Topic: Nordfx broker: news, weekly Analytics - page 5. (Read 50129 times)

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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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CryptoNews of the Week


– The price of bitcoin surged past $51,700 on 14 February, reaching a new high since 2021. This bull rally is largely attributed to the commencement of operations by nine leading spot bitcoin ETFs. According to The Block, a month after their launch, their assets exceeded 200,000 BTC (about $10 billion). These new bitcoin ETFs have risen to second place in the ranking of commodity exchange-traded funds in the US by asset volume, becoming a more popular investment instrument than silver ETFs. Observers have highlighted a statement from investment giant BlackRock, noting, "Investor interest in bitcoin remains high, hence the fund is ready to purchase even more BTC."
Documenting Bitcoin reports that Wall Street representatives are currently purchasing 12.5 times more BTC coins daily than the network can produce. Researchers believe this is the key driver behind the increased demand and price for the flagship crypto asset.

– Analysts at CryptoQuant have identified another factor that could lead to an increase in the price of BTC in 2024 and 2025: the upcoming halving. The researchers emphasised that this event significantly reduces the supply of bitcoin approximately every four years. They also agree that the recent approval of spot bitcoin ETFs has been one of the most powerful bullish factors for the growth in value of the leading cryptocurrency.
CryptoQuant also noted a significant increase in the number of active wallets, indicating a long-term upward trend. "Considering the reduction in supply, increased demand, and various economic and social issues, particularly the expected ongoing inflation, bitcoin is likely to strengthen its position as a long-term alternative investment asset with an upward trend," the analysts conclude.

– Anthony Pompliano, co-founder and partner at Morgan Creek Digital, also highlighted the success of the recent launch of spot BTC ETFs. The fact that BlackRock and Fidelity were able to attract $3 billion each in record time marks 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 bitcoin to funds is limited to just 900 BTC, which equates to approximately $40-45 million. Meanwhile, the daily net inflow of funds into BTC ETFs already equals $500 million. This is a clear indicator of a BTC shortage and its bullish impact on the price of the cryptocurrency and the market as a whole," Pompliano stated, noting the imbalance between the market supply of bitcoin and the demand from Wall Street companies.
The billionaire is optimistic about the future trajectory of BTC and asserts that with the demand from Wall Street continuing, especially considering the upcoming halving, the top cryptocurrency by market capitalization could significantly surpass its historical highs.

– The appearance of photographs with laser eyes in the personal accounts of US President Joe Biden sparked a wave of discussion within the crypto community. This led to speculation on whether Biden has become a supporter of bitcoin or if this was a strategic move for his 2024 presidential campaign to gain the support of crypto investors. There was also speculation that Biden's account might have been hacked.
It's important to remember that the "laser eyes" phenomenon is typically used as a symbol to demonstrate a bullish outlook on bitcoin. It emerged as part of a social media movement aimed at driving the price of BTC to $100,000 by the end of 2021, a goal that was not achieved. Among the most famous personalities who once featured laser eyes were Paris Hilton and Elon Musk.

– Anthony Scaramucci, founder of SkyBridge Capital and former White House official, believes that some retail investors might think they have missed the opportunity to buy bitcoin. His unequivocal response is, "No, it's not too late." In addition to the launch of spot BTC ETFs and the halving, Scaramucci highlighted the monetary policy of the US Federal Reserve. "The US Consumer Price Index (CPI) data released on Tuesday, 13 February, 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 an inflation rate of 3.1%. The data also led to speculation that the Fed's reduction of interest rates in March and May is likely off the table.
According to Scaramucci, the delay in rate cuts could lead to turbulent trading in the mainstream market but will act as a boom for the crypto world, as bitcoin is used as a hedge against inflation.

– Glassnode has identified that numerous on-chain indicators are now in what's termed the "risk zone." This assessment leverages a variety of metrics that analyze a comprehensive array of data pertaining to hodlers' behaviour, covering both short-term and long-term investment cycles. Experts have noted that a heightened risk level is typically observed at the beginning stages of a bull market. This phenomenon occurs as hodlers might start securing profits upon reaching a "significant level" of return.
Specifically, the MVRV ratio, which monitors the activity of long-term hodlers, has reached a critical zone. Such a high ratio (2.06) has not been seen since the FTX collapse. Currently, a "high" to "very high" risk status is also attributed to six out of the nine remaining metrics. These metrics highlight a relatively low level of profits being realized, in spite of the recent weeks' active price surge, as explained by the specialists.

– In the first two days of this week, the S&P 500 index fell from 5051 to 4922 points. Robert Kiyosaki, the renowned author of "Rich Dad Poor Dad," financier, and writer, has once again issued a stark warning that this stock index is on the brink of a massive crash, with a potential plunge of up to 70%. He accompanied this statement with his consistent recommendation to invest in solid assets such as gold, silver, and bitcoin.
Kiyosaki argues that financial advisors tend to direct their clients towards traditional investments due to their historical appeal and the significant commissions they earn from these recommendations. However, he emphasizes that historical data actually supports the superiority of solid assets, particularly gold, which has outperformed the S&P 500 index over decades. Kiyosaki firmly believes that diversification and the inclusion of solid assets in investment portfolios can be a wise strategy to mitigate potential losses in market volatility. He has called on investors to reassess their strategies and choose knowledgeable financial advisors.

– A popular analyst on Platform X, known as EGRAG CRYPTO, believes that the market capitalization of bitcoin will reach $2 trillion by September this year. Based on this, the price of the leading cryptocurrency will exceed $100,000. "Prepare 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!"

– During Q3 2023, the billionaire Peter Thiel's Founders Fund, known as the founder and former CEO of PayPal, invested $200 million in bitcoin and Ethereum. The amount was evenly distributed between the first and second cryptocurrencies, as informed sources told Reuters. According to the agency's information, this move marked the return of some institutional players to digital assets after the collapse of FTX and the subsequent regulatory pressure.
As one of the first venture crypto investors, Founders Fund began aggressively purchasing bitcoin back in 2014 but sold off this asset before the market crash in 2022, securing a profit of approximately $1.8 billion. In 2023, Founders Fund made its first purchases when the digital gold was valued below $30,000. Considering the current price, this operation has resulted in an unrealized profit of over 65%.

– Trader and entrepreneur Andrew Kang believes it's a mistake to attribute the current rise in bitcoin to the start of spot BTC ETF operations. "People seem to forget that there was a huge ongoing demand for bitcoin even before these exchange-traded funds were approved," Kang writes. "Meanwhile, BTC has become an almost trillion-dollar asset and has been consistently growing over the last decade." "Just the assumption that cryptocurrency owners allocate just 1% of their income to BTC annually should lead us to conclude: the potential cash flow into bitcoins could reach at least $52 billion per year, or almost $150 million per day."
Furthermore, Andrew Kang is convinced that his assessment of the situation is quite conservative and likely does not account for business and institutional financial flows. The expert is confident that the market demand for the asset will more than absorb all the volumes from expected sales of bitcoins, both from miners and large holders like the Mt.Gox exchange.

– US Federal Reserve Chairman Jerome Powell has recently asserted that US banks are very strong, a claim met with sarcasm by former BitMEX CEO Arthur Hayes, who noted that New York Community Bancorp (NYCB) might disagree.
Last week, the US banking sector was engulfed in fear as NYCB reported a colossal quarterly loss of $252 million. The bank's total loan losses quintupled to $552 million, fuelled by concerns over commercial real estate. Following this report, NYCB's stock plummeted by 40% in one day, leading to a downturn in the US Regional Banks Index.
Arthur Hayes recalled the bitcoin rally triggered by the banking crisis in March 2023, when three major US banks failed within five days. "Yeah... From solid to bankrupt, that's the future. And then there will be even more money, printers... and BTC at $1 million," he commented on the NYCB failure.

