, with GBP/USD ending the week at 1.2448.

Analysts are split on the short-term behaviour of GBP/USD: 50% voted for a rebound to the north, and 50% abstained from forecasting. Indicator readings on D1 suggest the following: among oscillators, 10% recommend buying, another 10% are neutral, and 80% indicate selling, with 20% of these signalling oversold conditions. All trend indicators are pointing downwards. If the pair continues south, it will encounter support levels at 1.2425, 1.2375-1.2390, 1.2185-1.2210, 1.2110, and 1.2035-1.2070. In the event of an increase, resistance will be found at levels 1.2515, 1.2575-1.2610, 1.2695-1.2710, 1.2755-1.2775, 1.2800-1.2820, 1.2880-1.2900, 1.2940, 1.3000, and 1.3140.

The most significant days for the British currency next week will be Tuesday and Wednesday. Extensive labor market data from the United Kingdom will be released on Tuesday, 16 April, along with a speech from the Governor of the Bank of England, Andrew Bailey. Wednesday, 17 April, could be even more turbulent and volatile as consumer inflation (CPI) data for the country will be published.

USD/JPY: Is 300.00 Just a Matter of Time?

Bears on USD/JPY continue to hope for its reversal southwards, yet the pair does not stop climbing. Our previous review titled "A Break Above 152.00 – A Matter of Time?" proved true within a very short period. Last week, the pair reached a 34-year high of 153.37, propelled by US inflation reports and increases in the DXY index and yields on 10-year US treasuries. (Considering that it traded above 300.00 in 1974, this is still not the limit).

This surge occurred despite another round of verbal interventions from high-ranking Japanese officials. Finance Minister Suzuki Shunichi reiterated his concern over excessive currency movements and did not rule out any options to combat them. Cabinet Secretary Yoshimasa Hayashi echoed these sentiments almost verbatim. However, the national currency no longer pays any attention to such statements. Only real currency interventions and significant steps towards tightening monetary policy by the Bank of Japan (BoJ) could help, but these have yet to occur.

Analysts at Dutch Rabobank believe the Japanese Ministry of Finance will eventually be forced to act to prevent the price from reaching 155.00. "While a breakthrough of the 152.00 level by USD/JPY might not immediately trigger currency interventions, we see a significant likelihood of such a step," they write. "Assuming that the Bank of Japan may announce a second rate hike later this year and considering expectations that the Fed will indeed cut rates in 2024, Rabobank expects USD/JPY to trade around 150.00 on a monthly horizon and 148.00 on a 3-month horizon.".

Last week, the pair closed at 152.26. Regarding its near future, 25% of experts sided with the bears, another 25% remained neutral, and the remaining 50% voted for further strengthening of the US currency and a rise in the pair. Technical analysis tools are apparently unaware of the fears regarding possible currency interventions, so all 100% of trend indicators and oscillators on D1 are pointing north, with a quarter of them now in the overbought zone. The nearest support level is around 152.75, followed by 151.55-151.75, 150.80-151.15, 149.70-150.00, 148.40, 147.30-147.60, and 146.50. Defining resistance levels after the pair updated 34-year highs is challenging. The nearest resistance lies in the zone 153.40-153.50, followed by levels 154.40 and 156.25. According to some analysts, the monthly high of June 1990 at around 155.80 and then the reversal high of April 1990 at 160.30 can also serve as references.

No significant events or publications regarding the state of the Japanese economy are planned for the upcoming week.

CRYPTOCURRENCIES: On the Eve of Hour X

The next halving, when the reward for mining a BTC block will again be halved, is scheduled for Saturday, 20 April. Although this date is approximate and may shift a day or two either way, the closer the Hour X, the hotter the discussions about how the price of the main cryptocurrency will behave before and after this event.

Historically, the value of bitcoin has risen after halvings: it surged by nearly 9000% to $1162 in 2012, by about 4200% to $19800 in 2016, and by 683% to $69000 following the previous halving in May 2020. However, it then crashed to nearly $16,000.

Lucas Kiely, CIO of the financial platform Yield App, believes that we should not expect a seven-fold increase in the price of bitcoin after the upcoming halving. According to Kiely, during the three previous cycles, the halving of miners' rewards heralded a massive increase in volatility levels. After the halving, BTC fell by 30-40% but then soared to unprecedented heights within 480 days. However, this year, he suspects, the cryptocurrency's flight to the Moon will not occur.

Kiely predicts that bitcoin will update its historical maximum reached this March at $73,743. However, the new peak will not exceed the previous one by as much as before, due to the low level of volatility. The specialist attributes the drop in volatility to two factors: 1. an increase in the number of bitcoins in the wallets of hodlers, who own more than 70% of the issued coins, and 2. the creation of spot Bitcoin ETFs, which remove a huge amount of coins from circulation. (In the three months since their inception, the capitalization of 10 such ETFs (excluding the Grayscale fund) has exceeded $12 billion). As a result, bitcoin is becoming a more traditional asset that is less risky but also less likely to yield massive profits. Kiely believes that this factor makes the coin more attractive to institutional investors and older people who prefer to invest in reliable assets and are not interested in gambling.

Ex-CEO of the BitMEX exchange, Arthur Hayes, expects a price drop. In his view, the halving is certainly a bullish catalyst for the crypto market in the medium term. However, prices might fall immediately before and after the event. "The narrative that the halving of block rewards will positively affect cryptocurrency prices has firmly taken root," says the expert. "However, when most market participants agree on a certain outcome, the opposite usually happens."

Hayes noted that the market would face a reduction in US dollar liquidity in the second half of April, driven by tax season, Fed policies, and the strengthening of the US Treasury's balance sheet. This reduction in liquidity will provide additional stimulus for a "furious sell-off of cryptocurrencies," he believes. "Can the market defy my bearish forecasts and continue to grow? I hope so. I have been involved with cryptocurrency for a long time, so I welcome being proven wrong."

The situation before this halving is indeed very different from before. This change is linked to the large influx of institutional investors through the newly launched Bitcoin ETFs in early January. The influence of ETFs on spot trading is clearly reflected in the reduced market activity on weekends and US public holidays when the exchange funds do not operate. The tax season has also significantly impacted the market for risky assets. Over the last two weeks, inflows into these funds have been significantly below the average mark of $203 million, with recent days seeing an outflow of funds from Grayscale and Ark Invest. Other ETFs are also reporting reduced inflows. All this suggests that Arthur Hayes' concerns are well-founded, and a 30% drop from the current price could send bitcoin down to around $50,000.

Miners, who will lose half their income after the halving, while the costs of obtaining the same amount of coins will increase, could also contribute to a market crash. After the halving in May 2020, the costs of mining rose to $30,000. Currently, the average cost of mining one BTC is $49,900, but after 20 April, according to Ki Young Ju, CEO of the analytical platform CryptoQuant, it will exceed $80,000. Therefore, the asset must trade above this level for miners to continue making any profit. However, as previously mentioned, a rapid price surge may not occur. This means that small mining companies and individual miners are facing a wave of bankruptcies and acquisitions.

According to Arthur Hayes, the situation might improve in May-June: the US Treasury will "most likely release an additional $1 trillion of liquidity into the system, which will pump the markets," he says. Anthony Scaramucci, CEO of Skybridge, also holds that spot Bitcoin ETFs, acting as "selling machines," will continue to stimulate demand for the first cryptocurrency from both retail customers and institutional investors. Scaramucci believes that in this cycle, bitcoin's value could increase by 2.5 times, and then continue to rise. "I'm just saying that the capitalization of bitcoin could reach half that of gold, i.e., increase six or even eight times from its current levels," the businessman declared. It's noteworthy that the current capitalization of bitcoin stands at $1.35 trillion, while gold's is at $15.8 trillion. Thus, if BTC reaches half the capitalization of the precious metal, its price would be around $400,000 per coin.

Brad Garlinghouse, CEO of Ripple, also places his hopes on spot Bitcoin ETFs. According to him, BTC-ETFs have attracted real institutional investments into the industry for the first time, so he is "very optimistic" about the macroeconomic trends in the crypto industry. In this context, Garlinghouse allowed that the market capitalization of digital assets could double by the end of the year, exceeding $5.0 trillion.

As of the evening of Friday, 12 April, BTC/USD is trading at around $66,900. The total capitalization of the crypto market is $2.44 trillion ($2.53 trillion a week ago). The Crypto Fear and Greed Index remains in the Extreme Greed zone at 79 points.

In conclusion, a bit of curious statistics: In anticipation of the halving, Deutsche Bank conducted a survey regarding the future price of bitcoin. 15% of respondents stated that within this year, BTC would trade in the range above $40,000 but below $75,000. A third of respondents were confident that the value of the main cryptocurrency would fall below $20,000 early in the next year. Meanwhile, 38% of those surveyed believed that BTC would cease to exist in the market altogether. And finally, about 1% of respondents called bitcoin a complete misunderstanding and speculation.


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Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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Forex and Cryptocurrency Forecast for 08 – 12 April 2024

EUR/USD: The Dollar Weakness Puzzle

What transpired with the EUR/USD pair last week? It behaved as expected on Monday, 01 April. However, starting from Tuesday, the situation deviated. Let's delve into the details. On the first day of April, data on business activity in the US industrial sector from the ISM for March showed the economy is on the rise: PMI increased from 47.8 to 50.3 points, crossing the 50-point threshold that separates growth from contraction. This marked the end of a downward trend lasting over 15 months. With this sector accounting for over 10% of the US GDP, the PMI growth is a vital indicator of an economy that easily withstands high interest rates. Thus, logically, this data benefited the dollar, pushing the pair to 1.0730 - its lowest since 15 February. The escalation of tensions in the Middle East also supported the strengthening of the American currency as a safe haven.

On the following day, Tuesday, preliminary data on inflation in Germany was released. The Consumer Price Index (CPI) in this powerhouse of the European economy showed a monthly increase of 0.4%, below the forecast of 0.6%. Year-on-year inflation slowed from 2.5% in February to 2.2% in March – the lowest since May 2021. The Harmonised Index of Consumer Prices (HICP) fell from 2.7% to 2.3%. Such a slowdown in inflation should have fuelled hopes for the ECB to soon start cutting rates, thereby weakening the euro further. However, instead of continuing its downward movement, EUR/USD reversed and moved north.  

Wednesday revealed that inflation is declining not just in Germany but across the Eurozone as a whole. Year-on-year, the preliminary Core Consumer Price Index dropped from 3.1% to 2.9%, surpassing the expectations of 3.0%, and the CPI fell from 2.6% to 2.4% (y/y). Despite this, EUR/USD continued its stubborn climb.

The dollar was not aided by another batch of strong data from the US either. Published macroeconomic figures showed that the number of JOLTS job openings rose to 8.756 million in February compared to 8.748 million the previous month, better than the market forecast. Moreover, the volume of manufacturing orders in February increased by 1.4% after a decrease of 3.8% at the beginning of the year.

A trend reversal began to emerge following speeches by US Federal Reserve officials. For instance, Loretta Mester, President of the Cleveland Fed, stated that the central bank sees a significant risk in easing national monetary policy too soon, especially in the context of a strong labour market and steady economic growth. Jerome Powell, Chair of the Federal Reserve, echoed this sentiment in a speech at the Stanford Graduate School of Business, reiterating that there is no rush to cut rates as inflationary risks persist.

The situation returned to a logical path with a new batch of data from the US labour market released on 04 and 05 April. According to the ADP report on employment levels in the private sector, employers hired 184K new workers in March, exceeding the forecast of 148K and the previous figure of 155K. The Bureau of Labor Statistics (BLS) added to the picture with information that non-farm employment (NFP) in the US rose by 303K. This significantly surpassed market expectations of 200K. The BLS report also showed that the unemployment rate in the country dropped to 3.8% from 3.9%.

Given all of the above, it can be expected that the Fed will not rush to ease its monetary policy. The likelihood of a rate cut in June dropped to 61% from 70% a week ago, and according to economists at Commerzbank, it is virtually nil. Naturally, such a shift in expectations should support the strengthening of the national currency. Yet, this has not occurred. EUR/USD has not managed to consolidate below 1.0800, and its last chord was played at 1.0836.

As for the short-term forecast, as of the writing of this review on the evening of Friday, 05 April, 50% of experts voted for the strengthening of the dollar and further decline of the pair. 10% sided with the euro, and 40% took a neutral stance. Among the oscillators on D1, only 15% are coloured green, 35% red, with the majority in a state of indecision, coloured neutral grey. The trend indicators have a 60:40 ratio in favour of the greens. The nearest support for the pair is located in the 1.0795-1.0800 zone, followed by 1.0725, 1.0680-1.0695, 1.0620, 1.0495-1.0515, and 1.0450. Resistance zones are at 1.0865, 1.0895-1.0925, 1.0965-1.0980, 1.1015, 1.1050, and 1.1100-1.1140.

This upcoming week, on Wednesday, 10 April, a whole set of data on consumer inflation (CPI) in the United States will be released. That same day, the Minutes of the last FOMC (Federal Open Market Committee) meeting of the US Federal Reserve will be published. The key day of the week will undoubtedly be Thursday, 11 April, when the European Central Bank (ECB) meeting is scheduled. Market participants' attention will be focused not only on the regulator's decisions on the interest rate but also on subsequent comments by its leadership. That day, the Producer Price Index (PPI) and the number of initial jobless claims from US residents will also be published. The working week will conclude with the publication on 12 April of the revised German CPI and the University of Michigan's US Consumer Sentiment Index.

GBP/USD: A Result Close to Zero

Last week, final data on the Business Activity Index in the UK for March were revised downwards. The Services PMI was reduced from 53.8 to 53.1, the lowest figure since November of the previous year. A survey of financiers who make decisions at the Bank of England (BoE) showed a slight decrease in inflation expectations to 3.2% (y/y) and an anticipated reduction in wage sizes over the next year. It is noteworthy that these forecast indicators have decreased for the first time in seven months. However, this did not significantly affect GBP/USD dynamics; the tone of its quotes was set by the Dollar Index (DXY).

Starting the past week at 1.2635, the pair finished it at 1.2637. Thus, the result of the week can be considered zero. Analysts' opinions on the behaviour of GBP/USD in the near future are divided as follows: the majority (60%) voted for the pair's fall, 40% remained neutral, and no one wished to side with the bulls. The indicators on D1 are as follows: among the oscillators, 50% recommend selling, 10% suggest buying, and the remaining 40% are in the neutral zone. Trend indicators point south by 60%, north by 40%. If the pair moves south, it will encounter levels and support zones at 1.2575, 1.2500-1.2535, 1.2450, 1.2375, 1.2330, 1.2085-1.2210, 1.2110, and 1.2035-1.2070. In case of an increase, it will face resistance at levels 1.2695, 1.2755-1.2775, 1.2800-1.2820, 1.2880-1.2900, 1.2940, 1.3000, and 1.3140.

The calendar for the upcoming week highlights Friday, 12 April, when GDP statistics for the United Kingdom will be released. No other significant events affecting the country's economy are scheduled for the coming days.

USD/JPY: A Break Above 152.00 – A Matter of Time?


For two and a half weeks, USD/JPY has been moving in a sideways channel, unsuccessfully attempting to rise above 152.00. Fear of possible currency interventions by the Japanese Ministry of Finance prevents the bulls from breaking this resistance. While actual interventions have not yet occurred, there has been plenty of verbal intervention from high-ranking Japanese officials. For example, Finance Minister Shunichi Suzuki once again stated that the authorities are closely monitoring the situation and do not exclude any options to combat excessive currency movements.

Despite such statements, the yen remains under pressure, increasing the likelihood of the pair's bullish trend continuing. According to strategists at the American bank Brown Brothers Harriman (BBH), the continuation of the upward rally is just a matter of time. They write that a very gradual tightening of the Bank of Japan's policy, coupled with a softer than previously anticipated Federal Reserve easing cycle, serves as a fundamental catalyst.

The market sentiment, according to several analysts, does not contradict BBH's forecast. Currently, according to statistics, most traders (up to 80%) are in sell positions for USD/JPY, which increases the chances of the market moving against the crowd.

The pair finished last week at 151.61. As for its near future, 80% of experts (i.e., the same percentage as the traders) sided with the bears for the pair, voting for further strengthening of the American currency, while the remaining 20% voted otherwise. Technical analysis tools are clearly unaware of fears regarding possible currency interventions. Therefore, all 100% of trend indicators and 85% of oscillators on D1 point north, with only 15% of the latter looking south. The nearest support level is located in the zone of 150.85, 149.70-150.00, 148.40, 147.30-147.60, 146.50, 145.90, 144.90-145.30, 143.40-143.75, 142.20, and 140.25-140.60. Resistances are placed at the following levels and zones – 151.85-152.00, 153.15, and 156.25.

No significant events related to the Japanese economy are scheduled for the upcoming week.

CRYPTOCURRENCIES: A Week of Unexpected Announcements

After bitcoin reached a new historical high of $73,743 on 14 March, BTC/USD sharply pulled back, losing approximately 17.5%. A local minimum was recorded at $60,778. This moment marked a record outflow of funds from exchange-traded funds, with bitcoin accounting for 96%. The departure of institutional capital from the crypto sphere overlapped with many investors and miners' desire to secure profits after updating the price record. At the peak, the realized profit exceeded $2 billion per day, with a third attributable to investors in Grayscale. Analysts at JPMorgan, in a note to investors dated 21 March, mentioned the overbought condition of the cryptocurrency and the risk of a continued correction.

However, a further downfall did not occur; the market sentiment changed. While crypto funds continued to lose assets, crypto exchanges registered an increase in the withdrawal of coins to cold wallets. Whales and sharks returned to accumulating the main cryptocurrency, expecting new BTC records in anticipation of or following the halving. If the net outflow amounted to $888 million in the week of 18-24 March, it changed to an inflow of $860 million in the week of 25-31 March. The record for coin accumulation by hodlers was 25,300 BTC per day. Bitcoin reached a high of $71,675 on 27 March.

The first half of the past week brought a new wave of sales; however, analysts at Coinshares believe that the absolute majority of investment companies and hedge funds are not interested in lowering BTC quotes, and whales will try to prevent a collapse below $60,000. The absence of new price records in those days was compensated by a series of if not sensational, then at least unexpected announcements made by crypto influencers.

For instance, CoinChapter reported that the head of Tesla and SpaceX, Elon Musk, declared meme coins Dogecoin (DOGE) the official currency of the colony to be built on Mars. "The brave colonists heading to the Red Planet will be rough and ruthless people. They won't drag gold bars with them. They will need a fast and fun currency that embodies the spirit of space travel. Dogecoin meets all these criteria," Musk said. One might expect such inspiring words to propel the token's price to cosmic heights, but this did not happen. Instead, it slightly declined. This may be related to the fact that the aforementioned information appeared on 1 April – April Fool's Day or All Fools' Day. Thus, it's possible that Musk was merely joking with his fans by assigning DOGE the status of Martian currency.

Attention was also drawn to a statement by the founder of the cryptocurrency exchange FTX, Sam Bankman-Fried (SBF), who was sentenced to 25 years in prison. Arrest did not prevent him from giving an interview to ABC News. In it, SBF stated that if he or another FTX employee had remained as CEO, the clients of the bankrupt exchange "would have long returned their money" at the current rate. Hence, the question arises: why not give Sam such an opportunity? Let him first compensate the clients for their losses and then go to jail.

Sam Bankman-Fried is far from the only notable crypto figure of interest to US law enforcement agencies. Changpeng Zhao, co-founder and former CEO of the Binance exchange, also faced court proceedings. However, last week, he made headlines not in the criminal chronicle but in Forbes' new billionaire ranking, where he placed 50th with a net worth of $33 billion. (Bloomberg's own index attributes Zhao with assets amounting to an even larger sum – $45.1 billion). Note that the Forbes list also includes other representatives of the crypto industry. For example, Brian Armstrong, co-founder and CEO of Coinbase, was ranked 180th with $11.2 billion. In total, the publication counted 17 entrepreneurs associated with cryptocurrencies with a net worth of over a billion dollars.

Another unexpected statement came from the pen of "Rich Dad Poor Dad" author and entrepreneur Robert Kiyosaki. He is widely known for his numerous constant calls not to save "fake dollars" that will soon turn into worthless paper but to buy gold, silver, and bitcoin. Kiyosaki repeated this mantra again this time, not ruling out that bitcoin could ... crash to zero! According to him, it's possible that the first cryptocurrency is as much a fraud or a Ponzi scheme as the US dollar, euro, yen, or any other "fake" fiat currency.

As of the writing of this review on the evening of Friday, 05 April, bitcoin quotes are far from zero; the BTC/USD pair is trading around $67,680. The total market capitalization of the crypto market has slightly decreased and stands at $2.53 trillion ($2.68 trillion a week ago). The Crypto Fear & Greed Index fell from 80 to 79 points, remaining in the Extreme Greed zone.

We have already detailed the history and meaning of halvings in a previous review. Now, we remind you that the upcoming fourth halving is expected to take place soon, most likely on 20 April. After this event, according to Mark Yusko, CEO of Morgan Creek Capital, "interest in the asset will increase – many will enter FOMO mode. We should see a twofold increase in fair value. In the current cycle, it stands at ~$75,000 with downward adjustments. [...] Thus, [by the end of the year] we get $150,000," he shared his calculations on CNBC. Yusko also believes that "historically, about nine months after the event, a price peak will be formed before the next bear market."

The senior manager called the first cryptocurrency the "dominant token" and the "best form of gold". Regarding long-term prospects, the expert stated that bitcoin "can easily" increase tenfold over the next decade. Separately, the head of Morgan Creek Capital mentioned that his hedge fund likes Ethereum, Solana, and Avalanche, although they fall short of the "king-bitcoin". Mark Yusko did not mention Elon Musk's "Martian" Dogecoin at all...

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World Forex Award Recognizes NordFX as Best Broker in Two Categories

Experts from one of the leading business awards organisations, the World Forex Award (WFA), have named NordFX as the winner in two categories: The Most Trusted Forex Broker and The Best IB Program 2024.

The award for The Most Trusted Forex Broker is particularly valuable because trust is a key aspect in the world of finance. When a company is acknowledged as the most reliable broker, it serves as a mark of quality for both potential and existing clients. It helps to strengthen the trust between the client and the broker, which is extremely important in the long term. Winning this award distinguishes the company among competitors and highlights its commitment to high standards of service and security. Victory in this category confirms that NordFX adheres to the best industry practices, ensuring a high level of customer service, transparency, and the protection of their interests.

Before reaching their verdict, WFA experts assessed how open, comprehensive, and timely the information provided by the company to interested parties was, and whether it was presented in a form that was understandable and necessary for making objective decisions. The role played by the fact that over its 16 years operating in financial markets, NordFX has always resolved any disputes that occasionally arose in its interactions with clients openly and, when necessary, with the involvement of independent experts, was also significant.

Equally valuable is NordFX's victory in The Best IB Program category. Since 2016, the company has received such awards repeatedly, year after year, confirming the high quality and efficiency of its partnership program, including excellent conditions for participants that encompass continuous support and impressive commissions. This has helped tens of thousands of program participants dramatically improve their lives. It's worth noting that in the past year, 2023, the actual earnings of NordFX's IB partners in the top 3 totalled USD 272,607, meaning that, on average, each partner earned USD 7,572 per month. In total, more than USD 35,000,000 was paid out in partnership rewards.


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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March 2024: NordFX Traders Yield Maximum Profits from Physical and Digital Gold

NordFX brokerage has summarized the trading performance of its clients for March 2024. The effectiveness of social trading services: PAMM and CopyTrading, as well as the profits earned by the company's IB partners, were also evaluated.

- The best result in March was achieved by a trader from Western Asia, account number 1654XXX, with a profit of 26,941 USD, achieved through transactions with gold (XAU/USD).

- The gold pair XAU/USD, along with the British pound and Japanese yen (GBP/USD and GBP/JPY), assisted a client from South Asia, account number 1723XXX, in securing the second place on the podium with a result of 24,778 USD.

- Third place went to a trader from across the Pacific, account number 1567XXX. Unlike physical gold, they traded in an asset commonly referred to as "digital gold" – bitcoin (BTC/USD), through which they were able to earn 24,531 USD.

In NordFX's passive investment services, the following situation has emerged:

In the PAMM service, we have previously drawn investors' attention to an account named Kikos2. After 135 days of operation, it has shown a profit of 548%. This is a very impressive result; however, with such aggressive trading, the maximum drawdown is also quite serious: about 60%.

Investors familiar with NordFX's passive investment services are likely aware of the accounts named KennyFXPRO, the oldest of which started over three years ago. This time, we would like to highlight another account from this group called KennyFXPRO - Road 250. Launched 120 days ago, it has shown a profit of more than 20%, with a very moderate maximum drawdown:less than 7%.

In CopyTrading, we continue to monitor the yahmat-forex signal, which has shown a return of 372% over 282 days with a maximum drawdown of 37%. Here, as usual, it's appropriate to remind that aggressive trading, besides high profit, also carries high risks and can lead to partial or total loss of the deposit. Therefore, we urge all traders and investors to exercise maximum caution when operating in financial markets.

Among NordFX's IB partners, representatives from South and West Asia have entered the top 3:
- The highest commission reward of 5,500 USD was awarded to a partner from South Asia with account number 1682XXX;
- Following was a partner from West Asia (account number 1645XXX), who received 5,053 USD;
- And finally, another partner from South Asia (account number 1593XXX) closes the top three leaders, having received a reward of 4,238 USD.

***

Concluding the month's review, it's worth reminding that NordFX clients now have another great opportunity to boost their budget. In the 2024 super lottery, 202+4 cash prizes will be drawn, totalling 100,000 USD. Becoming a participant in the lottery and getting a chance to win one or even several of these prizes is quite straightforward. All details can be found on the NordFX website.

Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex and Cryptocurrencies Forecast for March 25 - 29, 2024

EUR/USD: Switzerland Strengthens the Dollar

The key event of the past week was undoubtedly the FOMC (Federal Open Market Committee) meeting of the US Federal Reserve on March 20. As expected, the American Central Bank unanimously decided to maintain the key interest rate at its highest level in 23 years, 5.50%, for the fifth consecutive meeting. Since the rate was anticipated, market participants were significantly more interested in the comments and forecasts of the Fed's leadership. The most important statement came from the head of the regulator, Jerome Powell, who mentioned the consideration of three stages of borrowing cost reduction this year, totalling 75 basis points (bps). The long-term rate forecast was raised from 2.50% to 2.60%.

In comments following the meeting, solid growth in the United States economy was noted. The GDP forecast for this year was increased from 1.4% to 2.1%, and for 2025 from 1.8% to 2.0%. The labour market also appears to be in good health, with unemployment at a low level. According to the new forecast, it could reach 4.0%, compared to the previously expected 4.1%. The number of new jobs created outside of the agriculture sector (NonFarm Payrolls) in February was 275K, significantly exceeding both the previous figure of 229K and the forecast of 198K.

Regarding inflation, while it has eased, it remains "elevated," as noted in the statement. Consumer Price Index (CPI) figures for February showed a 3.2% increase on a year-over-year basis. Inflation is anticipated to settle at 2.4% by the end of 2024, with the core Personal Consumption Expenditures (PCE) index expected to be at 2.6%. Previously, both figures were forecasted to be 2.4% in December.

The comments emphasized that the long-term objective is to bring inflation down to 2.0% while achieving maximum employment. Thus, the Federal Reserve will remain vigilant about inflationary risks. Adjustments to monetary policy parameters may be made if factors emerge that obstruct its objectives. These factors include, but are not limited to, the labor market situation, economic growth, inflation in the US, the state of the global economy, and international events.

As already mentioned, the principal scenario for 2024 includes three rate reductions of 25 basis points each. Nonetheless, members of the FOMC have not discounted the possibility of there being just two or even one reduction. A survey by Reuters found that 72 out of 108 economists, or two-thirds, anticipate the first rate cut to occur in June, with the subsequent ones expected in the fall of this year.

The stock market responded positively to the outcomes of the Federal Reserve's meeting. The S&P 500, Dow Jones, and Nasdaq indices all moved higher, a reaction not mirrored by the Dollar Index (DXY), as news of the beginning of monetary policy easing did not please investors. As a result, EUR/USD surged sharply. However, on March 21, the American currency recouped its losses after the Swiss National Bank (SNB) unexpectedly reduced its key interest rate by 25 basis points to 1.5% at its quarterly meeting, contrary to market expectations of maintaining the rate at 1.75%.

"The easing of monetary policy was made possible thanks to the effective combat against inflation over the last two and a half years," the SNB stated. "Inflation has been below 2% for several months and is within the range that corresponds to the definition of price stability. According to the latest forecast, inflation is expected to remain within this range in the coming years."

Thus, the SNB became the first major central bank to start easing its policy after a long cycle of rate increases due to the COVID-19 pandemic. Consequently, traders "forgot" about the Fed's rate cut signals and began buying dollars, as they currently remain the only high-yield currency with a low risk level.

Support for the dollar towards the end of the working week was also provided by the business activity data in the US published on March 21. The S&P Global Composite PMI index increased to 52.5 from 52.2, and while the PMI index for the services sector decreased from 52.3 to 51.7, it remained above the 50.0 threshold that separates economic growth from contraction. Meanwhile, the Philadelphia manufacturing sector business activity index exceeded forecasts, reaching 3.2, and the number of initial jobless claims in the US for the week fell from 215K to 210K.

EUR/USD concluded the past five-day week at a mark of 1.0808. Regarding the forecast for the near future, as of the writing of this review on the evening of Friday, March 22, 50% of experts voted for the strengthening of the dollar and further decline of the pair. 20% sided with the euro, and 30% took a neutral stance. Among the oscillators on D1, only 15% are coloured green, 85% are coloured red, with a quarter of them indicating the pair is oversold. For trend indicators, the greens have 10%, while the reds hold an absolute majority of 90%. The nearest support for the pair is located in the zone of 1.0795-1.0800, followed by 1.0725, 1.0680-1.0695, 1.0620, 1.0495-1.0515, and 1.0450. Resistance zones are found in the areas of 1.0835-1.0865, 1.0900-1.0920, 1.0965-1.0980, 1.1015, 1.1050, and 1.1100-1.1140.

The upcoming trading week will be shorter than usual due to Good Friday in Catholic countries, where banks and stock exchanges will be closed. It will also be the last week of the month and the first quarter. Market participants will be summarizing the quarter, and there will be few important statistical releases. Nevertheless, notable in the calendar is Thursday, March 28, when data on retail sales in Germany will be released, as well as revised annual data on the US GDP and the volume of jobless claims. On Friday, March 29, despite the holiday, statistics on the consumer market in the United States will be released, and Federal Reserve Chair Jerome Powell is scheduled to speak.

GBP/USD: BoE Hawks Morph into Doves

Data on consumer inflation in the UK, released on Wednesday, March 20, a day ahead of the Bank of England (BoE) meeting, indicated a slight deceleration and fell a bit below expectations. The year-on-year CPI slowed from 4.0% to 3.4%, against the anticipated 3.5%. February's core CPI, on an annual basis, dropped to 4.5% after three months of stability at 5.1%. Conversely, the CPI saw a month-on-month increase of 0.6% following a decline of the same magnitude in January, yet this increase still fell short of the market's 0.7% expectation. February saw producer purchase prices decrease by 0.4%, with a year-on-year loss of 2.7%, returning to levels seen in May 2022 due to decreases in energy, metals, and some agricultural product prices.

Just a few hours before the regulator's meeting, preliminary business activity data were also released, showing positive but mixed results. The Manufacturing PMI rose to 49.9, closely approaching the critical 50.0 mark (with a forecast of 47.8 and a previous value of 47.5). The services sector index, in contrast, dropped from 53.8 to 53.4, despite expectations that it would hold steady. Consequently, the Composite PMI edged down from 53.0 to 52.9, remaining within the growth zone of the economy.

Regarding the Bank of England's meeting on Thursday, March 21, as expected, the regulator kept the key interest rate for the pound unchanged at 5.25% for the fifth consecutive meeting. The Governor, Andrew Bailey, stated that the economy has not yet reached the stage where rates can be lowered but added that everything is moving in the "right direction."   

The surprise came when two members of the BoE's Monetary Policy Committee, who had previously voted for a rate increase, reversed their position, leading to renewed selling of the pound. According to economists at Japan's MUFG Bank, the voting outcome "justifies an increased likelihood of an earlier rate cut than we had anticipated. [...] Whether the Bank of England makes the final decision in June or August remains an open question. We maintain our view that there will be a rate cut of 100 basis points this year." "The pound could suffer further in the short term if the market's conviction in a June rate cut strengthens, along with the potential magnitude of rate cuts for this year," the MUFG specialists added.

"Indeed, the Bank of England has taken another step towards reducing interest rates," echo their colleagues at Germany's Commerzbank. "But whether this will happen sooner than expected, simply because none of the policymakers voted for a rate increase, is not entirely clear yet." Commerzbank believes that "against the backdrop of the overall dovish sentiment triggered by the SNB's unexpected rate cut, the pound ended up on the losing side and became the second-worst currency. Also, depending on market sentiments, it has the chance to become one of the most vulnerable currencies."

Starting the past week at a level of 1.2734, GBP/USD concluded it at 1.2599. Analyst opinions on its near-term direction were split: half (50%) voted for the pair's decline, 25% for its rise, and 25% maintained neutrality. The indicator readings on D1 are exactly the same as for EUR/USD. Among oscillators, only 15% look north, 85% south, with a quarter of them signalling the pair is oversold. For trend indicators, 10% recommend buying, and 90% selling. Should the pair move southward, it will encounter support levels and zones at 1.2575, 1.2500-1.2535, 1.2450, 1.2375, 1.2330, 1.2085-1.2210, 1.2110, 1.2035-1.2070. In the event of an upward movement, resistance will be met at levels 1.2635, 1.2730-1.2755, 1.2800-1.2820, 1.2880-1.2900, 1.2940, 1.3000, and 1.3140.

No significant events related to the economy of the United Kingdom are scheduled for the upcoming week. Traders should also bear in mind that March 29 is a public holiday in the country due to Good Friday.

USD/JPY: How the BoJ Sank the Yen

In theory, if the interest rate rises, the currency strengthens. But that's just in theory. Reality can differ significantly, as demonstrated by the Bank of Japan's (BoJ) meeting on Tuesday, March 19.

Until that point, the BoJ had been the only central bank in the world to maintain a negative interest rate level of -0.1% since February 2016. Now, for the first time in 17 years, the regulator raised it to a range of 0.0-0.1% per annum. It also abandoned control over the yield of ten-year government bonds (YCC). As media reports, this move "represents a departure from the most aggressive and unconventional monetary easing policy we have seen in modern history." Yet, following this momentous decision, instead of appreciating, the yen ... plummeted, and USD/JPY reached a high of 151.85. Analysts believe this happened because each of these central bank actions met market expectations and had already been priced in.

Data on inflation in Japan for February, published towards the end of the workweek, offered some support to the Japanese currency. The country's Statistical Bureau reported that the annual national Consumer Price Index (CPI) rose by 2.8%, up from 2.2% previously. As a result, investors concluded that the persistence of price pressure above the target level of 2.0% would allow the Bank of Japan to maintain interest rates at a positive level.

However, maintaining rates does not mean increasing them. And as economists from ING, the largest banking group in the Netherlands, wrote, the yen's position depends more on the Federal Reserve's rate cuts than on a rate hike by the BoJ. They stated: "It will be difficult for the yen to sustainably strengthen beyond volatility around the rate hike until rates in the US are lowered."

The yen received another, but very weak, support from growing speculations about possible intervention by the Japanese government in the currency sphere, in simpler terms, about currency interventions. Japan's Finance Minister, Shunichi Suzuki, did declare that currency movements should be stable and that he is closely monitoring exchange rate fluctuations. However, these were merely words, not concrete actions, thus they didn't significantly aid the national currency. As a result, the week concluded with the pair marking the final note at 151.43.

Regarding the near future of USD/JPY, the bearish camp for the pair comprises 50% of experts, 40% remain undecided, and 10% voted for further strengthening of the US currency. Technical analysis tools seem to be unaware of rumours about possible currency interventions. Consequently, all 100% of trend indicators and oscillators on D1 are pointing upwards, with 20% of the latter in the overbought zone. The nearest support levels are found at 150.85, 149.70, 148.40, 147.30-147.60, 146.50, 145.90, 144.90-145.30, 143.40-143.75, 142.20, and 140.25-140.60. Resistance levels and zones are located at 151.85-152.00, 153.15, and 156.25.

On Friday, March 29, the Consumer Price Index (CPI) values for the Tokyo region will be published. Besides this, no other significant events related to the Japanese economy are scheduled for the coming days.

CRYPTOCURRENCIES: Bitcoin – The Calm Before the Halving


After bitcoin reached a new all-time high of $73,743 on March 14, a wave of selloffs and profit-taking by short-term speculators followed. BTC/USD sharply retreated, losing approximately 17.5%. A local minimum was recorded at $60,778, after which the leading cryptocurrency, in anticipation of the halving, began to gain momentum again.

It's worth recalling that a halving is an event that occurs approximately every four years, after another 210,000 blocks have been mined, and results in the mining reward for a new block in the bitcoin blockchain being cut in half. This naturally raises the question: why is this done? The halving is designed as a mechanism to combat inflation. As miners' rewards decrease, fewer new coins are produced with each round. This is intended to maintain a scarcity of bitcoin in the market and positively impact the token's price from a supply and demand perspective.

The total issuance of bitcoin is capped at 21 million coins. As of December 2023, miners have already extracted 19.5 million coins, which is nearly 93% of the total volume. Halvings will continue until the last bitcoin is mined, which is forecasted to occur sometime between 2040 and 2048. In 2040 (the 8th halving), miners' rewards will be 0.1953125 BTC, and in 2048 (the 10th halving) – 0.048828125 BTC. After this, miners will earn income solely from transaction fees. The upcoming, fourth halving is most likely to take place on April 20 this year, with the reward for mined blocks decreasing from 6.25 BTC to 3.125 BTC.

Thanks to the hype surrounding spot bitcoin ETFs and the FOMO (Fear of Missing Out) effect in anticipation of the halving, a certain scarcity of the main cryptocurrency is already observable. According to Bitcointreasuries, a significant portion of BTC is owned by state and private investment companies, governments, exchange and investment funds. In total, they hold approximately 12% of the total volume of bitcoins. About 10% is stored on centralized cryptocurrency exchanges, and another 8.09% belongs to accounts that have been inactive for many years. Adding to these figures the share of the asset attributed to bitcoin's founder, Satoshi Nakamoto (4.76%), it can be concluded that about 35% of mined coins are already unavailable to other private investors.

Grayscale Bitcoin Trust, iShares Bitcoin Trust, and Fidelity Wise Origin Bitcoin Fund lead in terms of bitcoin ownership volumes with 380,241 BTC, 230,617 BTC, and 132,571 BTC, respectively. MicroStrategy has become the largest holder of bitcoins among public companies with 205,000 BTC on its balance sheet. Marathon Digital holds the second position with 15,741 BTC, while Tesla and Coinbase Global share the third and fourth places with 9,720 BTC and 9,480 BTC, respectively. Among other, non-public, private companies, Block.one leads in ownership level with 164,000 BTC, according to available information. It is followed by the MTGOX exchange with a balance of 141,686 BTC. Stablecoin issuer Tether owns 66,465 BTC. The fourth position is taken by the BitMEX exchange with 57,672 BTC.

In the ranking of bitcoin ownership among countries, the USA leads with 215,000 BTC, followed by China with 190,000 BTC, the UK with 61,000 BTC, and Germany with 50,000 BTC.

Analysts at Standard Chartered Bank have revised their bitcoin price target for the end of 2024 from $100,000 to $150,000, with ethereum potentially reaching $8,000 by the same period. By the end of 2025, the first and second cryptocurrencies could appreciate to $200,000 and $14,000, respectively. The specialists justify their forecast by the dynamics of gold following the approval of bitcoin ETFs and the optimization of the precious metal to its digital counterpart in an 80% to 20% ratio.