– Popular blogger and analyst Lark Davis believes investors have 692 days to become wealthy. He discussed the importance of market cycles and the timely sale of assets. Davis noted that if traders pay attention, they can make a lot of money in the next two years. According to the expert, 2024 will offer the last chance to buy digital assets, while 2025 will be the best time to sell them. However, he advises against selling everything at once, recommending a gradual profit-taking strategy instead. Lark Davis also warned that a "Great Depression" will begin in the global economy and the cryptocurrency market in 2026. Failing to sell in time could result in significant losses.
 

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.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

https://nordfx.com/

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
 

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CryptoNews of the Week


– Nayib Bukele was re-elected as President of El Salvador on February 4, winning by a substantial margin. The leader, who has openly supported bitcoin and made it the country's first legal tender, garnered the support of the majority of the Salvadoran society, securing approximately 85% of the electorate's votes. "This is a record for democratic elections worldwide," Bukele stated.
Shortly before the election, it was announced that should Bukele win the presidency by a large margin, he would expand the use of bitcoin. Specifically, Bukele plans to issue passports to bitcoin entrepreneurs and launch Volcano bonds, which will fund the construction of Bitcoin City, a tax haven for crypto companies.

– Jim Rogers, an investor who co-founded the Quantum Fund with George Soros, believes that bitcoin does not pose a threat as a potential replacement for existing government currencies. According to him, despite bitcoin's growth and current perception, the primary role of the flagship cryptocurrency is to serve as a trading instrument. Rogers emphasized that governments are unlikely to recognize bitcoin as a currency, as they fear potential competition with existing monetary systems. However, the investor suggests that Central Bank Digital Currencies (CBDCs) are likely to be adopted in several countries around the world.

– The former President of the United States, Donald Trump, also commented on the possibility of the country adopting a Central Bank Digital Currency (CBDC). He stated that if he were to be re-elected, he would prevent the introduction of this type of currency in the United States. Trump emphasized that a CBDC infringes upon citizens' rights and freedoms, as it would allow government entities access to detailed information about people's financial activities. "I will never allow the creation of a central bank digital currency that would enable the theft of your money," Trump declared.

– The popular blogger PlanB has stated that following the upcoming bitcoin halving in April, bitcoin will become scarcer than gold and real estate, suggesting that the cryptocurrency could reach a price around $500,000. Based on his Stock-to-Flow model, the expert considered that the digital asset's market capitalization might not surpass that of gold: over $10 trillion. However, approaching this mark and a coin issuance of 20 million could lead to the stated price. PlanB did not specify a timeframe for reaching this price.
The analyst also named the minimum level below which, in his opinion, the primary cryptocurrency will not fall. The 200-week moving average (200WMA) of the BTC price has exceeded $31,000, and according to PlanB, historically, the price has never dropped below this metric.

– Scott Melker, a renowned trader, investor, writer, and host of "The Wolf Of All Streets" podcast, who also holds the title of Binance Influencer of the Year, has shared his perspective on the upcoming bitcoin halving. He believes this event could drive the price of bitcoin up to $240,000. "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," Melker explained. "Essentially, this means that the issuance of new coins will be halved. It will become twice as difficult for miners to earn money from bitcoin mining." Following the previous halving, the BTC price soared from $20,000 to $69,000, marking a 250% increase. Therefore, if the situation repeats this time, the next peak after $69,000 could be $240,000. "I know it might seem like an exaggeration... This cycle has worked in the past. And until I see it fail [this time], I'm prepared to bet that bitcoin will exceed $200,000," Melker insists.
It's worth noting that Anthony Scaramucci, the founder of Skybridge Capital, also recently expressed optimism about bitcoin's future. He believes the halving will lift the BTC price to $170,000.

– CryptoQuant has announced that bitcoin miner reserves have dropped to their lowest level since July 2021. The wallets of mining pools are holding the lowest volume of cryptocurrency since the so-called Great Migration of miners from China to other countries in Eurasia and North America. Moreover, last week saw the largest outflow of BTC from miners' autonomous wallets to exchanges.
Analysts at Bitfinex are also observing an influx of bitcoins to exchange addresses associated with mining companies. They believe that a massive coin dump could occur in the coming days. Consequently, pressure will increase again, and the digital currency may fall below $40,000. The Bitfinex report notes that sales are increasing due to the approaching halving. They estimate that, following the miners, short-term investors may join the sell-off. They will start to dispose of the cryptocurrency for fear that its price will fall below the level at which they purchased the coins.

– Michael Van De Poppe, a renowned trader, investor, and founder of MN Trading, believes that the value of bitcoin could reach $500,000. He highlighted several factors that will cause an explosive growth in the flagship coin's rate. Among these factors are the current market state, the launch of BTC-ETFs, inflows from institutional investors, and others. An important factor will be the halving, after which a bullish growth of the cryptocurrency market is expected. The researcher emphasized that the current cycle might be slightly longer than before, due to the entry of institutional players into the market and a change in the overall direction of the industry's development. According to the analyst, liquidity influences, macroeconomic factors, and others could have a greater impact on the market.
Van De Poppe suggests a scenario where the value of bitcoin could rise to $48,000 before the halving, hitting a key resistance level. This would be followed by another correction, resulting in a 20% price drop. After the halving, the BTC value will start to rise again and reach a local peak by the fall.

– Grok, an artificial intelligence developed by Elon Musk's company xAI, has made two predictions: by the end of 2024, the Ethereum rate will range from $4,000 to $5,000; within the year, the value of ETH could peak at $6,500. Grok highly values the prospects of Ethereum due to the development of its ecosystem and the upcoming Dencun update, scheduled for February 8. This upgrade is expected to enhance the scalability of the ETH blockchain and significantly reduce transaction processing costs in second-layer networks through the implementation of proto-danksharding technology, which allows for increased blockchain throughput. The artificial intelligence also identifies spot Ethereum ETFs as catalysts for the coin's price growth, which could be approved by the end of May. Applications for the issuance of these derivatives have been submitted to the U.S. Securities and Exchange Commission (SEC) by six major American companies: Volatility Shares, Bitwise, Grayscale, VanEck, Roundhill, and Proshares.

– Senator Elizabeth Warren asserts that her legislative proposal has already garnered the support of 19 members of the U.S. Senate. She hopes that "common sense will prevail," and her supporters, along with other congressmen, "will achieve effective measures to combat the criminal use of crypto assets."
Should the law come into effect, the anti-money laundering regulations from the traditional finance sector will fully apply to digital asset market players. According to the draft document, Know Your Customer (KYC) rules will affect providers of autonomous wallets, miners, validators, and other independent network participants. All financial institutions in the U.S. will be required to report on measures to prevent money laundering, tax evasion, and other criminal activities. "This bill will close the gaps in our anti-money laundering regulations," Warren stated, referencing a report by the analytics firm Chainalysis, which indicated that from 2022 to 2024, stablecoins accounted for more than 50% of transactions by cybercriminals.

– Cathy Wood, CEO of ARK Invest, asserts that investors have begun shifting from gold to bitcoin following the launch of spot bitcoin exchange-traded funds (ETFs). "Bitcoin is growing relative to gold. The substitution of gold with bitcoin is in full swing. And we believe this will continue now that a less complex access to bitcoin has emerged," she stated.
Cathy Wood anticipates that bitcoin will emerge as a "risk-free asset" when the banking sector shows signs of weakness again. The market witnessed this firsthand in March 2023, during the "regional banking crisis" in the United States, which resulted in a 40% surge in the price of digital gold. (Recent analysis by Fidelity indicates that bitcoin's inverse correlation with banking interest rates disappeared in 2023, despite rising rates worldwide).
 

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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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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.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

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CryptoNews of the Week


– Analysts note that the 12-month volatility of the first cryptocurrency has reached its lowest level in 12 years. The indicator has fluctuated significantly over the years, but overall, it has shown a clear downward trend during this period. From 179% in January 2012, it fell to 45% at the beginning of this year. A higher figure indicates significant price variability and signals greater market unpredictability. Lower metric values suggest much more stable trading conditions.
CryptoQuant believes that reduced volatility may indicate a greater number of long-term holders. Meanwhile, the research department at Galaxy Digital predicts that the launch of spot bitcoin ETFs in the USA will further smooth price fluctuations. "A huge amount of BTC will be in the accounts of [investment] advisors. They are not interested in intraday trading," the experts state.

– Analysts at Matrixport have predicted a fall in the price of the first cryptocurrency to $36,000. They believe that bitcoin can then appreciate, but only against the backdrop of favourable macroeconomic conditions and increased liquidity. It's worth recalling that in December, these same analysts forecasted bitcoin to reach $125,000 in 2024.

– Chris Burniske, a partner at the venture firm Placeholder, has forecasted that the price of bitcoin will initially drop to the $30,000-$36,000 range, before potentially reaching a local bottom around $20,000. "We're heading towards a consolidation lower than most people expect, due to too many variables (such as the specifics of the crypto market, macroeconomics, the adoption and development of new products)," the expert warned. However, he believes that testing levels around $20,000 will be a "real step" towards eventually returning to previous highs. "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 fall in other assets will be deeper than that of bitcoin.

– Amazon MGM Studios has launched the production of the feature film "Razzlekhan," which will narrate the story of the 2016 Bitfinex cryptocurrency exchange hack involving 120,000 BTC. The film is based on a 2022 New York Times article about the married couple, Russian Ilya Lichtenstein and American Heather Morgan, who are accused of laundering the stolen funds. The film's title is derived from Morgan's rap pseudonym.
In February 2022, the U.S. authorities arrested the couple and seized bitcoins worth $3.6 billion. That same month, Morgan was released on a $3 million bail, while Lichtenstein remained in custody.

– Peter Schiff, President of Euro Pacific Capital and a well-known opponent of the first cryptocurrency, unexpectedly conceded that by 2031, the price of bitcoin could reach $10 million, albeit under a very hypothetical scenario. According to him, this could occur if the US dollar follows the path of the "German paper mark". This term informally referred to the currency introduced in Germany at the beginning of World War I in 1914, replacing the previous mark, which was backed by gold.
In the early 1920s, the paper mark depreciated due to hyperinflation. During these years, companies paid salaries several times a day so that workers could make purchases before the next price increase. The money supply grew so rapidly that the state couldn't print banknotes fast enough and had to involve private printers. The largest denomination issued was a 100 trillion-mark banknote.

– While Peter Schiff may be sceptical and ironic about the prospect of an economic collapse and the fall of the US dollar, Robert Kiyosaki, the investor and bestselling author of "Rich Dad Poor Dad," harbours no such doubts. He insists that gold, silver, and bitcoin should be part of every investor's portfolio. Kiyosaki, admitting his limited knowledge about the main cryptocurrency, believes in the success of bitcoin due to the "very smart people" involved in it. He is confident that the price of BTC could reach $1 million in the event of a global economic downturn.

– The analyst known as Rekt Capital believes traders have one last opportunity to purchase bitcoin at a low price. His analysis of historical data has led him to several conclusions. 1. If bitcoin's price does not decrease within the next two weeks, it's unlikely to significantly drop before the halving, which is scheduled for April 19. 2. Around 60 days prior to the halving, BTC’s price is expected to increase due to the excitement surrounding the event. 3. Following the halving, there might be a rush by speculators to sell their holdings, potentially causing bitcoin's price to fall for several weeks, possibly by 20-38%. 4. After this period, a phase of accumulation is anticipated, which could last up to 150 days and is characterized by relatively low price volatility for BTC. 5. This accumulation phase is expected to be followed by a phase of parabolic growth in bitcoin's rate, culminating in a new historical high.

– A new study has revealed that the adoption of digital assets continues to grow actively in Europe. The Binance team conducted a survey across several European countries, including France, Italy, Spain, and Sweden, involving over 10,000 participants. The findings from the study showed that 73% of European residents believe in the future of cryptocurrencies. 55% of respondents reported using cryptocurrency for purchases, with 10% doing so on a weekly basis. Additionally, 24% indicated that nearly half of their trading operations involve tokens.
The main factors contributing to the adoption of digital assets in Europe, as identified by survey participants, include high profitability, decentralization, and innovation. Rachel Conlan, Chief Marketing Officer at Binance, noted that such widespread integration of digital assets in Europe is facilitated by a safe and harmonized regulatory framework in the region.

– Analyst DonAlt informed his 56,700 YouTube subscribers that despite the volatility due to the launch of BTC exchange-traded funds (ETFs), bitcoin has managed to avoid a complete price collapse. The digital gold remains strong even after its price fell below $40,000 last week. The expert believes that the absence of major selloffs is a positive sign. "For this reason, I'm no longer in the bear camp; now I'm in the bull camp," he stated. DonAlt also emphasized that bitcoin is consolidating within a strong upward trend and is likely to regain its bullish momentum as soon as it overcomes the resistance level at $44,000.

– According to analysts at Glassnode, the majority of long-term investors are still reluctant to part with their coins. The Glassnode report indicates that the vast majority of BTC holders are adhering to a hodling strategy in anticipation of higher spot prices. K33 Market Research reports that the volume of spot trading in bitcoins has reached "consistently high activity following the approval of ETFs." It's noted that "a significant portion of ETF flows is likely distributed among other over-the-counter orders, not affecting the spot market order books." According to The Block’s Data Dashboard, 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.

– Anthony Scaramucci, founder of SkyBridge Capital hedge fund, believes that the price of bitcoin will surge to at least $170,000 following the halving in April. "On the day of the halving, multiply the BTC price by four, and it will reach this level within the next 18 months," he stated. "For instance, if the price is $50,000, then later bitcoin will be worth $200,000," explained the investor. Previously, the head of SkyBridge had claimed that the BTC price post-halving could reach $100,000. He also cited the reduction of the Federal Reserve's interest rate in the USA as an additional reason for the onset of a bullish rally.
Regarding the long-term price, Scaramucci forecasts that bitcoin's market capitalization could reach half of gold's market capitalization, which is $14.5 trillion. Consequently, according to his calculations, the price of the coin could be around $345,000.

– Markus Thielen, Head of Research at 10x Research, utilizes Elliott Wave Theory in his forecasts, which suggests that asset prices move in five waves. According to this theory, the first, third, and fifth waves are "impulse waves," while the others are "corrective waves." The recent decline in bitcoin’s price represents the fourth wave, or a correction, the analyst believes. Currently, the fifth wave is starting, which could drive the price upwards. "Wave analysis has marked this recovery up to $52,671 potentially by the end of Q1 2024," the 10x Research representative announced. In his view, the bitcoin price is influenced by the overall growth of the stock market and the cessation of fund outflows from Grayscale's largest bitcoin exchange-traded fund. The growth of digital assets will also be supported by Google's decision to allow advertising for cryptocurrency ETFs.
 

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.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

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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
 

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CryptoNews of the Week


– On January 11, bitcoin reached a peak of $47,787, a height last seen in the spring of 2022. However, instead of the anticipated growth, it plummeted and recorded a local low of $38,520 on January 23. In just 12 days, the leading cryptocurrency lost nearly 20%. According to experts, this is a classic case of the "buy the rumour, sell the news" scenario. Initially, there was an impressive bull rally, fueled by speculation about the launch of bitcoin ETFs on the stock exchange. However, once these funds became operational, market participants began actively taking profits.
The inflow of capital into BTC-ETFs, many of which were launched by major Wall Street players like BlackRock, was not as substantial as expected. Data from CoinShares shows that the 10 new funds launched on January 11 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 holder of bitcoin and has now also been transformed into a BTC-ETF. Logic suggests that a significant portion of the money in the 10 new funds likely came from Grayscale investors who switched to competitors with lower fees. If this is the case, then the inflow of new investments into the funds amounts to only $1.3 billion.