According to Standard Chartered experts, bitcoin could appreciate further – up to $250,000 – if inflows into ETFs reach $75 billion. Sovereign investment funds' actions could also accelerate growth rates. "We see an increasing likelihood that major reserve managers might announce bitcoin purchases in 2024," say the bank's analysts.

Dan Tapiero, CEO of investment firm 10T Holdings, mentioned a similar figure – $200,000. "I don't think it's that crazy," he stated. According to the financier's calculations, the potential to triple from the current price roughly corresponds to the percentage difference between the peaks of 2017 and 2021. Furthermore, from the bear market lows to the 2021 peak, digital gold increased in value 20 times. This suggests a $300,000 target as a positive scenario.

"It's hard to pinpoint exact markers and timing in these matters. I think we will reach that [zone] within the next 18-24 months, perhaps even sooner," Tapiero believes. "The supply cut during the rapid increase in demand for ETFs along with the halving indicate a significant growth potential. I think the first cryptocurrency will pull the rest along with it." The CEO of 10T Holdings also noted "good chances" for the approval of ETFs based on Ethereum. However, he hesitated to say whether these ETFs would be registered in May or if it would happen later.

OpenAI's ChatGPT, when asked whether the BTC price could reach the $100,000 mark before the halving, deemed this target plausible. According to the AI's calculations, the recent correction does not affect growth prospects and only confirms the inaccuracy of short-term forecasts. ChatGPT estimated the probability of reaching $100,000 at 40%, while the likelihood of hitting the $85,000 mark was assessed at 60%.

As of the writing of this review, on the evening of Friday, March 22, BTC/USD is trading around $63,000. The total market capitalization of cryptocurrencies has decreased to $2.39 trillion (from $2.58 trillion a week ago). The Crypto Fear & Greed Index has dropped from 83 to 75 points, moving from the Extreme Greed zone to the Greed zone.

Despite the recent halt in bitcoin's decline, some experts do not rule out the possibility that BTC/USD could take another dip southward. For instance, Kris Marszalek, CEO of Crypto.com, believes that the current volatility of BTC is still low compared to previous cycles. This implies that with an increase in volatility, not only new highs but also new lows could be set.

Analysts at JPMorgan believe that bitcoin could fall by 33% after the halving. Meanwhile, Mike Novogratz, CEO of Galaxy Digital, is confident that the floor is at $50,000, and the price of the coin will never fall below that level unless some dramatic event occurs. According to him, bitcoin's growth is primarily driven by investors' insatiable appetite for the token, rather than macroeconomic factors such as the policy of the US Federal Reserve. This was evidenced by the fact that the price of bitcoin hardly noticed the Federal Reserve's meeting on March 20.


NordFX Analytical Group
 

Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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Forex and Cryptocurrencies Forecast for March 18 - 22, 2024

EUR/USD: Stubborn Inflation Refuses to Back Down

Market participants last week were keenly focused on inflation data from the US. The FOMC (Federal Open Market Committee) meeting of the Federal Reserve is scheduled for Wednesday, 20 March, and these figures will undoubtedly influence the Committee's decision on interest rates. Federal Reserve Chairman Jerome Powell recently stated that more evidence of a sustainable slowdown in inflation would be necessary to start cutting rates. However, it appears that such evidence is lacking. Data released on Tuesday, 12 March, showed that prices, instead of decreasing, have been on the rise.

The Consumer Price Index (CPI), excluding food and energy, was expected to increase by 0.3% but actually rose by 0.4% month-on-month. Year-on-year, inflation in February increased by 3.8%, slightly above the forecast of 3.7%. The overall CPI showed a monthly increase of 0.4% and an annual rise of 3.2%. Thus, the overall CPI has increased by 4.2% on an annual basis over the last three months, marking the highest level since June of the previous year. Certainly, this surge in inflation is not a cause for panic, but it is too early to declare a complete victory over it, for which the Fed raised rates to the highest level in 40 years.

Additional arguments for the Federal Reserve to refrain from hastily cutting rates emerged on Thursday, 14 March. It was found that industrial inflation, measured by the Producer Price Index (PPI), increased from 0.3% to 0.6% month-on-month, against market expectations of 0.3%. Against this backdrop, the yield on 10-year US Treasury bonds sharply increased, providing support to the dollar.

Beyond CPI and PPI, there's a third argument in favour of maintaining the Federal Reserve's tight monetary policy: the labour market, which remains relatively robust. Despite the highest unemployment rate increase in two years (from 3.7% to 3.9%), the number of new jobs created outside of the agricultural sector (NonFarm Payrolls) reached 275K, significantly exceeding both the previous figure of 229K and the forecast of 198K. Additionally, real wages continued to grow year-on-year in February.

Against the backdrop mentioned above, the euro faced pressure last week. Moderately dovish statements from officials at the European Central Bank (ECB) did not provide any relief. On Thursday, the bank's chief economist, Philip Lane, in an interview with CNBC, stated that wages are moving in the right direction. However, he added, the EU's monetary authorities avoid giving clear forecasts regarding further steps and must make decisions at each specific meeting.

According to Peter Kazimir, a member of the ECB's Governing Council and head of the National Bank of Slovakia, it would be wise to wait until June for the first rate cut. "Rushing this step is unwise and disadvantageous," he said. "Upside risks to inflation are alive and well. More convincing data on inflation prospects are needed. [And] only in June will we reach the threshold of confidence in this matter." "But the discussion on easing should start now," added the head of the National Bank of Slovakia.

Olli Rehn, a member of the ECB's Governing Council and head of the Bank of Finland, spoke similarly. He confirmed the start of discussions on reducing the restrictive aspect of the bank's monetary policy. When asked about the appropriate time to begin rate cuts, he carefully replied, "If inflation continues to decline, it would be possible to gradually start lifting the foot off the monetary policy brake pedal."

The preliminary Michigan Consumer Sentiment Index, published on 15 March, showed a slight decrease to 76.5 from the previous value and forecast of 76.9. Following this, EUR/USD ended the working week at 1.0886. As for the near-term outlook, as of the evening of Friday, 15 March, 75% of experts voted for a strengthening dollar and a decline in the pair, with 15% siding with the euro and 10% taking a neutral stance. Oscillator readings on the D1 are evenly distributed: one-third are coloured green, one-third red, and one-third neutral grey. Trend indicators' force ratio is such: 35% recommend selling the pair, while 65% recommend buying it. The nearest support for the pair is located in the zone of 1.0845-1.0865, followed by 1.0800, then 1.0725, 1.0680-1.0695, 1.0620, 1.0495-1.0515, and 1.0450. Resistance zones are found at 1.0920, 1.0965-1.0980, 1.1015, 1.1050, 1.1100-1.1140, and 1.1230-1.1275.

In the coming week, the Consumer Price Index (CPI) value for the Eurozone will be released on Monday, 18 March. However, as the ECB meeting has already taken place, this indicator is unlikely to provoke a strong market reaction. The main event of the week, as mentioned, will be the Federal Reserve's FOMC meeting on Wednesday, 20 March. It is expected to be the fifth consecutive meeting where the federal funds rate remains unchanged at 5.50%. The greatest interest for economists and investors will likely lie in the subsequent Federal Reserve leadership press conference, where they hope to hear hints about the start date for monetary policy easing. Currently, according to CME FedWatch, there is a 40% chance that the reduction will begin in June.

Apart from these events, a comprehensive package of data on business activity (PMI) across various sectors of the economy in the US, Germany, and the Eurozone, set to be released on Thursday, 21 March, also presents interest. On the same day, traditional data on the number of initial unemployment claims in the US will be published.

GBP/USD: More Negatives than Positives for the Pound

Last week, the dollar was recovering from the losses it suffered in the first ten days of March. On one hand, GBP/USD was pressured by rising inflation in the US, and on the other hand, by weak macroeconomic statistics from the United Kingdom. Data published on Tuesday, 12 March, confirmed the cooling of the country's labour market. In January, employment decreased by 21K (against a forecasted increase of 10K), and the unemployment rate rose from 3.8% to 3.9% (forecasted at 3.8%). Additionally, the number of claims for unemployment benefits sharply increased from 3.1K in January to 16.8K in February. Meanwhile, the wage growth of UK workers slowed down, marking the slowest pace since 2022.

Market participants' pessimism increased on Wednesday, 13 March. It was revealed that although the country's GDP grew by 0.2% in January, industrial production fell from +0.6% to -0.2% month-on-month and from +0.6% to +0.5% year-on-year. The manufacturing sector saw an even sharper decline, from +0.8% to 0.0% month-on-month and from +2.3% to +2.0% year-on-year.

All these data strengthen the likelihood of the Bank of England (BoE) soon shifting to a more dovish monetary policy. Some estimates suggest this could happen as early as May. If data from the United Kingdom continue to worsen, the probability of a pound interest rate cut in the coming months will only increase, pushing GBP/USD further down.

"GBP/USD could fall as the UK continues to stagnate and the Bank of England finally begins to cut rates," analysts at the French bank Societe Generale believe. Economists at the Dutch Rabobank also see potential for significant strengthening of the dollar against the British currency over a 1 to 3-month horizon. However, Rabobank forecasts that the interest rate differential, signs of improvement in the UK's economic outlook, combined with the prospect of uneventful elections in the country and a relatively stable political backdrop, should provide moderate support to the pound. "We believe," the bank's economists write, "that over a 12-month perspective, GBP/USD will recover to the 1.3000 area.".

The pair closed the week at 1.2734. Analyst opinions on its near-term direction were divided as follows: a majority (65%) voted for a decline, 20% for an increase, and 15% remained neutral. Among the D1 oscillators, 40% point north, only 10% south, and 50% east. Trend indicators have 65% looking upwards and 35% in the opposite direction. Should the pair move southward, it will encounter support levels and zones at 1.2695-1.2710, 1.2575-1.2610, 1.2500-1.2535, 1.2450, 1.2375, and 1.2330. In the event of an upward move, resistance will be met at levels 1.2755, 1.2820, 1.2880-1.2900, 1.2940, 1.3000, and 1.3140.

In addition to the Federal Reserve's FOMC meeting, the upcoming week will also feature a meeting of the Bank of England, scheduled for Thursday, 21 March. The day before, we will learn about the inflation situation (CPI) in the United Kingdom, and just before the BoE meeting, preliminary data on business activity (PMI) in the country will be released. The workweek will conclude with the publication of retail sales data in the United Kingdom.

USD/JPY: What to Expect from the Bank of Japan


The upcoming week, on Tuesday, 19 March, will also see a meeting of the Bank of Japan (BoJ). Consequently, speculation regarding an imminent shift in the regulator's monetary policy is mounting. Analysts at TD Securities have shifted their forecast for a yen rate hike from April to March. "Following a positive round of wage negotiations, we believe the Bank of Japan has the necessary information to raise the rate at next week's meeting," they write. TD Securities expects that if the rate is increased, such a move away from NIRP could easily push USD/JPY to 145.00. However, if the BoJ does not do so but attempts to sound hawkish, hinting at the possibility of a policy reversal in April, the pair might rise, but only slightly – to 150.00.

Rabobank analysts also discussed the potential tone of the Bank of Japan's statements. "If the Bank of Japan exits its negative interest rate policy on 19 March, it is likely that rates will only be raised by 10 or 15 basis points (bps)," the Rabobank experts believe. "Furthermore, at best, the Bank of Japan's guidance next week will be cautiously optimistic. It is important to note that even after the negative rate is relegated to economic history, Japan's monetary policy settings will likely remain accommodative." Rabobank does not rule out that a very cautious tone from the BoJ regarding further changes may increase the risk of a "sell the fact" reaction post-19 March. "Nevertheless, despite the risk of a short-term increase in the pair, we continue to see the possibility of USD/JPY declining to 146.00 in a three-month perspective," conclude the Rabobank economists.

Strategists at Standard Chartered echo similar sentiments. Like many of their peers, they anticipate that the Bank of Japan will end its ultra-loose policy in March rather than April. However, in their view, the expected policy adjustment is unlikely to signal the start of an aggressive rate-hiking cycle. The abolition of the negative interest rate policy (NIRP) will not alter the negative yield differential with other countries. Nonetheless, the potential cessation of yield curve control (YCC) should ultimately be positive for the yen, especially if the Federal Reserve and the ECB start cutting rates from June. In this scenario, Standard Chartered strategists believe that by the end of Q2 2024, USD/JPY could fall to 145.00.

Economists at ING, the largest banking group in the Netherlands, have repeatedly emphasized that a sustainable rally in the yen is more dependent on cuts in the Federal Reserve's rates than on rate hikes by the Bank of Japan. "We still believe that it will be difficult for the yen to sustainably strengthen beyond the volatility surrounding the rate hike until rates in the US are reduced. This remains our base scenario for this year," they write.

Societe Generale analysts are notably optimistic about the Japanese yen in their forecasts. They believe the yen is the only G7 currency likely to significantly appreciate against the US dollar this year. Even if the Bank of Japan's steps away from negative interest rates and yield curve control on 19 March are fairly symbolic, the yen is still expected to strengthen, as it is currently considered undervalued.

Throughout the past week, USD/JPY, buoyed by a strengthening dollar, rose and concluded at 149.05. Looking ahead, whereas a majority of analysts sided with the dollar in EUR/USD and GBP/USD, the situation here is reversed – in anticipation of a historic move by the Bank of Japan, 65% of experts leaned towards the bearish side for the pair, with 35% remaining undecided. No votes were cast in favour of the American currency. Technical analysis tools seem unaware of the Bank of Japan's meeting, which is why only 35% of D1 oscillators favoured the yen, 25% favoured the dollar, and 40% remained neutral. Trend indicators show a clear advantage for the dollar – 90% are coloured green, and only 10% red. The nearest support levels are located at 148.40, 147.60, 146.50, 145.90, 144.90-145.30, 143.40-143.75, 142.20, 140.25-140.60. Resistance levels and zones are at 150.00, 150.85, 151.55-152.00, 153.15.

Apart from the Bank of Japan meeting, no other significant events related to the Japanese economy are scheduled for the coming days. Traders should also note that Wednesday, 20 March, is a public holiday in Japan: the country observes the Vernal Equinox Day.

CRYPTOCURRENCIES: Riding the Wave of FOMO to New Historical Highs

FOMO (Fear of Missing Out) is currently the dominant sentiment in the market, driving the leading cryptocurrency to new heights. Another record was set on Thursday, 14 March, when BTC/USD reached $73,743.

Following the approval of spot bitcoin ETFs in the US earlier this year, demand for the flagship crypto asset has significantly outstripped the daily supply of bitcoin mined by miners. The halving, scheduled for the third decade of April, will only intensify this imbalance. Despite these two drivers remaining on the agenda, their endless discussion has started to weary market participants. As a result, the focus has shifted towards issues of the global economy, the Federal Reserve's monetary policy, and the upcoming presidential elections in the US.

Starting with the potential Presidents of the United States, specifically what could happen if the White House is won by one of the two main contenders. Former US President and Republican Party leader Donald Trump emphasized the importance of the American national currency in a CNBC interview, comparing a departure from the dollar standard to defeat. At the same time, he stated he would not interfere with the use of bitcoin or other cryptocurrencies if he wins the elections in November. "If you think about it, it's an additional form of currency," Trump said. "[Bitcoin] is widely used, and I'm not sure I'd want to give it up right now," the politician added. However, when asked by the host if he himself invests in cryptocurrency, the former (and potentially future) president answered negatively.

Regarding the current White House occupant, a study conducted by Pierre Rochard, Vice President of Riot, is of interest. He assessed the US budget for 2025, proposed by Joe Biden's team, and concluded that Democrats are expecting BTC to reach $250,000 over a decade – by 2034-2035. This is suggested by the taxes laid out by the White House in the budget. However, the expert clarified that the document, of course, does not contain direct indications of this price. Conclusions are made based on the assessment of potential profit from taxes and regulation of the cryptocurrency market.

Discussing the US economy, former Coinbase CTO and a16z general partner Balaji Srinivasan writes, "We are in the phase of looting the treasury amidst the collapse of an empire. Bitcoin is the only available salvation from inflation and potential asset confiscation in the US, which could occur due to the unsustainable trajectory of government spending." According to Srinivasan's calculations, the US national debt has reached a record $34.5 trillion, increasing by 25% since 2020, and continues to grow by $1 trillion every 90 days. The US government spends $10 billion more daily than it receives. Given this, the former Coinbase CTO did not rule out that as the "financial reckoning" for such behaviour approaches, the "insatiable state" might consider the possibility of confiscating private assets.

"Private property will not be protected by the state in a bankrupt blue [Democratic] America. Any blockchain under Washington's control is vulnerable. Fortunately, we have digital gold. It is independent of the state and cannot be confiscated. Bitcoin maximalism will win. It will save us from state budgeting," believes the former CTO of Coinbase. He declined to specify when the "reckoning" would occur but reminded that Ray Dalio, Elon Musk, Larry Fink, and Stanley Druckenmiller have previously announced the inevitability of such a scenario.

Analysts at Matrixport, sharing Balaji Srinivasan's optimism about the global future of bitcoin, also suggest that a risk-reward analysis indicates that the coin's quotes may soon undergo a correction. "This bull market still has legs," Matrixport believes, "but the divergence between the decreasing RSI and high BTC prices could signal that bitcoin needs to consolidate before it can start rising in price again."

Investor and founder of MN Trading, Michael Van De Poppe, believes a market pullback of 20-30% is quite possible in the near term. He also noted that he has high expectations for altcoins, which have yet to reach record highs.

Raoul Pal, the founder of the investment company Real Vision, predicted the potential performance of bitcoin, ETH, and SOL. He suggested that the target mark for bitcoin in the foreseeable future is $250,000 per coin. The first cryptocurrency may exceed this projected level due to high demand for spot bitcoin ETFs. The upcoming April halving is also expected to increase demand for this cryptocurrency.

Raoul Pal is also bullish on Ethereum. Thanks to the utility of smart contracts, the value of this altcoin could rise to $17,000-$20,000. Currently, ETH is trading around $4,000, but unlike bitcoin, it has not yet surpassed its record – in November 2021, Ethereum reached a level of $4,856. The Real Vision founder believes that the altcoin's growth could be influenced by a strong correlation with bitcoin, anticipation of the launch of spot ETH ETFs, and the Dencun update.

The specialist forecasts that the price of Solana could range from $700 to $1,000, as the high performance of the blockchain will increase demand for this coin. In early November 2021, SOL reached a peak mark of $260, and the coin still has plenty of growth opportunities.

Last week, much attention was also paid to miners, not just individually, but in conjunction with the American economy. Bill Ackman, CEO of Pershing Square Capital, called bitcoin mining one of the reasons for inflation and the fall of the US dollar. "The rise in bitcoin prices leads to an increase in mining and energy consumption, raising the latter's cost and causing inflation and the dollar's decline. This stimulates demand for bitcoin, its mining, and energy consumption. The cycle continues, bitcoin goes into infinity, energy prices skyrocket, the economy collapses," the billionaire described his scenario, adding that this relationship "works both ways."

Taking an opposite viewpoint was another influencer – the aforementioned Pierre Rochard from Riot. He believes that the mining industry could experience exponential 10-fold growth, thanks to the active development of the US market and the country's surplus of electricity. His scenario does not foresee an economic collapse and sky-high energy prices.

Time will tell which of these experts is correct. However, according to analysts at Bernstein, mining company stocks remain the best proxy investments in bitcoin as the cryptocurrency moves towards the target mark of $150,000. In a note to clients, they point out that historically, miners' quotes have almost always outperformed bitcoin in terms of growth rate during a bull market. Since we are in the middle of the current cycle, every "weakness window" for digital gold miners is, in the experts' opinion, an opportunity to buy their stocks.

Bernstein claims that retail investors currently dominate this segment, while institutional investors largely avoid "bitcoin-proxy" investments, as they remain sceptical about cryptocurrencies. However, as the asset grows to new highs, analysts expect this category of investors' interest in miners' stocks to awaken and grow.

At the beginning of spring, bitcoin surpassed the Russian rouble in market capitalization and occupied the 14th position in the overall ranking of the largest currencies. Just a few days later, on 11 March 2024, bitcoin made another leap – rising above $72,000 per coin, it surpassed silver in market capitalization. The first cryptocurrency moved to the eighth spot in the ranking of the largest assets by this measure, crossing the $1.4 trillion mark.

As of the writing of this review, on the evening of Friday, 15 March, after traders took profits, BTC/USD is trading around $68,200. The total market capitalization of the crypto market stands at $2.58 trillion ($2.60 trillion a week ago). The Crypto Fear & Greed Index has risen from 81 to 83 points and is in the Extreme Greed zone. (It's worth noting that the historical maximum for this index was recorded at 95 points during the Bull Rally at the end of 2020). 

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Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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Forex and Cryptocurrencies Forecast for March 11 - 15, 2024

EUR/USD: A Bad Week for the Dollar


The past week was dominated by the European Central Bank (ECB)'s meeting on Thursday, 7 March. As anticipated, the pan-European regulator decided to maintain its current monetary policy, leaving the interest rate unchanged at 4.50%. This move reaffirmed its commitment to steering inflation into the desired range. The ECB aims to be absolutely certain that inflation is consistently moving towards its 2.0% target, which currently stands at 2.6%.

According to analysis from ANZ Bank, a reduction in euro rates is expected in Q2. "Our interpretation of current ECB official guidance is that hawks are on the rise and prefer to wait for more detailed wage growth data before initiating a rate cut. We believe a consensus will be reached in June," ANZ economists wrote.

This expectation was echoed by Gediminas Šimkus, a member of the ECB Governing Council and head of Lithuania's central bank, on Friday, 8 March. He stated that "all conditions are set for a transition to a less stringent monetary policy, with a rate cut in June being very likely. While a cut in April cannot be ruled out, the likelihood is low." He added that there is no reason to reduce the rate by more than 25 basis points in one go.

It's important to note that the Federal Reserve usually acts more aggressively than the ECB, changing its rate more frequently and with greater amplitude. To see this, one only needs to look at the statistics from the last 10 years. According to analysts at Commerzbank, this means that if both central banks start their easing cycles at the same time, the dollar rate could very quickly fall below the euro rate, which would support an increase in the EUR/USD exchange rate.

However, what the cycles will look like this time remains unclear. The CME FedWatch Tool estimates a 56% probability of a Federal Reserve rate cut in June. Yet, speaking to the US Congress on 6-7 March, Fed Chair Jerome Powell only vaguely stated that the regulator would ease monetary policy "at some point this year".

A statement by Loretta Mester, president of the Federal Reserve Bank of Cleveland, proved to be more interesting. Speaking at the European Centre for Economics and Finance, she expressed concerns about the continued steady decrease in inflation throughout the year. Therefore, in Mester's view, it would be appropriate to keep the rate at its current level of 5.50%. The head of the Federal Reserve Bank of Cleveland also suggested that if economic conditions align with forecasts, the likelihood of a rate cut towards the end of the year might increase.

Regarding the macroeconomic statistics released last week, Eurostat's final assessment showed that the Eurozone economy grew by 0% in quarterly terms over the last three months of 2023. Year-on-year, GDP increased by 0.1%. Both figures matched preliminary estimates and market expectations, thus having no impact on the exchange rates.

Throughout the week, the dollar was under pressure, and not just due to Jerome Powell's "dull" Congressional testimony. US macroeconomic reports appeared relatively weak. For instance, the ISM Services Sector Business Activity Index for February fell from 53.4 points to 52.6 points. Manufacturing orders in January also dropped by 3.6%, which was worse than the 2.9% forecast. The number of job openings (JOLTS) in the US last month was 8.863 million, down from 8.889 million the previous month, and initial unemployment claims for the week ending on 2 March rose to 217K, exceeding the 215K forecast. All these factors together led to the EUR/USD pair moving out of the narrow range of 1.0800-1.0865, in which it had been trading since 20 February, and rising to the 1.0900 mark.

Labour market statistics released on Friday, 8 March, could have supported the dollar, but this did not happen, even though the market's reaction was somewhat puzzling. On one hand, the number of new jobs created outside of the agricultural sector (NonFarm Payrolls) was 275K, significantly exceeding both the previous figure of 229K and the forecast of 198K. Typically, such indicators would push the EUR/USD pair down. However, this time, it sharply rose instead. This likely relates to the unemployment rate increasing from 3.7% to 3.9% (with a forecast of 3.7%) and the average hourly earnings showing a sharp drop from 0.5% (month-over-month) to 0.1% (against a forecast of 0.2%). It seems the last two indicators outweighed the positive effect from the NFP. Market participants decided that these would be additional arguments in favour of a more imminent interest rate cut, resulting in EUR/USD soaring to 1.0980.

Subsequently, the excitement settled, and EUR/USD closed at 1.0937. As for the short-term outlook, as of the evening of Friday, 8 March, 35% of experts were in favour of the dollar strengthening and the pair falling, while 65% sided with the euro. Trend indicators and oscillators on the D1 chart are 100% coloured in green, with a quarter of the latter in the overbought zone. The nearest support levels for the pair are situated in the 1.0845-1.0865 zone, followed by 1.0800, then 1.0725, 1.0680-1.0695, 1.0620, 1.0495-1.0515, and 1.0450. Resistance zones are located around 1.0970-1.1015, 1.1050, and 1.1100-1.1140, up to 1.1230-1.1275.

The upcoming week is expected to be quite tumultuous. Significant volatility can be anticipated on Tuesday, 12 March, with the release of consumer inflation (CPI) data in Germany and the USA. On Thursday, 14 March, retail sales statistics and the Producer Price Index (PPI) in the United States will be announced. The week will conclude with the publication of the University of Michigan Consumer Sentiment Index on Friday, 15 March.

GBP/USD: A Good Week for the Pound

Starting the week at 1.2652, GBP/USD recorded a local high of 1.2893 on Friday, gaining 241 points and breaking out of the medium-term sideways channel of 1.2600-1.2800. The first reason for such dynamics is the weakness of the dollar, as mentioned earlier. The second reason is the positive economic statistics from the UK: the Construction PMI increased from 48.8 to 49.7. This indicates that the real estate sector is almost overcoming a period of stagnation, which, in turn, will eventually provide significant support to the country's economy.

There's also a third reason. In our last review, we warned that a key event for the pound sterling last week would be the announcement of the UK Government's budget on Wednesday, 6 March. This pre-election budget could significantly impact the British currency, which in 2024 is the second most successful G10 currency after the US dollar.

Finance Minister Jeremy Hunt, presenting the spring government budget, called it a plan for long-term growth. Hunt announced various benefits and subsidies amounting to £1.8 billion, as well as an allocation of £360 million for funding research and development in the biomedical sector, car manufacturing, and aerospace production. The government will also assist British households by partially reducing taxes. Moreover, it will actively stimulate economic growth to ensure the prosperity of the country's citizens. Specifically, the temporary reduction in duties on fuel and alcohol will continue.

Hunt also stated that inflation could fall to 2.0% by the end of the year, and the UK's GDP this year would grow by 0.8%. Overall, the finance minister's figures and promises, as is customary before elections, were quite impressive, allowing the pound to strongly challenge the dollar.

But will this boost of strength last for the British currency? Economists at HSBC note that the UK still faces a challenging combination of inflation and growth. This limits the Bank of England (BoE)'s ability to maintain a maximally hawkish stance compared to other central banks. As it becomes more dovish, the pound may face significant downward pressure in the coming months.

GBP/USD concluded last week at 1.2858. Analysts' opinions on its near-term behaviour are divided: a majority (60%) predict a decline, 20% anticipate growth, and 20% remain neutral. Among trend indicators and oscillators on the D1 chart, the situation mirrors that of EUR/USD: all point north, although 25% of oscillators signal the pair is overbought. Should the pair move southward, it will encounter support levels and zones at 1.2800-1.2815, 1.2750, 1.2695-1.2710, 1.2575-1.2610, 1.2500-1.2535, 1.2450, 1.2375, and 1.2330. In the event of an upward trend, resistance will be met at levels 1.2880-1.2900, 1.2940, 1.3000, and 1.3140.

On Wednesday, 13 March, the UK's GDP data for January 2024 will be released. The country's economy is expected to show growth of 0.2%, reversing a decline of -0.1% in December, which would confirm Jeremy Hunt's optimism. No other significant macroeconomic statistics regarding the UK economy are scheduled for release next week.

USD/JPY: A Great Week for the Yen

If the past week was very good for the pound, it was simply great for the Japanese yen. USD/JPY reached a local minimum of 146.47 on the evening of Friday, 8 March, meaning the yen reclaimed more than 360 points from the dollar.

In addition to the weakening of the dollar, the yen was bolstered by rumours that the Bank of Japan (BoJ) may soon decide to normalize its monetary policy. Citing informed sources, Reuters reported that "if the results of the spring wage negotiations [on 13 March] are strong, the Bank of Japan may not have to wait until April" to exit its negative interest rate policy, and that the BoJ "is leaning towards ending negative rates as early as March."

Another report by Jiji News mentioned that "the Bank of Japan is considering a new quantitative framework for its monetary policy, which will outline the prospects for future government bond purchases." "The Bank of Japan," Jiji continues, "will review its Yield Curve Control (YCC) as part of considering a new quantitative policy.".

Thus, Wednesday, 13 March, could become a significant day for the Japanese currency, as could 19 March, when the next meeting of the Bank of Japan is scheduled. It's possible the regulator might increase the interest rate on this day for the first time since 2016. However, analysts at the French Natixis Bank believe that if there is an increase, it would be very slight. "In reality, the depreciation of the yen is beneficial for the Japanese economy," the bank's analysts write. "It helps to bring inflation back to the 2% target and stimulates exports. Since Japan has very significant net foreign assets, primarily in dollars and euros, a depreciation of the yen leads to a capital gain in yen value of these external assets." "As a result," Natixis concludes, "one should not expect Japan to move to a tighter monetary policy. At most, a symbolic increase in the base rate can be expected."

Commerzbank holds a similar position, believing that the yen's potential is limited, and a strong appreciation, especially in the medium and long term, should not be expected. According to Commerzbank economists, this is due to the Bank of Japan's lack of capacity for a pronounced normalization of interest rates.

USD/JPY concluded last week at 147.06. As for the near future, it's impossible to come to a consensus: 20% sided with the bears, an equal 20% with the bulls, and 60% remained undecided. Among the oscillators on the D1 chart, only 15% are coloured in green, while the remaining 85% are in red, with 40% indicating an oversold condition. The distribution of strength among trend indicators is exactly the same: 85% to 15% in favour of the reds. The nearest support levels are found at 146.50, 145.90, 144.90-145.30, 143.40-143.75, 142.20, and 140.25-140.60. Resistance levels and zones are located at 147.65, 148.25-148.40, 149.20, 150.00, 150.85, 151.55-152.00, and 153.15.

In the upcoming week's calendar, noteworthy events include the announcement of Japan's Q4 2023 GDP volume on Monday, 11 March. Additionally, as previously mentioned, the wage negotiations on 13 March are of significant interest. No other major events related to the Japanese economy are planned for the near future.

CRYPTOCURRENCIES: Two Historic Records in One Week

In less than 24 hours on 4 March, bitcoin appreciated by approximately 10% and reached the mark of $69,016. This was a new (but not the last) historical record, surpassing the previous one of $68,917 set on 10 November 2021. Most top-10 crypto assets also saw a 10-30% increase in value over the week.

This surge in bitcoin is attributed to purchases by a supposed billionaire from Qatar, who flew in on his private jet to Madeira for the three-day Bitcoin Atlantis conference. Keychainx CEO Robert Rodin wrote that he saw something at Madeira airport that "could forever change bitcoin." BTC maximalist Max Keiser, in turn, shared a video in which the President of El Salvador, Nayib Bukele, greets the Emir of Qatar with the words "It's happening!"

What exactly Rodin and Bukele meant is unknown. However, this was enough to fuel discussions about Qatar adding bitcoins to its balance sheet. The accuracy of such claims is unproven, but social networks are abuzz with speculation on this matter. It's worth noting that rumours about one or two sovereign wealth funds or investment companies from the Middle East secretly buying up bitcoins have been circulating for several months.

Following the update of its historical high, bitcoin then plunged, dropping to $59,107 on 5 March, with forced liquidations on the futures market reaching $1 billion. However, this dip was short-lived as whales bought up much of the supply, not only returning the market to its previous dynamics but also setting a new record: on 8 March, the leading cryptocurrency reached $69,972. This is largely because most market participants anticipate its continued growth, surpassing at least the $100,000 mark.

According to trader Gareth Soloway, the upcoming bitcoin halving in April does not guarantee by itself that the digital gold will reach the mentioned size. Soloway identifies the monetary policy of the US Federal Reserve as the deciding factor. The Fed's reluctance to aggressively cut interest rates could support high inflation, potentially contributing to bitcoin's upward trend. "If we see an increase in liquidity (which will definitely happen), then bitcoin will rise to $100,000 in 2024," writes Soloway. However, on its way to this round figure, the trader does not rule out a short-term bearish correction.

Experts at JPMorgan also discuss the possibility that the halving could trigger a sharp decrease in the price of the first cryptocurrency. The algorithmic reduction of the reward from 6.25 BTC to 3.125 BTC will decrease mining profitability. Based on this, economists at JPMorgan, led by senior analyst Nikolaos Panigirtzoglou, predict that the price will fall to $42,000 after the halving. "The cost of mining bitcoin empirically acts as a floor for its price," their report states. "After the halving, this metric will be $42,000." "This is also the level towards which, in our view, the price will gravitate once the post-halving euphoria subsides in April," note JPMorgan's experts.

According to the well-known Stock-to-Flow (S2F) model, the primary cryptocurrency has transitioned from the accumulation phase to the growth phase. The accumulation phase is characterized by a relatively smooth price increase, low volatility, and moderate corrections, with the maximum drawdown in the concluded cycle not exceeding 22%. The growth phase presents a different picture. Historical data shows that during movements towards new highs, drawdowns ranged from 36% to 71%. JPMorgan has predicted a drop in bitcoin to $42,000. At the current price, this correction would be approximately 36-40%, aligning with the lower end of the specified range. A 70% correction, however, could lead to a significantly deeper fall.

How could this happen? Initially, to stay afloat, miners, whose incomes will be halved, will begin to sell off their stocks. Then, institutional and short-term speculators, looking to lock in profits, will join in. Concurrently, stop orders will start to trigger, leading to an avalanche-like plunge in quotations. And if investors who have put their money into spot BTC-ETFs also join this "crypto-fall", the depth of the drop could be hard to imagine. It's worth noting that in January-February, BTC-ETFs attracted 75% of all investments in the main cryptocurrency, and there are no guarantees that panic sentiment won't affect the depositors of these funds.

However deep the correction might be, bitcoin, in the opinion of many experts, will still remain within the long-term upward trend. "We have entered the era of the bitcoin gold rush. It started in January 2024 and will last approximately until November 2034," believes MicroStrategy's founder Michael Saylor. According to his calculations, by that time, miners will have extracted 99% of all coins, marking the beginning of the "growth phase." (According to BitcoinTreasuries, 93.5% has already been mined as of now).

Saylor believes that currently, only 10-20% of asset managers are interested in spot BTC-ETFs. In the future, as existing barriers are removed, this figure will approach 100%. "When they [managers] can buy BTC through a bank, platform, or prime broker, they'll spend $50 million in an hour," he stated. The founder of MicroStrategy also expressed confidence that "there will come a day when bitcoin will surpass gold and will be traded more than the S&P 500 ETFs."

In the next 15 years, bitcoin could appreciate 64 times to reach $10.63 million. This forecast was made by Professor Giovanni Santostasi based on a power-law model. According to the scientist, this model provides a clear and predictable scenario for the price change of the first cryptocurrency over long periods. However, over shorter spans, which the media primarily focus on, the quotations behave chaotically. Unlike the S2F model by the analyst known as PlanB, the power law is logarithmic, not exponential. In other words, the price of bitcoin is not expected to constantly increase over time. According to Santostasi's calculations, digital gold will peak at $210,000 in January 2026, then drop to $60,000, and after that, it will continue its wave-like growth to $10.63 million.

(For reference: A power-law relationship is a mathematical relationship between two quantities where a relative change in one quantity leads to a proportional relative change in the other, regardless of the initial values of those quantities. The manifestation of this law can be found across a wide range of natural phenomena, from the frequency of earthquakes to the dynamics of stock market changes.).

As of the evening of Friday, 8 March, BTC/USD is trading at around $68,100. The Crypto Fear & Greed Index has slightly risen from 80 to 81 points, entering the Extreme Greed zone. The total market capitalization of cryptocurrencies stands at $2.60 trillion (up from $2.34 trillion a week ago), with the main cryptocurrency's dominance index at nearly 52%, and its capitalization exceeding $1.35 trillion. This surpasses the fiat currency market capitalizations of Malaysia, Indonesia, Vietnam, Thailand, the UAE, Mexico, and many other countries. A few days ago, BTC surpassed the Russian ruble in capitalization, taking the 14th spot in the overall ranking of the largest currencies, with the Swiss franc as its nearest competitor. Amid news that bitcoin exceeded the rouble, jokes flooded the internet suggesting Vladimir Putin is Satoshi Nakamoto. Ethereum ranked 28th, performing better than the Chilean peso but not as well as the Turkish lira.

In the overall ranking of the most capitalized assets, which includes precious metals and companies, bitcoin secured the 10th place. It surpassed Berkshire Hathaway, the company of well-known cryptocurrency critic billionaire Warren Buffett, but did not reach Meta. The top 3 are currently occupied by gold, Microsoft, and Apple.
 

NordFX Analytical Group
 

Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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NordFX's New Mega Super Lottery: 202+4 Prizes in 2024

The new mega super lottery by brokerage firm NordFX kicked off on 8 March this year, featuring a multitude of cash prizes ranging from $250 to $5,000, amounting to a total of $100,000.

The Super Lottery with a prize pool of $100,000 has become a tradition, as NordFX has been hosting it for the fourth consecutive year. Over this time, more than 500 clients of this broker have emerged as winners. Unlike traders' contests, the lottery's undeniable advantage is that both experienced professionals and newcomers have completely equal chances of winning. Another benefit is that lottery winners receive their prizes in real money, not bonuses, which they can either use for further trading or withdraw without any restrictions.

There's also a third advantage: becoming a lottery participant and getting a chance to win one or even several prizes is very straightforward. You just need to have a Pro account with NordFX (or register and open a new one), fund it with $200, and simply trade. By making a trade turnover of just 2 lots in Forex currency pairs or gold (or 4 lots in silver), a trader automatically receives a virtual lottery ticket. The number of tickets per participant is unlimited. The more deposits and the higher the turnover, the more lottery tickets a participant will have, and the greater their chances of becoming one of the winners. The Super Lottery from NordFX is an excellent opportunity for traders not only to try their luck in winning cash prizes but also to increase their trading activity and possibly discover new trading strategies.

The slogan of this year's lottery, "Your 202+4 Chances to Win in 2024," makes it clear there will be plenty of prizes. This year, winners will receive 202 prizes (140 of $250, 30 of $500, 20 of $750, and 12 of $1,250) plus an additional 4 super prizes of $5,000 each. The total prize pool of $100,000 is divided into three parts: $20,000 will be played out in both the summer and autumn draws, and the third, New Year's, and most significant draw will have $60,000 in prizes.

For more details, visit NordFX's website. You can become a participant of the Mega Super Lottery 2024 and start receiving lottery tickets right now.


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex and Cryptocurrencies Forecast for March 04 - 08, 2024

EUR/USD: Weak Bulls vs. Weak Bears

Throughout the past week, EUR/USD has been trading within a narrow channel. News favouring the euro pushed it towards the resistance level at 1.0865, while positive developments for the dollar brought it back to the support level at 1.0800. However, neither the bulls nor the bears had enough strength to break through these defence lines.