– Along with bitcoin, all major altcoins, including Ethereum (ETH), Solana (SOL), Cardano (ADA), Avalanche (AVAX), Dogecoin (DOGE), Binance Coin (BNB), and others, also suffered losses. Analysts believe that digital assets are facing additional pressure due to improvements in the stock markets, with both American and European indices on the rise. Investors are anticipating the recovery of the US economy ahead of the January 25 publication of the country's GDP data for Q4 2023.

– Peter Schiff, President of Euro Pacific Capital, didn't miss the opportunity to gloat over the buyers of bitcoin ETF shares. The share price of these funds fell by 20% or more from their peak. The FBTC shares suffered the most, depreciating by 32%. "I think VanEck should change the ticker of its ETF from HODL to GTFO [from 'hold' to 'get rid of", Schiff commented. This advocate for physical gold didn't limit his criticism to spot BTC-ETFs but also highlighted the ProShares Bitcoin Strategy ETF (BITO), which allows investment in bitcoin futures. Since the launch of this derivative in October 2021, its share price has plummeted by more than half.
Schiff believes that the owners of spot bitcoin ETFs will continue to incur losses. Some experts do not rule out the possibility of the coin's price falling to $30,000 - $35,000, lending some credence to the financier's bleak forecast.

– An analyst operating under the pseudonym Ali illustrated the price patterns of the last two cycles of the first cryptocurrency and suggested a further decline in its value. The expert pointed out that during previous rallies, bitcoin followed a consistent pattern: first reaching the Fibonacci level of 78.6%, followed by a correction to 50%. Hence, according to this model, a drop in the BTC/USD pair to $32,700 (50%) is not ruled out.
Trader Mikeystrades also considered a dip to $31,000 and advised against opening long positions. "Save your money until the market starts showing bullish strength and follows the flow of orders," the expert emphasized.
A crypto trader known as EliZ predicted a fall in bitcoin's value to $30,000. "I anticipate a bearish distribution over the next two to three months, with the second half of 2024 likely to be truly bullish. These pauses are necessary to keep the market in a healthy state," he stated.

– Caroline Mauron, the head of OrBit Markets, told Bloomberg that if bitcoin fails to consolidate above $40,000 soon, we could witness a significant liquidation of positions in the futures market accompanied by a panic withdrawal of capital from the crypto sphere.
Michael Van De Poppe, the founder of MN Trading, has a different view. He emphasized that bitcoin has gathered liquidity and is approaching a local bottom. "Buy at the lows. Bitcoin under $40,000 is an opportunity," the analyst urges.
Yann Allemann, co-founder of blockchain data provider Glassnode, also known as Negentropic, believes that a bullish rally in the bitcoin market will start in the first half of 2024. He predicts that by early July, the coin's value will rise to $120,000. This forecast is based on the asset's past price dynamics after the appearance of a bullish flag on the chart.

– In recent critical remarks about digital gold, Jamie Dimon, CEO of JPMorgan, once again expressed doubts about the asset's finite supply limit of 21 million coins.
In response, Jameson Lopp, co-founder & CTO of Casa, posted a fragment of the bitcoin protocol code that establishes a halving of miners' rewards every 210,000 blocks, or approximately every four years. This mechanism implies that after 33 halvings, the reward will drop to zero from the initial 50 BTC, meaning no new coins will be produced. Lopp asserted that "even Satoshi [Nakamoto] can't force" a change in these five lines of the software.
However, some experts believe that theoretically, modifications to bitcoin's source code, like any other, are possible, and the emission limit of 21 million coins could be lifted. But such a decision would have to be made by a consensus of miners. A historical precedent cited is the "block size war" of 2017, when some developers, crypto companies, and mining pools wanted to increase the block size from the original 1 MB to scale the network. This idea was rejected by the community as it would have led to greater centralization of bitcoin.
In a Bitcointalk forum discussion of Dimon's statement, users noted that increasing the emission would negatively impact trust in the cryptocurrency. "The finite supply of 21 million BTC is an advantage that sets bitcoin apart from other banking products. With an emission limit, the asset becomes more valuable. Any attempt to increase the supply is foolishness by short-sighted people who want to undermine trust in digital gold," comments on the forum read. Most participants in the discussion agreed that the final decision remains with the community, which is unlikely to support a change in emission parameters.

– The crypto exchange BitMEX organized a mission with an ambitious goal: to deliver the main digital asset to the surface of Earth's natural satellite. Aboard the lunar lander was a 43-gram cold crypto wallet containing 1 BTC. The module was inscribed with text from the bitcoin genesis block: a tribute to the creator of the first cryptocurrency, Satoshi Nakamoto.
However, something went wrong. The spacecraft, launched into space ten days ago, struggled to maintain orientation towards the Sun, necessary for charging its onboard batteries. Engineers at Astrobotic detected a fuel leak in the module's engine system, but it was too late. NASA recommended burning the module in the atmosphere. Eventually, it almost completely burned up, with the remnants falling somewhere in the southern part of the Pacific Ocean. Thus, the bitcoin managed to travel only 50,000 km from Earth's surface, instead of the planned 385,000 km.

– Bloomberg exchange analyst James Seyffart believes that the U.S. Securities and Exchange Commission (SEC) may authorize the trading of options on spot bitcoin ETFs. He announced this on his page on X (formerly Twitter). Seyffart notes that the SEC has already taken into consideration applications under form 19b-4 for the possibility of trading such instruments. According to the analyst, approval could occur between February 15 and September 21 of this year.

– Last week, Morgan Stanley published a document titled "Digital (De)Dollarization?" authored by the bank's COO, Andrew Peel. According to the author, there is a clear shift towards reducing reliance on the dollar, which in turn is fuelling interest in digital currencies such as bitcoin, stablecoins, and CBDCs (Central Bank Digital Currencies). Peel writes that the recent surge in interest in these assets could significantly alter the currency landscape. He cites a recent survey by Sygnum Bank, which found that over 80% of institutional investors believe cryptocurrencies play a vital role in the global financial industry.

– Popular analyst Lark Davis has pointed out the significant demand for cryptocurrencies in South Korea. He suggests that if local authorities decide to approve a spot bitcoin ETF, it could potentially generate up to $3 billion per year. Additionally, Davis reminded that organizations in Hong Kong are planning to launch their debut product in Q1 this year. If this happens, the influx could amount to about $6 billion over 12 months.

– The number of cryptocurrency users has reached over half a billion people, which is approximately 6% of the Earth's population. According to recent data, the number of people owning Ethereum has increased from 89 million to 124 million, while the number of Bitcoin owners by the end of the year rose from 222 million to 296 million. Notably, 40% of BTC owners also hold ETH, whereas 42% of cryptocurrency owners do not have these coins in their portfolios.
The increase in user numbers is linked to the prolonged bearish trend in the crypto market, as the authors of the study believe: “The adoption of cryptocurrencies in 2023 grew despite macroeconomic obstacles, namely: tightening of monetary policies by Western central banks in an attempt to curb inflation, military conflicts, and the long-term consequences of the pandemic.” Analysts at Crypto.com noted a particularly sharp demand for bitcoin in Q4 2023, spurred by expectations related to the launch of BTC-ETFs.

 

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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.
 

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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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CryptoNews of the Week


– The long-standing regulatory saga surrounding the launch of spot bitcoin ETFs finally concluded last week, with the U.S. Securities and Exchange Commission (SEC) issuing the corresponding approval. Against this backdrop, the quotations momentarily surged to $49,000. However, the cryptocurrency subsequently depreciated by nearly 15%. Experts attribute this to an overbought condition or what is known as "market overheating," as reported by Cointelegraph. The SEC's positive decision had already been factored into the market price, and many investors now decided to realize profits rather than purchasing the more expensive asset.
Cointelegraph experts also noted that bitcoin ETFs have already attracted over $1.25 billion. On just the first day, the trading volume of these new financial market instruments reached $4.6 billion. However, the Bitcoin Dominance Index has been steadily declining. Over the past week, the index fell from 54.56% to 51.14%. Concurrently, many altcoins are exhibiting growth, indicating that investors are reallocating capital in favor of alternative coins.

– On the eve of the SEC's decision, some analysts had predicted a decline in bitcoin's price. For instance, analysts at CryptoQuant talked about a possible drop in quotations to $32,000. Other forecasts mentioned support levels at $42,000 and $40,000. "Bitcoin failed to overcome the $50,000 mark," Swissblock analysts write, raising the question of whether the leading cryptocurrency can regain the momentum it has lost.
Moreover, there is growing concern in the market due to the steady increase in the hash rate on the BTC network. This could lead to a scenario where miners start selling coins more actively. Recently, they have transferred bitcoins worth over $1 billion to centralized platforms, creating additional selling pressure and negatively impacting price dynamics.

– The international environmental organization Greenpeace criticized the SEC's decision regarding spot bitcoin ETFs. "Without significant changes in mining practices, this poses serious problems for our efforts to prevent the worst consequences of the climate crisis," the environmentalists stated. "As the price of bitcoin rises, so does its environmental impact. Miners consume more electricity […], which is predominantly generated from fossil fuels, leading to increased carbon dioxide emissions and water consumption," Greenpeace added.

– The entry of BlackRock, the world's largest asset management company in terms of managed assets, into the crypto market could bring significant changes. This financial giant has the potential to surpass MicroStrategy as the foremost holder of digital gold. BlackRock's bitcoin ETF remarkably attracted about $500 million, roughly equivalent to 12,000 BTC, in just two days. Continuing at this pace, BlackRock could become the largest holder of bitcoins by February 1.
For context, MicroStrategy is currently the top holder with 189,150 BTC, outpacing competitors like Marathon Digital and Tesla.

– Analysts at the investment bank Morgan Stanley have studied global market trends and concluded that the role of the US dollar as the cornerstone of the international financial system may be reevaluated. In their view, the growing interest in digital assets like bitcoin, the increasing circulation of stablecoins, and the real prospects of using Central Bank Digital Currencies (CBDCs) in cross-border transactions are changing the world.
"These innovations, though still in their infancy, open up possibilities for challenging the hegemony of the dollar. Macro-investors should consider how these digital assets, with their unique characteristics and increasing adoption, could alter the future dynamics of the dollar," Morgan Stanley strategists write.
Andrew Peel, Head of Digital Assets at Morgan Stanley, believes that the process of dedollarization in the global economy could significantly accelerate with the launch of spot bitcoin ETFs, as weekly inflows into these new products already exceed billions of dollars. The popularity of BTC has been consistently growing over the last 15 years, and currently, over 106 million people worldwide own the first cryptocurrency, Andrew Peel reminds us.

– Elizabeth Warren, a member of the U.S. Senate Banking Committee, criticized the SEC for approving bitcoin ETFs. She believes that this decision could harm the country's financial system and investors.
Conversely, the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, took an opposing stance. In an interview with Yahoo Finance, she refuted concerns that bitcoin could potentially displace the US dollar. The IMF chief stated that cryptocurrencies are an asset class, not money, and it's essential to make this distinction.
Ms. Georgieva also disagrees with industry participants who think the recent approval of spot BTC-ETFs will lead to the mass adoption of the first cryptocurrency. In her view, that day is still far off, so such discussions are not very meaningful. "I'm not in a hurry to convert my dollars into another currency. It doesn't mean that one shouldn't diversify investments. But I wouldn't worry about bitcoin competing with the dollar," added the IMF director.

– Tom Lee, co-founder of the analytics firm Fundstrat, expressed his opinion in an interview with CNBC that the first cryptocurrency's quotations could reach $100,000 - $150,000 by the end of 2024 and $500,000 in the next five years. "In the next five years, we'll have a limited supply, but with the approval of spot bitcoin ETFs, we potentially have enormous 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.

– Cathy Wood, CEO of ARK Invest, stated on CNBC that under a bullish scenario, the first cryptocurrency could reach a price of $1.5 million by 2030. Experts at her firm believe that even under a bearish scenario, the value of the digital gold will increase to $258,500.

– Anthony Scaramucci, founder of the hedge fund SkyBridge Capital and former White House Communications Director, provided another forecast. "If bitcoin is priced at $45,000 during the halving, then by mid-to-late 2025, it could 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 in the next 18 months," said the SkyBridge founder in Davos, ahead of the World Economic Forum. Scaramucci also mentioned that it would likely take another eight to ten trading days to observe the impact of the new spot ETFs on the price of the first cryptocurrency.

– Prominent investor and founder of MN Trading Consultancy, Michael Van De Poppe, reported that his account on social network X (formerly Twitter) was hacked on January 16th. He addressed his 864,000 followers, emphasizing his hope that none of them followed the phishing links posted by the culprits. The investor is counting on the fact that trusting users have not lost their cryptocurrency funds.
Following this incident, Van De Poppe continued to publish market analysis as usual. He noted that "this will be the last 'easy' cycle for bitcoin and cryptocurrencies." According to him, the current phase will take a bit longer than before, but it will change the lives of many people on Earth. Regarding the current situation, the expert said that the price is stuck between several levels. Resistance is at $46,000, but the price is expected to test support in the range of $37,000 to $40,000.

– Economist David Rosenberg, founder of Rosenberg Research, views buying bitcoin more as gambling than investing. His distrust in BTC is partly due to its high volatility, as evidenced by its price movements following the SEC's decision to approve the first spot BTC-ETFs in the USA.
Rosenberg believes that traditional stocks, by contrast, represent future cash flows of any company; bonds and savings accounts yield interest, and commodities have industrial applications, and their demand can be modelled, unlike bitcoin.

"If you want to get rich believing in cryptocurrencies, then add lottery tickets to your assets," advises the economist. He adds, "This and other tokens are examples of the 'greater fool theory' in action – people buy them not because they are inherently valuable, but because they hope to sell them at a profit to someone even more foolish."

– Amid growing market speculation in anticipation of the imminent launch of a spot ETF for Ethereum, analysts at the investment bank TD Cowen have stated that, according to the information they have, it is unlikely that the SEC will begin to consider applications for approval of this investment instrument in the first half of 2024. "We believe that before approving an ETH-ETF, 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 return to the discussion of ETFs on Ethereum only after the U.S. presidential elections, which are scheduled for November 2024.
Senior analyst at JP Morgan, Nikolaos Panagirtzoglou, also does not anticipate the swift approval of spot ETH-ETFs. According to Panagirtzoglou, for the SEC to make a decision, Ethereum needs to be classified as a commodity, not a security. However, in the near future, JP Morgan considers this event unlikely.

– Six AI-based chatbots have predicted the price of bitcoin at the end of 2024:
Claude Instant from Anthropic's Forecast: With increasing institutional adoption, regulatory clarity, and reduced supply post-halving, the price of bitcoin is expected to reach $85,000 by December 31, 2024.
Pi from Inflection's Forecast: The approval of 11 spot bitcoin exchange-traded funds (ETFs) in the USA certainly changes the game, and the upcoming halving adds more excitement. Considering the current price of bitcoin, it's predicted that the price could reach $75,000 by December 31, 2024.
Bard from Gemini's Forecast: The approval of 11 spot ETFs and the reduced supply due to the upcoming halving could trigger significant demand, potentially pushing the bitcoin price above $90,000 by December 31. However, unforeseen economic obstacles might restrain this growth, possibly capping the peak at around $70,000.
ChatGPT 3.5 from OpenAI's Forecast: Given the volatile nature of cryptocurrencies and the influence of various factors such as macroeconomic conditions, legislative changes, and market sentiment, making accurate predictions is challenging. Considering these factors, a bitcoin price within $75,000 to $85,000 by December 31, 2024, seems plausible but not guaranteed.
ChatGPT 4's Forecast: Conservatively, the price range could be between $40,000 and $60,000, considering potential market fluctuations and investor caution. On the other hand, the price could potentially vary between $60,000 and $80,000, aided by implementation and investments following ETF approvals and the halving.
Bing AI from Co-Pilot Creative's Forecast: Based on information gathered from various sources, the forecast for the price of bitcoin on December 31, 2024, is around $75,000.
 