The preliminary GDP data for the US in Q4 2023, released on Wednesday, 28 February, put pressure on the American currency as it fell short of both forecasts and the previous figure – 3.2% against 3.3% and 4.9%, respectively. However, the dollar managed to recover its losses the following day. This rebound was related to the Personal Consumption Expenditures (PCE) Index in the US, a measure used by the Federal Reserve to calculate inflation levels and a crucial factor in determining the regulator's future actions.

The US Bureau of Economic Analysis report, released on 29 February, revealed that the Core PCE, which excludes volatile food and energy prices, stood at 2.8% year-on-year in January. This was slightly below the previous value of 2.9% but matched analysts' forecasts precisely. On a monthly basis, the PCE increased from 0.1% to 0.4%. Market participants were immediately reminded of previously published data on consumer (CPI) and producer (PPI) inflation, which were higher than expected. This convinced them that, despite the GDP decline, the regulator might continue to postpone the start of easing its monetary policy. (Currently, the market expects the Fed to begin a rate-cutting cycle in June).

Hawkish comments from Federal Reserve officials, following the PCE publication, supported the American currency. Mary Daly, head of the Federal Reserve Bank of San Francisco, stated that lowering rates too quickly could lead to inflation stagnation. Meanwhile, her colleague, Raphael Bostic, president of the Federal Reserve Bank of Atlanta, suggested that it might be appropriate to start cutting rates in the summer.

The sellers of the single European currency were also influenced by relatively weak statistics from the Eurozone, where the volume of consumer lending in January showed the slowest growth since 2016. This indicator increased by only 0.3%. Experts cite the pressure on consumers from the high interest rates of the European Central Bank (ECB) as the main reason for this trend, which could become an additional argument for lowering them.

Regarding consumer inflation, the figures in Europe were quite mixed. Data published at the beginning of the last week from Spain and France came out stronger than forecasts. Meanwhile, in Germany, the CPI fell from 3.1% to 2.7% year-on-year, aligning with market expectations. The dynamics of EUR/USD could have been influenced by the Eurozone's overall figures, which were published on the first day of spring. The preliminary report from Eurostat showed that the Consumer Price Index (CPI) increased by 2.6% year-on-year in February, lower than the 2.8% growth in January but above the 2.5% forecast. Core inflation for the month decreased to 3.1% year-on-year compared to the previous figure of 3.3%, but it exceeded expectations of 2.9%. While inflation fell on a yearly basis, it sharply rose on a monthly basis, from a negative -0.4% to +0.6%.

At the very end of the working week, the final values of the Manufacturing Sector Purchasing Managers' Index (PMI) in the United States were released, somewhat disappointing market participants. The PMI for February fell from 49.1 to 47.8 points, despite being expected to rise to 49.5. As a result, after rebounding from the support level at 1.0800, EUR/USD once again moved upward, closing the week at 1.0839. As for the near-term forecast, as of the evening of Friday, 1 March, 45% of experts voted for the dollar's strengthening and the pair's decline. 30% sided with the euro, while 25% held a neutral position. Among the oscillators on D1, only 20% are coloured red, another 20% are in neutral grey, and the remaining 60% are green, with 10% of them in the overbought zone. Among the trend indicators: 20% are red, and 80% green. The nearest support levels for the pair are found at 1.0800, followed by 1.0725-1.0740, 1.0680-1.0695, 1.0620, 1.0495-1.0515, and 1.0450. Resistance zones are located at 1.0845-1.0865, 1.0925, 1.0985-1.1015, 1.1050, 1.1110-1.1140, and 1.1230-1.1275.

As for the upcoming week, the value of the Services Sector Purchasing Managers' Index (PMI) in the US will be announced on Tuesday, 5 March. Wednesday and Thursday are set to bring a batch of data from the US labour market, with Federal Reserve Chairman Jerome Powell scheduled to speak in Congress on the same days. The main event of the week will be the European Central Bank (ECB) meeting on Thursday, 7 March. Market participants expect the pan-European regulator to leave the interest rate unchanged at 4.50%, so the subsequent press conference by the central bank's leadership and their comments on future monetary policy will be of particular interest. The end of the week could also prove to be quite volatile. On Friday, 8 March, we will first receive data on the Eurozone's GDP for Q4 2023, followed by a batch of very important statistics from the American labour market, including the unemployment rate, average wage level, and the number of new jobs created outside the agricultural sector (Non-Farm Payrolls, NFP). 

GBP/USD: Will the Budget Bolster the Pound?

With the European Central Bank (ECB) meeting just a few days away, the Federal Reserve (Fed) and the Bank of England (BoE) meetings are not due for a while: on 20 and 21 March, respectively. The nearest key event for the sterling pound in the coming week will be the announcement of the budget by the UK Government on Wednesday, 6 March. This budget is pre-election, and therefore, according to strategists at the Dutch Rabobank, it could have a significant impact on the British currency, which in 2024 is the second most successful G10 currency after the US dollar.

It's worth noting that, according to current rules, general elections in the UK must take place no later than 28 January 2025. According to The Guardian, Prime Minister Rishi Sunak is leaning towards holding them in the second half of 2024. However, The Daily Telegraph reports that elections for the lower house of the British Parliament could occur even earlier: as soon as this spring.

Economists at Rabobank anticipate that the pre-election budget will include fiscal incentives, which could serve as a new stimulus for strengthening the pound. This entails a moderate easing of fiscal policy, potentially involving changes more in national insurance than in income tax. Any reforms that could boost incentives to work or changes in regulation that might enhance investment incentives will be of particular interest to the market. An increase in the labour force would contribute to economic growth and, therefore, could be seen as a favourable factor for the British pound.

Both Rabobank and the Japanese MUFG Bank believe that the extent of potential fiscal incentives is unlikely to be sufficient to significantly improve the metrics of the British economy. However, even a small number of such stimuli is likely to reinforce the general view that the Bank of England will not be in a hurry to cut interest rates and will not do so either in May or June.

Let's recall that at its meeting on 1 February, the Bank of England (BoE) maintained the rate at the previous level of 5.25%. The accompanying statement mentioned that "more evidence is needed that the Consumer Price Index will fall to 2.0% and remain at this level before cutting rates." Market participants are anticipating the first rate cut to occur in August. This expectation has already been factored into prices and prevents GBP/USD from declining.

However, if inflation remained unchanged at 4.0% in February and the country's GDP contracted by -0.3%, it seems the Government intends to bolster the economy with new fiscal incentives. Nonetheless, if these measures do not lead to GDP growth, discussions may once again turn towards an imminent rate cut, which would exert pressure on the pound.

GBP/USD concluded the past week at the level of 1.2652, failing to break out of the medium-term sideways channel of 1.2600-1.2800. Regarding the analysts' forecast for the near future, their opinions were evenly divided: a third voted for the pair's decline, a third for its rise, and a third remained neutral. Among the oscillators on D1, 25% point south, 40% look north, and the remaining 35% are pointing east. Trend indicators, as a week ago, show a significant bias towards the British currency – 80% indicating north and 20% south. Should the pair move southward, it will encounter support levels and zones at 1.2575-1.2600, 1.2500-1.2535, 1.2450, 1.2375, and 1.2330. In the event of a rise, it will meet resistance at levels 1.2695-1.2710, 1.2785-1.2815, 1.2880, 1.2940, 1.3000, and 1.3140.

Besides the announcement of the country's budget on 6 March, no significant macroeconomic statistics regarding the economy of the United Kingdom are scheduled for release in the coming week.

USD/JPY: Petal Predictions

There's an ancient method of fortune-telling with a flower. A girl takes a flower in her hand and plucks the petals one by one: the first one means someone will love her, the second means they won't, the third means love, the fourth means no love, and so on until the petals run out. The fate declared by the last petal is believed to come true. This method of fortune-telling can quite aptly be applied to the Bank of Japan (BoJ): will change its monetary policy, won't change, will change, won't change...

Low interest rates make the yen cheap, which in turn stimulates exports, making Japanese goods competitive in foreign markets. However, on the flip side, it creates problems for the national industry as it makes imports more expensive, primarily the import of raw materials and energy resources.

In January, the trade balance was sharply negative. If in December the balance was in favour of imports (+69 billion yen), in January, it collapsed to minus 1758 billion yen. Looking at the balance for the entire year of 2023, imports often lost to exports. Industrial production decreased by -7.5% in January, which is worse than the previous growth of +1.4% and the forecast of -6.7%. Thus, Japanese officials, like with the flower method, wonder what is better and more important – supporting the economy or fighting inflation. Meanwhile, the BoJ does not take any concrete steps but limits itself to vague statements, often very contradictory.

On 29 February, following hawkish comments from Bank of Japan (BoJ) Board member Hajime Takata, the yield on Japanese government bonds rose from 0.68% to 0.71%, and USD/JPY plummeted from 150.14 to 149.20. This high-ranking official stated that the BoJ should consider the possibility of adopting flexible countermeasures, including moving away from monetary easing policies, which investors interpreted as a signal for a rate hike.

However, just a day later, Kazuo Ueda, the head of the Bank of Japan, stated that the country's economy would continue to recover gradually, and the GDP decline in the fourth quarter was somewhat of a correction after the strong growth spurred by the economic restart post-COVID pandemic. According to Ueda, inflation is decreasing at a faster pace than expected, without any rate hikes. Following this, USD/JPY reversed direction, heading north and rising to 150.70.

The main advantage of the yen right now is that while the major G10 central banks are considering easing their policies, the Bank of Japan can only contemplate tightening its policy. It is clear that it will not lower its already negative interest rate of -0.10%. Commerzbank still does not rule out the possibility that the BoJ may decide to take initial steps towards normalizing its monetary policy soon. "However, we expect this to be limited in nature," write the bank's economists. "As in 2000 and 2006, the first interest rate hikes are likely to slow inflation. After that, there will be no further normalization." As a result, Commerzbank forecasts a gradual decline in USD/JPY to 142.00 by December this year, followed by a steady rise to 146.00 by the end of 2025.

Last week concluded at 150.10 for the pair, following the release of weak PMI data in the US manufacturing sector. Looking ahead, the analysts' median forecast positions 60% in favor of the bears for the USD/JPY pair, 20% for the bulls, and 20% remain indecisive. On the D1 oscillators, 65% are green (with 10% in the overbought zone), and the remaining 35% display a neutral-grey color. Similarly, 65% of the trend indicators are green, with 35% red. The nearest support level is at 149.60, followed by 149.20, 148.25-148.40, 147.65, 146.65-146.85, 144.90-145.30, 143.40-143.75, 142.20, and 140.25-140.60. Resistance levels and zones are at 150.90, 151.70-152.05, and 153.15.

In the upcoming week's calendar, Tuesday, 5 March, is notable for the announcement of the Consumer Price Index (CPI) in the Tokyo region. There are no other significant events related to the Japanese economy scheduled for the near future.

CRYPTOCURRENCIES: New Records for the "Naked King"


Last week, bitcoin set historical highs against local currencies in many countries. Now, the leading cryptocurrency is aiming to test and possibly surpass its all-time high of $68,917, reached on 10 November 2021. At least, the current dynamics suggest this goal: starting from $50,894 on Monday, 26 February, BTC/USD soared to $63,925 by Wednesday, gaining more than 25% in just three days. At this point, the Bitcoin Fear & Greed Index jumped to 82 points, entering the Extreme Greed zone. As Matt Simpson, a senior market analyst at City Index, wrote, "If this were any other market, it would probably be classified as 'peak overheating – stay away from this bubble.' But bitcoin has entered a parabolic rally phase, and there are no immediate signs of a peak forming.".

Let's recall that on 1 February, BTC was trading at $41,877. Thus, in 29 days, the digital gold gained approximately 50%, making this past February the most successful month for investors in the last three years. We thoroughly examined the five reasons behind the ongoing bull rally in our previous review, ranging from the most to the least important. Large investments in spot Bitcoin ETFs acted as a catalyst for the frenzied demand for bitcoin. However, as noted by JPMorgan, purchases by retail crypto investors with relatively small amounts have even surpassed the cash flows from large companies at this point.

Glassnode analysts believe that the current situation resembles the boom observed in 2020–2021. The dynamics of capital flows, exchange activity, leverage in crypto derivatives, and demand from both institutional and retail speculators all indicate an explosion in investors' risk appetite. Signs of speculative sentiment have also emerged in the derivatives market. The total open interest (OI) in bitcoin futures reached $21 billion and is also approaching the euphoria levels of 2021. Only in 7% of trading days was the OI value higher. The substantial increase in the liquidation of short positions on bitcoin acted as an additional trigger.  

Investor, founder of Heisenberg Capital, and host of the Keiser Report, Max Keiser, compared investing in the leading cryptocurrency to buying shares of Warren Buffett's Berkshire Hathaway in March 1985, when they were priced at $1,500 each. Since then, the price of these shares has risen to $629,000. According to Keiser, bitcoin has the potential to increase by more than 41,000%. If the leading cryptocurrency experiences such rapid growth, each coin would be worth over $21,000,000, and the digital asset's market capitalization would exceed $450 trillion. (For comparison, the current market capitalization of Apple Inc. is $2.82 trillion, making it one of the most valuable companies in the world, followed by Microsoft at $2.0 trillion, Alphabet at $1.77 trillion, and Amazon at $1.6 trillion).

Furthermore, Max Keiser warned traders and investors of a potential major crash in the US stock market. He stated, "A crash akin to 1987 is coming. Bitcoin is the perfect safe haven, whose price will soar above $500,000." It should be noted that bitcoin has completely "decoupled" from such risk assets as stocks, and its correlation with stock indices such as the S&P500, Dow Jones, and Nasdaq has virtually dropped to zero.

After BTC/USD broke through the $56,000 level on 27 February, legendary trader, analyst, and head of Factor LLC, Peter Brandt, revised his forecast for the first cryptocurrency's rate in 2025 from $120,000 to $200,000. The expert raised the bar as bitcoin overcame the upper boundary of resistance of a 15-month channel (on the BTC/USD chart, these are the trend lines that connect the lows of November 2022 and September 2023, as well as the highs of April 2023 and January 2024). According to Brandt, the current bullish cycle will conclude in August-September 2025. By that time, the quotes of the digital gold should reach the stated goal.

Regarding the exit point from the position, Brandt, half-jokingly, half-seriously, wrote that he would use laser eyes on the X network as a "contrarian indicator," just as in 2021. "So, folks," he urged, "if you want bitcoin to maintain a strong trend, please do not post laser eyes on your social media profile picture. Too many laser eyes are a sell signal."

A similar figure was mentioned by ChatGPT-4. According to this Artificial Intelligence, by August 2025, the price of BTC could reach $179,000. However, ChatGPT-4 acknowledged the difficulty of precise forecasting and warned that "these calculations are speculative and depend on a wide range of unpredictable economic, regulatory, and technological factors.".

Regarding the current year, 2024, the price of the first cryptocurrency could reach $150,000 in the next 10 months. This opinion was expressed by Tom Lee, co-founder of the analytical firm Fundstrat, in an interview with CNBC. "ETFs increase demand, halving reduces supply, and the expected easing of monetary policy all support risk assets and bitcoin," he explained. At the same time, the expert believes that a correction in the crypto market should not be expected in the near future. In the long-term perspective, Lee reiterated his January forecast of bitcoin reaching $500,000 within five years. "It's sound money, I think it's proving its utility. It's a great store of value, a good risk asset, and also incredibly safe," added the Fundstrat co-founder.

As of the review's writing on the evening of Friday, 1 March, BTC/USD is trading in the vicinity of $62,500. The total market capitalization of the crypto market has surpassed an important threshold of $2 trillion and reached $2.34 trillion (up from $1.95 trillion a week ago). The Crypto Fear & Greed Index has risen from 76 to 80 points and is in the Extreme Greed zone.

And finally, a fly in the ointment amidst the general rejoicing. Contrary to numerous bitcoin enthusiasts, experts at the European Central Bank believe that the fair value of BTC is... zero. And this is despite the approval of spot bitcoin ETFs in the US and the current price rally.

In November 2022, ECB experts published an article titled "Bitcoin's Last Stand". There, they referred to the stabilization of the cryptocurrency's quotes as "an artificially induced last gasp before the road to ultimate irrelevance". Since then, the price of digital gold has risen from ~$17,000 to ~$60,000. However, this has not caused the bank's specialists to change their opinion. In a new essay titled "ETF Approval - New Clothes for the Naked King", they stated that they were right in their main arguments more than a year ago. Firstly, bitcoin has failed as a global decentralized digital currency for payments. Secondly, the cryptocurrency has not become a suitable investment asset whose value will inevitably increase.

"Bitcoin is still not suitable as an investment," the essay states. "It does not generate any cash flows (like real estate) or dividends (like stocks), cannot be productively used (like commodities), does not offer any social benefits (like gold jewellery), or subjective value based on outstanding abilities (like works of art)," believe ECB experts. It would be interesting to see what they would say if, for example, Max Keiser's forecast comes true, and the "naked king" is worth $21 million per coin.
 

NordFX Analytical Group
 

Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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February 2024 Results: NordFX Top 3 Traders and New Unique Bonus

NordFX, a brokerage firm, has summarized the trading performance of its clients for February 2024. The effectiveness of social trading services, PAMM and CopyTrading, as well as the profits earned by the company's IB partners, were also evaluated.

- The best result in February was achieved by a trader from Southeast Asia, account number 1745XXX, who made a profit of 70,757 USD through transactions with gold (XAU/USD).
- The gold pair XAU/USD, along with the British pound (GBP/USD), assisted a client from Western Asia, account number 1704XXX, in securing the second spot on the podium with earnings of 45,303 USD.
- Third place went to another trader from Southeast Asia, the owner of account number 1748XXX. Utilising the same instrument, XAU/USD, they managed to gain a profit of 25,570 USD.

The following situation has emerged in the passive investment services of NordFX:

The PAMM service at NordFX continues to attract investors' attention to the "Trade and earn" account, which opened in March 2022. After four months of dormancy, it reactivated in November of the same year. For a long time, its maximum drawdown did not exceed 17%. However, at the end of 2023, the account manager made a significant mistake, and within a few days, the drawdown neared a risky 60%. Fortunately, the manager was able to rectify the situation, resulting in a sharp increase in profitability, exceeding 477% over 16 months of operation.

In our last review, we also highlighted a startup named Kikos2. A month later, it remains showcased in the PAMM service, boasting a profit of 394% within 101 days of its existence, despite a significant maximum drawdown of around 60%. Therefore, in this and all other cases, investors must exercise maximum caution and be prepared for both profits and losses.

Those familiar with NordFX's passive investment services will likely know the accounts named KennyFXPRO, the oldest of which has been operating for over three years. This time, we want to highlight two new accounts created by this manager. The first, KennyFXPRO - The CAD Bank, has shown a profit of 7% in 87 days with a very low maximum drawdown of less than 5%. The profitability of the second, KennyFXPRO - Road to 250, was nearly 15% over 89 days, with a drawdown of less than 7%.

In CopyTrading, we continue to monitor the yahmat-forex signal, which has shown a return of 372% over 251 days, with a maximum drawdown of 37%. Among the startups, it's worth noting the FxBro Tradings account, which has demonstrated a return of 26% in just 23 days, with a maximum drawdown of less than 8%.

Among the IB partners of the brokerage firm NordFX, the top 3 are as follows:
- The largest commission reward in February was credited to a partner from Southeast Asia, account number 1743XXX, amounting to 10,975 USD.
- Following them is their colleague from Western Asia, account number 1645XXX, who earned 6,137 USD for the month.
- Finally, completing the top three leaders is another partner from Southeast Asia, account number 1516XXX, who received a commission of 5,535 USD.

***

Attention! Starting from February 20, clients of the brokerage firm NordFX have been given the opportunity to participate in a new accumulation program called the Margin Call Bonus. The program's uniqueness lies in the fact that traders earn bonus funds for themselves: the more actively they deposit into their account and the more actively they trade, the larger the amount they can receive when a Margin Call occurs.


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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NordFX Secures Its First 2024 Award as Best Crypto Broker in South East Asia

Finance Derivative magazine announced the 2024 Awards, among which brokerage firm NordFX emerged victorious in the "Best Crypto Broker South East Asia 2024" category.

Finance Derivative is a publication and magazine specializing in financial news, analysis, and reports on trends in finance, banking, technology, and investments. The magazine covers a wide range of topics, from macroeconomic issues to specific investment instruments and strategies, making it a valuable resource for professionals in the financial sector.

The Finance Derivative Awards are an annual accolade that recognizes the outstanding achievements of companies leading in banking, insurance, fintech, brokerage services, and other sectors of the finance industry. These awards not only acknowledge the laureates' achievements but also set standards and serve as an important indicator for all industry participants.

"We would like to congratulate you and extend our special recognition for your pursuit of excellence," states the letter from the Finance Derivative editorial team. "Highlighting your outstanding results, we are pleased to announce that NordFX has been named the 2024 winner in the 'Best Crypto Broker South East Asia' category. Commenting on this award, experts note NordFX's innovative approaches, wide range of cryptocurrency pairs, high level of order execution, and the opportunity for margin trading, which allows traders to significantly increase potential profits.


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex and Cryptocurrencies Forecast for February 26 - March 01, 2024

EUR/USD: ECB Rhetoric Against the Dollar

Data on consumer inflation (CPI) in the US, published on February 13, exceeded expectations. The Producer Price Index (PPI) also indicated a rise in industrial inflation in the country. However, despite this, the American currency failed to gain additional support. The Dollar Index (DXY) began to decline from February 14, while EUR/USD steadily climbed higher.

The minutes of the latest FOMC (Federal Open Market Committee) meeting of the US Federal Reserve were published on Wednesday, February 21, serving as a reminder that the American regulator might not be in a hurry to lower interest rates. However, market expectations still dominate that the Fed will begin to ease its monetary policy significantly earlier than the ECB. This factor exerts serious pressure on the dollar, especially as such expectations are constantly fuelled by statements from high-ranking European officials. ECB Executive Board member Isabel Schnabel stated that monetary policy must remain restrictive until the regulator is confident that inflation has sustainably returned to the medium-term target level of 2.0%.

A similar stance was taken by Schnabel's ECB colleague, Bundesbank President Joachim Nagel. On Friday, February 23, he stated that "it is still too early to cut rates, even if this step might seem tempting to some." According to Nagel, the price forecast is not clear enough yet, and key data on price pressure will only be received in Q2, which is when it might be appropriate to consider lowering interest rates.

The Bundesbank head believes that the period of rapid inflation decrease has ended, some setbacks are possible ahead, and in the coming months, inflation will remain noticeably above the target level of 2.0%. (According to the latest forecasts by MUFG Bank, CPI in the Eurozone is expected to be 2.7% in 2024).

EUR/USD surged to 1.0887 on Thursday February 22 and then fell to 1.0802, due to uneven business activity (PMI) data across various Eurozone countries. Preliminary estimates showed that France's manufacturing PMI jumped from 43.1 to 46.8 points, exceeding the expected 43.5. The services index rose from 45.4 to 48.0, surpassing the anticipated 45.7. Significantly exceeding expectations, these indicators ignited investor risk appetite, encompassing not only stock indices but also purchases of the common European currency against the dollar.

However, the joy of euro bulls was short-lived, halted by the publication of Germany's PMI. The manufacturing index of this powerhouse of the European economy plummeted from 45.5 to 42.3, against a forecast of 46.1. The Eurozone's manufacturing PMI dropped from 46.6 to 46.1, contrary to the expected rise to 47.0. It's important to note that all these indicators are below the key horizon of 50.0, indicating an economic downturn. Only the services sector reached this significant threshold of 50.0. Overall, the Eurozone's composite PMI increased to 48.9, the highest since June 2023, but it still remains in the negative zone for the seventh consecutive month.

Regarding the situation on the other side of the Atlantic, these indicators suggest economic growth in the US. Preliminary data showed that the business activity indicator in the services sector was 51.3 points, and in the manufacturing sector, 51.5. On Thursday, the traditional number of initial unemployment claims in the United States was also published, decreasing from 213K to 201K over the week (forecast was 217K), indicating a strengthening labour market.

EUR/USD closed the last week at 1.0820. According to some analysts, the recent macroeconomic data suggest that the dollar's weakening is a temporary phenomenon, and the DXY is expected to return to an upward trajectory. Only extraordinary events in the economy or politics could prevent this. As of the writing of this review, on the evening of Friday, February 23, 50% of experts voted for the strengthening of the dollar and the fall of the pair. 30% sided with the euro, while 20% took a neutral position. Among the oscillators on D1, only 10% are coloured red, 15% are in neutral grey, and 75% are green, with 20% of them in the overbought zone. The balance among trend indicators is different: 35% are red, and 65% are green. The nearest support for the pair is located in the 1.0800 zone, followed by 1.0725-1.0740, 1.0695, 1.0620, 1.0495-1.0515, 1.0450. Bulls will encounter resistance in the areas of 1.0840-1.0865, 1.0925, 1.0985-1.1015, 1.1050, 1.1110-1.1140, 1.1230-1.1275.

Key events to highlight for the upcoming week include Tuesday, February 27, when updates on US durable goods orders will be released. Preliminary data on the American GDP volume for Q4 2023 will follow the next day. Data on retail sales and consumer prices (CPI) in Germany will be published on Thursday, along with the Personal Consumption Expenditures Index and labour market statistics in the US. Significant volatility can be expected towards the end of the working week. On the first day of spring, the annual inflation rate (CPI) in the Eurozone and the final figures of the Business Activity Index (PMI) in the United States will be disclosed.

GBP/USD: UK Economy Gains Momentum

Alongside business activity data from the US and the Eurozone, preliminary indicators for the United Kingdom were also released on Thursday, February 22. The UK's manufacturing sector Business Activity Index (PMI), though slightly below the forecast of 47.5, showed a modest increase from 47.0 to 47.1 points. The services sector indicator remained steady at 54.3. However, the composite PMI reached 53.3, surpassing both the forecast and the previous value of 52.9. Values in the green zone above 50.0 clearly indicate an improvement in the outlook for the British economy. It seems that the technical recession experienced in the second half of 2023 has ended or is at least close to ending.

In a previous review, we cited economists from Scotiabank's forecast that, starting from a strong long-term support zone of 1.2500, GBP/USD would begin to rise towards 1.2700. This prediction came true on 22 February, following the publication of the British PMI, as the pair reached a peak of 1.2709, returning to the very centre of the medium-term sideways channel of 1.2600-1.2800.

Favourable data on the UK economy and the recovery of global risk appetites should have a positive impact on the pound. In such a situation, strategists from the Japanese MUFG Bank write, "if the Fed and the ECB delay the timing of the first rate cut, then the Bank of England (BoE) will delay it as well." Recall that at the conclusion of the meeting that ended on February 1, the BoE announced it would keep the bank rate at its current level of 5.25%. The accompanying statement mentioned that "before lowering rates, more evidence is needed that the Consumer Price Index will fall to 2.0% and remain at this level." Market participants expect the first rate cut to occur in August. This expectation is already priced in and prevents GBP/USD from falling.

MUFG believes, "although the pound's correlation with global stocks has begun to weaken, it remains stronger than the dollar's correlation with risk. And if risk appetite persists, this could cause some strengthening of the pound." However, the bank's experts warn that some concerns about the growth of the British economy still remain, and this could restrain the growth of GBP.

GBP/USD closed the past week at 1.2670. As for the median forecast of analysts for the coming days, 65% voted for the pair's decline, while 35% supported its growth. Among the oscillators on D1, only 10% point south, 15% look east, and the remaining 75% point north, of which 10% signal overbought conditions. Trend indicators show a significant bias towards the British currency: 90% point north, with the remaining 10% pointing south. Should the pair move southward, it will encounter support levels and zones at 1.2635-1.2650, 1.2570, 1.2500-1.2535, 1.2450, 1.2370, 1.2330. In case of an increase, resistance will be met at levels 1.2695-1.2710, 1.2755-1.2775, 1.2825, 1.2880, 1.2940, 1.3000, and 1.3140-1.3150.

No significant macroeconomic data releases related to the UK economy are scheduled for the upcoming week.

USD/JPY: To the Moon and Beyond, Mars is Next

The yield on 10-year US Treasury bonds, currently around 4.30%, continues to support the dollar against the yen, with its low yield and negative interest rates. USD/JPY once again rose above 150.00 last week and attempted to storm the 151.00 mark. Again, it was unsuccessful: the local maximum was recorded at 150.76, with the week closing at 150.52.

The caution of bulls on USD/JPY is largely due to the fact that the 150.00-152.00 zone was where the Ministry of Finance of Japan initiated currency interventions in October 2022 and November 2023. However, every trader knows that past results do not guarantee future performance. Thus, it is not certain that the Ministry of Finance and the Bank of Japan (BoJ) will follow the same path this time.

It should be noted that Japan's GDP has fallen for the last two quarters. A weak national currency supports exporters by making Japanese products more attractive and competitive in foreign markets, thereby stimulating the country's economy. This explains the reluctance of Japanese financial regulators to tighten monetary policy. According to Kazuo Ueda, the head of the BoJ, the question of maintaining or changing monetary policy, including the negative interest rate, will only be considered "when there is a chance of sustainable and stable achievement of the target price level."

As mentioned, the likelihood of a reversal in USD/JPY southward from the 151.00-152.00 zone is high, yet it remains less than 100%. Currently, the pair's rate is approximately 14% higher than a year ago. As some experts note, the financial authorities in Japan start to get nervous when this figure approaches 20% year-on-year. For now, they can feel relatively relaxed and comfortable, especially since the country's economy has already adapted to such an exchange rate over the past two years. Therefore, it's not entirely out of the question that instead of falling to 140.00 as expected by Danske Bank, we might see the pair reach heights of 160.00, as was the case 34 years ago in April 1990.

Regarding the near future, specialists at Singapore's United Overseas Bank believe that within one to three weeks, USD/JPY is likely to trade within the range of 148.70 to 150.90. However, UOB does not rule out that a breakthrough above 150.90 could trigger a rise to 152.00. At the time of writing this review, 40% of experts sided with the dollar, while the majority (60%) voted for the strengthening of the yen. Trend indicators and oscillators on D1 all point north, yet 10% of the latter are in the overbought zone. The nearest support level is located in the zone of 149.70-150.00, followed by 148.25-148.40, 147.65, 146.65-146.85, 144.90-145.30, 143.40-143.75, 142.20, 140.25-140.60. Resistance levels and zones are at 150.90, 151.70-152.05, and 153.15.

No significant events related to the Japanese economy are scheduled for the upcoming week.

CRYPTOCURRENCIES: Five Reasons for the End of the Crypto Winter


Throughout the past week, there was a lull in the battle between bitcoin bears and bulls. Choosing $51,500 as the Pivot Point, BTC/USD moved sideways in a narrow corridor of $50,500-$52,500. Bulls' attempt to break through resistance on 20 February ended in failure, and the pair returned to its defined boundaries. However, as experience shows, any calm is not everlasting. It is inevitably replaced by thunder rolls, stormy winds, and squally showers, especially true for the highly volatile crypto market. So, what can we expect if the weather changes?

According to Lucas Outumuro, head of research at IntoTheBlock, there's an 85% likelihood that bitcoin will reach a new all-time high within the next six months, potentially surpassing $70,000. The analyst identified five factors that could catalyse this growth.

1. Halving in April: This will be the fourth halving event, reducing the block reward from 6.25 BTC to 3.125 BTC, leading to decreased selling pressure. Outumuro does not rule out the possibility of bitcoin reaching an all-time high (ATH) just a month after the halving.

2. Continued inflow into spot Bitcoin ETFs: While the duration of strong inflows remains uncertain, a stable inflow over time is expected to bolster the price of bitcoin by increasing demand.

3. Federal Reserve's interest rate policy: The Fed's stringent stance on interest rates in 2022 laid the groundwork for a bearish trend in risk assets, including the crypto market. With inflation dropping from 10% to 3% by 2024, many anticipate a policy shift by the Fed and the beginning of a rate-cutting cycle. "This expectation is likely the main driving force behind the recent rallies in both bitcoin and stocks... This time, bitcoin's price movement has been more closely linked with traditional assets, leading to its correlation with the Nasdaq and S&P 500 reaching two-month highs," explains Outumuro.

4. US Presidential Elections: Despite the current President Joe Biden's general opposition to digital assets, election campaigns positively impact the crypto market. "The prediction market Polymarket currently gives Biden just a 33% chance of re-election, making Donald Trump, who is significantly more crypto-friendly, the most likely victor," reports IntoTheBlock. The Fed may begin to ease its monetary policy more aggressively to increase the current US President's re-election chances, benefiting stock and cryptocurrency markets.

5. Hedge Funds: Outumuro points out that when bitcoin recovered after the COVID-19 pandemic in 2020, traditional financial giants first recognized cryptocurrency's potential. With the launch of spot Bitcoin ETFs, hedge funds have the opportunity to accumulate a new asset class, leading to increased adoption and acceptance of digital assets.

However, IntoTheBlock acknowledges that these scenarios could change due to several factors. For instance, if the Fed does not ease policy, bitcoin could face a 10% correction. Geopolitical conflicts also negatively impact digital gold's price. Unexpected selling pressure in the event of major player bankruptcies is not ruled out.

As mentioned (in point 3), the correlation between bitcoin and the S&P 500 is increasing, suggesting BTC could rise alongside the US stock market. Following the S&P 500 surpassing 5,000 points, investment bank Goldman Sachs revised its end-of-year forecast for the index to 5,200, potentially providing additional support for bitcoin.

Every trader knows that determining the optimal moment to sell an asset is just as important as the decision to buy it. Dennis Liu, also known as Virtual Bacon, shared his bitcoin investment methodology a few days ago, identifying three elements designed to signal that the market may have reached its peak.

1. Specific Price Milestones: The first sign to look out for is reaching certain price milestones: $200,000 for bitcoin and $15,000 for Ethereum. Liu's assumption is based on historical cycles and diminishing returns. This is a clear, quantifiable indicator that eliminates guesswork when deciding to exit a position.

2. Time-based Exit Strategy: The second benchmark Liu mentions is time-bound. Regardless of the asset's price dynamics, the trader plans to exit positions by the end of 2025. This decision is grounded in the importance of historical patterns and is based on the analysis of halving cycles and the duration of bull markets.

3. Monitoring Price Patterns: The last element of Liu's methodology involves closely monitoring price patterns, specifically BTC's behaviour relative to its 200-day and 21-week exponential moving averages (EMAs). A fall below these support levels would signal the need to sell bitcoin.

It's clear that $200,000 for bitcoin is a forecast, and moreover, a forecast for the relatively distant future. As for the near future, as we've noted, many on-chain indicators from Glassnode have already entered what's termed the "risk zone." They record a relatively low level of realized profit considering the active price growth in the last four weeks. According to Glassnode specialists' observations, a high risk indicator is usually seen in the early stages of a bull market. This is because, upon reaching a "significant level" of profitability, hodlers may begin to take profits, potentially leading to a sharp correction downwards.

Analyst Gareth Soloway suggested that bitcoin could potentially fall to the $30,000 mark, especially if the stock market undergoes a correction. The expert referred to the new potential support for bitcoin as the "line in the sand." "My main line in the sand is between $30,000 to $32,000. [...]. If we drop there, I'll start buying quite large volumes of BTC," he wrote.

Investor and founder of MN Trading, Michael Van De Poppe, also advises investors to wait for a 20-40% correction before entering the market. The specialist believes that a bitcoin pullback could occur upon reaching the $53,000-$58,000 zone. "However," adds Van De Poppe, "if you're buying bitcoin with the intention to hold it for two to three years, and if you believe it will rise to $150,000 during that period, then nothing should stop you from purchasing it at these [current] prices."

While the leading cryptocurrency has been in a flat trend over the last week (a 4% fluctuation for BTC is definitely considered flat), its main competitor, Ethereum, has been significantly more active. Recovering from the previous year, this altcoin has shown excellent dynamics since the end of January, growing by more than 35% and reaching a significant level of $3,000. This is related to both a revival in the DeFi sector and hopes for the launch of ETH-based ETFs in May this year. Although previous reviews have cited several leading experts' doubts about this, there are also many optimists. For instance, analysts at Bernstein believe that the likelihood of the US Securities and Exchange Commission (SEC) approving an ETH-ETF in May is almost 50%, and there is almost a 100% certainty of approval within the next 12 months.

"Ethereum, with its dynamic yield rates, environmentally friendly design, and utility in creating new financial markets, has good prospects for mass institutional adoption. It's probably the only digital asset alternative to bitcoin that could receive unequivocal ETF approval from the SEC," Bernstein analysts argue. They believe that officials might be influenced by the fact that participants in the traditional stock market not only want to launch spot ETH ETFs similar to bitcoin ETFs but also express the intention "to build more transparent and open tokenized financial markets on the ETH network, where utility goes beyond simple asset accumulation." According to Standard Chartered bank estimates, with the anticipation of ETH-ETF approval, the coin's price could rise to $4,000 in the near future.

As of the evening of February 23 when this review is written, BTC/USD is trading in the $51,000 zone, and ETH/USD is at $2,935. The total market capitalization of the crypto market has remained unchanged over the week, standing at $1.95 trillion. The Crypto Fear & Greed Index has risen to the lower boundary of the Extreme Greed zone at 76 points (up from 72 a week ago).
 

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Forex and Cryptocurrencies Forecast for February 19 - 23, 2024

EUR/USD: A Week of Mixed Data


The macroeconomic statistics released last week were mixed in both the United States and the Eurozone. As a result, EUR/USD failed to break through either the 1.0700 support or the 1.0800 resistance, continuing to move within a narrow sideways channel.

The US dollar received a strong bullish impulse on Tuesday, February 14, following the release of US inflation data. The Dollar Index (DXY) surged by more than 0.5% and nearly reached the 105.00 resistance level. Consequently, EUR/USD moved downward, towards the lower boundary of the specified sideways range. Meanwhile, the S&P 500 stock index fell from 5051 to 4922 points.

It can be said that the US inflation data caught the markets off guard. Some analysts even described them as shocking. It turned out that the final victory over prices is not as close as it seemed before, and that the Federal Reserve is unlikely to start lowering interest rates anytime soon.

In January, the Consumer Price Index (CPI) sharply increased against the backdrop of a significant rise in the cost of rent, food, and healthcare services. On a monthly basis, the overall index accelerated from 0.2% to 0.3%. On an annual basis, the CPI was 3.1%, which is below the previous value of 3.4%, but significantly above the forecast of 2.9%. Excluding the volatile prices of food and energy, inflation in January rose from 0.3% to 0.4% month-on-month, while the annual core CPI remained at the previous level of 3.9%, although analysts had forecast a decrease to 3.8%. Particularly sharp was the increase in so-called "super-core inflation," which also excludes housing costs. In January, on a monthly basis, it reached 0.8%: the highest level since April 2022.

Certainly, the Federal Reserve's achievements in combating inflation are significant. It is worth recalling that in the summer of 2022, the CPI reached a 40-year peak at 9.1%. However, the current inflation rate is still almost twice the target level of 2.0%. Based on this, the market concluded that the Federal Reserve is now unlikely to rush into easing monetary policy and will probably maintain high interest rates for longer than previously anticipated. At the beginning of January, according to the FedWatch Tool, the probability of a 25 basis point (bp) rate cut in May was 54.1%. After the inflation report was released, this figure dropped to 35%. An even lower probability is given by the monitoring tool developed by Investing.com. The possibility of a dovish pivot in March, according to its readings, stands at 5%, and in May – around 30% (just a few weeks ago, it was over 90%). As for the beginning of summer, the probability of a reduction in the cost of borrowing through federal funds in June is estimated at 75%.