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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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CryptoNews of the Week


– A real drama unfolded in the cryptocurrency market after hackers breached the social network X (formerly Twitter) account of the U.S. Securities and Exchange Commission (SEC) and posted a fake tweet about the approval of the long-awaited bitcoin exchange-traded funds (BTC-ETFs). This statement caught investors off guard as it was expected that this important decision by the SEC would only be published on Wednesday, January 10. The market reacted instantly, and the price of the main cryptocurrency soared to $48,000.
The head of the regulatory body, Gary Gensler, urgently published a denial, stating: "The SEC's Twitter account was hacked, and an unauthorized tweet was published. The SEC has not approved the listing and trading of bitcoin spot exchange-traded products." Following this message, the BTC price reversed and dropped to around $45,000.

– As anticipation for a positive decision from the U.S. SEC grew, the number of Google search queries for "Bitcoin ETF" reached a record level. Last week, the percentage index exceeded the 50 mark, and this week it hit the maximum of 100 points. Interestingly, the search queries for "Bitcoin ETF" predominantly come not from the U.S. but from other countries. Canada leads with 100, followed by Hong Kong (86) and Singapore (85). Switzerland (73) ranks fourth, and Germany (72) is fifth among the most interested countries. As for the U.S. itself, it holds the 9th place with 39 percentage points.

– SEC Chair Gary Gensler warned on January 8 about the volatile nature of crypto assets and also reminded of the risks associated with crypto service providers. His recommendations followed amidst firms submitting updated applications for launching bitcoin exchange-traded funds (BTC-ETFs). Perianne Boring, the founder and president of the U.S. Chamber of Digital Commerce, believes that the SEC could delay its decision. In her view, amendments to these applications could be the reason for postponing the deadlines. Consequently, the Commission would need more time to coordinate the changes and might not complete all procedures even by the end of the week.
Perianne Boring hopes she is wrong. However, she admits that Gary Gensler and members of the expert commission may have received another chance to delay the final decision. The SEC, she is confident, has enough tools at its disposal to block the market entry of this exchange product altogether and is not willing to give up its position without a fight. Markus Thielen, an analyst at Matrixport, also believes that the regulator may avoid making a positive decision.

– Television host and founder of the hedge fund Cramer & Co., Jim Cramer, stated that the price of bitcoin has peaked and further growth should not be expected. He made this statement at the moment when bitcoin surpassed the $47,000 mark. Social media users and the crypto community consider Cramer a unique "indicator," whose predictions in the vast majority of cases... do not come true.

– Macro-strategist Henrik Zeberg expects a fantastic bull market in 2024. According to him, the dynamics of digital assets this year, driven by the arrival of new players, will be "parabolic." "[Bitcoin] will be absolutely explosive: it will go vertical. I think we will reach at least $115,000. That's my most conservative forecast. The $150,000 level is also quite achievable, and I see the potential for $250,000," notes the economist.
Zeberg added that thanks to the entry of institutional and traditional investors following the potential approval of spot bitcoin ETFs, the first four months of 2024 could be "incredibly impressive" for the crypto market. Everyone who did not participate in the first or second bull cycles will now say, "Oh, I missed the first two times, but I will be in this one." However, the expert believes that traditional markets are facing "the worst crash since 1929," when the Great Depression began in the U.S.

– An unknown user sent on January 5 nearly 27 BTC (worth about $1.2 million at the time) to the wallet of bitcoin creator Satoshi Nakamoto. This sender's address received funds from three different sources, the majority originating from a wallet registered with the cryptocurrency exchange Binance.
The genesis wallet of Satoshi Nakamoto, as of the time of writing, contains 99.67 BTC, which is valued at around $4.4 million. These assets have remained unmoved since the disappearance of the bitcoin creator in December 2010. Coinbase director Conor Grogan commented, "Either Satoshi has awakened, bought 27 BTC on Binance and transferred them to his own wallet, or someone just burned a million dollars." He also speculated that it might be a form of "strange marketing" related to the potential approval of a spot bitcoin ETF.

– Vytautas Kaseta, President of the Crypto Economy Organisation, has stated that while the crypto community celebrates January 3 as the birthday of bitcoin, technically this is not correct. On that day, Satoshi Nakamoto generated the zero block of the BTC blockchain, known as Genesis. However, this block only served as a starting point for creating the network, as it contained no actual transaction data. The first non-zero block, mined on January 9, 2009, marks the beginning of real transactions in the network, when the blockchain came to life as a functional means of exchange. It's the creation of this block that should be considered the true birthday of the first cryptocurrency, Vytautas Kaseta believes.

– The approval of spot exchange-traded funds (ETFs) based on the first cryptocurrency represents a "turning point" for the asset's adoption. In this scenario, the price of bitcoin could soar to $200,000 by the end of 2025, according to analysts at Standard Chartered in a recent report. The bank estimates that by the end of 2024, exchange-traded funds will hold between 437,000 BTC and 1.32 million BTC. This is equivalent to a market inflow of $50-100 billion.
The analysts noted that exchange-traded products related to gold exhibited a similar dynamic, but only seven to eight years after their launch. "Bitcoin will see the same growth as a result of the approval of a spot ETF in the U.S., but we will see it materialize over a shorter period (one to two years), given the rapid development of the crypto market," explained Standard Chartered.

– Venture investor Chamath Palihapitiya echoed a similar sentiment, believing that 2024 could be the most important year for the first cryptocurrency. The billionaire noted in a new episode of the All-In podcast that the approval of a large number of spot exchange-traded funds (ETFs) will likely be a "game changer for BTC." This could ultimately lead to the widespread adoption of the asset. Palihapitiya added that in this case, by the end of 2024, bitcoin will become a part of the traditional financial lexicon.

– Renowned analyst PlanB believes that the value of bitcoin could soon reach a range between $100,000 and $1 million. He explained that he does not expect a fall in BTC price because its level of adoption is only at 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 level of adoption is below 50%. Therefore, the analyst opines, "the main cryptocurrency can expect exponential growth for a couple more years."
It's worth noting that PlanB is the creator of the Stock to Flow model for predicting the course of bitcoin. This model reflects the ratio of the available supply of an asset to the volume of its production. Thus, according to this model, the current price of the coin for most holders exceeds the purchase cost, which is a "distinctive signal of bullish growth."

– According to CoinDesk, the 40-day correlation between digital gold and the Nasdaq 100 technology index has dropped to zero. Over the last four years, this price relationship was positive, ranging from moderate (0.15) to strong (0.. The indicator reached its maximum value during the bear market of 2022. Now, bitcoin has completely "broken away" from the Nasdaq, thanks to expectations of the ETF launch.
Experts from Fairlead Strategies, interviewed by the publication, spoke about the prospects of maintaining the "independence" of digital gold in the near future. This nullification of correlation could signify the potential use of the first cryptocurrency as a means of diversifying investment portfolios. "We believe that the price correlation will remain low in the coming months, given the potential approval of a spot bitcoin ETF and the halving in April. Furthermore, risk assets generally exhibit lower correlation in bull markets compared to bear markets," the experts explained.
 