The inflation report was a boon for dollar bulls, but their joy was short-lived. The data on industrial production and retail sales in the US released on Thursday, February 16, were weaker than expected. In January, retail sales showed a decline of -0.8% compared to the December increase of 0.4% and the forecast of -0.1%. As a result, the dollar was under pressure, and the EUR/USD pendulum swung in the opposite direction: the pair headed towards the upper boundary of the 1.0700-1.0800 channel.

The dollar received a slight boost at the very end of the workweek. On Friday, February 16, the Producer Price Index (PPI) indicated that industrial inflation in January rose just as consumer inflation did. Against a forecast of 0.1%, the actual increase was 0.3% month-on-month, which is 0.4% higher than December's figure. On an annual basis, the PPI rose by 2.0% (forecast 1.6%, previous value 1.7%). However, this support was soon offset by a drop in the University of Michigan's US Consumer Confidence Index, which, although it increased from 79.0 to 79.6, was below the forecast of 80.0 points.

On the other side of the Atlantic, the news was also rather contradictory, resulting in the European statistics not being able to significantly support its currency. The February Economic Sentiment Index from ZEW in Germany improved more than expected, rising to 19.9 from 15.2 in the previous month. The economic sentiment indicator for the Eurozone as a whole also showed growth, moving from 22.7 points to 25.0. However, the assessment of the current situation fell to -81.7, the lowest level since June 2020.

Preliminary GDP data for Q4 2023, released on Wednesday, February 14, showed that the Eurozone is in a state of stagnation. On a quarterly basis, the figures remained at 0%, and on an annual basis, they were at 0.1%, exactly matching forecasts. This statistic did not add optimism, and markets continued to exercise caution, fearing that the Eurozone economy might slip into recession.

Europe faces a significantly sharper choice between supporting the economy and fighting inflation compared to the United States. Isabel Schnabel, a member of the Executive Board of the ECB and a well-known hawk, stated on Friday, February 16, that the regulator's monetary policy must remain restrictive until the ECB is confident that inflation has sustainably returned to the medium-term target level of 2.0%. Furthermore, Ms. Schnabel believes that persistently low labour productivity growth increases the risk that companies may pass their higher labour costs on to consumers, which could delay the achievement of the inflation target.

However, despite such hawkish statements, according to a ZEW survey, more than two-thirds of business representatives still hope for an easing of the ECB's monetary policy within the next six months. The probability of a rate cut for the euro in April is currently estimated by the markets at about 53%.

After all the fluctuations of EUR/USD, the final note of the past week was struck at the level of 1.0776. At the time of writing this review, on the evening of Friday, February 16, 55% of experts voted for the strengthening of the dollar in the near future and the further fall of the pair. 30% sided with the euro, while 15% took a neutral stance. Among the oscillators on D1, 60% are coloured red, 40% in neutral-grey, and none in green. The ratio among trend indicators is different: 60% red and 40% green. The nearest support for the pair is located in the zone of 1.0725-1.0740, followed by 1.0695, 1.0620, 1.0495-1.0515, 1.0450. Bulls will encounter resistance in the areas of 1.0800-1.0820, 1.0865, 1.0925, 1.0985-1.1015, 1.1110-1.1140, 1.1230-1.1275.

Among the events of the upcoming week, the minutes from the last meeting of the Federal Open Market Committee (FOMC) of the US Federal Reserve, which will be published on Wednesday, February 21, are of great interest. The following day, a powerful flow of data on business activity (PMI) in Germany, the Eurozone, and the US will be released. Moreover, on Thursday, February 22, the January figure for the Consumer Price Index (CPI) in the Eurozone and the number of initial jobless claims in the US will be known. Towards the very end of the workweek, on Friday, February 23, data on Germany's GDP, the main engine of the European economy, will arrive. Additionally, traders should keep in mind that Monday, February 19, is a holiday in the United States: the country observes Presidents' Day.

GBP/USD: What's Happening with the UK Economy?

As is known, following the meeting that concluded on February 1, the Bank of England (BoE) announced the maintenance of the bank rate at the previous level of 5.25%. The accompanying statement mentioned that "more evidence is needed that the Consumer Price Index will fall to 2.0% and remain at that level before considering rate cuts."

On February 15, Catharine Mann, a member of the Monetary Policy Committee (MPC) of the regulator, provided the most comprehensive overview of the state of the British economy, including aspects concerning inflation. The key points of her analysis were as follows: "The latest GDP data confirm that the second half of 2023 was weak. However, GDP data is a rearview mirror. On the other hand, the Purchasing Managers' Index (PMI) and other leading indicators look promising. The unemployment rate in the UK remains relatively low, and the labour market continues to be tight. Wage growth is slowing, but the pace remains problematic for the target Consumer Price Index (CPI) indicator. In the UK, goods prices may become deflationary at some point, but not on a long-term basis. Inflation in the UK's services sector is much more persistent than in the EU or the US." Consequently, Catharine Mann's conclusion was: "Mitigating the sources of inflation will be crucial in decision-making" and "Before making a decision on further actions, the Bank of England needs to receive at least one more inflation report."

Referring to specific figures, the latest data from the Office for National Statistics (ONS), published on February 16, showed that retail sales in the UK in January increased by 3.4% against the expected 1.5% and a decline of -3.3% in December (month-on-month). The core figure (excluding automotive fuel retail sales) rose by 3.2% over the month against a forecast of 1.7% and -3.5% in December. On an annual basis, retail sales also showed growth of 0.7% against the expected decline of -1.4% and a December figure of -2.4%.

Labour market data also supports the pound. The unemployment rate fell to 3.8% from 4.2%, against expectations of 4.0%. The reduction in the number of active job seekers in the labour market intensifies competition among employers, which helps maintain a higher wage growth rate. For the three months to December, wage growth was 5.8%. Such strong labour market statistics, complemented by high inflation (CPI 4.0% year-on-year, core CPI 5.1% year-on-year), are likely to push back the anticipated date for easing the Bank of England's monetary policy. Many analysts do not rule out that ultimately, the BoE may be among the last mega-regulators to cut rates this year.

GBP/USD ended the week at the level of 1.2599. According to economists at Scotiabank, the 1.2500 zone represents strong long-term support for it, and a confident move above 1.2610 will strengthen the pound and set GBP/USD on a growth path towards 1.2700. Regarding the median forecast of analysts for the coming days, 65% voted for the pair's decline, 20% for its rise, and the remaining 15% maintained neutrality. Among the oscillators on D1, 75% point south, the remaining 25% look east, with none willing to move north. The situation is different with trend indicators, where there is a slight bias in favour of the British currency – 60% indicate north, while the remaining 40% point south. If the pair moves south, it will encounter support levels and zones at 1.2570, 1.2500-1.2535, 1.2450, 1.2370, 1.2330, 1.2185, 1.2070-1.2090, 1.2035. In case of an increase, the pair will meet resistance at levels 1.2635, 1.2695-1.2725, 1.2775-1.2820, 1.2880, 1.2940, 1.3000, and 1.3140-1.3150.

Thursday, February 22 stands out in the calendar for the upcoming week. On this day, a batch of data on business activity (PMI) in various sectors of the economy of the United Kingdom will be released. The release of other significant macroeconomic statistics in the coming days is not anticipated.

USD/JPY: The Flight Continues

On Tuesday, February 13, USD/JPY reached another local maximum at 150.88. The Japanese currency retreated again, this time against the backdrop of inflation data in the US. The yen also continues to be under pressure due to the Bank of Japan's (BoJ) consistent dovish stance. On February 8, Deputy Governor Shinichi Uchida expressed doubts that the regulator would start to quickly raise its benchmark rate anytime soon. Last Friday, February 16, BoJ Governor Kazuo Ueda spoke in a similar vein. He stated that the issue of maintaining or changing monetary policy, including the negative interest rate, would only be considered "when there is a chance of sustainable and stable achievement of the price level target." Ueda declined to comment on short-term fluctuations in the exchange rate and the factors behind these movements.

In general, there's nothing new. However, many analysts continue to hope that in 2024 the Bank of Japan will finally decide to tighten its monetary policy. "We believe," write economists at the Swiss financial holding UBS, "that the normalization of the Bank of Japan's policy this year will occur against the backdrop of strong negotiations on wage increases and corporate profitability. We still believe that the Japanese yen is likely at a turning point after significant depreciation from 2021 to 2023. Considering that the yield differential between 10-year U.S. and Japanese bonds will narrow over the year, we believe the current entry point for buying yen is attractive."

A similar position is held at Danske Bank, where they forecast a sustainable decrease in USD/JPY below 140.00 on a 12-month horizon. "This is primarily because we expect limited growth in yields in the US," say strategists at this bank. "Therefore, we expect the yield differential to become a tailwind for the yen throughout the year, as the G10 central banks, with the exception of the Bank of Japan, are likely to start rate-cutting cycles."

Regarding the short-term outlook, specialists at Singapore's United Overseas Bank Limited believe that the dollar still has the potential to test 151.00 before weakening. "The risk of the US dollar rising to 152.00 will remain unchanged as long as it stays above 149.55," UOB states. This position is supported by only 25% of experts, with the majority (60%) already siding with the yen, and the remaining 15% preferring to maintain neutrality. Among the trend indicators and oscillators on D1, all 100% point north, however, 25% of the latter are in the overbought zone. The nearest support level is located in the zone of 149.65, followed by 148.25-148.40, 147.65, 146.65-146.85, 144.90-145.30, 143.40-143.75, 142.20, 140.25-140.60. Resistance levels are located at the following levels and zones - 150.65-150.90, 151.70-152.00.

No significant events related to the Japanese economy are scheduled for the upcoming week. Moreover, it is important to note that Friday, February 23, is a public holiday in Japan: the country observes the Emperor's Birthday.

CRYPTOCURRENCIES: Bitcoin Breaks Records

Last week, the price of bitcoin rose above $52,790, setting a new peak since 2021. According to CoinGecko, the market capitalization of the leading cryptocurrency exceeded $1.0 trillion for the first time in two years, and the total market capitalization of the entire crypto market rose above $2.0 trillion for the first time since April 2022.

Much of this bull rally is attributed to the launch of nine leading spot bitcoin ETFs. According to The Block, a month after their launch, their assets exceeded 200,000 BTC (about $10 billion). The new bitcoin ETFs rose to second place in the ranking of US commodity exchange-traded funds by asset volume, becoming a more popular investment instrument than silver ETFs. Observers note BlackRock's statement that "interest in bitcoin among investors remains high," hence the fund is ready to buy even more BTC.

According to Documenting Bitcoin, the net interest from ETF issuers exceeds 12,000 BTC per day. Thus, Wall Street representatives are currently buying 12.5 times more BTC coins daily than the network can produce. Researchers believe this has been a key driver of the price increase for the flagship crypto asset.

Morgan Creek Digital co-founder and partner Anthony Pompliano also highlighted the success of the newly launched spot BTC-ETFs. According to him, the fact that BlackRock and Fidelity managed to attract $3 billion each in record short times was a historic event for exchange-traded funds. "Wall Street is not just in love with bitcoin," the financier wrote. "They are in an active love affair. The daily supply of bitcoins to funds is limited to just 900 BTC, which corresponds to approximately $40-45 million. Meanwhile, the daily net inflow of funds into BTC-ETFs already equals $500 million (max. $651 million). This is a clear indicator of BTC scarcity and its bullish impact on the cryptocurrency's price and the market as a whole," Pompliano stated, noting the imbalance between the market supply of bitcoin and demand from Wall Street companies. The billionaire is optimistic about BTC's future trajectory and asserts that with continued demand from Wall Street, especially considering the upcoming halving, the top-capitalization cryptocurrency could significantly exceed its historical highs.

CryptoQuant noted that, in addition to the demand from BTC-ETFs, the number of active wallets is also significantly increasing. This too indicates a long-term upward trend. "Given the reduction in supply, increased demand, and various economic and social issues, especially ongoing inflation, bitcoin is likely to strengthen its position as a long-term alternative investment asset with an upward trend," analysts conclude.

SkyBridge Capital founder and former White House senior official Anthony Scaramucci also emphasized inflation. Beyond the launch of spot BTC-ETFs and the halving, Scaramucci pointed to the monetary policy of the US Federal Reserve as a driver for Bitcoin's growth. "The US Consumer Price Index (CPI) data released on Tuesday, February 13, signalled that inflation may not be as under control as the Fed would like," the investor writes. "Based on data published by the US Bureau of Labor Statistics, the consumer price index for January showed inflation at 3.1%. The data also sparked speculation that a Federal Reserve interest rate cut in March and May is likely off the table." Delays in rate cuts can cause turbulent trading in the main market but will serve as a boom for the crypto world, as Bitcoin is used as a hedge against inflation. Therefore, according to Scaramucci, the time to invest profitably in digital gold has not yet passed.

Popular blogger and analyst Lark Davis shared a similar position: he believes investors have about 700 days to get rich. Discussing the importance of market cycles and the timely sale of assets, the specialist noted that if traders are attentive, they can make a lot of money in the next two years. According to the expert, 2024 will be the last chance to buy digital assets, and 2025 will be the best time to sell them. The specialist emphasized the importance of not disposing of everything at once but gradually securing profits. Lark Davis also warned that in 2026, a "Great Depression" will begin in the global economy and the cryptocurrency market. And if not sold in time, investments could be lost.

The onset of the "Great Depression" is also predicted by the famous author of "Rich Dad Poor Dad," financier, and writer Robert Kiyosaki. He believes that the S&P 500 index is on the verge of a monumental crash with a potential collapse of a full 70%. He accompanied this statement with his consistent recommendation to invest in assets such as gold, silver, and bitcoins.

Ex-CEO of the cryptocurrency exchange BitMEX, Arthur Hayes, identified another driver for Bitcoin's growth related to the Federal Reserve's monetary policy. Last week, the US banking sector was gripped by fear as New York Community Bancorp (NYCB) reported a colossal quarterly loss of $252 million. The bank's total loan losses increased fivefold to $552 million, fuelled by concerns over commercial real estate. Following the release of this report, NYCB shares fell 40% in one day, leading to a decline in the US Regional Banks Index.

Arthur Hayes recalled the Bitcoin rally triggered by the banking crisis in March 2023, when three major American banks, Silicon Valley Bank, Signature Bank, and Silvergate Bank, went bankrupt within five days. The crisis was caused by an increase in the Federal Reserve's refinancing rate and, as a consequence, the outflow of deposit accounts. Its biggest victims also included Credit Suisse and First Republic Bank. To prevent the crisis from affecting even more banks, global industry regulators, primarily the Fed, intervened to provide liquidity. "Yeah... From rock to bankruptcy, that's the future. And then there will be even more money, printers... and BTC at $1 million," the ex-CEO of BitMEX commented on the current NYCB failure.

Popular analyst on the X platform known as Egrag Crypto believes that by September this year, Bitcoin's market capitalization will reach $2.0 trillion. Based on this, the price of the leading cryptocurrency at that moment will exceed $100,000. "Get ready for the journey of your life," Egrag Crypto urges his followers. "Hold on tight, as you are witnessing a cryptocurrency revolution. Don't blink, or you might miss this historic moment in financial history!"

As of the evening of February 16, when this review was written, the BTC/USD pair is trading in the $52,000 zone. The total market capitalization of the crypto market stands at $1.95 trillion ($1.78 trillion a week ago). The Crypto Fear & Greed Index remains in the Greed zone at a level of 72 points.

– It's worth noting that the Greed zone corresponds to a situation where traders are actively buying an asset that is increasing in price. However, Glassnode warns that many on-chain indicators have already entered the so-called "risk zone". The analysis is based on a group of indicators that consider a wide range of data regarding investor behaviour. Their combination covers both short-term and long-term cycles. In particular, the MVRV indicator, which tracks long-term investors, has approached the critical zone. Such a high value (2.06) has not been observed since the FTX collapse. A similar "high" and "very high" risk status is currently characteristic of six out of the remaining nine metrics. They record a relatively low level of realized profit considering the active price increase in recent weeks. According to observations by Glassnode specialists, a high risk indicator is usually observed in the early stages of a bull market. This is because, having reached a "significant level" of profitability, hodlers may start to secure profits, which, consequently, could lead to a strong correction downwards.
 

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Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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Forex and Cryptocurrencies Forecast for February 12 - 16, 2024

EUR/USD: Dollar Dips but Promises a Rebound

Last week saw a scarcity of significant macroeconomic data. In anticipation of new drivers, market participants analysed the state of the US labour market and statements from Federal Reserve officials.

Data released on February 2 revealed that the number of new jobs in the US non-farm sector (Non-Farm Payrolls) increased by 353,000 in January, against the expected 180,000. This figure followed a December increase of 333,000. Unemployment remained stable at 3.7%, although experts had forecast a rise to 3.8%. Meanwhile, wage inflation grew to 4.5% on an annual basis, significantly exceeding market expectations of 4.1%. The report, issued on Thursday, February 8, was also robust, showing that the number of US citizens applying for unemployment benefits was 218K, down from 227K previously.

Thus, Federal Reserve Chair Jerome Powell's concerns proved unfounded. Recall that he recently suggested that if the labour market were to cool sharply, easing of monetary policy could occur quite rapidly. However, no cooling has occurred, so the FOMC members may not rush to a dovish pivot until they see convincing evidence of inflation dropping below the 2.0% target.

Subsequent comments from Fed representatives confirmed the low likelihood of an easing of national monetary policy in the near term. For instance, Susan Collins, President of the Federal Reserve Bank of Boston, stated that due to a strong labour market and economic growth, a rate cut is currently not advisable. Her colleague from the Federal Reserve Bank of Richmond, Thomas Barkin, expressed serious doubts about the sustainability of the inflation reduction pace, as price growth continues in the services and rental sectors. As the figures above indicate, wage inflation is also rising.

Against this backdrop of the regulator's representatives' hawkish stance, the probability of a rate cut in March has decreased, and according to the FedWatch Tool, it currently stands at only 15.5%, with May at 54.1%. In such conditions, bulls on the Dollar Index (DXY) feel significantly more confident than bears.

Regarding the euro, the common European currency has been significantly impacted by recent dovish statements from European Central Bank (ECB) officials. Weak statistics from the Eurozone also support the case for an earlier start to monetary policy easing. A comparison of macroeconomic indicators between the Old and New Worlds suffices to illustrate this. Unemployment in the Eurozone stands at 6.4% compared to 3.7% in the US. European GDP in Q4 barely moved from a recessionary level of -0.1% to 0% (in contrast to the US, which saw a +3.3% increase). The service sector activity index dropped from 48.8 to 48.4 points, while the composite indicator, which includes both services and manufacturing, is at 47.9 points. Hence, both these indicators remain in the stagnation zone (below 50.0). In Germany, exports of goods decreased by 4.6% in December, and imports by 6.7%.

On the other hand, the Consumer Price Index (CPI), a crucial inflation indicator, showed a slight increase in consumer prices in Germany from 0.1% to 0.2% month-on-month, offering the euro some support by giving investors hope that the ECB may not be the first to cut rates. As a result, EUR/USD ended the week at 1.0785.    

A number of experts believe that the dollar's weakening last week was a corrective pullback, and the fundamental backdrop continues to favor the American currency. As of the writing of this review, on the evening of Friday, February 9, 70% of experts voted for a strengthening of the dollar in the near future and a further decline of the pair. 15% sided with the euro, and an equal percentage adopted a neutral position. Oscillators on D1 share a similar view: 65% are coloured red, indicating a bearish outlook, 10% green, showing a bullish outlook, and 25% in neutral grey. Among trend indicators, the distribution of forces between red (bearish) and green (bullish) stands at 65% to 35%. The nearest support for the pair is located in the zone of 1.0725-1.0740, followed by 1.0680, 1.0620, 1.0495-1.0515, and 1.0450. Bulls will encounter resistance at levels 1.0800-1.0820, 1.0865, 1.0925, 1.0985-1.1015, 1.1110-1.1140, and 1.1230-1.1275.

The upcoming week's noteworthy events include the publication of the US Consumer Price Index (CPI) data on Tuesday, February 13. Market participants will analyse the latest Eurozone GDP data on February 14, the same day Valentine's Day is celebrated. American statistics on manufacturing activity, unemployment, and retail sales volume will be highlighted on Thursday, February 15. The week will conclude with the release of the US Producer Price Index (PPI) for January on Friday.

GBP/USD: Factors Supporting and Weighing on the Pound

On Friday, February 2, strong data from the US labour market strengthened the dollar and pushed GBP/USD from the upper boundary of the sideways channel at 1.2600-1.2800 to the lower end. The decline continued over the past week, with the pair finding a local bottom at 1.2518 on February 5. It is to the credit of the British currency that it managed to recover its losses and returned to the 1.2600 zone, which shifted from support to resistance.

Analysts believe that the British currency continues to be supported by expectations that the Bank of England (BoE) may be among the last to cut rates this year. It's worth noting that on February 1, the BoE held its meeting and kept the key rate at the previous level of 5.25%. However, the pound received support because two members of the BoE's Monetary Policy Committee continued to vote for a rate hike of 25 basis points (bps). The following day, Catherine Mann explained that she voted for a rate increase because she is not confident that the decline in core inflation will continue in the near term. Another Committee member, Jonathan Haskel, acknowledged that inflationary pressures might be easing but noted that he would need additional evidence of this process before changing his stance on rate hike prospects.

Furthermore, GBP/USD is significantly influenced by market participants' risk appetite, which has been increasing, as evidenced by the quotations of stock indices such as the S&P 500, Dow Jones, and Nasdaq. Consequently, hawkish remarks from Bank of England representatives and improved sentiment regarding risk have helped the pair offset its losses.

Working against the British currency is the fact that inflationary pressures are indeed starting to ease. According to the KPMG and the Recruitment & Employment Confederation's UK Report on Jobs, the wage inflation index decreased from 56.5 points to 55.8 points in January, indicating that wage growth in the country was at its slowest pace since March 2021. Thus, signs of cooling inflation serve as an argument for the Bank of England to begin cutting interest rates. At the regulator's last meeting, as mentioned, two members of the Committee voted for an increase in borrowing costs, eight for keeping the rate unchanged, and only one member voted for a reduction. However, if at the next meeting on March 21, the doves gain not just one but two or three votes, this could trigger active selling of the GBP/USD pair.

The pair concluded the past five-day period at the mark of 1.2630. Regarding the median forecast of analysts for the coming days, 50% voted for the pair's decline, 15% for its rise, and the remaining 35% abstained from commenting. Among the oscillators on D1, 50% indicate a downward direction, the remaining 50% look eastward, with none showing a preference for moving north. The situation with trend indicators is different, where a slight majority favors the British currency – 60% pointing north and the remaining 40% south. Should the pair move southward, it will encounter support levels and zones at 1.2595, 1.2570, 1.2495-1.2515, 1.2450, 1.2330, 1.2210, 1.2070-1.2085. In case of an upward movement, resistance will be met at levels 1.2695-1.2725, 1.2785-1.2820, 1.2940, 1.3000, and 1.3140-1.3150.

Regarding the UK economy, the upcoming week's calendar highlights include a speech by Bank of England Governor Andrew Bailey on Monday, February 12. A significant amount of statistics from the British labour market will be released on Tuesday, February 14. On Wednesday, February 15, the Consumer Price Index (CPI) values will be announced, followed by the country's GDP indicators on February 16. The week's stream of statistics will conclude on Friday, February 16, with the publication of data on retail sales in the UK.

USD/JPY: The Pair's Flight to the Moon Continues

Thanks to the hawkish rhetoric from Federal Reserve representatives, USD/JPY continued to rise last week, coming close to the psychological resistance level of 150.00. It likely would have breached this level, but market participants are exercising caution ahead of the January Consumer Price Index (CPI) data release in the US, which is scheduled for February 13.

The yen continues to be under pressure due to the Bank of Japan's (BoJ) persistent dovish stance. Investors observe that the regulator still has no intention of raising interest rates. On Thursday, February 8, BoJ Deputy Governor Shinichi Uchida stated that "the future course of rates depends on economic and price developments" and that monetary policy conditions in the Japanese economy are on a deeply negative trajectory, with no expectations of aggressive inflation. The following day, BoJ Governor Kazuo Ueda traditionally spoke, stating that "the chances of maintaining accommodative conditions are high even if negative rates are abandoned."

From this, the market concluded that if any changes are to be made to the central bank's monetary policy, they will occur very slowly and it's uncertain when. The investors' reaction is evident in the USD/JPY chart: a local maximum was recorded at 149.57, with the week's final note hitting at 149.25.

Regarding the near-term outlook for USD/JPY, experts' opinions are evenly divided: a third anticipate further growth, another third expect a decline, and the remaining third have chosen to remain neutral. Trend indicators and oscillators on D1 unanimously point north, indicating bullish sentiment, but 25% of the oscillators are in the overbought zone. The nearest support level is located in the zone of 148.25-148.40, followed by 147.65, 146.85-147.15, 145.90-146.10, 144.90-145.30, 143.50, 142.20, and 140.25-140.60. Resistance levels are found at 149.65-150.00, 150.75, and 151.70-151.90.

Among the significant events related to the Japanese economy, the publication of the country's GDP data on Thursday, February 15, stands out. Traders should also be aware that Monday, February 12, is a public holiday in Japan: the country observes National Foundation Day.

CRYPTOCURRENCIES: Why Bitcoin Is Rising


"Halving: Grief or Joy?" was the question we posed in the title of our previous review. The debate on this matter does not subside but, on the contrary, becomes more intense as April approaches.

The process of profit-taking after the approval of bitcoin spot ETFs on January 10 has ended. However, a new threat looms over the market now. And this threat is the miners. Scott Melker, a renowned trader, investor, and host of the podcast "The Wolf of All Streets," writes the following: "The bitcoin halving will occur when the number of mined blocks reaches 840,000 in April 2024, at which point the block reward will decrease from 6.25 to 3.125 BTC. Essentially, this means that the issuance of new coins will be halved. It will become twice as hard for miners to earn money from mining bitcoin."

The halving is tentatively scheduled for April 19, meaning there are roughly two months left. If the price of digital gold does not show significant growth in this period, the majority of miners will face a sharp liquidity shortage. Therefore, to replenish their liquidity, they may start actively selling their BTC holdings, which would exert significant pressure on the market.

According to estimates, bitcoin miners still had about 1.8 million BTC worth approximately $85 billion (at current prices). And now, CryptoQuant has announced that the reserves of these companies have fallen to their lowest level since July 2021. Currently, the wallets of mining pools hold the lowest volume of cryptocurrency since the so-called "Great Migration" of miners from China to other countries in Eurasia and North America. Coins have moved from miners' autonomous wallets to exchanges.

Bitfinex also observes an influx of bitcoins to exchange addresses associated with mining companies. Analysts believe that at some point, a large-scale coin dump could occur, which is concerning. However, miners are holding onto their reserves for the time being, despite reduced transaction fee revenues. According to CryptoQuant, their daily sales have dropped and are now less than 300 BTC.

The situation of mining companies is also complicated by the decline in the production volumes of new coins. According to TheMinerMag, BTC mining by U.S. miners dropped to historical lows in January due to a 29-50% increase in electricity tariffs. High electricity costs are expected to persist until the end of Q1 2024. Therefore, if the trend continues, a certain bitcoin supply deficit will be observed before the halving amid growing demand. And the fact that demand is increasing is confirmed by analysts at Santiment, who note a sharp increase in the number of "whales" owning more than 1,000 BTC. Naturally, this pushes BTC/USD upwards.

From February 7 to 9, bitcoin's price showed a sharp surge, reaching a peak of $48,145. In this rally, in addition to the reasons mentioned, the global increase in risk appetites of major investors likely played the most significant role. The inflow of capital into stock markets also benefited the crypto market. According to IntoTheBlock, the correlation between bitcoin and the S&P 500 index was negative at the end of January but has since returned. Another reason some experts cite for the digital gold's price increase is the approach of the New Year according to the Chinese calendar. It is noted that the price of cryptocurrency always rises in anticipation of this date.

Overall, most forecasts for the entirety of 2024 look quite optimistic, with some being very optimistic. Scott Melker, for instance, believes that the halving could lead to a rise in bitcoin's price to $240,000. "After the previous halving, the BTC price updated its maximum from $20,000 to $69,000, which is a 250% increase," he writes. "Thus, if the situation repeats this time, the next maximum after $69,000 will be $240,000." "I know it might seem like an exaggeration," Melker continues. "This cycle has worked in the past. But until I see it fail [this time], I'm willing to bet that bitcoin will exceed $200,000."

According to ARK Invest CEO Cathy Wood, investors have begun shifting from gold to bitcoin following the launch of spot Bitcoin ETFs. "Bitcoin is growing relative to gold. The substitution of gold with bitcoin is in full swing. And we think this will continue...," she stated.

Echoing Cathy Wood's sentiment is the popular blogger and analyst PlanB. "After the upcoming halving, bitcoin will become scarcer than gold and real estate," he writes. "This implies that the cryptocurrency could reach a price of around $500,000." Based on his Stock-to-Flow model, the expert suggested that the market capitalization of the digital asset might not surpass that of gold – over $10 trillion. However, approaching this mark and a supply limit of 20 million coins would lead to the stated price. PlanB did not specify a timeframe for reaching this price, but he did mention a minimum price level that, in his opinion, the primary cryptocurrency will not fall below. According to PlanB, the BTC price has historically never dropped below the 200-week moving average. (At the time of writing the review, the 200WMA is around $32,000). Another analyst, known by the nickname ali_charts, believes that the critical support level is now $42,560.

Renowned trader, investor, and founder of MN Trading, Michael Van De Poppe, like PlanB, believes that the value of bitcoin could reach $500,000. The expert highlighted that there are numerous factors that will cause explosive growth in the flagship coin's rate. Among these are the current state of the market, the launch of BTC ETFs, inflow of funds from institutional investors, among others. The halving is considered a significant factor, after which a bullish growth of the cryptocurrency market is expected. Van De Poppe suggests that the current cycle might be slightly longer than previous ones, due to the entry of institutional players into the market and changes in the overall direction of industry development.

Van De Poppe believes that a scenario where the value of bitcoin soon reaches the key resistance level of $48,000 is quite plausible. This would be followed by another correction, resulting in a 20% price drop to $38,400. After the halving, the value of BTC will begin to rise again and reach a local peak by the autumn.

Elon Musk's company xAI developed Artificial Intelligence Grok, which has made two predictions regarding Ethereum, the main competitor to the leading cryptocurrency: 1) by the end of 2024, the price of ETH will range from $4,000 to $5,000; 2) within the year, the value of ETH could peak at $6,500. Grok highly values Ethereum's prospects due to the development of this altcoin's ecosystem and the Dencun update. This upgrade will increase the ETH blockchain's scalability level and significantly reduce transaction processing costs. The Dencun deployment took place in the Goerli test network on January 17th, and in the Sepolia test network on January 30th. The launch of Dencun in the main network is scheduled for March 13th. (It's worth noting that this update has already become one of the reasons why large ETH coin holders have started moving their assets from long-inactive wallets. Recently, such a "whale" moved 492 ETH worth over $1.1 million from a wallet that had been dormant for more than eight years).

Grok also considers the potential approval of spot Ethereum ETFs by the end of May as a catalyst for the altcoin's price growth. Six major American companies have submitted applications for these derivatives to the U.S. Securities and Exchange Commission (SEC).

However, the situation is not so straightforward. We have previously quoted SEC Chairman Gary Gensler's statement that positive decisions regarding spot ETFs exclusively concern bitcoin-based exchange products. According to Gensler, this decision "in no way signals a readiness to approve listing standards for crypto assets that are securities." Recall that the regulator still refers to bitcoin as a commodity, while "the vast majority of crypto assets, in his view, are investment contracts (i.e., securities)."

Last week, it was revealed that the SEC had postponed its decision on applications from Invesco and Galaxy. The agency had previously postponed the review date for other applications. "The only date that matters for spot ETH-ETFs at the moment is May 23. This is the deadline for the VanEck application," Bloomberg notes.

Analysts at investment bank TD Cowen believe it is unlikely that the SEC will make any decision before the second half of 2024. "Before approving an ETH-ETF, the SEC will want to gain practical experience with similar investment instruments in bitcoins," commented Jaret Seiberg, head of the TD Cowen Washington Research Group. TD Cowen believes the SEC will return to the discussion of Ethereum ETFs only after the U.S. presidential elections in November 2024.

Senior JP Morgan analyst Nikolaos Panagirtzoglou also does not expect the prompt approval of spot ETH-ETFs. For the SEC to make a decision, it needs to classify Ethereum as a commodity, not a security. However, JP Morgan considers this event unlikely in the near future.

The cryptocurrency market has shown impressive growth over the past week. As of the evening of February 9, BTC/USD is trading in the $47,500 zone, and ETH/USD at $2,500. The total market capitalization of cryptocurrencies is $1.78 trillion (up from $1.65 trillion a week ago). The Crypto Fear & Greed Index has risen to 72 points (from 63 a week ago) and remains in the Greed zone.
 

NordFX Analytical Group
 

Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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Forex and Cryptocurrencies Forecast for February 05 – 09, 2024

EUR/USD: Dollar Strengthening Prospects Increase


Throughout January, a series of indicators: GDP, employment, and retail sales, consistently highlighted the strength of the US economy. The threat of recession diminished, and it became evident that the high interest rate did not significantly hinder economic performance. Market participants were keenly awaiting the Federal Open Market Committee (FOMC) meeting of the US Federal Reserve, scheduled for Wednesday, January 31, against the backdrop of these positive economic indicators.

As anticipated, the regulator maintained the key rate at its current level (5.50%) but shifted its rhetoric to indicate that its next move would likely be to ease monetary policy. The question on everyone's mind was: when? During the press conference, Fed Chair Jerome Powell sought to temper expectations. He stated that FOMC members wanted to be 100% certain of victory over inflation and that they would not rush into a dovish pivot until convincing evidence of inflation falling below the 2.0% target was seen. Fortunately, the strong economy permits this cautious approach. However, Powell acknowledged that should there be a sharp cooling in the labour market, the easing of monetary policy could occur quite swiftly.

It should be noted that throughout the latter half of January, Fed officials made concerted efforts to temper expectations of a rate cut starting as early as March. And it must be said, they succeeded. The probability of a policy reversal in March dropped from a peak of 90% to 35.5%, while the likelihood of a rate cut in May increased to 61%.

The market's reaction to the outcome of the FOMC meeting was rather muted. The DXY dollar index failed to reach 104.00, and EUR/USD, having dropped to 1.0800 on February 1, reversed direction and climbed back to 1.0900 by Friday, in anticipation of the release of data on the state of the American labour market.

The data published on February 2 revealed that the number of new jobs in the US non-farm sector (Non-Farm Payrolls) increased by 353,000 in January, far exceeding the expected 180,000. This followed a December increase of 333,000. Unemployment remained stable at 3.7%, while wage inflation rose to 4.5% on an annual basis, significantly surpassing market expectations of 4.1%. Thus, Fed Chair Jerome Powell's concerns about a sharp cooling of the labour market were unfounded, which clearly benefited the American currency.

Let's recall that a week earlier, on January 25, the European Central Bank (ECB) held a meeting where the regulator also left the key interest rate unchanged at 4.50%. During the press conference following the meeting, ECB President Christine Lagarde refrained from commenting on the possible timing of rate cuts. According to her, the Governing Council members believe it is too early to discuss easing monetary policy. However, many market participants think that economic challenges may prompt the ECB to initiate this process first. A comparison of macroeconomic indicators between the Old and the New World is enough to support this view.

The unemployment rate in the Eurozone stands at 6.4% compared to 3.7% in the US. European GDP barely moved from a recessionary negative level of -0.1% to 0% in Q4, while the US saw a growth of +3.3%. Moreover, inflation in the Eurozone is close to the target of 2.0%, currently at 2.9%, compared to 3.4% in the US. All these indicators could prompt the European Central Bank to begin easing monetary policy soon. Furthermore, ECB Vice President Francois Villeroy de Galhau recently stated that the rate could be reduced at any moment. Many market participants interpreted this as a signal that a dovish trend might begin within the next two months.

However, analysts at Commerzbank believe that an initial rate cut in March or April might not occur. They note that one negative factor for the euro persists. The bank's strategists think that there is a significant faction within the ECB Governing Council that is merely biding time, to then seize the first opportunity to advocate for a rate cut. "This may even be too soon," Commerzbank warns.

Economists at another bank, the British HSBC, expect the dollar to strengthen slightly in the medium term, especially against the euro and the pound. This is attributed to the continued outperformance of the US economy compared to many other G10 countries, allowing the Federal Reserve to delay easing its policy. "A less aggressive easing path could lead to a decrease in risk appetite, which would support the US dollar," HSBC specialists write.

EUR/USD closed the week at 1.0787. At present, 30% of experts have voted for the dollar to strengthen in the near future, anticipating further decline in the pair. An equal percentage sided with the euro, believing that the pair will at least remain within the 1.0800-1.0900 channel. The remaining 40% have adopted a neutral stance. Indicator readings on the D1 are more definitive. Oscillators are 100% in the red (though 20% of them signal oversold conditions). Among trend indicators, the balance of power is 85% red to 15% green. The nearest support for the pair is located in the 1.0780 zone, followed by 1.0725-1.0740, 1.0620-1.0640, 1.0500-1.0515, and 1.0450. Bulls will encounter resistance in the areas of 1.0820, 1.0890-1.0925, 1.0985-1.1015, 1.1110-1.1140, and 1.1230-1.1275.

Key events for the upcoming week include the release of data on business activity (PMI) in the US services sector on Monday, February 5. The next day, volumes of retail sales in the Eurozone will be disclosed. Thursday traditionally brings information on the number of initial jobless claims in the United States. And towards the very end of the workweek, on Friday, February 9, data on consumer price inflation (CPI) in Germany, the main engine of the European economy, will be released.

GBP/USD: US Labor Market Delivers Blow to the Pound

Last week, on Thursday, February 1, the Bank of England (BoE), like its counterparts across the Channel and the Atlantic, maintained its key interest rate at 5.25%. The Bank of England made no changes to its policy and did not issue any dovish statements. However, the pound received support as two members of the BoE's Monetary Policy Committee continued to vote for a rate hike of 25 basis points. This argument proved to be relatively weak, especially since another committee member voted for a rate cut, while the overwhelming majority, eight members, supported keeping the rate unchanged.

Analysts continue to believe that expectations are on the side of the British currency, speculating that the BoE might be among the last to cut rates this year. However, according to Scotiabank specialists, for further growth of the GBP/USD pair, a breakthrough of the late December peak at 1.2825 is necessary. Yet, there seems to be no foundation for this at the moment. Moreover, strong data from the US labour market strengthened the dollar and prevented the pair from remaining near the upper boundary of the 1.2600-1.2800 sideways channel, where it has been trading for seven weeks.

GBP/USD concluded the past week at 1.2632. According to economists at Internationale Nederlanden Groep (ING), a strong dollar may keep GBP/USD around the 1.2600-1.2700 range in Q1 2024. Regarding the median forecast of analysts for the coming days, 35% voted for the pair falling below the 1.2600 support level, 50% for its rise, and 15% preferred to maintain neutrality. Unlike the experts, trend indicators on D1 show a slight bias towards the American currency, with 60% indicating a strengthening dollar and further decline of the pair, against 40% suggesting its rise. Among oscillators, 65% lean towards the dollar (with 10% indicating oversold conditions), 10% favour the pound, and the remaining 25% hold a neutral position. Should the pair move south, it will encounter support levels and zones at 1.2595-1.2610, 1.2500-1.2515, 1.2450, 1.2330, 1.2210, and 1.2070-1.2085. In case of an upward movement, resistance will be met at levels 1.2695-1.2725, 1.2785-1.2820, 1.2940, 1.3000, and 1.3140-1.3150.

No release of significant macroeconomic data related to the economy of the United Kingdom is anticipated for the upcoming week.

USD/JPY: BoJ Policy Shift: Dreams or Reality?