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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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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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.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

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CryptoNews of the Week


– On Tuesday, January 2, the price of bitcoin rose above $45,860 as investors anticipated a statement from the U.S. Securities and Exchange Commission (SEC) regarding the approval of spot bitcoin ETFs. The last time BTC traded at this level was in April 2022.
Analysts at Matrixport suggest that the primary cryptocurrency could surpass $50,000 in the coming days. The main drivers of the digital gold's price increase will be the potential approval of spot BTC-ETFs, demand from financial institutions, and a shortage of coin supply in the market. "Institutional investors cannot afford to miss another potential rally. Therefore, they must buy immediately," the experts shared their forecast. In their view, regulators might announce the approval of new exchange-traded products "today or tomorrow, ahead of most investors' expectations." This will serve as a powerful factor in the price growth of the leading cryptocurrency.

– Wall Street investment giants BlackRock, Fidelity, and Invesco, along with Valkyrie and Bitwise, companies specializing in crypto asset operations, have announced in their press releases their readiness to launch spot ETFs on bitcoin. Bitwise and BlackRock, in particular, have formed initial capital for trading operations, amounting to $200 million and $10 million respectively. These companies have disclosed key details of their future trades, including trading chains, partnerships with key brokerage firms, and the commission rates their potential ETF partners will charge clients, pending the green light from the SEC.
Eric Balchunas, Bloomberg ETF analyst, opines that the investment corporations' proposals are largely similar. He anticipates that the competitive battle among BTC-ETF issuers will primarily revolve around fee structures, brand history, and customer preferences.
MicroStrategy founder Michael Saylor previously remarked that the approval of BTC-ETF, which the entire crypto industry is eagerly awaiting, could be the most significant event for the American stock market in the last three decades.

– Analysts at the platform Immunefi have calculated that, compared to 2022, when the total stolen funds amounted to $3.9 billion, this year's figures have more than halved – by 54.2%. In total, due to hacks and fraud, the crypto industry suffered losses of $1.8 billion in 2023. Researchers have tallied that $1.69 billion in losses were attributed to 219 hacking attacks, and about $103,000 was lost in 100 cases of fraud. The biggest losses were incurred in November ($343 million), September ($340 million), and July ($320 million).
It's worth noting that the Immunefi project manages a fund of $135 million for payments to "white hat" hackers who find vulnerabilities in decentralized financial platforms (DeFi).

– The new President of Argentina, Javier Milei, has proposed the legalization of digital asset circulation. He assured that once the bill is passed, citizens will be able to own and trade cryptocurrencies regardless of their origin and the actual location of coin storage. This digital currency legalization program is part of the economic reforms proposed by Javier Milei.
According to the new law, crypto assets that Argentine citizens voluntarily report by March 31 will be subject to a 5% tax rate. By November 30, the tax level will be increased to 15%. Subsequently, if the fiscal authorities discover undeclared cryptocurrency assets, the settlement of requirements may be accompanied by the imposition of an increased tax rate and additional penal sanctions.

– While the majority of crypto market participants view the approval of spot bitcoin ETFs as an exclusively positive event for BTC, some experts believe otherwise. Analysts at the platform CryptoQuant think that with the launch of this financial instrument, the main cryptocurrency's price could drop from its current levels to $32,000. CryptoQuant noted that the market is factoring in a 90% probability of these ETFs being approved in early January. This reflects investors' optimism about the instrument but at the same time creates a classic "buy the rumour, sell the news" scenario.
"The likelihood of the ETF approval becoming a catalyst for selling on the news is increasing, as market participants have a large unrealized profit. For short-term bitcoin holders, it's about 30%, which historically precedes a price correction," the company asserts.
Analysts also highlighted the influence of miners' behaviour. Due to the recent rise in BTC's price, they have shifted back to active selling and could significantly impact the dynamics of the main cryptocurrency's price.

– Cathy Wood, the CEO of ARK Invest, also anticipates the possibility of a short-term sell-off. However, she remains optimistic about the long-term prospects of bitcoin. "A sell-off upon the news wouldn't be a surprise. But I believe it will be a very short-term phenomenon," Wood concluded. The head of ARK also noted the significant impact on bitcoin's price that even modest institutional investments can have. Her opinion is based on the scarcity of BTC and the expected inflow of institutional funds into the asset following the approval of ETFs.

– Analysts at the crypto exchange BIT share a similar view. They believe that bitcoin will continue to grow despite the "buy the rumor, sell the news" mindset. Even if the launch of the ETF causes a short-term sell-off, the combination of buyer pressure and the reduction in supply following the halving will lay the foundation for an extremely bullish 2024, potentially leading to the establishment of a new all-time high (ATH).

– Nic Carter, a financing partner at Castle Island Ventures, aligns with Cathy Wood's perspective. He believes that the ETF will unlock new classes of capital, fostering structural flows that will benefit the BTC market. Carter also thinks that in the context of the ETF launch, even the halving event seems less significant.

– Bitcoin futures indicate a bullish trend for the spring of 2024. Data from Binance futures contracts, expiring on March 29th, show that the annualized price of bitcoin is currently exceeding 20%. When futures trade at a higher price than the spot price, this situation is referred to as "contango". This condition suggests that the market expects the price of the asset to rise by the time the contract expires. According to The Block’s Data Dashboard, the difference between the spot price and the future price of BTC has increased to a record high level.

– A special agent from the FBI office in Alabama, USA, informed FOX News journalists that in 2023, around 300 state residents who fell victim to fraudulent cryptocurrency operations lost an average of $170,000 each. Matt Tootle observed that the greatest danger was posed by schemes involving the theft of digital assets using methods of so-called social engineering.
"We see cases where fraudsters spend months developing seemingly decent relationships with their future victims. For example, they create fake internet resources, showing victims the balance of their assets and the profitability of investing in cryptocurrencies. In some cases, to encourage the aggrieved investors to continue funding or make a large money transfer, fraudsters allow the victim to witness the 'effectiveness' of the crypto project and even withdraw a portion of the funds," the special agent explained. As a result, victims realize that they have lost all their money only weeks or months after the initial 'investment'.

– Peter Schiff, President of Euro Pacific Capital and a gold enthusiast, shared his forecast for 2024 in a series of tweets. "Investors are convinced that the Federal Reserve has managed to restore price stability without causing a recession, achieving a miraculous soft landing," wrote Schiff. "The big surprise in 2024 will be not only that the economy falls into a recession, but also that high inflation returns with doubled force."
"More importantly," Schiff notes, "technical indicators are collapsing... The Fed plans to lower interest rates, which will not only accelerate the downturn but also exert new upward pressure on inflation." In his view, "this not only indicates a weak and troubled economy but also foretells a significant fall in the dollar exchange rate and a rise in prices for imported goods in 2024." According to the financier, this situation does not bode well for bitcoin. Recall that Schiff has previously stated that there is "nothing more low-quality than cryptocurrencies," and "bitcoin is nothing." He also compared asset holders to a cult. "No one needs bitcoin. People buy it only after others convince them to do so. After acquiring BTC, they immediately try to attract others to it." In his words, "it's like a cult."
 

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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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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CryptoNews of the Week


– Brian Armstrong, the head of the cryptocurrency exchange Coinbase, published an article filled with numerous statistical data. Following a significant market correction this year, the value of cryptocurrencies increased by 90%, accompanied by a 60% increase in trading volume in the fourth quarter (Q4). Armstrong highlighted that currently, 425 million people worldwide own cryptocurrencies. Additionally, 83% of the G20 member countries and major financial centres have either implemented or are in the process of developing regulations for the industry.
He emphasized that over 100,000 merchants and payment systems worldwide now accept payments in cryptocurrencies, including companies like PayPal and Visa. Armstrong also referenced a report by Circle, according to which the volume of international settlements in stablecoins over the last year exceeded $7 trillion. This indicates that stablecoins are assisting fiat currencies like the US dollar to exist in digital form.
In countries with underdeveloped economies, such as Argentina, Brazil, and Nigeria, cryptocurrencies are becoming increasingly popular among the population. People living and working abroad use cryptocurrencies for money transfers. Crypto transfers are on average 96% cheaper than traditional methods and take 10 minutes instead of 10 days, as mentioned in Armstrong's article. Even major financial hubs, London, Switzerland, Hong Kong, and Singapore are transforming into crypto centres to expand employment opportunities in the blockchain and cryptocurrency sector.
Brian Armstrong underscored that cryptocurrencies provide people with economic freedom by giving them access to their own money and allowing them to fully participate in the economy, regardless of the limitations of powerful, but outdated, financial companies.