Strong U.S. labour market statistics dashed the hopes of bulls not only for the euro and the pound but also for the yen. At the beginning of the past week, the Japanese currency was gaining, and USD/JPY was trending downwards, marking a local minimum at 145.89 on Thursday, February 1. A sharp decline in the yield of U.S. Treasuries helped the yen. Specifically, the yield on 10-year U.S. bonds fell to its lowest level since the end of December: 3.9%. It is worth noting the correlation between U.S. securities and USD/JPY. If the yield on ten-year Treasury notes falls, the yen strengthens, and USD/JPY forms a downward trend. This was exactly the case. However, the end of the workweek was characterized by a clear advantage for the American currency, and the pair soared again, concluding at 148.35.

Many market participants continue to harbour hopes for a tightening of monetary policy by the Bank of Japan (BoJ). For instance, analysts at the Canadian Imperial Bank of Commerce (CIBC) expect the BoJ to move away from negative interest rates in April, with additional changes in its Yield Curve Control (YCC) policy to support the Japanese yen in the second half of the year. "We believe," CIBC strategists write, "that USD/JPY has already reached its peak and should [...] decrease to 144.00 in Q2. Following this, we anticipate that rate cuts by the Federal Reserve and the prospect of gradual adjustments to the BoJ's YCC will lead to a decline in USD/JPY to 140.00 in Q3 and 135.00 in Q4 2024."

It's important to note that many experts had anticipated a tightening of the Bank of Japan's (BoJ) monetary policy already in 2023: a topic extensively covered in previous discussions. However, this did not occur. And it might not happen now either.

In January, the Consumer Price Index (CPI) in the Tokyo region unexpectedly fell from 2.4% to 1.6%, and the core CPI, excluding fresh food and energy prices, decreased from 3.5% to 3.1%. Additionally, the growth of industrial production in Japan in December slowed to 1.8%, against a forecast of 2.4%. On a year-over-year basis, industrial production also showed further deceleration: in December, this indicator was -0.7% (year-on-year), an improvement compared to the previous period's -1.4% but still marking a decline.

Such a significant easing of inflationary pressure and a slowdown in economic growth may lead to the BoJ not tightening its policy in the foreseeable future, leaving the interest rate at -0.1%. This forecast was also confirmed by the minutes from the Bank of Japan's December meeting. It was indicated that the Board members agree that "it is necessary to patiently maintain a loose policy."

Regarding the near-term outlook, only 25% of experts expect further strengthening of the dollar and an increase in USD/JPY. In contrast, 75% are siding with the yen, agreeing with CIBC economists that the pair has reached its peak. Trend indicators and oscillators on D1 are all pointing northward, with 100% indicating upward momentum, although 10% of the latter are in the overbought zone. The nearest support level is located in the 147.60 zone, followed by 146.85-147.15, 146.00, 145.30, 143.40-143.65, 142.20, 141.50, and 140.25-140.60. Resistance levels and zones are at 148.55-148.80, 149.85-150.00, 150.80, and 151.70-151.90.

No significant events or statistics related to the Japanese economy are expected in the upcoming week.

CRYPTOCURRENCIES: Halving – Grief or Joy?

Throughout the past week, BTC/USD moved with support at $42,000 without showing any significant results in either direction, drawing special attention to its statistics. Analysts note that the 12-month volatility of the first cryptocurrency has reached its lowest level in 12 years. The indicator has varied significantly over the years but has generally shown a clear downward trend over this period. From 179% in January 2012, it dropped to 45% at the beginning of this year.

A higher volatility figure indicates significant price variability and signals greater market unpredictability. Lower metric values suggest much more stable trading conditions. The decreased volatility could mean a larger number of long-term holders, according to CryptoQuant. The research department at Galaxy Digital predicts that the spot bitcoin ETFs launched in January will further smooth out price fluctuations. "A huge amount of BTC will be held in [investment] advisory accounts. They are not interested in intraday trading," the experts state.

Analysts at Glassnode also spoke about long-term investors. Their report indicates that the overwhelming majority of such BTC holders still do not wish to part with their coins and adhere to a hodling strategy in anticipation of higher spot prices. According to K33 Market Research, the volume of spot trading in bitcoin reached "sustainably high activity following the approval of ETFs." Data from The Block’s Data Dashboard shows that the monthly volume of on-chain transactions in the bitcoin network in January was at a multi-month high, with trading volume for January exceeding $1.11 trillion.

Regarding the Bitcoin ETFs launched in January, the situation has not been as promising as expected. According to several experts, this is a classic case of "buy the rumour, sell the news." Initially, there was an impressive bull rally. Now, however, as these funds have become operational, market participants have begun actively taking profits.

The Grayscale ETF was converted from a trust fund, and by the end of January, it experienced a withdrawal of funds amounting to $2.2 billion. The reason for this is not only the profit-taking by the trust's shareholders in 2023 but also dissatisfaction with high management fees. Grayscale charges a 1.5% fee, whereas other funds have managed to keep their fees between 0.2-0.3%. Among the ETF competitors, BlackRock continues to lead with $2.2 billion, with Fidelity approaching $2 billion. WisdomTree is at the bottom of the ranking with $6.3 million. As for the net inflow of funds since the launch of spot BTC-ETFs, it stands at a modest $760 million.

In addition to profit-taking, another reason putting pressure on the market has been the miners. The halving is scheduled for April 19, leaving roughly 2.5 months. If the price of digital gold does not show significant growth during this period, the majority of miners will face a severe liquidity shortage. Therefore, they have already started to sell off their BTC reserves to replenish liquidity. Since the approval of spot ETFs on January 10, they have sent a record 624,000 BTC to exchanges over the last six years, approximately worth $26 billion. According to estimates, miners still have about 1.8 million BTC left, valued at $76 billion. The sale of these reserves could potentially push bitcoin prices significantly lower.

Analysts at Matrixport have forecasted a drop in BTC/USD to $36,000. They believe that bitcoin might then appreciate in value, but only against a backdrop of favourable macroeconomic conditions and increasing liquidity. (It's worth mentioning that these same analysts had predicted bitcoin would reach $125,000 in 2024 back in December).

Chris Burniske, a partner at the venture firm Placeholder, provided an even more pessimistic forecast. He believes that the price of the leading cryptocurrency will first fall to the $30,000-$36,000 range and then likely reach a local bottom around $20,000. "The consolidation will come lower than most people expect, due to too many variables (e.g., specifics of the crypto market, macroeconomics, adoption, and development of new products)," the expert warned. However, testing the levels around $20,000 will be a "real step" towards reaching previous highs, he believes. "The journey there will be volatile – expect setbacks. And it will take months. As always, your best friend is patience," Burniske emphasized, adding that the decline in other assets will be even deeper than that of bitcoin.

Contrary to Chris Burniske, the forecast by analyst DonAlt appears significantly more optimistic. He cheered his 56,700 YouTube subscribers by noting that bitcoin managed to avoid a total price collapse after the launch of the Bitcoin ETFs. "Digital gold looks strong even after its price dropped below $40,000 last week," he observed. The expert believes that the absence of mass selloffs is a positive sign. "For this reason, I am no longer in the bear camp; now, I am with the bulls," he declared. DonAlt also emphasized that bitcoin is consolidating within a strong upward trend and is likely to regain bullish momentum once it overcomes resistance at the $44,000 level.

Another expert, known by the nickname Rekt Capital, believes traders have one last chance to buy bitcoin at a low price. He analysed historical data and came to the following conclusions:

1. If bitcoin does not become cheaper in the next two weeks, then the coin's price will not significantly fall until the halving. 2. Approximately 60 days before the halving, BTC's price will rise on the wave of hype surrounding the event. 3. After the halving, speculators will rush to sell the cryptocurrency, so bitcoin will depreciate for several weeks, and its value may drop by 20-38%. 4. Then a period of accumulation will begin, lasting up to 150 days, characterized by a relatively low level of BTC price volatility. 5. After this, a phase of parabolic growth in the bitcoin price will start, and its price will reach a new all-time high.

Markus Thielen, Head of Research at 10x Research, is a proponent of Elliott Wave Theory, which suggests that asset prices move in five waves. According to this theory, the first, third, and fifth waves are "impulse waves" that move the asset in the direction of the trend, while the others are corrective "retracement waves." The analyst believes the recent decline in bitcoin's price represents the fourth wave, i.e., a retracement. At present, the fifth wave is beginning, which could push the price upward. "Wave analysis has marked this recovery up to $52,671 potentially by the end of the first quarter of 2024," Thielen announced.

Anthony Scaramucci, the founder of hedge fund SkyBridge Capital, pointed to a similar figure. "Suppose the price [on the day of the halving] is $50,000," he predicts. "Multiply this BTC price by four, and it will reach this level [$200,000] within the next 18 months." Previously, the head of SkyBridge claimed that the BTC rate could reach $100,000 after the halving. As an additional reason for a bullish rally, he cited the reduction of the US Federal Reserve's interest rate.

Regarding the long-term course, Scaramucci forecasts that bitcoin's market capitalization could reach half of gold's, which stands at $14.5 trillion. Therefore, by his calculations, the price per coin would amount to about $345,000.

Peter Schiff, the President of Euro Pacific Capital and a staunch opponent of the first cryptocurrency, made an unexpected long-term forecast. While he typically predicted a complete crash for bitcoin, he has now suggested that by 2031 the price of the coin could reach ... $10 million, albeit under a very hypothetical scenario. According to him, this would only occur if the US dollar were to follow the path of "German paper marks." This term informally referred to the currency introduced in Germany at the start of World War I in 1914 as a replacement for the previous gold-backed mark. In the early 1920s, the paper mark depreciated due to hyperinflation. At that time, companies paid wages several times a day so that workers could make purchases before prices rose again. The money supply grew so rapidly that the state could not print banknotes fast enough and had to enlist private companies for help. The largest denomination issued was a banknote worth 100 trillion marks.

In reality, Peter Schiff does not believe in an economic collapse and the fall of the US dollar. Thus, this forecast of his can be considered mockingly sarcastic towards bitcoin. However, Robert Kiyosaki, the economist and author of the bestseller "Rich Dad Poor Dad," harbours no doubts about such a scenario. He continues to insist that gold, silver, and bitcoin should be part of every investor's portfolio. He is confident that the price of BTC could reach $1 million in the event of a global economic collapse.

As of the evening of February 2, when this review was written, the global economy has not collapsed, BTC/USD has not reached either $1 million or $10 million, and is currently trading around $43,000. The total market capitalization of the crypto market stands at $1.65 trillion (up from $1.61 trillion a week ago). The Crypto Fear & Greed Index has increased to 63 points (from 49 a week ago), moving from the Neutral zone into the Greed zone.
 

NordFX Analytical Group
 

Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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January 2024 Results: Gold Regains Value in the New Year

NordFX, a brokerage firm, has summarized the trading performance of its clients for January 2024. The effectiveness of social trading services, PAMM and CopyTrading, as well as the profits earned by the company's IB partners, were also evaluated.

- The most successful trader in the first month of the new year was a client from Western Asia, with account number 1740XXX, who achieved a profit of 18,732 USD through transactions with gold (XAU/USD).
- The XAU/USD pair also aided a representative from South Asia, account number 1694XXX, to secure the second step on the podium with a result of 16,355 USD.
- Third place went to a compatriot of the latter, the owner of account number 1595XXX. By trading the same instrument favoured by NordFX traders, gold (XAU/USD), as well as the British pound (GBP/USD), he earned a profit of 12,725 USD.

As for NordFX passive investment services, the situation unfolded as follows:

- In the PAMM service, the Trade and Earn account continues to attract the attention of passive investors. Opened in March 2022, it remained dormant for four months before awakening in November. As a result, during its "active" period, its return exceeded 415%. Unfortunately, at the end of 2023, the account manager made a serious mistake. While for a long time the maximum drawdown did not exceed 17%, in just a few days of December, it approached a dangerous 60%. However, the manager was able to rectify the situation afterwards, leading to a sharp increase in profitability, with the maximum drawdown in January not exceeding 10%.
    
Among startups, the account Kikos2 is noteworthy, showing a profit of 325% in just 72 days. However, given the aggressive trading strategy, it also experienced a significant maximum drawdown of about 60%. This serves as a reminder that investors should exercise utmost caution when investing their money. Past results do not guarantee future performance, so it is important to assess one's financial capabilities and be prepared for potential setbacks.
    
- In CopyTrading, we continue to monitor the signal from yahmat-forex, which has shown a return of 335% over 222 days, with a maximum drawdown of 37%. The startup Fund Manage Global 100 also caught our attention, delivering a 160% return in just 83 days with a relatively moderate drawdown of 20%. Additionally, the signal FX NEW SKY cannot be overlooked. In just two weeks, it achieved not just a sky-high, but a cosmic profit of 1820%. However, it also experienced a cosmic maximum drawdown of 77%. After all, as is well known, journeys to the stars are exceptionally risky and fraught with potential crashes and catastrophes.

Among the IB partners of the brokerage firm NordFX, the top 3 are as follows:
- The largest commission reward in January was credited to a partner from East Asia, with account number 1218XXX, amounting to 8,268 USD;
- is was followed by a colleague from West Asia, account number 1645XXX, who earned 5,746 USD for the month;
- nally, completing the top three is a partner from South Asia, account number 1718XXX, who received 3,842 USD in commissions.
 

Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forex and Cryptocurrencies Forecast for January 29 – February 02, 2024

EUR/USD: US Economy Delivers Surprises

The two most significant events last week occurred on Thursday, January 25. On this day, the European Central Bank (ECB) held a meeting, and preliminary GDP data for the US for Q4 2023 was published.

As expected, the ECB left the key interest rate unchanged at 4.50%. The regulator also maintained other critical parameters of its monetary policy. At the press conference following the meeting, ECB President Christine Lagarde refrained from commenting on potential timelines for rate cuts. She reiterated her previous statements, noting that the ECB Governing Council members believe it is premature to discuss policy easing. However, Lagarde highlighted that wage growth is already declining and added that they anticipate further inflation reduction throughout 2024.

Overall, the first event passed without surprises, unlike the second. The preliminary GDP data for Q4 2023 released by the US Bureau of Economic Analysis showed the expected slowdown in American economic growth compared to the extremely high rates of Q3 (4.9%), reaching 3.3% on an annual basis. However, this was significantly above the market consensus forecast, which anticipated a more substantial slowdown to 2.0%. Thus, it turned out that for the entire year of 2023, the country's economy grew by 2.5% (compared to 1.9% in 2022). The data confirmed the national economy's resilience to the most significant interest rate hike cycle since the 1980s – instead of the expected slowdown, it continues to grow at rates above the historical trend (1.8%).

These impressive results were a surprise for market participants. They look particularly 'stellar' compared to the performance of other currency zones. For instance, Japan's GDP continues to crawl back to pre-COVID-19 pandemic levels, and the Eurozone's GDP seems to have been in a state of stagnation for some time. This benefits the dollar, as a stable economy allows the Federal Reserve to delay the start of monetary policy easing and maintain restrictive measures for a while longer. According to CME futures quotes, the probability of an interest rate cut in March is currently 47%, almost half of what was expected a month ago (88%). Many experts believe the Fed will start gradually reducing the cost of federal fund loans no earlier than May or June, waiting for signs confirming the sustainability of the inflation slowdown.

The US Bureau of Labor Statistics also reported on January 25 that the number of initial unemployment claims for the week ending January 20 rose to 214K, exceeding the previous week's figures and forecasts of 200K. Despite the slight increase, the actual value still represents one of the lowest levels since the end of last year.

As mentioned earlier, the economic situation in the Eurozone appears significantly worse, exacerbated by Russia's military actions in Ukraine and the downturn of China's economy, an important partner for Europe. Against this backdrop, the ECB may become the most hasty among the G10 central banks to start reducing interest rates. Such a step would exert strong pressure on the common European currency, placing the euro at a disadvantage in the Carry-trade segment. Additionally, the advantages of the dollar as a safe-haven currency should not be overlooked.

The dollar index DXY found strong support at the 100.00 level at the end of last year, rebounded upwards, and has been consolidating around 103.00 for the past week, seemingly 'sticking' to its 200-day moving average. Market participants are awaiting the Federal Open Market Committee (FOMC) meeting of the US Federal Reserve, scheduled for Wednesday, January 31, amidst strong GDP data and convincing evidence of disinflation. It is likely that, as with the ECB, the interest rate will remain at the current level (5.50%). Moreover, Federal Reserve Chair Jerome Powell's remarks, similar to the ECB's, are expected to be cautious regarding the timelines for rate cuts. However, his more favourable tone regarding inflation reduction may be enough to restore market confidence in the beginning of monetary policy easing as early as March. In this case, DXY could resume its movement towards 100.00. Otherwise, a renewal of the December peak of 104.28 seems quite plausible.

Data on personal consumption expenditures in the US were released at the very end of the workweek, on Friday, January 26. The Core Personal Consumption Expenditures (PCE) Price Index showed a monthly increase from 0.1% to 0.2%, which fully matched forecasts. Year-on-year, the index stood at 2.9%, lower than both the previous value (3.2%) and the forecast (3.0%).

These figures did not significantly impact the exchange rates, and EUR/USD closed the week at 1.0854. Currently, the majority of experts predict the strengthening of the US dollar in the near future. Among them, 80% voted for the dollar's appreciation, 0% sided with the euro, and the remaining 20% held a neutral position. However, in the monthly perspective, the balance of power between bullish (red), bearish (green), and neutral (grey) is evenly distributed: a third for each. Oscillator readings on the D1 timeframe confirm the analysts' forecast: 100% of them are coloured red (15% indicating oversold conditions). Among trend indicators, the balance of power is 65% in favour of the reds and 35% for the greens. The nearest support levels for the pair are located in the zones 1.0800-1.0820, followed by 1.0725-1.0740, 1.0620-1.0640, 1.0500-1.0515, and 1.0450. The bulls will encounter resistance in the areas of 1.0905-1.0925, 1.0985-1.1015, 1.1110-1.1140, 1.1230-1.1275, 1.1350, and 1.1475.

In the upcoming week, in addition to the aforementioned FOMC meeting and subsequent press conference, we are expecting the release of Q4 GDP data for Germany and the Eurozone on Tuesday, January 30. On Wednesday, we will see the retail sales volumes and the Consumer Price Index (CPI) in Germany, as well as the state of employment in the US private sector from ADP. On Thursday, February 1, inflation data (CPI) for the Eurozone and business activity in the US manufacturing sector (PMI) will be published. Additionally, on February 1 and 2, we will traditionally receive a wealth of statistics from the US labor market, including the unemployment rate and the number of new jobs created outside of the agricultural sector (Non-Farm Payrolls, NFP).

GBP/USD: Inflation Continues to Bolster the Pound


The retail sales report released on January 19 in the United Kingdom turned out to be disappointing. Retail sales volumes in December decreased by -3.2% following a 1.4% increase in the previous month, while analysts had expected a -0.5% drop. Year-on-year, this indicator declined by -2.4% after increasing by 0.2% a month earlier (forecast was -1.1%). Sales excluding fuel dropped by -3.3% month-on-month and -2.1% year-on-year, against expert forecasts of -0.6% and -1.3%, respectively.

However, despite this, GBP/USD not only maintains its position within the six-week lateral channel of 1.2600-1.2800 but is even seeking to consolidate in its upper half. Analysts believe that the British currency continues to be supported by expectations that the Bank of England (BoE) will likely be among the last to lower rates this year.

It's worth recalling that the December inflation data showed the Consumer Price Index (CPI) in the United Kingdom rose month-on-month from -0.2% to 0.4% (consensus forecast was 0.2%), and year-on-year reached 4.0% (compared to the previous value of 3.9% and expectations of 3.8%). The core CPI figure remained at the previous level of 5.1% year-on-year. Following the release of this report, which showed rising inflation, UK Prime Minister Rishi Sunak quickly sought to reassure the markets. He stated that the government's economic plan remains sound and continues to work, having reduced inflation from 11% to 4%. However, despite the Prime Minister's optimistic statement, many market participants are now more convinced that the Bank of England will delay the start of easing its monetary policy until the end of the year. "Concerns that the disinflation process may stall have probably increased," Commerzbank economists wrote at the time. "And the market will likely bet that the Bank of England will respond accordingly and, therefore, be more cautious about the timing of the first interest rate cut."

The British currency was also bolstered by preliminary data on business activity in the country, released on Wednesday, January 24. The Manufacturing PMI rose from 46.2 to 47.3, against a forecast of 46.7. Furthermore, the Services PMI and the Composite PMI firmly established themselves in the growth zone (above 50 points). The Services PMI increased from 53.4 to 53.8 (forecast was 53.2), and the Composite PMI went up from 52.1 to 52.5 (forecast was 52.2). From these figures, the market inferred that the country's economy could withstand high interest rates for an extended period.   

GBP/USD concluded the previous week at a level of 1.2701. Regarding the analysts' forecasts for the coming days, the sentiment is similar to that for EUR/USD: 70% voted for the pair's decline, only 10% were in favor of its rise, and 20% preferred to remain neutral. The outlook for the monthly and longer-term horizon is more ambiguous. Among the trend indicators on the D1 timeframe, in contrast to the specialists' opinions, there's a clear preference for the British currency: 80% indicate a rise in the pair, while 20% suggest a decline. Among oscillators, 35% are in favour of the pound, 10% for the dollar, and the remaining 55% maintain a neutral stance. Should the pair move southward, support levels and zones at 1.2595-1.2610, 1.2500-1.2515, 1.2450, 1.2330, 1.2210, 1.2070-1.2085 await it. In case of an upward movement, the pair will encounter resistance at levels 1.2750-1.2765, 1.2785-1.2820, 1.2940, 1.3000, and 1.3140-1.3150.

In addition to the FOMC meeting of the US Federal Reserve, we will also have a meeting of the Bank of England in the upcoming week. It is scheduled for Thursday, February 1st, and according to forecasts, the BoE is also expected to keep the borrowing rate at the current level of 5.25%. Besides this, no other significant events related to the economy of the United Kingdom are anticipated in the near future.

USD/JPY: Does the Drift Towards 150.00 Continue?

The Consumer Price Index (CPI) in the Tokyo region unexpectedly dropped from 2.4% to 1.6% in January, and the figure excluding food and energy prices decreased from 3.5% to 3.1%. Such a significant weakening of inflationary pressure could lead the Bank of Japan (BoJ) to refrain from tightening monetary policy in the foreseeable future.

This forecast is also supported by the monthly economic report of the Japanese government, published on Thursday, January 25. The report states that the consequences of the strong earthquake on the Noto Peninsula in central Honshu, Japan's main island, could reduce the national GDP by 0.5%. These estimates increase the likelihood that the Bank of Japan will maintain its ultra-loose monetary policy at least until mid-2024. Consequently, any speculation about an interest rate hike in April can be disregarded.

The minutes from the Bank of Japan's December meeting reinforce this outlook. It was noted that the Board members agreed that "it is necessary to patiently maintain an accommodative policy." Many members (another quote) "stated that it is necessary to confirm a positive wage-inflation cycle to consider the issue of phasing out negative rates and YCC." "Several members said they do not see the risk of the Central Bank falling behind schedule and can wait for developments at the annual wage negotiations this spring." And so on in the same vein.

Economists at MUFG Bank in Japan believe that the current situation does not hinder the selling of the yen. "Given our view on the strengthening of the US dollar in the near term and the more significant-than-expected drop in inflation data [in Japan]," they write, "we may see an increase in the appetite for Carry-trade positions funded by the yen, which will contribute to the further rise of USD/JPY." MUFG strategists opine that the pair will continue its drift northward, towards 150.00. However, as it approaches this level, the threat of currency interventions by Japanese financial authorities is expected to gradually increase.

In the interest of fairness, it should be noted that there are still those who believe in an imminent shift by the BoJ to a tighter policy. For instance, specialists at the Dutch Rabobank still adhere to a forecast suggesting the regulator could raise rates as early as April. "However," the bank's experts write, "everything will depend on strong wage data from the spring negotiations and evidence of changes in corporate behaviour regarding wages and pricing." "Our forecast, which sees USD/JPY ending the year at 135.00, assumes that the Bank of Japan will raise rates this year," continue the Rabobank economists. However, they add that there is still a possibility of disappointment in the pace of rate hikes.

USD/JPY recorded its peak for the past week at 148.69, finishing slightly lower at 148.11. In the near-term outlook, 30% of experts anticipate further strengthening of the dollar, 30% side with the yen, and 40% hold a neutral position. Regarding the trend indicators and oscillators on the D1 timeframe, all 100% point north, though 10% of them are in the overbought zone. The nearest support level is located in the 146.65-146.85 zone, followed by 146.00, 145.30, 143.40-143.65, 142.20, 141.50, and 140.25-140.60. Resistance levels are positioned at 148.55-148.80, 149.85-150.00, 150.80, and 151.70-151.90.

No significant events related to the Japanese economy are anticipated in the upcoming week.

CRYPTOCURRENCIES: Why Bitcoin Fell

On January 10, the U.S. Securities and Exchange Commission (SEC) approved a batch of all 11 applications from investment companies to launch spot exchange-traded funds (ETFs) based on bitcoin. Against this backdrop, the quotations of the main cryptocurrency momentarily spiked to $47,787, a level last seen in the spring of 2022. However, instead of the expected growth, bitcoin then tumbled and recorded a local minimum of $38,540 on January 23. Thus, in just 12 days, the cryptocurrency lost nearly 20% of its value. According to several specialists, this is a classic case of the "buy the rumour, sell the news" scenario. Initially, there was a significant bull rally fueled by speculations about the launch of bitcoin-based ETFs. Now that these funds are operational, market participants have begun actively taking profits.

However, there are other reasons for the decline, reflected in specific figures. The capital inflow into BTC-ETFs, many of which were launched by major Wall Street players like BlackRock, turned out to be smaller than expected. It appears that investors have become disillusioned with cryptocurrency. According to CoinShares, the 10 new funds had gathered $4.7 billion by the end of Tuesday. Meanwhile, $3.4 billion flowed out of the Grayscale trust, which was considered the world's largest bitcoin holder and has now also been transformed into a BTC-ETF. Logic suggests that a significant portion of the funds likely just shifted from Grayscale investors to the 10 new funds with lower fees. If this is the case, then the net new investment inflow is just $1.3 billion. Moreover, in recent days, this has turned into a net outflow of $25 million.

It's also important to note that since the approval of BTC-ETFs, along with short-term speculators and Grayscale investors, the sell-off has been influenced by the bankruptcy manager of the FTX crypto exchange and especially by miners. Together, they have unloaded $20 billion worth of coins on the market, a large portion of which belongs to the miners. They are particularly concerned about the increasing computational difficulty and the halving in April, which will force many of them out of business. As a result, since January 10, miners have sent a record 355,000 BTC worth $15 billion to crypto exchanges, the highest in six years. In these circumstances, the demand for a spot bitcoin ETF of $4.7 billion (or realistically $1.3 billion) seems modest and unable to compensate for the resulting outflow of funds. Hence, we are witnessing such a significant drop in the price of the main digital asset.

Along with bitcoin, major altcoins, including Ethereum (ETH), Solana (SOL), Cardano (ADA), Avalanche (AVAX), Dogecoin (DOGE), Binance Coin (BNB), and others, also incurred losses. Analysts believe that the improvement in the stock markets has also exerted additional pressure on cryptocurrencies – over the last three weeks, both American and European indices have shown growth.

Peter Schiff, the president of Euro Pacific Capital, did not miss the opportunity to gloat over the buyers of bitcoin ETF shares. He believes that the approval of these funds does not create new demand for cryptocurrency. According to the financier, those investors who previously bought cryptocurrency on the spot market or invested in shares of mining companies and Coinbase are now merely shifting their investments to ETFs. "Shuffling deck chairs won't save the ship from sinking," predicted this advocate of physical gold.

Schiff thinks that the fate of investors in the spot product will be similar to those who invested in the futures ETF BITO, launched in the fall of 2021. Currently, shares of this fund are trading at a 50% discount, implying that bitcoin is also expected to fall to around $25,000. Since January 10, 2024, the share price of BTC-ETFs has already fallen by 20% or more from their peak. The shares of FBTC suffered the most, decreasing in value by 32% in two weeks. "I think VanEck should change the ticker of its ETF from HODL to GTFO [from 'hold' to 'get the heck out']," Schiff sarcastically commented on the situation.

Caroline Mauron, head of OrBit Markets, told Bloomberg that if bitcoin fails to firmly establish itself above $40,000 soon, it could trigger a massive liquidation of positions in the futures market, accompanied by a panic outflow of capital from the crypto sphere.

An analyst using the pseudonym Ali illustrated the price patterns of the last two cycles and, like Caroline Mauron, suggested a further decline in the coin's value. The expert noted that in previous rallies, bitcoin followed a consistent pattern: first reaching the 78.6% Fibonacci level and then correcting to 50%. Thus, according to this model, a drop in the BTC/USD pair to $32,700 (50%) is not ruled out.

Trader Mikeystrades also allowed for a drop to $31,000 and advised against opening long positions. "Save your money until the market begins to demonstrate bullish strength and follows the flow of orders," the expert recommended.

A crypto trader known as EliZ predicted a fall in the bitcoin price to $30,000. "I expect a bearish distribution over the next two to three months, but the second half of 2024 will be truly bullish. These stops are necessary to keep the market in a healthy state," he stated.

Michael Van De Poppe, founder of MN Trading, holds a different view. He emphasized that bitcoin has already collected liquidity and is approaching a local bottom. "Buy at the lows. Bitcoin below $40,000 is an opportunity," the analyst urged. Yann Allemann, co-founder of Glassnode, believes that a bullish rally in the bitcoin market will start in the first half of 2024, with the coin's value increasing to $120,000 by early July. This forecast is based on the dynamics of the asset's value changes in the past after the appearance of a bullish flag pattern on the chart.

Indeed, negative scenarios should not be ignored. However, it's important to consider that current pressures are largely due to temporary factors, while long-term trends continue to favor digital gold. For instance, since the fall of 2021, there has been an increase in the proportion of coins that have remained inactive for over a year. This indicator is now showing a record 70%. An increasing number of people are trusting bitcoin as a tool for inflation protection and savings. The number of cryptocurrency users has reached over half a billion people, about 6% of the Earth's population. According to recent data, the number of Ethereum holders has grown from 89 million to 124 million, while the number of bitcoin owners by the end of the year increased from 222 million to 296 million people.

There is also growing acceptance of this new type of asset among large capital representatives. Last week, Morgan Stanley published a document titled "Digital (De)Dollarization?", authored by the investment bank's COO Andrew Peel. According to the author, there is a clear shift towards reducing dependency on the dollar, simultaneously fuelling interest in digital currencies such as bitcoins, stablecoins, and CBDCs. Peel writes that the recent surge in interest in these assets could significantly alter the currency landscape. According to a recent Sygnum Bank survey, over 80% of institutional investors believe that cryptocurrencies already play an important role in the global financial industry.

As of the evening of January 26, when this review was written, BTC/USD is trading around $42,000. The total market capitalization of the crypto market stands at $1.61 trillion, down from $1.64 trillion a week ago. The Bitcoin Fear & Greed Index remains in the Neutral zone at 49 points, slightly down from 51 a week earlier.
 

NordFX Analytical Group
 

Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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Forex and Cryptocurrencies Forecast for January 22 – 26, 2024

EUR/USD: Reasons Behind the Dollar's Strengthening


The past week was notably sparse in terms of macroeconomic statistics. Consequently, the market participants' sentiment largely depended on the statements made at the World Economic Forum in Davos (WEF). It's worth noting that this event, held annually at a ski resort in Switzerland, gathers representatives of the global elite from over 120 countries. There, amidst the sparkling, crystal-clear snow glistening in the sunlight, the world's power players discuss economic issues and international politics. This year, the 54th edition of the forum took place from January 15 to 19.

Speaking at the World Economic Forum on January 16, the President of the European Central Bank, Christine Lagarde, expressed her confidence that inflation would reach the target level of 2.0%. This statement did not raise any doubts, as the Consumer Price Index (CPI) in the Eurozone shows a steady decline. From a level of 10.6% at the end of 2022, the CPI has now fallen to 2.9%. Isabel Schnabel, a member of the ECB's Executive Board, did not rule out the possibility of a soft landing for the European economy and a return to the target inflation level by the end of 2024.

According to a Reuters survey of leading economists on the future monetary policy of the ECB, the majority expect the regulator to lower interest rates as early as the second quarter, with 45% of respondents believing that this decision will be made at the June meeting. 

On the other hand, inflation in the United States has been unable to surpass the 3.0% mark since July 2023. The figures published on January 11th showed that the annual Consumer Price Index (CPI) increased by 3.4%, which was above the consensus forecast of 3.2% and the previous value of 3.1%. In monthly terms, consumer inflation also rose, registering at 0.3% against a forecast of 0.2% and a previous value of 0.1%.

In light of this, and considering that the U.S. economy appears quite stable, the likelihood of the Federal Reserve lowering interest rates in March started to diminish. This shift in sentiment led to a slight strengthening of the dollar, moving EUR/USD from the 1.0900-1.1000 range to the 1.0845-1.0900 zone. Additionally, the weak performance of the Asian stock markets exerted some pressure on the European currency.

According to economists at the Dutch Rabobank, long positions on the euro may face further challenges. This could happen if Donald Trump continues his movement towards a potential second term in the White House. "Although President Biden's Inflation Reduction Act meant that the past four years were not always easy for Europe, Trump's stance on NATO, Ukraine, and possibly climate change could prove costly for Europe and enhance the appeal of the U.S. dollar as a safe asset," the Rabobank experts write. "Based on this, we see a possibility of EUR/USD falling to 1.0500 in a three-month perspective."

EUR/USD closed last week at 1.0897. Currently, the majority of experts predict a rise in the U.S. dollar in the near future. 60% voted in favour of the dollar's strengthening, 20% sided with the euro, and the remaining 20% took a neutral stance. Oscillator readings on the D1 chart confirm the analysts' forecast: 80% are coloured red, indicating a bearish trend, and 20% are in neutral grey. Among the trend indicators, there is a 50/50 split between red (bearish) and green (bullish) signals.

The nearest support levels for the pair are located in the zones of 1.0845-1.0865, followed by 1.0725-1.0740, 1.0620-1.0640, 1.0500-1.0515, and 1.0450. On the upside, the bulls will face resistance at 1.0905-1.0925, 1.0985-1.1015, 1.1110-1.1140, 1.1230-1.1275, 1.1350, and 1.1475.

Unlike the past week, the upcoming week promises to be more eventful. On Tuesday, January 23, we will see the publication of the Eurozone Bank Lending Survey. Wednesday, January 24, will bring a deluge of preliminary statistics on business activity (PPI) in various sectors of the German, Eurozone, and U.S. economies. The main event on Thursday, January 25, will undoubtedly be the European Central Bank's meeting, where a decision on the interest rate will be made. It is expected to remain at the current level of 4.50%. Investors will therefore be paying close attention to what the ECB leaders say at the subsequent press conference. For reference, the FOMC meeting of the Federal Reserve is scheduled for January 31. Additionally, on January 25, we will learn about the GDP and unemployment data in the United States, and the following day, data on personal consumption expenditures of residents of this country will be released. 

GBP/USD: High Inflation Leads to High Rates and a Stronger Pound

Unlike the United States and the Eurozone, there was a significant amount of important statistics released last week concerning the state of the British economy. On Wednesday, January 17, traders were focused on the December inflation data. The data revealed that the Consumer Price Index (CPI) in the United Kingdom rose from -0.2% to 0.4% month-on-month (against a consensus forecast of 0.2%) and reached 4.0% year-on-year (compared to the previous value of 3.9% and expectations of 3.8%). The core CPI remained at the previous level of 5.1% year-on-year.

Following the release of the report showing inflation growth, UK Prime Minister Rishi Sunak moved quickly to reassure the markets. He stated that the government's economic plan remains correct and continues to work, having reduced inflation from 11% to 4%. Sunak also noted that wages in the country have been growing faster than prices for five months, suggesting that the trend of weakening inflationary pressure will continue.

Despite this optimistic statement, many market participants believe that the Bank of England (BoE) will postpone the start of easing its monetary policy until the end of the year. "Concerns that the disinflation process might slow down have likely intensified as a result of the latest inflation data," economists at Commerzbank write. "The market will probably bet on the Bank of England responding accordingly and, therefore, being more cautious regarding the first interest rate cut."

Clearly, if the BoE does not rush to ease monetary policy, this will create ideal conditions for the long-term strengthening of the British pound. This prospect already allowed the GBP/USD pair to bounce off the lower boundary of its five-week channel at 1.2596 on January 17th, rising to the channel's midpoint at 1.2714.

It is quite possible that GBP/USD would have continued its upward trajectory, but it was hindered by weak retail sales data in the United Kingdom, which were published at the end of the workweek on Friday, January 19th. The data showed a decline in this indicator by 4.6%, from +1.4% in November to -3.2% in December (against a forecast of -0.5%). If the upcoming Purchasing Managers' Indexes and business activity indicators, due to be released on January 24th, paint a similar picture, it could exert even more pressure on the pound. The Bank of England might fear that a stringent monetary policy could overly decelerate the economy and might consider easing it. According to analysts at ING (Internationale Nederlanden Groep), a reduction in the key interest rate by 100 basis points could lead to GBP/USD falling to the 1.2300 zone over a one to three-month horizon.

ING analysts also believe that the UK budget announcement on March 6 will significantly impact the pound, with tax cuts on the agenda. "Unlike in September 2022," the experts write, "we believe this will be a real tax cut, financed by the reduced cost of debt servicing. This could add 0.2-0.3% to the UK's GDP this year and lead to the Bank of England maintaining higher rates for a longer period."

GBP/USD ended the last week at 1.2703. Looking ahead to the coming days, 65% voted for the pair's decline, 25% were in favour of its rise, and 10% preferred to remain neutral. Contrary to the specialists' opinions, the trend indicators on D1 show a preference for the British currency: 75% indicate a rise in the pair, while 25% point to a decline. Among the oscillators, 25% are in favor of the pound, the same proportion (25%) for the dollar, and 50% hold a neutral position. If the pair moves southward, it will encounter support levels and zones at 1.2650, 1.2595-1.2610, 1.2500-1.2515, 1.2450, 1.2330, 1.2210, 1.2070-1.2085. In case of an upward movement, the pair will meet resistance at 1.2720, 1.2785-1.2820, 1.2940, 1.3000, and 1.3140-1.3150.

No significant events related to the United Kingdom's economy are anticipated for the upcoming week, other than the previously mentioned events. The Bank of England's next meeting is scheduled for Thursday, February 1.

USD/JPY: The 'Moon Mission' Continues

According to data published by the Japanese Statistics Bureau on Friday, January 19, Japan's National Consumer Price Index (CPI) for December was 2.6% year-on-year, compared to 2.8% in November. The National CPI, excluding fresh food, was 2.3% year-on-year in December, down from 2.5% the previous month.

Given that inflation is already decreasing, the question arises: why raise the interest rate? The logical answer: there is no need. This is why the market's consensus forecast suggests that the Bank of Japan (BoJ) will leave the rate unchanged at its meeting on Tuesday, January 23rd, maintaining it at the negative level of -0.1%. (It is worth remembering that the last time the regulator changed the rate was eight years ago, in January 2016, when it was lowered by 200 basis points.).

As usual, Japan's Finance Minister Shunichi Suzuki made another round of verbal interventions on Friday, and as usual, he said nothing new. "We are closely monitoring currency movements," "Forex market movements are determined by various factors," "it's important for the currency to move stably, reflecting fundamental indicators": these are statements that market participants have heard countless times. They no longer believe that the country's financial authorities will move from persuasion to real action. As a result, the yen continued to weaken, and USD/JPY continued its upward movement. (Interestingly, this aligns precisely with the wave analysis we provided two weeks ago.)

The past week's high for USD/JPY was recorded at 148.80, with the week closing near that level at 148.14. In the near future, 50% of experts anticipate further strengthening of the dollar, 30% are siding with the yen, and 20% hold a neutral position. As for the trend indicators and oscillators on D1, all 100% point north, though a quarter of the latter are in the overbought zone. The nearest support level is located in the 147.65 area, followed by 146.90-147.15, 146.00, 145.30, 143.40-143.65, 142.20, 141.50, and 140.25-140.60. Resistance levels are set in the following areas and zones: 148.50-148.80, 149.85-150.00, 150.80, and 151.70-151.90.

In addition to the Bank of Japan's meeting, another significant event related to the Japanese economy to note for the upcoming week is the publication of the Consumer Price Index (CPI) data for the Tokyo region, which is scheduled for Friday, January 26.

CRYPTOCURRENCIES: Numerous Predictions, Uncertain Outcome

Last week, the long-awaited regulatory saga finally concluded: as expected, on January 10th, the U.S. Securities and Exchange Commission (SEC) approved a batch of all 11 applications from investment companies to launch spot exchange-traded funds (ETFs) based on bitcoin. This news initially caused a spike in bitcoin's price to around $49,000. However, the cryptocurrency then depreciated by about 15%, falling to $41,400. Experts cite overbought conditions or what is known as "market overheating" as the main reason for this decline. As Cointelegraph reports, the SEC's positive decision was already factored into the market price. In 2023, bitcoin had grown 2.5 times, with a significant part of this growth occurring in the fall when the approval of the ETFs became almost inevitable. Many traders and investors, especially short-term speculators, decided to lock in profits rather than buy the now more expensive asset. This is a classic example of the market adage, "Buy on rumors (expectations), sell on facts."

It cannot be said that this price collapse was unexpected. In the lead-up to the SEC's decision, some analysts had predicted a downturn. For instance, experts at CryptoQuant talked about a potential drop in prices to $32,000. Other forecasts mentioned support levels at $42,000 and $40,000. "Bitcoin failed to break through the $50,000 level," analysts at Swissblock wrote. "The question arises whether the leading cryptocurrency can regain the momentum it has lost."

Our previous review was titled "D-Day Has Arrived. What Next?". More than a week has passed since the approval of the Bitcoin ETF, but judging by the BTC/USD chart, the market still hasn't decided on an answer to this question. According to Michael Van De Poppe, head of MN Trading Consultancy, the price is stuck between several levels. He believes that resistance lies at $46,000, but bitcoin could test support in the range between $37,000 and $40,000. In reality, for almost the entire past week, the primary cryptocurrency moved in a narrow sideways channel: between $42,000 and $43,500. However, on January 18-19, bitcoin experienced another bear attack, recording a local minimum at $40,280.

Evaluating the impact of the launch of spot bitcoin ETFs will require some time. Suitable data for analysis is expected to accumulate around mid-February. However, as noted by Cointelegraph, these funds have already attracted over $1.25 billion. On the first day alone, the trading volume of these new financial market instruments reached $4.6 billion.

Andrew Peel, Head of Digital Assets at investment bank Morgan Stanley, points out that the weekly inflow of funds into these new products already exceeds billions of dollars. He believes that the launch of spot bitcoin ETFs could significantly accelerate the process of de-dollarization of the global economy. He is quoted as saying, "Although these innovations are still in their infancy, they open up opportunities for challenging the hegemony of the dollar. Macro investors should consider how these digital assets, with their unique characteristics and growing adoption, can change the future dynamics of the dollar." Andrew Peel reminds us that the popularity of BTC has been growing steadily over the last 15 years, with over 106 million people worldwide now owning the first cryptocurrency. Meanwhile, Michael Van De Poppe notes that the events of January 10 will change the lives of many people around the world. However, he warns that "this will be the last 'easy' cycle for bitcoin and cryptocurrencies" and that it "will take longer than before."

The impact of the newly launched bitcoin ETFs on the global order has also been a topic of discussion among many influencers at the top of the power pyramid, underscoring the significance of this event. For instance, Elizabeth Warren, a member of the U.S. Senate Banking Committee, criticized the SEC's decision, expressing concerns that it could harm the existing financial system and investors. In contrast, Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF), holds a different view. She believes that cryptocurrencies are a class of assets, not money, and it's crucial to make this distinction. Therefore, she argues, bitcoin will not be able to replace the U.S. dollar. Additionally, the IMF head disagrees with those who expect that bitcoin ETFs will contribute to the mass adoption of the first cryptocurrency.

Bitcoin's price is projected to reach $100,000 - $150,000 by the end of 2024 and $500,000 within the next five years, according to Tom Lee, co-founder of the analytics firm Fundstrat, in an interview with CNBC. "In the next five years, supply will be limited, but with the approval of spot bitcoin ETFs, we have potentially huge demand, so I think something around $500,000 is quite achievable within five years," the expert stated. He also highlighted the upcoming halving in the spring of 2024 as an additional growth factor.

ARK Invest CEO Cathy Wood, also speaking on CNBC, predicted a bullish scenario where the first cryptocurrency could reach $1.5 million by 2030. Her firm's analysts calculated that even under a bearish scenario, the price of the digital gold would grow to at least $258,500.

Another forecast was given by Anthony Scaramucci, founder of SkyBridge Capital and former White House Communications Director. "If bitcoin is at $45,000 during the halving, then by mid-to-late 2025, it will be worth $170,000. Whatever the price of bitcoin is on the day of the halving in April, multiply it by four, and it will reach that figure within the next 18 months," said the SkyBridge founder in Davos, ahead of the World Economic Forum.

It's interesting to see how different AI chatbots have provided varied predictions for the price of bitcoin by December 31, 2024. Claude Instant from Anthropic predicted $85,000, while Pi from Inflection expects a rise to $75,000. Bard from Gemini forecasts that the price of BTC will exceed $90,000 by that date, though it cautions that unforeseen economic obstacles could limit the peak to around $70,000. ChatGPT-3.5 from OpenAI sees a price range of $75,000 to $85,000 as plausible but not guaranteed. A more conservative estimate from ChatGPT-4 suggests a range of $40,000 to $60,000, factoring in potential market fluctuations and investor caution, but doesn't rule out a rise to $80,000. Lastly, Bing AI from Co-Pilot creative predicts a price around $75,000, based on the information it has gathered.

These diverse predictions from AI systems reflect the inherent uncertainty and complexity in forecasting cryptocurrency prices, highlighting a range of factors that could influence market dynamics over the next few years.

As of the evening of January 19, BTC/USD was trading around $41,625. The total market capitalization of the cryptocurrency market stood at $1.64 trillion, down from $1.70 trillion a week earlier. The Bitcoin Fear & Greed Index, a measure of market sentiment, has dropped from 71 to 51 points over the week, moving from the 'Greed' zone to the 'Neutral' zone. This shift indicates a change in investor sentiment, reflecting a more cautious approach in the cryptocurrency market.

In conclusion regarding the growing market speculation about the imminent launch of spot ETFs on Ethereum, in our previous review, we cited a statement by SEC Chairman Gary Gensler, who clarified that the regulator's positive decision applies exclusively to exchange-traded products based on bitcoin. According to Gensler, this decision "does not signal readiness to approve listing standards for crypto assets that are considered securities." It's important to note that the regulator still classifies only bitcoin as a commodity, while "the vast majority of crypto assets are seen as investment contracts (i.e., securities)."

Now, analysts from the investment bank TD Cowen have confirmed pessimism regarding ETH-ETFs. Based on the information they have; it seems unlikely that the SEC will begin reviewing applications for this investment instrument in the first half of 2024. "Before approving ETH-ETFs, the SEC will want to gain practical experience with similar investment instruments in bitcoin," commented Jaret Seiberg, head of TD Cowen Washington Research Group. TD Cowen believes that the SEC will revisit the discussion of Ethereum ETFs only after the U.S. presidential elections in November 2024.

Nikolaos Panagirtzoglou, a senior analyst at JP Morgan, also does not expect a quick approval of spot ETH-ETFs. He opines that for the SEC to make a decision, it needs to classify Ethereum as a commodity rather than a security. However, JP Morgan considers such a development unlikely in the near future.
 

NordFX Analytical Group
 

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NordFX: Best News & Analysis Provider 2023

Following the results of the voting on the information portal Forexing.com, the brokerage firm NordFX was acknowledged as the Best News & Analysis Provider 2023. The victory was secured "by a clear margin" with over 75% of the votes cast in favour of NordFX.

Forexing.com is one of the leading portals comprehensively covering news and events in the Forex, CFD, and Crypto industry. Winners of the Forexing Awards were determined by open voting by visitors of this online platform, making this award particularly valuable as it most objectively reflects the opinion of the professional community. We sincerely thank everyone who voted for the high appraisal of the work of the NordFX Analytical Group.

The congratulatory letter of this platform addressed to NordFX states: “We are thrilled to extend our heartiest congratulations to you for being honoured as the 'Best News & Analysis Provider' of the Year 2023. This prestigious award is a testament to your exceptional service and dedication in the brokerage industry. At Forexing.com, we take pride in recognizing and celebrating excellence within the financial sector. Our team reviews, rates, and nominates top companies in the industry. The awards recognize the best-performing retail International and regional Forex Brokers. Your achievement stands out as a significant contribution to the industry.”
 

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Forex and Cryptocurrencies Forecast for January 15 – 19, 2024

EUR/USD: Market Anticipates Federal Reserve Rate Cut

We published our global forecast for EUR/USD for the upcoming year in the last week of 2023. Now, moving from long-term projections, we return to our traditional weekly reviews, which have been conducted by the NordFX analytical group for over a decade.

The main event of the past week was undoubtedly the U.S. inflation data. The figures released on Thursday, January 11, showed that the Consumer Price Index (CPI) rose by 3.4% year-on-year, compared to a consensus forecast of 3.2% and a previous value of 3.1%. On a monthly basis, consumer inflation also increased, registering 0.3% against a forecast of 0.2% and a previous figure of 0.1%. On the other hand, the core CPI, which excludes volatile food and oil prices, decreased to 3.9% from a previous value of 4.0% (year-on-year).

Recall that with his dovish remarks at the December press conference, Federal Reserve Chairman Jerome Powell created the impression that he is no longer the staunch inflation fighter he appeared to be earlier. This suggests that the U.S. monetary authorities will now respond more flexibly to changes in this indicator. Consequently, the mixed CPI data further convinced market participants that the Fed will begin to ease its policy by the end of Q1 2024. According to CME Fedwatch, the likelihood of a 25 basis point rate cut in March increased to 68% from 61% prior to the release of the statistics. Meanwhile, strategists at the largest banking group of the Netherlands, ING, expect a significant weakening of the dollar towards the end of Q2: that's when they anticipate EUR/USD will start its rally to 1.1500. Until then, in their view, the currency market will remain quite unstable.

Regarding the Eurozone, statistics released on Monday, January 8, indicated that the situation in the consumer market is bad, but not as dire as expected. Retail sales showed a decline of -1.1% year-on-year. This figure, although higher than the previous value of -0.8%, was significantly below the forecast of -1.5%.

In this context, the statement by European Central Bank (ECB) board member Isabel Schnabel appeared rather hawkish. She opined that economic sentiment indicators in the Eurozone have likely reached their nadir, while the labour market remains stable. Schnabel also did not rule out the possibility of a soft landing for the European economy and a return to the inflation target of 2.0% by the end of 2024. According to her, this is still achievable, but it would require the ECB to maintain a high interest rate. This contrast between the hawkish stance of the pan-European mega-regulator and the dovish comments of its overseas colleagues supported the euro, preventing EUR/USD from falling below 1.0900.

Data on industrial inflation in the U.S., released at the end of the workweek on Friday, January 12, also showed a decline in this indicator, but it did not have a strong impact on the quotes. The Producer Price Index (PPI) was 1.8% year-on-year (forecast 1.9%, previous value 2.0%), and the monthly PPI, like in November, recorded a decrease of -0.1% (forecast +0.1%).

Following the release of this data, EUR/USD closed the workweek at 1.0950.

Currently, experts' opinions regarding the near future of the pair provide no clear direction, as they are evenly split: 50% voted for a strengthening of the dollar, and 50% sided with the euro. Technical analysis indicators also appear quite neutral. Among trend indicators on D1, the balance of power between red and green is 50% to 50%. Among oscillators, 25% have turned green, another 35% are in a neutral grey, and the remaining 40% are red, with a quarter of them signalling that the pair is oversold. The nearest support for the pair is in the zone of 1.0890-1.0925, followed by 1.0865, 1.0725-1.0740, 1.0620-1.0640, 1.0500-1.0515, 1.0450. Bulls will encounter resistance in the areas of 1.0985-1.1015, 1.1185-1.1140, 1.1230-1.1275, 1.1350, and 1.1475.

Next week, notable economic events include the release of Consumer Price Index (CPI) data for Germany on Tuesday, January 16, and for the Eurozone on Wednesday, January 17. Additionally, Wednesday will bring statistics on the state of the U.S. retail market. On Thursday, January 18, the usual figures for initial jobless claims in the United States will be released. The same day, we will learn the value of the Philadelphia Federal Reserve's Manufacturing Business Outlook Survey, and on Friday, the University of Michigan's Consumer Sentiment Index will be published. Furthermore, traders should be aware that Monday, January 15, is a public holiday in the U.S. as the country celebrates Martin Luther King Jr. Day.
 

GBP/USD: Pound Retains Potential for Growth


Before the New Year holidays, GBP/USD reached its highest level since August 2023, touching 1.2827. It then fell by more than 200 points to the lower line of the ascending channel and, bouncing off it, began to rise again. At the time of writing this forecast, it is difficult to confidently say that the pound has returned to a firm upward trend. The dynamics of the last four weeks can be interpreted as a sideways trend. A similar pattern, specifically in the 1.2600-1.2800 zone, was observed in August. Back then, it was merely a temporary respite before the pair's fall continued with renewed vigour. It's possible that we are witnessing a similar scenario now, but with a positive sign instead of a negative one. If this is the case, we could see GBP/USD in the 1.3000-1.3150 zone during the first quarter.

Last week, the British currency was bolstered by data on inflation in the U.S. and forecasts regarding a dovish pivot by the Federal Reserve. The UK's Office for National Statistics (ONS) also supported the pound, reporting on Friday, January 12, that the country's GDP in November grew by 0.3% month-on-month, against a forecast of 0.2% and a decrease of -0.3% recorded in October. Additionally, the volume of manufacturing output rose by 0.4% month-on-month in November (forecast 0.3%, previous value – a decline of -1.2%). At the same time, the British FTSE 100 index rose by 0.8%, reflecting the market's optimistic mood and its participants' appetite for risk.

GBP/USD concluded the week at 1.2753. According to economists at Scotiabank, for the pound to maintain its bullish momentum, it needs to confidently overcome resistance in the 1.2800-1.2820 zone. "However," they write, "the absence of a breakthrough in the 1.2800 area may begin to weary [market participants], and the price actions over the last month are still shaping up as potentially bearish."

Despite the pound retaining potential for growth in the medium term, the experts' forecast for the coming days leans towards the dollar. 60% of them voted for a fall in the pair, 25% for its rise, and 15% preferred to remain neutral. In contrast to the specialists, the indicators almost unanimously favour the British currency: among the oscillators on D1, 90% are on the side of the pound (with 10% neutral), and among trend indicators, all 100% are pointing upwards. If the pair moves south, it will encounter support levels and zones at 1.2720, 1.2650, 1.2600-1.2610, 1.2500-1.2515, 1.2450, 1.2330, 1.2210, 1.2070-1.2085. In the event of a rise, it will face resistance at levels 1.2785-1.2820, 1.2940, 1.3000, and 1.3140-1.3150.

For the upcoming week, notable dates include Tuesday, January 16, when a significant batch of labour market data from the United Kingdom will be released. Consumer Price Index (CPI) data will be published on Wednesday, January 17, and retail sales figures in the UK will be available on Friday, January 19.
 

USD/JPY: U.S. CPI Outperforms Japan's CPI

The Bank of Japan (BoJ) is considering lowering its inflation forecast for the 2024 fiscal year to around the mid-2% range in its upcoming quarterly report, set to be published on January 23. This news was reported by the Jiji agency, citing Reuters, on Thursday, January 11. Japan's real wages fell by 3.0%. With a sharp slowdown in wage growth, Tokyo's Consumer Price Index (CPI) was below forecasts, dropping from 2.7% to 2.4%. Interpreting these data, analysts have begun to speculate that the Bank of Japan might delay tightening its ultra-loose monetary policy. Following this logic, traders were advised to open long positions in the USD/JPY pair.

However, after reaching a peak of 146.41 on January 11, the pair reversed and began to decline: the decrease in U.S. inflation turned out to be much more significant for market participants than the decrease in Japan's inflation. The fact that the interest rate on the yen will remain at a negative level of -0.1% is not so crucial. What is more important is that the rate on the dollar could soon drop by 0.25%.

Mathias Cormann, the Secretary-General of The Organisation for Economic Co-operation and Development (OECD), recently stated that "the Bank of Japan has opportunities to further consider the level of tightening of its monetary policy." However, we have already heard many such vague statements and opinions. In our view, it is much more interesting to present the technical analysis of the current situation performed by economists at the French bank Societe Generale.

"They write that USD/JPY sharply recovered after forming an intermediate low around 140.20 at the end of last month. It has returned to the 200-Day Moving Average (200-DMA) and approached the October low of 146.60-147.40, which acts as an intermediate resistance zone. After an unsuccessful attempt to break through the 50-day moving average at the level of 146.41 on Thursday, January 11, the pair is retreating, indicating the start of an initial pullback. "It will be interesting to see if the pair can hold the 200-DMA around 143.40. Failure would mean the risk of another decline towards 140.20-139.60. A breakthrough above 146.60-147.40 is necessary to confirm the continuation of the rebound [upwards]," they believe at Societe Generale.

USD/JPY ended last week at 144.90. (Interestingly, the current dynamics fully align with the wave analysis we discussed in our previous review). In the near term, 40% of experts anticipate further strengthening of the yen, another 40% are in favour of the dollar, and 20% hold a neutral position. Regarding the trend indicators on D1, 60% are pointing north, while the remaining 40% are looking south. Among the oscillators, 70% are coloured green (with 15% in the overbought zone), 15% are red, and the remaining 15% are neutral grey. The nearest support level is in the zone of 143.75-144.05, followed by 142.20, 141.50, 140.25-140.60, 138.75-139.05, 137.25-137.50, and 136.00. Resistance levels are located at 145.30, 146.00, 146.90, 147.50, 148.40, 149.80-150.00, 150.80, and 151.70-151.90.

No significant events concerning the Japanese economy are expected in the coming week
 

CRYPTOCURRENCIES: Day X Has Arrived. What's Next?

What many have long talked about and dreamed of has finally come to pass. As expected, on January 10, the U.S. Securities and Exchange Commission (SEC) approved a batch of 11 applications from investment companies to launch spot exchange-traded funds (ETFs) based on Bitcoin. As a result, ETFs from Grayscale, as well as from Bitwise and Hashdex, were admitted to the NYSE Arca stock exchange. BlackRock and Valkyrie funds are being launched on Nasdaq. CBOE will host ETFs from VanEck, Wisdom Tree, Fidelity, Franklin Templeton, as well as joint funds from ARK Invest/21 Shares and Invesco/Galaxy.

Contrary to expectations, immediately after the approval, the BTC/USD pair's rate rose only to $47,652 instead of a jubilant surge. The reason for such a tepid reaction is that the market had already priced in this event. Moreover, the day before, hackers breached the SEC's account on social network X (formerly Twitter) and published a fake tweet about the approval of the long-awaited BTC-ETFs. The market then reacted to this false statement with a rise in the main cryptocurrency to the $48,000 mark. After the refutation, the price fell back down, and on January 10, it merely repeated what had happened the day before.

It's important to note that the SEC was not particularly pleased with its decision to approve the applications. The first application for a spot ETF was filed back in 2013 by the Winklevoss brothers (Cameron & Tyler Winklevoss) and was rejected in 2017. Approximately six years have passed since then, but the regulator's aversion to cryptocurrencies remained, and the current approval was granted somewhat reluctantly and under pressure. According to a press release by the agency's chair Gary Gensler, the Commission's decision was based on a ruling by the appellate court in Grayscale's lawsuit regarding the transformation of a trust fund into a spot ETF. The court ruled in favour of Grayscale, stating that the SEC “failed to adequately justify its reasons for refusal.” After this, delaying the approval of similar products was no longer sensible.

However, on January 10, Gensler did not hold back in his negative assessment. "Despite the approval of spot BTC-ETFs," he noted in the press release, "we do not endorse bitcoin. Investors should consider the numerous risks associated with Bitcoin and products whose value is tied to the cryptocurrency. Bitcoin is primarily a speculative, volatile asset that is also used for illegal activities, including ransomware, money laundering, evasion of sanctions, and financing of terrorism. Today, we approved the listing and trading of certain ETP spot bitcoin shares, but we did not approve Bitcoin," concluded the SEC head, making it clear that the battle with digital assets is far from over.

Discussing the short-term perspective, many analysts did not anticipate a significant rally, pointing to $48,500 as a key resistance level. They proved correct: after BTC/USD breached this level on September 11, a "sell the news" phenomenon ensued – a mass closure of buy-orders and profit-taking. Consequently, the price sharply retraced. According to Coinglass, the total sum of liquidations for all cryptocurrency positions was approximately $209 million.

Regarding the long-term impact of the launch of spot bitcoin ETFs, time is needed for a full assessment. About a week is necessary for the funds to commence operations on exchanges, with investment volume data expected around mid-February. If we compare with ETFs for other products, approximately $1.2 trillion has been invested in them over the past two years. Seven years after the 2004 launch of physical gold ETFs, the price of this metal quadrupled, and now over $100 billion is held in gold ETFs.

Concerning digital gold, analysts at Standard Chartered bank consider the approval of bitcoin ETFs a pivotal moment for the asset's acceptance. "Bitcoin will likely see growth akin to gold-linked exchange-traded products," they write. "But this is expected to materialize over a shorter period: not in seven to eight years, as was the case with gold, but within one to two years, considering the swift evolution of the crypto market." The bank forecasts bitcoin's price potentially reaching $200,000 by the end of 2025. Standard Chartered estimates that by the end of 2024, exchange-traded funds could hold between 437,000 BTC and 1.32 million BTC, equating to a market inflow of $50-100 billion, creating a significant price impulse for the primary cryptocurrency.

Venture investor Chamath Palihapitiya also expresses a comparable sentiment. He believes that 2024 could emerge as a landmark year for bitcoin. The billionaire highlighted that the approval of numerous spot exchange-traded ETFs is likely to "revolutionize BTC," potentially leading to its widespread adoption. Palihapitiya remarked that in such a scenario, by the end of 2024, bitcoin could become a staple in traditional financial parlance.

According to CoinDesk data, the 40-day correlation between digital gold and the Nasdaq 100 technology index has dropped to zero. Over the past four years, this price correlation has been positive, varying from moderate (0.15) to strong (0.8), reaching its peak during the bear market of 2022. Now, bitcoin has completely "decoupled" from Nasdaq. This correlation reset may signify bitcoin's potential as an attractive diversification tool for investment portfolios, thereby enhancing its value.

Macro-strategist Henrik Zeberg also anticipates a phenomenal bull market in 2024. He expects the dynamics of digital assets this year, driven by the entry of new players, to be "parabolic." "[Bitcoin] is going to be absolutely explosive – it will shoot up vertically. I think we will reach at least $115,000. That's my most conservative forecast. The $150,000 level is also feasible, and I see the potential for $250,000," the economist notes.

Zeberg added that the first four months of 2024 could be "incredibly impressive" for the crypto market, thanks to institutional and traditional investors entering after the approval of spot bitcoin ETFs. Those who missed out on the first or second bull cycle will now say, "Oh, I missed the first two times, but I'll be in this one." However, he believes that traditional markets are facing "the worst crash since 1929," when the Great Depression began in the U.S.

Renowned analyst known as PlanB believes that the price of bitcoin could soon reach between $100,000 and 1 million. He explains that he doesn't expect a BTC price drop, as its adoption level is currently only 2-3%. According to the logistic S-curve of organizational development and Metcalfe's law, a decrease in asset profitability should not be expected while the adoption level is below 50%. Therefore, the analyst opines, "the main cryptocurrency is set for exponential growth for a couple more years."

Indeed, alongside the optimists, there are many who forecast a downward trend. We discussed some of these views two weeks ago in a special review titled "Forecast 2024: Bitcoin Yesterday, Tomorrow, and the Day After." Currently, it's worth noting the recent statement from TV host and founder of hedge fund Cramer & Co., Jim Cramer. He asserted that bitcoin has reached its peak and further growth should not be expected. This statement was made as bitcoin surpassed the $47,000 mark. Observing bitcoin's performance on January 11-12, it raises the question: "Could Jim Cramer be right?"

As of the evening of January 12, when this review was written, BTC/USD is experiencing a significant drop, trading around $43,000. The total market capitalization of the crypto market is at $1.70 trillion, up from $1.67 trillion a week ago. The Bitcoin Fear & Greed Index over the week has decreased from 72 to 71 points and remains in the Greed zone.

Contrary to bitcoin's performance, the leading altcoin exhibited a much more impressive growth last week. Starting from a level of $2,334 on January 10, ETH/USD reached a weekly high of $2,711 on January 12, showcasing a 16% increase. Interestingly, this surge occurred after the SEC Chairman's statement emphasizing that the regulator's positive decision exclusively pertained to exchange-traded products based on bitcoin. Gary Gensler clarified that this decision "in no way signals readiness to approve listing standards for crypto assets that are securities." It's worth noting that the regulator still regards only bitcoin as a commodity, while considering "the overwhelming majority of crypto assets as investment contracts (i.e., securities)." Therefore, the hope for the imminent arrival of spot ETFs with Ethereum and other altcoins is unfounded.

Yet, against this rather grim backdrop, ETH suddenly soared. The market's reaction is indeed inscrutable. However, towards the end of Friday, January 12, Ethereum followed bitcoin in a downturn, welcoming Saturday in the $2,500 zone.
 

NordFX Analytical Group
 

Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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USD/JPY: 2023 Review and 2024 Forecast

According to statistics, USD/JPY (US Dollar/Japanese Yen) is among the top three most traded currency pairs in the Forex market. This is facilitated by the pair's high liquidity, which ensures narrow spreads and favourable trading conditions. This means that traders can enter and exit positions with minimal costs. Additionally, the pair exhibits very high volatility, providing excellent profit opportunities, particularly in short-term and medium-term operations.


2023: The Yen of Unfulfilled Hopes

Throughout 2023, the Japanese currency steadily lost ground to the American dollar, and consequently, USD/JPY pair trended upwards. The yearly low was recorded on January 16th at 127.21, while the peak occurred on November 13th, with 1 dollar exchanging for 151.90 yen.

We have repeatedly mentioned that the weakening of the yen is due to the Bank of Japan's (BoJ) persistent ultra-dovish stance. Understandably, the negative interest rate of -0.1% cannot be attractive to market participants, especially against the backdrop of rising global yields and high rates set by the central banks of other leading countries. For investors, it was much more preferable to engage in carry trade: borrowing yen at low interest rates, then converting them to US dollars and Treasury bonds, which yielded a good profit due to the interest rate differential, all without any risk.

The monetary policy conducted by the Japanese Government and the Bank of Japan in recent years clearly indicates that their priority is not the yen's exchange rate, but economic indicators. Until mid-summer, to combat rising prices, regulators in the US, EU, and the UK tightened monetary policy and raised key interest rates. However, the BoJ ignored such methods, even though inflation in the country continued to rise. In June 2023, core inflation reached 4.2%, the highest in over four years. The only action the Bank of Japan took was to switch from strict to flexible targeting of the yield curve of Japanese government bonds, which did not aid the national currency.

Instead of tangible actions, Japan's Finance Minister Shunichi Suzuki, Bank of Japan Governor Kazuo Ueda, and Japan's top currency diplomat Masato Kanda actively engaged in verbal interventions. They and other senior financial officials consistently assured in their speeches that everything was under control. They claimed that the Government was "closely monitoring currency movements with a high sense of urgency and immediacy" and that it "would take appropriate measures against excessive currency movements, not ruling out any options." Here are a few quotes from Kazuo Ueda's speech: "Japan's economy is recovering at a moderate pace. […] Uncertainty regarding Japan's economy is very high. […] The rate of inflation growth is likely to decrease and then accelerate again. [But] overall, Japan's financial system maintains stability." In short, interpret it as you wish.

Winter-Spring 2023. At the beginning of the year, many market participants took the promises to "take immediate measures" quite seriously. They were hopeful for a rate hike, which had been stuck at a negative level since 2016. In January, economists at Danske Bank forecasted that following a rate increase, the USD/JPY pair would fall to 125.00 within three months. Analysts from the French Societe Generale pointed to the same target. Their colleagues from ANZ Bank did not rule out the possibility of the pair reaching around 124.00 by the end of 2023. According to BNP Paribas' projections, a tightening of monetary policy was expected to stimulate the repatriation of funds by Japanese investors, potentially leading the USD/JPY pair to fall to 121.00 by year's end. Economists from the international financial group Nordea anticipated it dropping below 120.00. Potential significant strengthening of the Japanese currency was also suggested by strategists from Japan's MUFG Bank and HSBC, the largest bank in the UK.

Summer 2023. As time passed, nothing significant occurred. Commerzbank, a German bank, stated that the yen is a complex currency to understand, possibly due to the BoJ's monetary policy. Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF), subtly hinted that it "would be appropriate to bring more flexibility to the monetary policy of the Bank of Japan."

In the first half of the summer, market participants began to adjust their forecasts. Economists at Danske Bank now predicted the USD/JPY rate to be below 130.00 over a 6-12 month horizon. A similar forecast was made by strategists at BNP Paribas, projecting a level of 130.00 by the end of 2023 and 123.00 by the end of 2024. Societe Generale's July forecast also became more cautious. Analysing the pair's prospects, the bank's experts expected that the yield on 5-year U.S. Treasury bonds would fall to 2.66% within a year, allowing the pair to break below 130.00. If the yield on Japanese government bonds (JGB) remains at the current level, the pair might even drop to 125.00.

Wells Fargo's prediction, one of the 'big four' banks in the US, was considerably more modest, with its specialists targeting a USD/JPY rate of 136.00 by the end of 2023 and 129.00 by the end of 2024. MUFG Bank declared that the Bank of Japan might only decide on its first rate hike in the first half of 2024. Only then would a shift towards strengthening the yen occur. Regarding the recent change in yield curve control policy, MUFG believed it was insufficient by itself to trigger a recovery of the Japanese currency. Danske Bank stated that expecting any steps from the BoJ before the second half of 2024 was not advisable.

Autumn-Winter 2023. No one held any hope that the Bank of Japan (BoJ) would change its monetary policy before the end of the year. However, market participants started fearing that the weak yen might eventually mobilize Japanese officials to move from verbal interventions to actual actions.

The USD/JPY pair was eagerly racing towards the critical mark of 150.00. Market participants vividly remembered that in the fall of 2022, when the pair reached a 32-year high at 152.00, Japanese authorities initiated financial interventions. Adding fuel to the fire was a report by Reuters, stating that Japan's chief currency diplomat Masato Kanda had announced the banking authorities were considering intervention to end "speculative" movements.

Then, on October 3, as the quotes slightly exceeded the "magical" height of 150.00, reaching a peak of 150.15, what everyone had been anticipating for so long finally happened. In just a few minutes, the USD/JPY pair plummeted nearly 300 points, halting the slide at 147.28. Japan's Finance Minister, Shunichi Suzuki, refrained from commenting on the event. He vaguely stated that "there are numerous factors determining whether movements in the currency market are excessive." However, many market participants believed this to be a real currency intervention. Although, of course, one cannot rule out the mass automatic triggering of stop-orders at the breakthrough of the key level of 150.00, as such "black swan" events have been observed before.

Whatever the case, the intervention did not significantly help the Japanese currency, and 40 days later, it was trading again above 150.00, at the level of 151.90. It was at this moment, on November 13, that the trend reversed, and the strengthening of the yen became consistent. This happened a couple of weeks after the peak in yields of the ten-year U.S. Treasury bonds when markets became convinced that their decline had become a trend. It's important to recall that there's traditionally an inverse correlation between these securities and the yen. If the yield on Treasuries rises, the yen falls against the dollar, and vice versa: if the yield on the securities falls, the yen strengthens.

The primary reason for the resurgence of the Japanese currency was growing expectations that the Bank of Japan (BoJ) would finally abandon its negative interest rate policy, possibly sooner than expected. Rumours suggested that regional banks in the country, lobbying for an abandonment of yield curve targeting policy, were exerting significant pressure on the regulator.

The yen also benefited from market confidence that the key interest rates of the Fed and the ECB had plateaued, with only a decrease expected thereafter. As a result of this divergence, it was anticipated that investors would unwind their carry trade strategy and reduce the yield spreads between Japanese government bonds and those of the U.S. and Eurozone. According to most analysts, all these factors were expected to bring capital back to the yen.

The fourth quarter's low was recorded on December 28 at 140.24, after which USD/JPY ended the year 2023 at a rate of 141.00.

 
2024 – 2028: Fresh Forecasts

After three years of sharp decline, the yen's value might finally be turning around. This is the view held by market participants surveyed by Bloomberg. Overall, respondents expect the Japanese currency to strengthen next year, with the average forecast for USD/JPY pointing to a level of 135.00 by the end of 2024.

Several banks anticipate the pair trading within the range of 125.00-135.00 (Goldman Sachs at 130.00, Barclays at 135.00, UBS at 132.00, MUFG at 125.00). Currency strategists at HSBC believe the US dollar is currently overvalued and will return to its fair value over the next five years due to declining yields in the US and rising stock markets. HSBC experts expect the exchange rate of the pair to reach 120.00 by mid-2024 and drop to 108.00 by 2028. According to ING Group's forecasts, the rate will fall to around 120.00 only in 2025.

However, there are also those who predict further decline for the Japanese currency and a continued 'flight to the moon' for the pair. For instance, analysts at the Economic Forecasting Agency (EFA) expect USD/JPY to reach 166.00 by the end of 2024, 185.00 by the end of 2025, and 188.00 by the end of 2026. Wallet Investor's forecast suggests that the pair will continue its upward rally, reaching a mark of 208.10 by 2028.

In conclusion, for those who favour graphical analysis, it's noteworthy to mention that the behaviour of USD/JPY throughout 2023 almost perfectly aligns with Elliott Wave Theory. If in 2024 the pair continues to follow the tenets of this theory, we can first expect a bullish corrective wave B. This will be followed by a bearish impulse wave C, which could lead the pair to the levels anticipated by proponents of a strengthening Japanese currency.
 

NordFX Analytical Group
 

Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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Top 3 NordFX Traders Earn Nearly $2.5 Million in 2023

NordFX, a brokerage firm, consistently releases statistics that detail the trading performance of its clients and the profits garnered by the company's IB partners. As a tradition, we compile a summary of the past year's outcomes at the beginning of January.

Throughout 2023, the composition of the top three leaders changed monthly, with traders from various countries and regions occupying places of honour on the podium, sometimes separated by tens of thousands of kilometres. Yet, all trading routes from Southeast, Central, and Western Asia, Africa, and Latin America converged at one point: the accounts of the brokerage firm NordFX.

In total, participants in the top three earned a substantial amount, nearly reaching the $2.5 million mark, with precise earnings of 2,494,466 USD. Notably, this was 1.73 times higher than the 2022 profit of 1,441,457 USD. This increase was partly due to improved trading conditions and services provided to NordFX clients. On average, a trader in the top three in 2023 earned about 69,290 USD per month.

Regarding the trading instruments favoured by the top three, gold (XAU/USD pair) was the clear leader. This aligns with the ancient Greek philosopher Plato's observation over 2000 years ago that like attracts like. The GBP/USD and EUR/USD pairs shared the second spot on the popularity pedestal. The bronze went to the Japanese yen (USD/JPY pair).

The earnings of the top three IB partners of NordFX in 2023 were also impressive, although naturally less than those of the traders. This is expected since the partners do not trade themselves but earn commission for clients they attract. The higher the clients' trading activity, the greater the partner's profit.

Potential earnings for a NordFX IB partner can be explored on the company's website. As for the actual earnings in 2023, the top three members collectively earned 272,607 USD. This means, on average, each partner earned about 7,572 USD per month.
 

Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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Forecast 2024: Bitcoin Yesterday, Tomorrow, and the Day After

The main question, just a few years ago, was when the crypto bubble would burst. Over time, bitcoin gradually earned its place in the minds and portfolios of traders and investors. Competing actively with physical gold and other investment and defensive assets, digital gold emerged as a formidable contender.

In the past year, the merits and drawbacks of bitcoin have been a topic of frequent discussion, encompassing analysis of its rises and falls and presenting views from seasoned Wall Street experts and pseudonymous social network analysts. It's important to note that many predictions from both groups proved quite accurate, despite the ultra-high volatility of this flagship asset. Today's focus is on recalling the 2023 predictions for bitcoin, their forecasts for 2024 and beyond, with a particular emphasis on those specialists who offered specific figures rather than general, vague phrases.


2023: Those Who Hit the Mark or Came Close

Let's recall that the past year was undoubtedly successful for bitcoin. Despite all its highs and lows, BTC/USD, starting the year at $16,515, reached a peak of $44,694 on December 8, demonstrating a 2.7-fold increase. Among the reasons for the coin's bull rally, experts cite the growing network hash rate, anticipation of the Federal Reserve's policy easing, and, of course, the approval by the Securities and Exchange Commission (SEC) of the launch of spot bitcoin ETFs and the bitcoin halving in April 2024. It should be noted that all these events began to influence market sentiment only in the second half of 2023. Therefore, the forecasts made in the first half of the year are particularly interesting.

Alistair Milne, IT Director of Altana Digital Currency Fund, made a nearly bullseye prediction by stating, "By the end of 2023, we should see bitcoin at a minimum of $45,000," which he declared already in January.

Mark W. Yusko, the head of Morgan Creek, in February, precisely identified that the next bull market could start as early as the second quarter of 2023, due to favourable macroeconomic conditions. He noted that it was unlikely for the U.S. Federal Reserve to reduce the key interest rate during this period. However, a slowdown or pause in rate adjustments would be seen as a positive sign for risk assets, including cryptocurrencies. Yusko, emphasizing the upcoming halving, pointed out that the digital asset market's recovery usually starts nine months prior to such events, indicating that this rally should have commenced by the end of summer 2023.

Experts at Matrixport, comparing January's BTC quotes with historical data and anticipating a deceleration in the U.S. Consumer Price Index (CPI) growth, accurately predicted that the flagship cryptocurrency's rate might reach $29,000 by summer and $45,000 by Christmas. This precise hit on the target was made evident by their analysis.

Trader, analyst, and founder of venture company Eight, Michael Van De Poppe, released a video review predicting the coin's rise to $40,000 by year-end, a forecast made at the start of March. Similarly, Mike Novogratz, CEO of Galaxy Digital, projected a rise to $40,000, with the caveat that this level would be achieved only when the U.S. Federal Reserve started reducing the key interest rate. Dave the Wave, a trader known for several accurate predictions, voiced the same $40,000 target in May, emphasizing that this was his conservative estimate.

BTC/USD fell below $25,000 in the first half of June, and the market was yet to learn that in just a few days, major financial institutions would start submitting applications to the SEC for entering the cryptocurrency market through spot bitcoin ETFs. Among the contenders for launching these funds were global asset managers like BlackRock, Invesco, Fidelity, and others. At this point, Business Insider took an interest in expert predictions. Let's look at a few opinions gathered from their survey.