– Gary Gensler, the Chairman of the U.S. Securities and Exchange Commission (SEC), published a post on X (formerly Twitter) on December 22, addressing the industry's non-compliance with regulations. "There are numerous violations in the cryptocurrency sphere," the post read. "It's a breach of trust resulting in many people being harmed. All they can do is wait for the court to declare them bankrupt."
The community instantly reacted to the SEC head's statement, emphasizing that they had long requested the regulator to clarify the specific rules they need to comply with. It is known that Coinbase, the largest American cryptocurrency exchange, has been striving for years to get clarity from the SEC on industry regulations.
Billy Markus, the founder of Dogecoin, stated that the SEC Chairman had not established real rules. Markus went on to describe Gensler as "useless in every respect." Brad Garlinghouse, the CEO of Ripple, also commented on Gensler's post. He characterized it as "staggering hypocrisy" and called Gensler "politically accountable" for undermining the integrity of the SEC's requirements.
On the same day, the SEC issued a new statement, expressing "deep regret" over some mistakes made by the Commission during enforcement proceedings. Paul Grewal, the Chief Legal Officer at Coinbase, pointed out that the SEC's "regrets" about its mistakes do not negate the fact that its chairman is "intimidating the entire American industry." From a legal standpoint, these regrets hold no significance for any taxpayer or judge.

– Jan van Eck, the head of the eponymous company that also applied to launch a spot BTC-ETF, gave an interview to CNBC. "I cannot imagine any other asset overtaking bitcoin," he stated. Jan van Eck views the first cryptocurrency as the best means of saving and expects BTC to reach a record high in the next 12 months. "Bitcoin has 50 million users. It's an obvious asset that is growing right before our eyes," he declared. The head of VanEck also dismissed the idea that bitcoin is a "bubble." The businessman explained that an asset that consistently surpasses its previous highs in each upward trend simply cannot be considered "inflated."

– Bitcoin will end the year as one of the most profitable assets, largely due to the excitement surrounding applications for bitcoin exchange-traded funds (ETFs). The leading cryptocurrency, having grown by more than 163%, outperformed traditional assets, only falling behind semiconductor giant Nvidia, whose stocks more than doubled amid the artificial intelligence wave.
Kaiko Research analysts believe that this year's bitcoin price dynamics can be divided into three phases: an early rally from cyclical lows, a mid-year pause, and a year-end rally, indicating the development of a new bull market.
Kaiko points out that bitcoin has long been regarded as a hedge against inflation, a digital alternative to gold, or a completely new asset. However, for most of its history, its price was significantly tied to macroeconomic conditions, the strength of the dollar, and stocks. This year marked a change when bitcoin began losing its correlation with stock indices, including the Nasdaq 100. The most rapid decoupling occurred recently, when the asset surpassed the $40,000 mark, the analysts note.

– According to the forecast of Brandon Zemp, CEO of the consulting firm BlockHash, 2024 will be a favorable year for bitcoin, the launch of cryptocurrency ETFs, and the adoption of regulations for crypto-assets.
Zemp, the author of "The Future Economy: A Crypto Insider’s Guide to the Tech Dismantling Traditional Banking," mentioned the collapse of the FTX exchange, the bankruptcy of crypto lenders, and the downfall of some stablecoins. He believes that the failure of crypto projects was facilitated by investors themselves, who bought colourful JPEG-format NFTs and trusted developers creating useless software.
"The good news is that cryptocurrencies are here to stay, and wrongdoers are constantly being pushed out of the market. A bullish trend is again on the horizon, and it may be more stable as bad players have been removed from the scene," the head of BlockHash declared. He expressed hope that in 2024, U.S. legislators will be able to bring regulatory clarity to the crypto market. "I would not like everything to be decided in courts. I am hopeful that next year a cryptocurrency bill will be passed. Otherwise, regulators will continue to sink their teeth into the industry, and cryptocurrencies will continue to resist," added Zemp.

– Analysts at the analytical company IntoTheBlock reported that hodlers hold a record number of bitcoins and Ethereum. IntoTheBlock classifies as hodlers those who have kept digital assets for at least a year. According to their data, as of December 24, hodlers owned 70% of the circulating bitcoins and 74% of Ethereum. The chart suggests that hodlers began accumulating coins as early as 2022. In such a market situation, a supply shock could occur. In this case, an increase in the value of digital assets would be inevitable, even with a constant level of demand.
IntoTheBlock experts also noted that this year Ethereum lags behind bitcoin in terms of price growth. Since January 1, BTC has increased in price by 163%, while ETH has risen only by 90%. Considering the increasing number of Ethereum blockchain users, analysts believe that in 2024, this altcoin will appreciate more than bitcoin.

– The Reserve Bank of India (RBI) announced that it has not changed its stance and continues to advocate for a complete ban on the use of cryptocurrencies as a means of payment and a tradable commodity. High-ranking government officials have indicated that the central bank sees no significant benefits in issuing licenses to cryptocurrency companies. According to central bank representatives, private cryptocurrencies threaten India's macroeconomic stability, violate the country's monetary sovereignty, expose consumers to risks, and facilitate illegal activities, including money laundering and financing terrorism. Officials assert that, at best, crypto assets should be viewed as gambling.
However, the RBI considers it prudent to launch its own digital currency, as a Central Bank Digital Currency (CBDC) would be another tool to stimulate the rapid development of the digital economy. The Reserve Bank of India is confident that a digital rupee will provide consumer protection and serve as an alternative to private cryptocurrencies.

– Investor and bestselling author of "Rich Dad Poor Dad," Robert Kiyosaki, made three key forecasts for 2024. His first prediction is based on the actions of the BRICS countries (Brazil, Russia, India, China, and South Africa), which are expected to introduce their own gold-backed cryptocurrency. This, he believes, will lead to the demise of the US dollar. According to Kiyosaki, bitcoin and precious metals may benefit from this, as investors shift their funds into these assets. "The US dollar will die. Trillions of dollars will return home. Inflation will skyrocket. Buy gold, silver. Next year bitcoin will shoot up to $120,000," Kiyosaki declared.
His second forecast suggests that traditional investors, who usually allocate 60% of their funds in bonds and 40% in stocks, will face significant losses in 2024. To safeguard themselves, he recommended reallocating 75% of their portfolio into gold, silver, and bitcoins, and investing the remaining 25% in real estate or oil stocks.
Finally, Kiyosaki's third and last prediction is a stark warning about the severity of the upcoming market crash. Rejecting the idea of a soft landing, he asserts that a crash landing is more likely, which could lead to a full-scale economic depression.

– American venture capitalist Tim Draper has speculated that the value of bitcoin might significantly surpass the $250,000 mark in the upcoming year. He believes the route to widespread adoption of this premier cryptocurrency will be paved through stablecoins. Draper explained his confidence in bitcoin's potential, recalling his belief in the cryptocurrency even when it was valued at $4,000. He attributed the slower-than-expected growth of bitcoin to the apprehensions of a rigid U.S. government, acknowledging his underestimation of the United States' conservative stance.
Draper, an avid supporter of smart contracts, envisions a future where all financial dealings, including investments, payments, salary disbursements, and tax transactions, could be conducted in bitcoin. He anticipates that stablecoins will act as a critical transitional tool, facilitating bitcoin's mass acceptance. "Stablecoins will remain functional as long as the dollar retains its viability. However, as the dollar's influence wanes, I foresee a shift where people will gravitate towards bitcoin," Draper predicted.
 

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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