Jagdeep Sidhu, President of Syscoin Foundation, believed that despite several crypto storms, the ecosystem's resilience had become evident. The market had recovered from the ashes of FTX, and if inflation in the U.S. decreased, bitcoin could reach $38,000 by year-end, Sidhu stated. David Uhryniak, Director of Ecosystem Development at TRON, along with Benjamin Cowen, was confident that bitcoin would end the year above $35,000.

A consensus forecast from another survey conducted by Finder.com among 29 analysts pointed to a price of $38,488 by year-end, with bitcoin's peak values in 2023 expected to be around $42,000. Naturally, individual expert predictions varied. Overall, most survey participants (59%) were optimistic about BTC, considering summer a good time to enter the market, 34% advised holding existing cryptocurrency, and 7% recommended selling it.


2023: Above or Below the Target

Certainly, not all predictions were as close to the year's outcomes. Another frequently cited target in forecasts was the $50,000 mark, which, according to the analyst known as CryptoYoddha, experts at TradingShot, and former Goldman Sachs top manager and CEO of Real Vision Raoul Pal, BTC/USD was expected to reach. Legendary trader and analyst Peter Brandt, who accurately predicted BTC's 2018 correction, set his sights even higher this time. He believed the coin would reach its previous highs near $68,000 in the second half of 2023, followed by another correction and a new all-time high.

In late January 2023, the analyst under the pseudonym Plan B predicted that the flagship currency would rise to $100,000 by year-end. Moreover, he estimated that bitcoin could test the $42,000 level as early as March, citing the stock-to-flow (S2F) model he developed, which measured the relationship between an asset's available supply and its production rate. However, as we now know, the $42,000 test occurred only nine months later, in December, and $100,000 remained an unattainable height.

Felix Zulauf, founder of Zulauf Asset Management, speculated that bitcoin would enter a clear bull rally around late spring 2023 and did not rule out the possibility of the asset reaching $100,000 on a sharp upward trend. Credible Crypto experts also issued an optimistic forecast, suggesting that the flagship crypto asset had a good chance of renewing its historical maximum in the $69,000 zone. A CNBC survey among influential industry figures revealed expectations of retesting $69,000 by Tether's CTO Paolo Ardoino, while Marshall Beard, the Strategy Director of cryptocurrency exchange Gemini, pointed to $100,000. Investor and author of the famous book "Rich Dad Poor Dad," Robert Kiyosaki, named an even larger figure, claiming that by the beginning of 2024, bitcoin would reach $120,000.

The market isn't driven solely by bulls. Roaming its expanse, one can encounter bears and even "crypto-gravediggers." For instance, Bloomberg analyst Mike McGlone, in May, anticipated a bitcoin price collapse to a support level of $7,366. This was a stark contrast to his view at the end of the previous year, 2022, when McGlone predicted bitcoin would soar to $100,000.

Strategists from the British multinational financial conglomerate Standard Chartered expected that a liquidity crisis would lead to new bankruptcies of crypto exchanges and companies, resulting in BTC potentially plummeting to $5,000 in 2023. An analyst known as Grinding Poet even declared that "a retest of the 2018 lows is inevitable" and set a new target of $3,150.
 

2024: Optimism and Super Optimism

Bloomberg Intelligence analyst Jamie Coutts has forecasted a rise in bitcoin's price to $50,000 before the halving in April 2024. Eric Balchunas, a senior analyst at Bloomberg, explained that the SEC's approval of BTC-ETF applications would open up bitcoin to a capital market of $30 trillion. Bloomberg anticipates that the approval will occur very soon, around January 8-10. According to predictions by the analytical firm Fundstrat, this could increase daily demand for bitcoin by $100 million. In this scenario, even before the planned halving, the price of BTC could reach up to $180,000.

Adam Back, CEO of Blockstream and one of the earliest developers of BTC, likened the past few years to a biblical plague epidemic. "There was COVID-19, central banks' quantitative easing, wars affecting energy costs, inflation driving people and companies to bankruptcy," he explained. As 2023 came to a close, the effects of many of these events had diminished, according to Back. "The bankruptcies linked to Three Arrows Capital, Celsius, BlockFi, and FTX... all of that is mostly over. I don't think we're in for many big surprises." Back believes 2024 will be a year of recovery for bitcoin, responding to the upcoming halving in April and potentially reaching $100,000 before the event.

Samson Mow, former colleague of Back at Blockstream and now CEO of Jan3, agreed with this assessment. Experts at Seeking Alpha also echoed a similar figure, suggesting that the cryptocurrency should be valued around $98,000 to keep miners afloat post-halving.

Standard Chartered experts, particularly Geoff Kendrick, speak of a similar outlook. According to the bank's economists, the current situation indicates the end of the "crypto winter." However, their forecast is slightly more conservative, with the main cryptocurrency reaching the $100,000 mark only by the end of 2024. Apple co-founder Steve Wozniak also settled on this round figure. Pascal Gauthier, CEO of Ledger, David Marcus, head of Lightspark, and Vijay Ayyar, a top manager at CoinDCX, also anticipate bitcoin's price rise to $100,000.

Investor and bestselling author of "Rich Dad Poor Dad," Robert Kiyosaki, believes that the U.S. economy is on the brink of a serious crisis, and cryptocurrencies, particularly bitcoin, offer investors a safe haven in these turbulent times. Kiyosaki predicts that the halving will be a key event, potentially driving BTC's price to soar to $120,000. Markus Thielen, head of research at the crypto-financial service Matrixport, suggests a similar figure of $125,000. Renowned blogger and analyst Lark Davis believes that this event could lead to bitcoin's price rising to about $150,000, or even up to $180,000. Tom Lee, co-founder of Fundstrat, estimates a rise to $185,000.

According to calculations by Dave the Wave, BTC, post the April 2024 halving, will only rise slightly above its previous high of around $69,000 by mid-2024, but could escalate to $160,000 by year-end. Alistair Milne predicts that by the end of 2024, the BTC rate should reach $150,000-$300,000. However, he cautions, "this may well be the peak opportunity for bulls." Analysts from LookIntoBitcoin advise locking in profits when the coin appreciates to at least $110,000.

And finally, let's consider the fresh perspective of Artificial Intelligence (AI): an increasingly integral voice in such discussions. The experts at Finbold consulted Google Bard, a machine learning system, about the likely value of the flagship cryptocurrency after the much-anticipated 2024 halving. The AI predicted that bitcoin would likely reach a new all-time high, attributing this not only to the halving but also to broader BTC adoption and interest from institutional investors. Google Bard specifically noted that after the halving, bitcoin could surge to $100,000. However, the AI also highlighted factors that could limit the cryptocurrency's growth, not ruling out the possibility of a continued crypto winter in 2024.

In contrast, a scenario from Google Bard’s competitor, ChatGPT, developed by OpenAI, appears more optimistic. It suggests that the main cryptocurrency could climb as high as $150,000. (Interestingly, the illustration accompanying this article was also created using AI, in this case, Microsoft Bing)
 

2024: Moderate Optimism and Moderate Pessimism

Consolidating all the aforementioned scenarios into a consensus forecast, with certain allowances, yields a range from $100,000 to $180,000. While this range is undoubtedly encouraging for investors, there are more conservative and even pessimistic predictions.

Analyst PlanB, having missed his target in 2023, significantly lowered his expectations. "Expect $32,000 for bitcoin before the halving," he writes, "rising to $55,000 during the halving, and then, by the end of the year, the main cryptocurrency might climb to $66,000." Arthur Hayes, former CEO of the cryptocurrency exchange BitMEX, also stated that the first cryptocurrency's quotes would reach only a "modest" goal of $70,000.

A sobering perspective comes from the company CryptoVantage, whose employees surveyed 1,000 crypto investors in the USA. Only 23% of them believe that bitcoin will reach its historical maximum of $68,917 in the upcoming year. 47% think that the coin's price will rise to this mark within five years. 78% are confident that BTC will eventually return to its historical maximum, but at an undefined future date. However, 9% believe this will never happen again.

BBC World analyst Glen Goodman joined the chorus of sceptics. He commented that the $120,000 figure "seems more like a number plucked out of thin air than a realistically grounded prediction." Goodman argues that authors of such predictions favor market bulls and overlook several key factors. The most crucial, according to him, is that U.S. financial regulators are relentlessly targeting the crypto industry with lawsuits and investigations. Against this backdrop, experts from JP Morgan believe that in 2024 the main cryptocurrency will trade around $45,000, considering this price as an upper limit indicating the asset's limited potential.
 

2025 and Beyond: $1,000,000 to $10,000,000. Who Predicts Higher?

"Looking too far into the future is not far-sighted," a saying attributed to Sir Winston Churchill, the Prime Minister of the United Kingdom during 1940-1945 and 1951-1955. While we might heed the advice of the esteemed British leader, some influencers still dare to make long-term predictions without fearing being seen as short-sighted.

An average result from a survey of 29 experts conducted by Finder.com indicates that BTC's price may reach $100,000 not in 2024, but only by the end of 2025, and could ascend to $280,000 by the end of 2030. An analyst known as Trader Tardigrade believes that bitcoin is following the same price structure as it did from 2013 to 2018. If his model is accurate, the beginning price "boom" could lead to bitcoin rising to $400,000 by 2026.

Venture capitalist Tim Draper, a third-generation venture capitalist and co-founder of Draper Fisher Jurvetson, is optimistic about 2025. He believes that the halving will significantly impact the main cryptocurrency's price, eventually reaching $250,000. Previously, he predicted that BTC would hit this mark by the end of 2022. When his prediction did not materialize, he extended the timeline to mid-2023. Now, Draper has revised his forecast again, stating with certainty that the main cryptocurrency will reach the targeted price by the end of June 2025. According to him, one of the growth drivers will be the adoption of BTC by women, suggesting that housewives using bitcoin for shopping could become a significant factor in the coin's widespread adoption.

Mike Novogratz, CEO of Galaxy Digital, believes that the demand for alternative financial instruments will continue to grow, with bitcoin being one of these instruments. He predicts that in the long term, bitcoin's price could reach $500,000. Doubling this estimate, Arthur Hayes, former CEO of the cryptocurrency exchange BitMEX, and Max Keiser, a former trader and TV host who is now an advisor to the president of El Salvador, have both cited a figure of $1 million per coin. Michael Saylor, the founder of MicroStrategy, has a more polarized view, stating that "bitcoin will either plummet to zero or skyrocket to $1 million."

Cathy Wood, CEO of ARK Invest, forecasts a significant increase in the total market capitalization of cryptocurrencies, reaching $25 trillion by 2030, which is an increase of more than 2100%. ARK Invest's baseline scenario envisages bitcoin's price rising to $650,000 during this period, while a more optimistic scenario projects a climb to $1,500,000. Yassine Elmandjra, an analyst at ARK Invest and a colleague of Wood, acknowledged that such a prediction for the coin's growth may seem improbable, but added that it is "quite reasonable" when considering the history of cryptocurrency development.

Larry Lepard, Managing Partner at the Boston-based investment company Equity Management Associates, has also provided a long-term forecast. He believes that over the next decade, the dollar will devalue, and people will increasingly invest in cryptocurrencies, gold, and real estate. Given bitcoin's limited supply, the digital asset will become a highly sought-after investment tool and will benefit from the collapse of fiat currency. "I believe the price of bitcoin will rise sharply. I think it will first reach $100,000, then $1 million, and eventually rise to $10 million per coin. I'm confident that my grandchildren will be shocked at how wealthy people who own just one bitcoin will become," Lepard stated.

The Artificial Intelligence ChatGPT offers a slightly more modest scenario. It suggests that the main cryptocurrency might rise to $500,000 by 2028, reach $1 million by 2032, and escalate to $5 million by 2050. However, this AI prediction comes with several conditions. Such growth is possible only if: cryptocurrency is widely adopted; bitcoin becomes a popular means for capital saving; and the coin is integrated into various financial systems. If these conditions are not met, then, according to AI calculations, by 2050, the value of the coin could range from $20,000 to $500,000.
 

Funeral Squad for Bitcoin: $0.0000. Who Predicts Lower?

According to Newton's Third Law, every action has an equal and opposite reaction. Although this law was formulated in 1689, it seems to apply even to 21st-century cryptocurrencies. If there are those eager to drive up the value of bitcoin, there will inevitably be others prepared to bury it deeper.

Warren Buffett, the billionaire and stock market legend, famously described bitcoin as "rat poison squared." His steadfast partner, Charles Munger, Vice Chairman of the holding company Berkshire Hathaway, is equally critical. Despite turning 100 years old on January 1, 2024 (congratulations to him), he continues to actively oppose this digital "evil."

Munger has called on the U.S. authorities to destroy bitcoin, equating investment in it to gambling. In an interview with The Wall Street Journal, he stated that the cryptocurrency industry undermines the stability of the global financial sector and argued that BTC cannot be considered an asset class as it holds no intrinsic value. He believes that it should be subject to such stringent regulatory measures that would ultimately suffocate the industry. "It's the dumbest investment I've ever seen," the renowned investor exclaimed. "I'm not proud of my country for allowing this nonsense. It's laughable that someone buys it. It's not good. It's insane. It's only harmful." The billionaire labelled everyone who disagrees with him as idiots and branded bitcoin a "spoiled product" and a "venereal disease."

Steve Hanke, a professor of economics at Johns Hopkins University, has also criticized bitcoin, asserting that the fundamental value of the first cryptocurrency is zero. He has labelled BTC as an extremely speculative asset with no economic value or utility.

Peter Schiff, President of Euro Pacific Capital and a gold enthusiast, believes that "there is nothing more inferior than cryptocurrencies" and that "bitcoin is nothing." He has compared holders of the asset to a cult. "Nobody needs bitcoin. People buy it only after being persuaded by others. Once they acquire [BTC], they immediately try to draw others into it. It's like a cult," Schiff wrote. Back in 2017, he predicted that the coin would soon become worthless. Despite the years that have passed, the entrepreneur has not changed his stance. He recently reiterated that "bitcoin's journey to zero just got a bit delayed. In the end, bitcoin will implode.".

Jamie Dimon, the head of the American banking giant JPMorgan, has also heavily criticized digital gold. During a CNBC broadcast, he expressed skepticism about the supposed 21 million coin limit of bitcoin's issuance. "How do you know? It might reach 21 million, and a picture of Satoshi [Nakamoto] might pop up and laugh at all of you," he speculated about the future.

Jim Cramer, host of CNBC's "Mad Money," also focused on the risks. He believes that no one really knows what the major players in the industry are hiding and that there are no guarantees of their honesty with their clients. According to him, any new scandal could cause a sharp decline in bitcoin's value, putting investor assets at risk. Referring to the opinion of Carley Garner, senior commodity strategist & broker at DeCarley Trading, he recommended staying away from virtual currencies.

Discussing the prospects of the flagship cryptocurrency, Dieter Wermuth, economist and partner at Wermuth Asset Management, stated that the economy would be better and simpler without bitcoin. In his view, it makes sense to abandon bitcoin altogether: it could be beneficial for overall prosperity, as investments in cryptocurrency are wasteful and divert funds from overall economic growth. Moreover, bitcoin creates social inequality, facilitates money laundering, tax evasion, and is highly energy-intensive due to mining. Dieter Wermuth even called bitcoin "the main killer of the climate."

Jenny Johnson, CEO of the investment firm Franklin Templeton, which manages assets worth $1.5 trillion, also expressed scepticism about the primary cryptocurrency. She claimed that bitcoin is the biggest distraction from real innovation. The head of Franklin Templeton is convinced that bitcoin can never become a global currency, as the U.S. government will not allow this to happen. "I can tell you that if bitcoin becomes so significant that it threatens the dollar as the reserve currency, the U.S. will limit its use," she stated.

Indeed, Mrs. Johnson's statement did not come out of nowhere. Over the past year, there has been a lot of discussion about regulatory pressure on the crypto industry, legal disputes, and astronomical fines. Gary Gensler, Chairman of the Securities and Exchange Commission (SEC) compared the current state of the crypto industry to the wild early 20th century. At that time, the agency undertook stringent measures, which he believes are necessary now to intimidate businessmen and keep the industry in check. John Reed Stark, a former SEC official, echoes Gensler's sentiments. "Cryptocurrency prices are rising for two reasons," he explains, "firstly, due to gaps in regulation and potential market manipulation; secondly, because of the possibility to sell inflated, overvalued cryptocurrency to an even bigger fool."

Such statements are not only made by U.S. authorities but also by many other government representatives worldwide. For instance, the European Central Bank declared in December 2022 that bitcoin had lost its relevance. However, the ECB later revised its assessment, noting that cryptocurrency could still serve as an alternative to fiat currency.

***

It's noteworthy that since the inception of bitcoin, its demise has been proclaimed 474 times. The death counter of the main cryptocurrency is maintained on the platform 99bitcoins. This information resource tallies what are known as "bitcoin obituaries" – statements from notable individuals, news portals, and other media outlets with significant readership, unequivocally asserting that the asset has depreciated or is about to depreciate. In 2021, there were 47 such "obituaries," in 2022 – 27, and in 2023, BTC was declared "dead" only seven times. This figure is the lowest in the last decade, indicating that bitcoin is not only alive but also continues to thrive, despite the scepticism of its detractors.

To conclude this extensive overview, let's look at some interesting statistics. According to research by DocumentingBTC, an investor who put $100 into real gold exactly 10 years ago would now have only $134 in their account. Investing in Google would have yielded $504, Facebook – $818, Amazon – $830, Netflix – $1,040, and Microsoft – $1,111. Apple investors could have seen their investment grow to $1,208. Tesla claims the third spot on the profitability podium with an increase from $100 to $4,475. NVIDIA shares rank second, growing to $8,599. However, had you invested your $100 in digital gold, bitcoin, you would now have an impressive $25,600! This is why bitcoin is often hailed as the best investment of the decade. The conclusion is yours to draw.

Happy New Year!
 

NordFX Analytical Group
 

Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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Forecast: What to Expect from the Euro and Dollar in 2024

Traditionally, we publish currency forecasts from leading global financial institutions at the turn of the outgoing and incoming years. Having maintained this practice for several years, it enables us to not only peer into the future but also to reflect on past predictions by experts and evaluate their accuracy.
 

2022: The Beginning

Just as the world had adapted to living under coronavirus-induced quarantine conditions, war entered the planet's life. Russia's armed invasion of Ukraine in February 2022 and the ensuing anti-Russian sanctions exacerbated economic problems and spurred inflation growth in many countries, even those far from this region.

The proximity of EU countries to the conflict zone, their strong dependence on Russian natural energy resources, the nuclear threat, and the risks of the conflict spreading to their territories dealt a serious blow to the Eurozone economy. In such circumstances, the European Central Bank (ECB) had to act with utmost caution to avoid a complete collapse. The United States found itself in a significantly more advantageous position, which allowed the Federal Reserve, aiming to reduce inflationary pressure, to begin a cycle of interest rate hikes on March 16. This acted as a catalyst for the strengthening of the dollar, and on July 14, EUR/USD fell below the parity line of 1.0000 for the first time in 20 years, reaching a low of 0.9535 on September 28. In mid-July, the European Central Bank also began to gradually increase the euro rate. As a result, EUR/USD entered the new year, 2023, at a level of 1.0700.


2023: Whose Forecasts Proved More Accurate

The coronavirus pandemic began to subside, and on May 5, the WHO declared that COVID-19 was no longer a global emergency. Gradually, various countries started to relax quarantine restrictions. The military actions in Ukraine turned into a prolonged conflict. The fight against inflation slowly started showing signs of success, and the economy managed to adapt to rising interest rates and high energy prices. A global catastrophe was averted, and voices predicting a soft landing, especially for the U.S. economy and possibly the Eurozone, grew louder.

In 2022, the maximum range of fluctuations for EUR/USD exceeded 1,700 points, but in 2023, this figure was halved to 828 points. The pair reached its peak on July 18, climbing to 1.1275. It found its bottom at 1.0447 on October 3 and is ending December in the 1.0900-1.1000 range (as of the writing of this review), not far from the January values.

So, what forecasts did experts give for 2023? The furthest from reality was the forecast by Internationale Nederlanden Groep. ING was confident that all the pressure factors of 2022 would persist into 2023. High energy prices would continue to heavily burden the European economy. Additional pressure would come if the U.S. Federal Reserve halted its printing press before the ECB. According to analysts from this major Dutch banking group, a rate of 0.9500 euros per dollar was expected in Q1 2023, which could then rise, reaching parity at 1.0000 in Q4.

The Agency for Economic Forecasting's experts were accurate regarding the EUR/USD dynamics in Q1: they predicted a rise to 1.1160 (in reality, it rose to 1.1033). However, they expected the pair to then undergo a steady decline, reaching 1.0050 by the end of Q3 and finishing the year at 0.9790. Here, they were significantly mistaken.

But it wasn't just the bears who were wrong; the bulls on the euro/dollar pair also erred. For example, the French financial conglomerate Societe Generale voted for a weakening dollar and a rising pair. However, their forecast of a climb above 1.1500 by the end of Q1 was too radical. Strategists at Deutsche Bank allowed for fluctuations in the 1.0800-1.1500 range. However, in their view, the pair's rise to the upper limit was only possible if the Fed began to ease its monetary policy in the second half of 2023. (We now know that no easing occurred, but the rate was frozen at 5.50% from July onwards).

The most accurate predictions came from Bank of America and the German Commerzbank. According to Bank of America's base scenario, the U.S. dollar was expected to remain strong in early 2023 and then start to gradually weaken, leading the EUR/USD pair to rise to 1.1000 after the Fed's pause. Commerzbank supported this scenario, stating, "Considering the expected change in the Fed's interest rate and assuming that the ECB refrains from lowering interest rates [...], our target price for EUR/USD for 2023 is 1.1000," was the verdict of strategists from this banking conglomerate.
 

2024: What to Expect in the New Year

What awaits the euro and dollar in the upcoming year of 2024? It's important to note that forecasts vary significantly due to the numerous "surprises" life has presented recently and the many unresolved issues it has left for the future. Questions remain about the geopolitical situation, the direction and pace of the monetary policies of the Federal Reserve (Fed) and the European Central Bank (ECB), the state of the economy and labour markets, the extent to which inflation and energy prices can be controlled, who will be elected President of the United States in November, the outcomes of Russia's war in Ukraine and the ongoing conflict between Israel and Hamas, and the balance of power in the U.S.-China rivalry. The answers to these and other questions are yet to be discovered. With many factors of uncertainty, experts have not reached a consensus.

Recent dovish remarks by Fed Chair Jerome Powell and moderately hawkish statements by ECB President Christine Lagarde have led markets to believe that the Fed will lead in easing monetary policy and lowering interest rates in 2024. If the market does not receive a countersignal, the U.S. dollar will remain under pressure. Societe Generale believes the Dollar Index (DXY) could drop from the current 102.50 to below 100, possibly as low as 97 points. A Reuters poll of analysts also indicates that the U.S. dollar should weaken in the coming year. An Investing.com review suggests that EUR/USD could potentially reach 1.1500, subject to various geopolitical and macroeconomic conditions.

According to the base scenario outlined by UBS Wealth Management, a slowdown in U.S. economic growth, falling inflation, and expectations of lower interest rates should support stocks and bonds. Regarding the EUR/USD pair, UBS sees it at a level of 1.1200. German Commerzbank's forecasts also include a peak of 1.1200. Analysts there expect a temporary strengthening of the euro against the dollar before a subsequent weakening. They anticipate the rate will rise to 1.1200 by June 2024, then decrease to 1.0800 by March 2025.

ING economists calculate that in the second half of 2024, the EUR/USD rate will still be rising towards 1.1800. However, they caution that this forecast is based solely on the possible trajectory of Fed and ECB policies. They note, "The rate differential is not the only factor determining the EUR/USD course." Low growth rates in the Eurozone and political uncertainty regarding the reintroduction of the Stability and Growth Pact suggest that EUR/USD will end this year close to 1.0600, with its peak levels in 2024 closer to 1.1500 than to 1.1800.

Fidelity International, JPMorgan, and HSBC economists do not rule out a scenario where other regulators, such as the ECB and the Bank of England, might take the lead in easing ahead of the Fed.

Goldman Sachs strategists believe that while the dollar's prospects may worsen in 2024, the strong and stable U.S. economy will limit the fall of the currency. They write that the dollar is still highly valued, and investors lean towards it, which will remain "strong for a long time," and any decline will be insignificant. The U.S. economy is too strong to cause a rate cut of a full 150 basis points in 2024.

Danske Bank, Westpac, and HSBC also believe that by the end of 2024, the dollar will strengthen against the euro and the British pound. ABN Amro's forecast for the end of next year suggests a rate of 1.0500, and the Agency for Economic Forecasting predicts 1.0230.

***

The ancient Chinese military treatise "The Thirty-Six Stratagems" states, "He who tries to foresee everything loses vigilance." Indeed, it is impossible to foresee everything. But one thing can be said for sure: the upcoming twelve months, like the previous ones, will be full of unexpected surprises. So, remain vigilant, and fortune will be on your side.

Happy upcoming New Year 2024! It promises to be very interesting.
 

NordFX Analytical Group
 

Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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Forex and Cryptocurrencies Forecast for December 18 – 22, 2023

EUR/USD: Dovish Fed Reversal


The fate of EUR/USD was determined by two events last week: the FOMC (Federal Open Market Committee) meeting of the US Federal Reserve and the meeting of the Governing Council of the European Central Bank (ECB), which took place a day later. As a result, the euro emerged victorious: for the first time since November 29, the pair rose above 1.1000.

The Federal Reserve left its key interest rate unchanged at 5.5%. Meanwhile, the regulator's leadership acknowledged that it is discussing easing its monetary policy. The FOMC's forecast for the foreseeable future turned out to be significantly lower than market expectations. It is planned that by the end of 2024, the rate will be reduced at least three times: to 4.6% (instead of the expected 5.1%), and by the end of 2025, there are plans for four more stages of reduction, ultimately bringing the cost of borrowing down to 3.6% (expectations were 3.9%). In a three-year perspective, the rate will drop to 2.9%, after which in 2027 it will be 2.0-2.25%, while inflation will stabilize at the target level of 2.0%. Following the meeting, the market expects the Fed to take its first step towards easing as early as March. According to the FedWatch Tool, the likelihood of this scenario is currently estimated at 70%.

In addition to forecasts of a sharper rate cut, additional pressure on the dollar continues to be exerted by the declining yields of Treasuries, which also indicates an imminent change in the direction of monetary policy in the USA. Another confirmation of the dovish pivot was the reaction of the stock markets. Lower rates are good news for stocks. They lead to cheaper financing, and easier economic conditions stimulate domestic demand. As a result, last week the stock market indices S&P 500, Dow Jones, and Nasdaq soared again.

It is known that ECB President Christine Lagarde was previously involved in synchronized swimming. This time, she acted in sync with the Fed: the pan-European regulator also left the interest rate unchanged, at the previous level of 4.50%. However, the ECB expects the Eurozone's GDP to grow by only 0.6% in 2023, compared to the previously forecasted 0.7%, and by 0.8% in 2024 instead of 1.0%. Inflation in 2024 is forecasted at 5.4%, in 2024 at 2.7%, and in 2025 it is expected to almost reach the target mark of 2.1% (two years earlier than in the US).

The desynchronization with the Fed occurred following the Governing Council's meeting. In their comments, the ECB leadership did not mention the timing of the start of rate cuts. Moreover, it was stated that the European Central Bank's goal is to suppress inflation, not to avoid a recession, so borrowing costs will be kept at peak values as long as necessary. This stance benefited the pan-European currency and strengthened the euro relative to the dollar.

Given the Fed's dovish rhetoric and the ECB's moderately hawkish stance, EUR/USD may retain potential for further growth. It's worth noting that this pivot by the Fed surprised not only the markets. According to an insider report from Financial Times, Jerome Powell's comments following the FOMC meeting also caught the ECB Governing Council off guard. As a result, during her speech, Madame Lagarde threw several stones into the garden of her American colleague.

Currently, it appears that the Fed will lead in easing monetary policy. If the market does not receive a contrary signal, the dollar will remain under pressure. However, it's important to consider that the reality of 2024 may not necessarily align with statements made in December 2023. Objectively, the ECB has significantly more reasons for loosening its financial grip. The European economy is poorly adapted to high rates, it appears weaker than the American economy, its GDP volume has already been revised downward, and the reduction in inflation in the Eurozone is occurring much more rapidly than in the USA. Based on this, economists from Fidelity International, JPMorgan, and HSBC do not rule out that everything may change, and other regulators such as the ECB and the Bank of England may be the first to embark on a path of easing. However, we will not receive signals about this today or tomorrow, but only in the next year.

Regarding the past week, after the release of disappointing business activity data (PMI) in Europe on December 15th and mixed results in the US, EUR/USD ended the week at 1.0894.

According to economists from MUFG Bank, a sharp further rise in EUR/USD is on shaky ground. "The situation in the Eurozone and globally does not seem favourable for a further sustainable rally in EUR/USD," they write. "Fundamental factors as a driving force over the next few weeks during the Christmas and New Year period are never reliable, but if this rally continues during this period, we expect a reversal as we move towards the first quarter of next year."

At present, expert opinions regarding the near future of the pair are divided as follows: 40% voted for a strengthening dollar, 30% sided with the euro, and 30% remained neutral. Among trend indicators on D1, 100% are voting for the euro and the pair's rise. With oscillators, 60% are in favour, 30% are looking south, and 10% are pointing east. The nearest support for the pair is located around 1.0800-1.0830, followed by 1.0770, 1.0725-1.0740, 1.0620-1.0640, 1.0500-1.0520, 1.0450, 1.0375, 1.0200-1.0255, 1.0130, and 1.0000. Bulls will encounter resistance around 1.0925, 1.0965-1.0985, 1.1020, 1.1070-1.1110, 1.1150, 1.1230-1.1275, 1.1350, and 1.1475.

Next week, both Europe and the United States will be summarizing the year and preparing for Christmas. Notable economic events include the release of inflation data (CPI) in the Eurozone on Tuesday, December 19. On Wednesday, December 20, the U.S. Consumer Confidence Index will be published. The following day, the U.S. GDP volume for the third quarter and the number of initial jobless claims will be announced. The work week concludes on Friday, December 22, with a comprehensive package of data on the U.S. consumer market.

GBP/USD: BoE Refrains from Feeding Doves

Just as with the Fed and the ECB, the situation with the Fed and the Bank of England (BoE) is completely aligned. A simple copy-paste of the earlier discussion applies here. In its meeting, the British regulator also left the interest rate unchanged at 5.25%. And like the ECB, it did not provide any reason that could spur dovish expectations for 2024. BoE Governor Andrew Bailey noted that the Bank of England still has a path to tread, and three out of the nine members of the Monetary Policy Committee even voted for a further increase in the rate.

The economic indicators for the United Kingdom are varied. According to statistics, the real wage growth, adjusted for inflation, continues to increase annually. However, while the economy was forecasted to grow by 0.1%, it actually contracted by 0.3%, following a growth of 0.2% the previous month. Additionally, industrial production volumes in October decreased by 0.8%, and the annual figure dropped from 1.5% to 0.4%, significantly worse than the market's expectation of 1.1%. Data released on Friday, December 15th, showed a significant improvement in service sector activity in December. The PMI index reached 52.7, exceeding expectations of 51.0 and marking the best figure in the last five months. However, on the other hand, manufacturing activity in November decreased to 46.4 from 47.2, even though markets were expecting it to rise to 47.5.

Meanwhile, "the inflation genie is still out of the bottle." Based on this, the Bank of England is unlikely to abandon its strict monetary policy, which remains the only barrier to further inflation growth. Experts agree on this point. The only open question is when the regulator will finally be able to reduce the rate.

The last chord of the past week for GBP/USD sounded at the level of 1.2681. According to economists at ING, the 1.2820-1.2850 area poses strong resistance for GBP/USD. If this is breached, they believe, the pair could reach the heights of 1.3000, which would be a huge Christmas gift for the bulls. However, the team at Japan's Nomura Bank is quite sceptical about the growth prospects of the pair, believing that in both Q1 and Q2 of 2024, the pair will trade around 1.2700 and 1.2800.

At the time of writing this forecast, the median forecast of analysts offers no clear guidance: 25% voted for the pair's rise, another 25% for its fall, and 50% simply shrugged their shoulders. Among trend indicators on D1, as in the case of the previous pair, 100% point north. Among the oscillators, 65% look up, 30% down, and the remaining 15% maintain neutrality. In the event of the pair moving south, it will encounter support levels and zones at 1.2600-1.2625, 1.2545-1.2575, 1.2500-1.2515, 1.2450, 1.2370, 1.2330, 1.2210, 1.2070-1.2085, 1.2035. In case of an increase, the pair will meet resistance at levels 1.2710-1.2535, then 1.2790-1.2820, 1.2940, 1.3000, and 1.3140.

The upcoming week's calendar highlights Wednesday, December 20, as a significant day, when the United Kingdom's Consumer Price Index (CPI) will be published. On Friday, December 22, the day will be shorter in the UK due to Christmas preparations. However, that morning will see the release of significant economic macrostatistics, including data on retail sales and GDP.

USD/JPY: Yen's Triumph Scheduled for 2024

On November 13, USD/JPY reached a high of 151.90. However, within a mere five weeks, the Japanese yen succeeded in regaining over 1000 points from the dollar. Thursday, December 7, marked a significant triumph for the yen, as it strengthened across the entire market, moving the dollar down by about 225 points. At that moment, the pair's minimum was recorded at 141.62. In the past week, it followed the lead of the Fed and the Dollar Index DXY, ending the five-day stretch at a level of 142.14.

The primary reason for this yen rally has been growing expectations that the Bank of Japan (BoJ) will finally abandon its negative interest rate policy, and this is anticipated to happen sooner than expected. Rumours suggest that regional banks in the country, lobbying for a departure from yield curve control policy, are pressuring the regulator. Seemingly to confirm these rumours, the BoJ conducted a special survey in early December among market participants to discuss the consequences of moving away from ultra-loose monetary policy and the side effects of such a step.

The yen is also being favoured by the outcomes of the recent meetings of the Fed and the ECB, which have reinforced market confidence that interest rates for the dollar and euro have plateaued and are only expected to decrease going forward. This divergence allows for the prediction that investors will unwind their carry trade strategies and reduce the yield spreads between Japanese government bonds and their counterparts in the US and Eurozone. Such developments should lead to a return of capital to the yen.

The Bank of Japan's (BoJ) final meeting of the year is scheduled for Tuesday, December 19. However, it is likely that the regulator will keep its monetary policy parameters unchanged at this meeting. Economists at Japan's MUFG Bank expect the BoJ to end its YCC (Yield Curve Control) and NIRP (Negative Interest Rate Policy) at its January meeting. This is partially already factored into the quotes, but the tone of the Bank of Japan at the December meeting could further fuel expectations for a tightening of policy in 2024. MUFG believes that the yen has the greatest potential for growth among G10 currencies next year. "The global inflationary shock is reversing direction, and this has the most significant implications for the JPY," say the bank's strategists.

In the near term, 30% of experts anticipate further strengthening of the yen, 10% favour the dollar, and a substantial majority (60%) hold a neutral position. Regarding trend indicators on D1, there's again an absolute dominance of the red color, 100%. Among the oscillators, the same 100% are colored red, but 25% of them signal oversold conditions. The nearest support level is located in the 141.35-141.60 zone, followed by 140.60-140.90, 138.75-139.05, 137.25-137.50, 135.90, 134.35, and 131.25. Resistance levels and zones are situated at 143.75-144.05, followed by 145.30, 146.55-146.90, 147.65-147.85, 148.40, 149.20, 149.80-150.00, 150.80, 151.60, and 151.90-152.15.

Apart from the Bank of Japan's meeting on December 19 and the subsequent press conference by its leadership, no other significant events concerning the Japanese economy are expected in the coming week.

CRYPTOCURRENCIES: Will Bitcoin ETFs Replace Binance?

By the end of Friday, December 8, the leading cryptocurrency, bitcoin, reached a height of $44,694. It last traded above $40,000 in April 2022. Just two days later, on the morning of December 11, surprised investors found bitcoin at the $40,145 mark, leading to immense disappointment.

The rapid price decline lasted no more than 5 minutes. Several theories explain this event. One theory is that the trigger was the strong U.S. labour market data released on December 8. Another possibility is that it was either a nervous reaction or a technical error in trade volume, possibly made by a trading bot or a trader, leading to a cascade of protective stop executions in the futures market. According to Coinglass, over 24 hours, more than $400 million in long positions were liquidated, including $85.5 million in bitcoin.

Our analysis suggests that the most realistic explanation is as follows: since mid-August, bitcoin had grown by about 85% and more than 160% since the beginning of the year. It appears that some major players, in anticipation of the year's end, decided to lock in profits. Notably, two days before this incident, DecenTrader's head, known as FibFilb, had warned: "We have grown significantly this year, and a correction is expected. [...] It has been long overdue," he stated on December 9.

The negative sentiment may have been amplified by news that a $4.3 billion fine had not resolved the issues the crypto exchange Binance is facing. The U.S. Securities and Exchange Commission (SEC) continues to press charges against the exchange for illegal trading of securities and other violations.

U.S. Department of Justice officials intend to thoroughly scrutinize the trading platform's operations to determine compliance with legislative standards. The exchange will be compelled to grant continuous access to all its documents and records, including information related to the company's employees, agents, intermediaries, consultants, partners, and contractors, as well as traders, to representatives of the Department of Justice, the Financial Crimes Enforcement Network, and all other financial regulators and law enforcement agencies.

Last week, former SEC head John Reed Stark published an opinion on the potential demise of Binance, referencing the U.S. government's official demands to the platform. The list of these demands alone spanned 13 pages of typescript, including procedures that have never before been applied to companies. This led Stark to sardonically refer to the situation as a "financial colonoscopy."

It is noteworthy that attacks on Binance in 2023 led to a decline in its share of the spot market from 55% to 32%. In the derivatives market, its share is 47.7%, marking the worst performance since October 2020.

Discussing the intensification of regulatory pressure, JPMorgan CEO Jamie Dimon stated that if he were the U.S. government, he would "damn well ban all digital currencies for aiding fraudsters and terrorists." Yet, the U.S. authorities haven't taken such measures. Why?

There's a famous saying attributed to the Italian thinker, politician, and philosopher Niccolò Machiavelli: "If you can't beat the crowd, lead it." He voiced it about 500 years ago, but it remains relevant today. For instance, despite all prohibitions, the Chinese continue to be a significant and active part of the crypto industry. The U.S. seems to have considered that instead of banning digital assets, cutting off the internet, and confiscating computers and smartphones, it's easier to lead and control this process. Hence, experts believe, the idea of exchange-traded spot bitcoin ETFs was born. Such funds will allow for monitoring crypto investors, studying their transactions, and not only collecting taxes from them but also determining the legality of these transactions. Therefore, the logic of the officials here is quite clear. And in this rare case, millions of small investors also applaud this process, hoping that their investments will significantly increase thanks to BTC-ETFs and regulatory pressure.

Returning to the events of December 11, trader, analyst, and founder of the venture company Eight, Michael Van De Poppe, urged the community "not to worry." He explained that corrections happen, especially deep ones in the illiquid altcoin market. In light of what occurred, the analyst made his forecast for the change in bitcoin's price. According to his analysis, the key support zone on higher time frames is currently in the $36,500-38,000 range. "Bitcoin's momentum is gradually coming to an end, and Ethereum will easily take the lead in the next quarter," he added.

Crypto expert William Clemente is also unworried about the decrease in bitcoin's price, deeming it inevitable. In his view, such a correction serves as a solid foundation for the start of the next bullish trend, as it eliminates long positions opened by greedy traders using leverage.

Eli Taranto, Director at EQI Bank, agrees with Van De Poppe's prediction and also foresees a decline in bitcoin's value. "As traders lock in profits and await decisions on ETF applications, bitcoin's price will continue to fluctuate, subject to the butterfly effect [a phenomenon where a small change in a system can have large and unpredictable consequences, even in a completely different location]. A drop in BTC price to $39,000 is clearly possible," noted Taranto.

Indeed, the Director of EQI Bank is correct: bitcoin did continue to "fluctuate in the wind," as evident from the BTC/USD chart before and after the last week's Fed meeting in the U.S. As a result, aided by a weakening dollar, the pair moved upwards again, reaching a high of $43,440 on Wednesday, December 13.

As of writing this review, on the evening of December 15, it is trading around $42,200. The total market capitalization of the crypto market stands at $1.61 trillion, down from $1.64 trillion a week ago. The Crypto Fear & Greed Index has dropped from 72 to 70 points and remains in the Greed zone.

Regarding the near future of digital gold, investment banking giant Goldman Sachs' experts recently published a new report suggesting that bitcoin's quotations could continue to rise in the near term. CryptoQuant analysts have entertained the possibility of bitcoin breaking the $50,000 level at the start of 2024. This forecast is based on an analysis of BTC holder activity and also takes into account the dynamics of transaction volume, market capitalization, and Metcalfe's Law in the context of cryptocurrencies. "Bitcoin could be targeting the $50,000-$53,000 range," the experts noted.

However, CryptoQuant believes that the market is currently approaching an "overheated bullish phase," which historically is accompanied by pauses and corrections. The analysts emphasized that the volume of "in the money" coin supply exceeds 88%. This indicates potential selling pressure and, therefore, probable short-term corrections. According to their observations, such high levels of unrealized profit "historically coincided with local peaks."

To conclude, let's reflect on another historic event – a time when digital gold was trading at $0.20. Thirteen years ago, on December 12, 2010, the creator of the first cryptocurrency, known by the pseudonym Satoshi Nakamoto, published his last post on a forum before disappearing from the public eye. The message did not hint at the departure of this enigmatic figure. It contained a description of an update and code for Denial-of-Service (DoS) management elements. Some experts believe that the blockchain founder had planned to leave the team due to disputes and disagreements within the developer collective and criticism for excessive control over the project and unilateral decision-making.

Regardless, as one user on the BitcoinTalk forum noted while recalling the last post of the cryptocurrency's creator, "Satoshi's contribution to decentralization and his fight against financial dictatorship is more than just a technological marvel. It's a movement for economic freedom and sovereignty. [...] His disappearance is not just an act of self-preservation but also a reminder that not everything in life revolves around personal fame."
 

NordFX Analytical Group
 

Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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Forex and Cryptocurrencies Forecast for December 11 – 15, 2023

EUR/USD: Continuation of the Rate War

The labour market and inflation: these are the factors that Central Banks closely monitor when making decisions regarding monetary policy and interest rates. It is sufficient to recall the significant shift that occurred after the publication of October's inflation data in the United States. In November, the dollar weakened significantly, and the classical portfolio of stocks and bonds yielded the highest profit in 30 years! EUR/USD, starting at 1.0516, reached a monthly peak on November 29 at 1.1016.

Regarding the labour market, crucial indicators were released on Friday, December 8, including the unemployment rate and the number of new non-farm payrolls (NFP) in the United States. The first indicator revealed a decline in unemployment: in November, the rate dropped to 3.7%, surpassing both the forecast and the previous value of 3.9%. The second indicator showed an increase in the number of new jobs: 199K were created in a month, surpassing both the October figure of 150K and the market expectations of 180K. It cannot be said that such statistics significantly supported the dollar. However, at the very least, it did not harm it.

Two to three months ago, the market's reaction to such data would have been more intense, as there were still hopes for further increases in the Federal Reserve's interest rates in 2023. Now, those expectations are nearly reduced to zero. The discussions revolve not around how the key rate will rise, but rather how long it will be maintained at the current level of 5.50% and how actively the regulator will reduce it.

An economist survey conducted by Reuters revealed that just over half of the respondents (52 out of 102) believe that the rate will remain unchanged at least until July. The remaining 50 respondents expect the Federal Reserve to start cutting before that. 72 out of 100 respondents believe that by 2024, the rate will gradually be reduced by a maximum of 100 basis points (bps), possibly even less. Only 5 experts still hold hope for further rate increases, even if it's just by 25 bps. It's worth noting that Reuters' survey results do not align with the immediate market expectations, which forecast five rate cuts of 25 bps each starting from March.

A Citi economist, as part of the Reuters survey, noted that an increase in core inflation would disrupt the narrative of the Federal Reserve lowering interest rates and delay this process. The upcoming inflation data in the United States will be available on Tuesday, December 12, and Wednesday, December 13, with the release of the November Consumer Price Index (CPI) and Producer Price Index (PPI), respectively. Following this, on Wednesday, we can expect the Federal Open Market Committee (FOMC) meeting of the U.S. Federal Reserve, where decisions on interest rates will be made. Market participants will undoubtedly focus on the economic forecasts presented by the FOMC and the comments from the leadership of the Federal Reserve.

However, it's not only the Federal Reserve that influences the EUR/USD pair; the European Central Bank (ECB) also plays a significant role, and its meeting is scheduled for next week on Thursday, December 14. Currently, the base rate for the euro stands at 4.50%. Many market participants believe it is too high and could push the fragile economy of the region into recession.

Deflation in the Eurozone is considerably outpacing that in the United States. Last week, Eurostat reported that, according to preliminary data, the Harmonized Index of Consumer Prices (HICP) fell to its lowest level since June 2021, at 2.4% (y/y), which is lower than both October's 2.9% and the expected 2.7%. This is very close to the target level of 2.0%. Hence, to support the economy, the ECB may soon initiate the process of easing its monetary policy.

Market forecasts suggest that the first cut in the key rate could occur in April, with a 50% probability even a month earlier in March. There is a 70% probability that by 2024, the rate will be reduced by 125 bps. However, the consensus estimate among Reuters experts is more conservative, anticipating a decrease of only 100 bps.

So, the rate war between the Federal Reserve and the European Central Bank will continue. While the one who previously prevailed was the one with faster advancing rates, now the advantage will be with the one whose retreat occurs more slowly. It is entirely possible that investors will receive some information regarding the regulators' plans after their meetings next week.

As for the past week, EUR/USD concluded at the level of 1.0760. Currently, expert opinions regarding the pair's immediate future are divided as follows: 75% voted for the strengthening of the dollar, while 25% sided with the euro. Among trend indicators on D1, the distribution is the same as with experts: 75% for the dollar and 25% for the euro. For oscillators, 75% favor the red side (with a quarter of them in the overbought zone), while 10% point in the opposite direction, and 15% remain neutral.

The nearest support for the pair is situated around 1.0725-1.0740, followed by 1.0620-1.0640, 1.0500-1.0520, 1.0450, 1.0375, 1.0200-1.0255, 1.0130, and 1.0000. Bulls will encounter resistance around 1.0800-1.0820, 1.0865, 1.0965-1.0985, 1.1020, 1.1070-1.1110, 1.1150, 1.1230-1.1275, 1.1350, and 1.1475.

In addition to the events mentioned earlier, the economic calendar highlights the release of the summary data on the U.S. retail market on Thursday, December 14th. On the same day, the number of initial claims for unemployment benefits will be traditionally published, and on December 15th, the preliminary values of the Purchasing Managers' Index (PMI) in the manufacturing and services sectors of the United States will be released. Additionally, on Friday, preliminary data on business activity in Germany and the Eurozone as a whole will be disclosed.

GBP/USD: Should We Expect a Surprise from the BoE?

The Bank of England (BoE) conducted its quarterly survey on December 8. It turns out that inflation expectations for the UK population in November 2024 are 3.3%, which is lower than the previous quarter's figure of 3.6%. Meanwhile, 35% of the country's population believes that they would personally benefit from a decrease in interest rates. In other words, the majority (65%) is not concerned about this indicator. However, it is a matter of concern for market participants.

The BoE meeting will also take place next week, on Thursday, December 14, shortly before the ECB meeting. What will be the decision on the interest rate? Lately, the hawkish rhetoric of the Bank of England's leadership has verbally supported the British currency. For instance, BoE Governor Andrew Bailey recently stated that rates should rise for longer, even if it may negatively impact the economy. However, experts predict that the regulator will likely maintain the status quo at the upcoming meeting, keeping the key interest rate at 5.25%, which is already the highest level in the last 15 years.

Expectations for the rate in 2024 imply an 80 bps decrease to 4.45%. If the Federal Reserve lowers its rate to 4.25%, it would give the pound some hope for strengthening. However, this is a matter of the relatively distant future. Last week, the dollar actively recouped November losses, resulting in the GBP/USD pair finishing the five-day period at 1.2548.

Speaking of its immediate future, 30% voted for the pair's rise, another 30% for its fall, and 40% remained indifferent. Among trend indicators on D1, 60% point north, while 40% point south. Among oscillators, only 15% are bullish, 50% bearish, and the remaining 35% remain neutral. In the event of the pair moving south, it will encounter support levels and zones at 1.2500-1.2520, 1.2450, 1.2370, 1.2330, 1.2210, 1.2070-1.2085, and 1.2035. In case of an upward movement, the pair will face resistance at levels 1.2575, then 1.2600-1.2625, 1.2695-1.2735, 1.2800-1.2820, 1.2940, 1.3000, and 1.3140.

Among the important events in the upcoming week, in addition to the Bank of England meeting, the release of a comprehensive set of data from the United Kingdom labour market is scheduled for Tuesday, December 12. Additionally, the country's GDP figures will be published on Wednesday, December 13.

USD/JPY: Is the Bank of Japan Losing Caution?

The strengthening of the Japanese currency has taken on a sustained character since the beginning of November. This occurred a couple of weeks after the peak in yields of U.S. ten-year Treasury bonds when the markets were convinced that their decline had become a trend. It's worth noting that there is traditionally an inverse correlation between these securities and the yen. If Treasury yields rise, the yen weakens against the dollar. Conversely, if bond yields fall, the yen strengthens its positions.

A significant moment for the Japanese currency was on Thursday, December 7, when it strengthened across the market spectrum, gaining approximately 225 points against the U.S. dollar and reaching a three-month peak. USD/JPY recorded its minimum at that moment at the level of 141.62.

The main reason for the yen's advance has been the growing expectations that the Bank of Japan (BoJ) will finally abandon its negative interest rate policy, and this is expected to happen sooner than anticipated. Rumours suggest that regional banks in the country are pressuring the regulator, advocating for a departure from the yield curve control policy.

As if to confirm these rumours, the BoJ conducted a special survey of market participants to discuss the consequences of abandoning the ultra-loose monetary policy and the side effects of such a move. Additionally, the visit of the BoJ Governor, Kadsuo Ueda, to the office of Prime Minister Fumio Kishida, added fuel to the fire.

The yen is also benefiting from market confidence that the key interest rates of the Federal Reserve (FRS) and the European Central Bank (ECB) have reached a plateau, and further reductions are the only expectation. As a result of such a divergence, an accelerated narrowing of yield spreads between Japanese government bonds on one side and similar securities from the US and Eurozone on the other can be predicted. This is expected to redirect capital flows into the yen.

Furthermore, the Japanese currency might have been supported by the slowdown in the growth of stock markets over the past three weeks. The yen is often used as a funding currency for purchasing risky assets. Therefore, profit-taking on stock indices such as S&P500, Dow Jones, Nasdaq, and others has additionally pushed USD/JPY lower.

Graphical analysis indicates that in October 2022 and November 2023, the pair formed a double top, reaching a peak at 151.9. Therefore, from this perspective, its retracement downward is quite logical. However, some experts believe that a definitive reversal on the daily timeframe (D1) can only be discussed after it breaks through support in the 142.50 zone. However, at the time of writing this review, on the evening of Friday, December 8th, thanks to strong US labor market data, USD/JPY rebounded from a local low, moved upward, and concluded at 144.93.

In the immediate future, 45% of experts anticipate further strengthening of the yen, 30% side with the dollar, and 25% remain neutral. As for indicators on D1, the advantage is overwhelmingly in favour of the red colour. 85% of trend indicators are coloured red, 75% of oscillators are in the red, and only 25% are in the green.

The nearest support level is located in the 143.75-144.05 zone, followed by 141.60-142.20, 140.60, 138.75-139.05, 137.25-137.50, 135.90, 134.35, and 131.25. Resistances are positioned at the following levels and zones: 145.30, 146.55-146.90, 147.65-147.85, 148.40, 149.20, 149.80-150.00, 150.80, 151.60, and 151.90-152.15.

Except for the release of the Tankan Large Manufacturers' Index on December 13 for Q4, there is no anticipation of other significant macroeconomic statistics regarding the state of the Japanese economy.

CRYPTOCURRENCIES: Rational Growth or Speculative Frenzy?


Late in the evening on December 8, the flagship cryptocurrency reached a peak of $44,694. The last time BTC traded above $40,000 was in April 2022, before the Terra ecosystem crash triggered a massive crypto market collapse. Among the reasons for the sharp rise in BTC, growing network hash rate, investor optimism about the U.S. economic recovery, and expectations of a Federal Reserve policy easing are mentioned. However, the main reason for the current bull rally is undoubtedly the potential approval of spot Bitcoin ETFs in the U.S.

Twelve companies have submitted applications to the Securities and Exchange Commission (SEC) to create ETFs, collectively managing over $20 trillion in assets. For comparison, the entire market capitalization of bitcoin is $0.85 trillion. These companies will not only offer existing clients the opportunity to diversify their assets through cryptocurrency investments but also attract new investors, significantly boosting BTC capitalization. Franklin Templeton CEO Jenny Johnson, overseeing $1.4 trillion in assets, recently explained the increased institutional interest, stating, "The demand for bitcoin is evident, and a spot ETF is the best way to access it." Bloomberg analyst James Seyffart believes that the approval of these fund launches is 90% likely to occur from January 5 to 10.

According to Bitfinex experts, the current active supply of bitcoin has dropped to a five-year low: only 30% of the coins have moved in the past year. Consequently, approximately 70% of bitcoins, or "unprecedented" 16.3 million BTC, remained dormant over the year. At the same time, 60% of the coins have been in cold wallets for two years. Simultaneously, as noted by Glassnode, the average deposit amount on cryptocurrency exchanges has approached absolute highs, reaching $29,000. Considering that the number of transactions is continuously decreasing, this indicates the dominance of large investors.

Alongside the bitcoin rally, stock prices of related companies have also surged. In particular, shares of Coinbase, MicroStrategy, miners Riot Platforms, Marathon Digital, and others have seen an increase.

Senior Macro Strategist at Bloomberg Intelligence, Mike McGlone, believes that bitcoin is currently demonstrating much greater strength than gold. He noted that on December 4, the price of gold reached a record high, after which it decreased by 5.1%, while bitcoin continued to rise, surpassing $44,000. However, the analyst warned that bitcoin's volatility could hinder it from being traded as reliably as physical gold during "risk-off" periods. According to McGlone, for bitcoin to compete with precious metals as an alternative asset, it must establish key reliability indicators. This includes a negative correlation of BTC with the stock market and achieving a high deficit during periods of monetary expansion.

McGlone's warning pales in comparison to the forecast of Peter Schiff, President of the brokerage firm Euro Pacific Capital. This well-known crypto sceptic and advocate for physical gold is confident that the speculative frenzy around BTC-ETF will soon come to an end. "This could be the swan song... The collapse of Bitcoin will be more impressive than its rally," he warns investors.

Former SEC official John Reed Stark echoes his sentiments. "Cryptocurrency prices are rising for two reasons," he explains. "First, due to regulatory gaps and possible market manipulation; second, due to the possibility of selling inflated, overvalued cryptocurrency to an even bigger fool [...] This also applies to speculation about a 90% probability of approving spot ETFs."

In the interest of fairness, it should be noted that the current surge is not solely the fault of spot BTC-ETFs. The excitement around them gradually started building up since late June when the first applications were submitted to the SEC. Bitcoin, on the other hand, began its upward movement from early January, growing more than 2.6 times during this period.

Several experts point out that the current situation remarkably mirrors previous BTC/USD cycles. Currently, the drawdown from the all-time high (ATH) is 37%, in the previous cycle for the same elapsed time, it was 39%, and in the 2013-17 cycle, it was 42%. If we measure from local bottoms instead of peaks, a similar pattern emerges. (The first rallies are an exception, as young Bitcoin grew significantly faster in the nascent market.)

According to Blockstream CEO Adam Back, the price of bitcoin will surpass the $100,000 level even before the upcoming halving in April 2024. The industry veteran noted that his forecast doesn't take into account a potential bullish impulse in the event of SEC approval of spot bitcoin ETFs. Regarding the long-term movement of digital gold quotes, the entrepreneur agreed with the opinion of BitMEX co-founder Arthur Hayes, forecasting a range of $750,000 to $1 million by 2026.

For reference: Adam Back is a British businessman, a cryptography expert, and a cypherpunk. It is known that Back corresponded with Satoshi Nakamoto, and a reference to his publication is included in the description of the bitcoin system. Previously, Adam Back did not make public price forecasts for BTC, so many members of the crypto community paid close attention to his words.

The CEO of Ledger, Pascal Gauthier, the head of Lightspark, David Marcus, and the top manager of the CoinDCX exchange, Vijay Ayyar, also anticipate the bitcoin exchange rate to reach $100,000 in 2024. They shared this information in an interview with CNBC. "It seems that 2023 was a year of preparation for the upcoming growth. Sentiments regarding 2024 and 2025 are very encouraging," said Pascal Gauthier. "Some market participants expect a bullish trend sometime after the halving, but considering the news about ETFs, we could very well start the rise before that," believes Vijay Ayyar. However, unlike Adam Back, in his opinion, "a complete rejection of ETFs could disrupt this process."

Renowned bitcoin maximalist, television host, and former trader Max Keiser shared unconfirmed rumors that the sovereign wealth fund of Qatar is preparing to enter the crypto market with massive investments and plans to allocate up to $500 billion in the leading cryptocurrency. "This will be a seismic shift in the cryptocurrency landscape, allowing bitcoin to potentially surpass the $150,000 mark in the near future and go even further," stated Keiser.

Unlike the television host, we will share not rumors but absolutely accurate facts. The first fact is that as of the review writing on the evening of December 8, BTC/USD is trading around $44,545. The second fact is that the total market capitalization of the crypto market is $1.64 trillion ($1.45 trillion a week ago). And finally, the third fact: the Crypto Fear and Greed Index has risen from 71 to 72 points and continues to be in the Greed zone.
 

NordFX Analytical Group
 

Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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Forex and Cryptocurrencies Forecast for December 04 – 08, 2023

EUR/USD: December – A Formidable Month for the Dollar

Who will start loosening the grip on their monetary policies earlier, the Federal Reserve (FRS) or the European Central Bank (ECB)? The discussion on this topic remains active, as clearly seen in the quotes' charts. The statistics from the past week did not allow EUR/USD to solidify above the significant level of 1.1000. It all began on Wednesday, November 29, with the publication of inflation data in Germany. The preliminary Consumer Price Index (CPI) in annual terms amounted to 3.2%, which is lower than both the forecast of 3.5% and the previous value of 3.8%. In monthly terms, the German CPI went even deeper into the negative territory, reaching -0.4% (against a forecast of -0.2% and 0.0% the previous month).

These data marked the beginning of the euro's retreat. EUR/USD continued its decline after the release of the Harmonized Index of Consumer Prices (HICP) for the Eurozone. Eurostat reported that, according to preliminary data, the HICP fell to the lowest level since June 2021, amounting to 2.4% (y/y), which is lower than both the 2.9% in October and the expected 2.7%. The monthly indicator was -0.5%, decreasing from 0.1% in the previous month.

All these data have shown that deflation in the Eurozone significantly outpaces the American one. As a result, many market participants, including strategists at the largest banking group in the Netherlands, ING, have started talking about the imminent victory of the ECB over inflation. They have concluded that the European Central Bank will be the first to ease its monetary policy, including lowering interest rates and engaging in monetary expansion. According to forecasts, this process may begin in April, and with a 50% probability, even a month earlier, in March. The likelihood that the key interest rate will be reduced by 125 basis points (bps) during 2024, from 4.50% to 3.25%, is estimated at 70%. Indirectly, the move towards a more dovish policy was recently confirmed by a member of the ECB's Executive Board and the head of the Bank of Italy, Fabio Panetta, who spoke about the "unnecessary harm" that can be caused by persistently high-interest rates.

As for the United States, FOMC officials speak not of harm but, on the contrary, of the benefits of high-interest rates. For instance, John C. Williams, the President of the Federal Reserve Bank of New York, stated that it is appropriate to keep borrowing costs on a plateau for an extended period. According to him, this would allow for a complete restoration of the balance between demand and supply and bring inflation back to 2.0%. Williams predicts that the Personal Consumption Expenditures (PCE) Index will decrease to 2.25% by the end of 2024 and stabilize near the target level only in 2025.

Therefore, it is unlikely that we should expect the hawks of the Federal Reserve to turn into doves in the near future. Especially considering that the U.S. economy allows maintaining such a position: stock indices are rising, and the GDP data published on November 29 showed a growth of 5.2% in Q3, surpassing both market expectations of 5.0% and the previous value of 4.9%.

Given this situation, it's not surprising that EUR/USD experienced a decline.

On Friday afternoon, it reached a local low at the level of 1.0828 and would have continued to decline further if it were not for the head of the Federal Reserve. Jerome Powell spoke at the very end of the workweek and stated that he considers premature the discussion of when the U.S. central bank can begin to ease its monetary policy. He hinted that the Fed will keep the interest rate unchanged at the current level of 5.50% at the December meeting. Powell also noted that the core inflation in the U.S. is still significantly higher than the target of 2.0%, and the Federal Reserve is ready to continue tightening its policy if necessary. In general, he said the same things as John Williams. However, if the words of the President of the New York Fed strengthened the dollar, somehow similar words from the Fed Chair weakened it: during Powell's speech, the DXY Index lost about 0.12%. Market reactions are truly unpredictable! As a result, the final chord of the week sounded at the level of 1.0882.

What awaits us in December? Following the logic mentioned above, the dollar should continue its advance against the euro. However, a seasonal factor may intervene, indicating a bearish movement for the dollar in December against a range of currencies. According to economists at Societe Generale, the average decline of the Dollar Index (DXY) over the last 10 years in December is 0.8%. Seasonally, the euro (EUR), Swedish krona (SEK), British pound (GBP), and Swiss franc (CHF) tend to rise, while the movements of the Australian dollar (AUD), Canadian dollar (CAD), Japanese yen (JPY), and Mexican peso (MXN) can be considered mixed.

Specialists at the Japanese MUFG Bank also confirm bullish indicators for EUR/USD in the last month of the year. "The seasonal tendency in December," they write, "is quite convincing: over the last 20 years, December has seen EUR/USD rise 14 times, with an impressive average gain of 2.6% over these 14 years. If we exclude December 2008 (+10.1%), the average gain in the other 13 cases was still significant at +2.0%. Moreover, in 8 out of 11 cases when EUR/USD rose in November, it was followed by a rise in December" (and it rose indeed!). "But this does not mean," caution MUFG, "that we can ignore fundamental factors." It is relevant to remind here that based on such factors, the Federal Reserve (FRS) and the European Central Bank (ECB) will make decisions at their meetings on December 13 and 14, respectively.

At the moment, experts' opinions on the near future of EUR/USD are divided as follows: 50% voted for the strengthening of the dollar, 30% sided with the euro, and 20% remained neutral. Regarding technical analysis, 50% of oscillators on the D1 chart are coloured green, 30% are in a neutral grey, and only 20% are red. Interestingly, half of these 20% are already signalling oversold conditions. Among trend indicators, 65% favour the bullish side, while 35% point in the opposite direction.

The nearest support for the pair is located in the area of 1.0830-1.0840, followed by 1.0740, 1.0620-1.0640, 1.0480-1.0520, 1.0450, 1.0375, 1.0200-1.0255, 1.0130, and 1.0000. Bulls will encounter resistance around 1.0900, 1.0965-1.0985, 1.1070-1.1110, 1.1150, 1.1230-1.1275, 1.1350, and 1.1475.

A substantial flow of data is anticipated from the American labour market in the upcoming week of December 5 to 8. The highlight will be on Friday, December 8, when crucial indicators such as the unemployment rate and the number of new non-farm jobs (NFP) will be published. Additionally, on Tuesday, December 5, we will learn about business activity (PMI) in the U.S. service sector. Data on retail sales in the Eurozone will be available on Wednesday, December 6, and the following day, we will find out about GDP. Finally, on Friday, December 8, revised data on consumer inflation (CPI) in Germany will be released.

GBP/USD: Three Reasons in Favor of the Pound

The likelihood that the US Federal Reserve has likely concluded its cycle of monetary restriction and interest rates have plateaued has been mentioned earlier. Similar sentiments were expressed regarding the historical seasonal advantages of the British pound over the dollar in December.

Verbal support for the British currency was provided by the rhetoric of the Bank of England (BoE) leadership, which currently has no plans to adjust its current monetary policy trajectory. As known, this trajectory is aimed at tightening. Deputy Governor of the BoE, Dave Ramsden, stated that monetary policy should continue to be restrictive to curb inflation. A similar hawkish position was taken by BoE Governor Andrew Bailey, who emphasized that rates should rise for longer, even if it negatively affects the economy.

Currently, the key interest rate for the pound is at a 15-year high of 5.25%. Its last increase occurred on August 3, after which the Bank of England took a pause. However, this does not necessarily mean that they won't resume and increase the rate by 25 basis points at their December or January meeting.

Similar hawkish statements from the leaders of the Bank of England contribute to bullish sentiments for the pound. Even despite the dollar's rise in the second half of the past week, GBP/USD couldn't breach the support at 1.2600. According to economists from the Singaporean United Overseas Bank (UOB), as long as this strong level remains unbroken, there is a possibility for the pair to move slightly higher in the next 1-3 weeks before an increased risk of a pullback. UOB believes that, at the moment, the likelihood of the pound rising to the resistance level of 1.2795 is not substantial.

Following Jerome Powell's remarks, GBP/USD settled at the level of 1.2710 at the conclusion of the past week. Regarding its immediate future, 20% are in favour of further ascent, while the majority of surveyed analysts (55%) have taken the opposite position, and the remaining 25% remain neutral. On the D1 chart, all trend indicators and oscillators unanimously point north, with the latter indicating overbought conditions at 15%.

In the event of a southward movement, the pair will encounter support levels and zones at 1.2600-1.2635, followed by 1.2570, 1.2500-1.2520, 1.2450, 1.2370, 1.2330, 1.2210, and 1.2040-1.2085. In case of an upward movement, resistance awaits at levels 1.2735-1.2755, then 1.2800-1.2820, 1.2940, 1.3000, and 1.3140.

No significant economic events related to the United Kingdom are anticipated for the upcoming week.

USD/JPY: Caution, More Caution, and Even More Caution


We mentioned in the previous overview that the dynamics of USD/JPY in the coming weeks would be almost entirely dependent on the dollar's performance. Additionally, its volatility would be influenced by the oversold condition of the yen: in mid-November, the pair reached a peak at 151.90, a level not seen since October 2022, and before that, 33 years ago in 1990. The result of the synergy between these two factors was observed last week. Following the Dollar Index (DXY), the pair initially dropped by 300 points, from 149.67 to 146.67, then rose in two waves to 148.51. On December 1, it responded with a significant red candle to the statement from the head of the Federal Reserve, finishing at 146.79.

The influence of the United States on the dynamics of USD/JPY is consistently evident. However, will the Bank of Japan (BoJ) impact the strength of its national currency? Hopes for this are diminishing. BoJ board member Toyoaki Nakamura made comments on Thursday, November 30, expressing his opinion on the possibility of transitioning from an ultra-easy monetary policy. He stated that tightening it prematurely is risky, and for now, it is necessary to patiently maintain the current course. As for the timing of when this can be done, according to the official, it is currently challenging to determine. 'We can change our policy when the Japanese economy sees sustainable growth in wages and inflation,' Nakamura explained. 'Now is the time to exercise caution in our policy.'

One might think, was the Bank of Japan not cautious before this? Judging by its monetary policy, BoJ can confidently contend for the title of the 'Most Cautious Central Bank in the World.'.

According to economists at the Singaporean United Overseas Bank (UOB), in the next 1-3 weeks, USD/JPY is likely to trade in a range between 146.65 and 149.30, then start declining. Regarding the median forecast, in the near term, only 20% of experts anticipate further strengthening of the dollar, while 60% are in favour of the yen, and 20% have refrained from making any predictions. As for trend indicators on D1, 85% favour the yen, recommending buying the pair in only 15% of cases. All oscillators are in the red, with 100%, and a quarter of them are in the oversold zone. The nearest support level is located in the 146.65 zone, followed by 145.90-146.10, 145.30, 144.45, 143.75-144.05, and 142.20. The closest resistance is at 147.25, then 147.65-147.85, 148.40, 149.20, 149.80-150.00, 150.80, 151.60, 151.90-152.15, 152.80-153.15, and 156.25.

Among the events in the upcoming week's calendar, it is worth noting Tuesday, December 5, when data on consumer inflation in the Tokyo region will be released, and Friday, December 8, when the GDP volume of Japan for Q3 2023 will be announced.

CRYPTOCURRENCIES: A Year Between a Bear Past and a Bull Future

December is upon us, making it a fitting time not only to review the week's outcomes but also to assess the entire passing year. Apparently, 2023 has the potential to serve as a transition between the bear 2022 and the bull 2023, supported by an impressive 11% growth in the leading cryptocurrency in November and a staggering 130% increase since the beginning of the year.

The share of potentially profitable bitcoins has reached 83.7% of the total supply, marking the highest level since November 2021. According to analysts at Bitfinex, the balance between short-term and long-term holders of digital gold is tilting in favour of the latter. The active supply of bitcoin has dropped to a five-year low, with only 30% of coins moving over the year. Consequently, approximately 70% of bitcoins, or an "unprecedented" 16.3 million BTC, remained stagnant throughout the year. Moreover, 60% of these coins have been motionless for two years. According to Bitfinex experts, these metrics indicate that the market is in a "relatively strong position" as coin holders are experiencing positive returns on their investments and are not rushing to liquidate assets in anticipation of even greater profits.

Positive sentiments have increased, especially among large investors (those with investments of $1 million or more). Over the first 11 months of 2023, they have increased their investments in crypto funds by 120%, bringing the total to $43.3 billion. Bitcoin remains the leader in this regard, with its volume growing to $32.3 billion, a 140% increase. Among altcoins, Solana has also attracted institutional interest. However, Ethereum had been showing negative dynamics for a while, although it has recently started to recover.

The rise in optimism in the market is attributed to: 1) the resolution of the issues between the U.S. authorities and the crypto exchange Binance, 2) the anticipation of the imminent launch of spot bitcoin ETFs, and 3) the upcoming bitcoin halving in April next year.

Regarding point 1, as a result of a settlement agreement between the U.S. authorities and Binance, bitcoin is now expected to exceed $40,000 by the end of the year, according to Matrixport. Various estimates suggested that Binance could face fines of up to $10 billion and might be accused of unauthorized appropriation of user funds or market manipulation. However, on November 21, an agreement was reached that Binance would pay a $4.3 billion fine, cease operations in the U.S., and its CEO, Changpeng Zhao, stepped down and posted a $175 million bail to remain free. This outcome is considered by Matrixport experts as a 'turning point in the crypto industry,' indicating that Binance will maintain its position among the largest crypto exchanges for at least the next two to three years.

In light of this news, bitcoin initially experienced a temporary correction but then bounced back from $36,000. This confirmed a strong trend, and according to Matrixport experts, a rise above $40,000 in December appears 'inevitable.' However, they assess the probability of this 'inevitable' outcome at 90%, acknowledging that unforeseen events could still impact the situation.

According to some experts, the "peaceful" withdrawal of Binance from the U.S. market should ease tensions and facilitate the approval by the Securities and Exchange Commission (SEC) of applications for the creation of exchange-traded funds (ETFs) for spot bitcoin. In November, the SEC held a series of meetings with applicants to allow them to edit their submissions in accordance with the regulator's requirements. The presence of this dialogue was viewed as a positive factor. It is not ruled out that by January 10, 2024, the Commission will approve a significant portion, if not all, of the applications for launching bitcoin ETFs. This date marks the deadline for approving the joint application from ARK Invest and 21Shares. If the regulator makes a negative decision, it risks getting involved in legal proceedings again. The SEC has already lost a legal battle with an investment giant like Grayscale, with the court deeming the SEC's actions "arbitrary and capricious." So, is it worth stepping on the same rake again and risking similar humiliations?

Trader, analyst, and founder of the venture company Eight, Michael Van De Poppe, expects the first bitcoin ETFs to be approved by the SEC in the next five to six weeks. Consequently, the price of BTC could rise in December as investors try to profit from the potential rally. The expert forecasts its growth to $48,000. However, after approval, according to Van De Poppe, BTC/USD could sharply decline. The lower target of this potential pullback is the 200-week exponential moving average (EMA) line, which is currently around $26,500. This downward trend may continue even after the upcoming halving, Van De Poppe believes. The analyst suspects that it is then that traders will actively accumulate coins, triggering the next bullish rally with a target ranging from $300,000 to $400,000.

The strategists at Standard Chartered believe that BTC could reach $50,000 by the end of this year and $120,000 by the end of 2024. The bank's initial forecast indicated a possible rise to $100,000 but was later increased. The price of $120,000 is three times higher than the current level. This optimism from Standard Chartered experts is linked to the increased profitability of mining when selling a smaller quantity of tokens to maintain the same cash flow volume, leading to price growth.

The Managing Partner and CEO of 10T Holdings, Dan Tapiero, is confident in the inevitable growth of the first cryptocurrency and believes that bitcoin is becoming an increasingly attractive means of savings. However, in his opinion, the next bullish trend will not occur in 2024 but in 2025. "And we will see bitcoin surpass $100,000," predicts Tapiero, adding that this is a rather conservative estimate. The businessman believes that negative interest rates on US Treasury bonds will be a special "mega-bull signal" for BTC.

(Note that the former CEO of the crypto exchange BitMEX, Arthur Hayes, intends to withdraw the funds he invested in US Treasury bonds and invest them in cryptocurrency in the near future, without waiting until 2025.)

We have repeatedly noted earlier that the leading cryptocurrency has "decoupled" from both stock indices and the dollar exchange rate, disrupting direct and inverse correlations. However, now analysts at the Santiment analytical company are observing an increase in the correlation between the crypto and stock markets. In November, bitcoin, Ethereum, and the S&P 500 index grew on average by 9.2%. The strengthening connection was recorded after bitcoin traded in a narrow price range in late October to early November, showing no significant fluctuations. "If bitcoin continues to grow, surpassing stocks," say the analysts at Santiment, "this will once again disrupt the correlation, which, according to historical data, is one of the factors for the formation of a bullish crypto market.

BTC/USD set a new high for 2023 on Friday, reaching $38,950, aided by the surge in risk assets, including cryptocurrencies, mentioned in this review by the Federal Reserve Chair Jerome Powell in his speech. As of the evening of December 1, BTC/USD is trading around $38,765. The overall market capitalization of the crypto market is $1.45 trillion ($1.44 trillion a week ago). The Crypto Fear and Greed Index rose from 66 to 71 points and still remains in the Greed zone.

So, December has arrived, and many members of the crypto community are once again talking about the "Bitcoin Santa Rally." This phenomenon mirrors the historical "Santa Claus Rally" in the stock market when stocks rise between Thanksgiving and Christmas. On the crypto market, a similar rally first occurred at the end of November 2013 when the price of BTC was less than $1,000. Throughout December, the price of bitcoin steadily rose, reaching a peak of $1,147 by December 23. The next significant surge happened four years later during the holiday season of 2017. Bitcoin embarked on a steep upward trajectory, surpassing $19,000 by mid-December and touching $20,000 for the first time. However, in 2021, Santa Claus didn't bring joy to traders; the result was the opposite. On November 10, the asset reached an all-time high, approaching $69,000, but in December, the price was influenced by volatility and low trading volumes during the holiday days. By the end of the year, bitcoin was trading in the $46,000 range.

Naturally, this year, members of the crypto community are hoping for a convincing rise in digital gold. It remains to be seen whether Santa Claus will fulfil these hopes.
 

NordFX Analytical Group
 

Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

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November 2023 Results: NordFX's Top 3 Traders Set Records with Profits of $470,000

NordFX Brokerage Company Summarizes Client Trading Performance for November 2023. Additionally, an evaluation was conducted on the social trading services – PAMM and CopyTrading, along with the profits generated by the company's IB partners.

- The client from Western Asia with account number 1691XXX secured the highest profit this month, reaching $351,521. This remarkable achievement was attained through trading in gold (XAU/USD), euro (EUR/USD), and the British pound (GBP/USD).

- Similarly, fellow countryman with account number 1692XXX claimed the second position on the podium of distinction, accruing a profit of $91,650. The same currency pairs – XAU/USD, EUR/USD, GBP/USD, along with USD/JPY, contributed to this impressive outcome.

- The third spot is occupied by the account holder with number 1733XXX from Southeast Asia. Utilizing the favoured NordFX trading instrument – gold (XAU/USD), they achieved a profit of $26,713.

In NordFX's passive investment services, the following situation has developed:

- In the PAMM service, the Trade and Earn account continues to attract attention. It was opened 631 days ago but remained dormant, awakening only in November 2022. Over 13 months, its profitability approached 210% with a relatively small maximum drawdown of less than 17%. Undoubtedly, the manager of this account can take pride in such performance.
    
Two long-standing accounts on the PAMM service's showcase have persevered, previously mentioned in our past reviews – KennyFXPRO-The Multi 3000 EA and TranquilityFX-The Genesis v3. Recall that on November 14, 2022, they suffered significant losses, with the drawdown at that moment approaching 43%. However, PAMM managers decided not to give up, and by November 30, 2023, the profit on the first of these accounts exceeded 118%, and on the second, 78%.
    
- In CopyTrading, noteworthy is the signal yahmat-forex, which, over 160 days, demonstrated a profitability of 190% with a maximum drawdown of 37%. Also catching attention is the startup with the original name $20 - ⟩ $1,000,000. One can reasonably guess that the provider of this signal intends to increase the deposit from $20 to $1 million. Currently, in its 37 days of existence, the profit stands at 101% with a moderate drawdown of less than 18%.
    
Undoubtedly, such profitability appears very attractive and far exceeds the returns on bank deposits. However, subscribers must always remember that past successes do not guarantee the same results in the future. Therefore, as usual, we urge investors to exercise maximum caution when investing their money.

Among the IB partners of the NordFX brokerage company, the top three are as follows:
- The largest commission reward once again was credited to a partner from Western Asia, account number 1645XXX. This time it amounted to $10,525.
- Next is their colleague from South Asia, account number 1675XXX, who earned $6,510 in November.
- Finally, another partner from South Asia, account number 1700XXX, closes the top three leaders, receiving $5,034 in commissions.

***

Attention! On January 5, 2024, just a month away, NordFX will host the New Year draw of its super lottery. A multitude of cash prizes ranging from $250 to $5,000 will be up for grabs among the company's clients.

There's still time to become a participant and have a chance to win one or even several of these prizes. All details are available on the NordFX website.
 

Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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NordFX Super Lottery $100,000

Participation in the NordFX Super Lottery is a great opportunity to improve your financial situation by winning one or even several large cash prizes. The total prize pool is $100,000. 60 prizes of $250 and 15 prizes of $1000 to $5000 will be drawn on January 5. 

The organizer of the Super Lottery is NordFX, an international brokerage company with 15 years of experience in financial markets, which is trusted by clients from 188 countries around the world. All information about the terms of the Super Lottery can be found on the broker's official website.

As early as 1748, Benjamin Franklin, whose portrait adorns the $100 bill, formulated one of the main financial laws: Time is Money. So, hurry up and don't waste time: the sooner you participate in the lottery (which is not difficult at all), the more likely you are to win there!
 

Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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