Latest Analysis

Crypto

Crypto

  • Money Monday: FOMC this Week!

    Volatility Incoming:

    • FOMC Meeting is this Wednesday, November 2nd – Jerome Powell is expected to raise rates another 75bps
    • Over $100 billion dollars was added to the crypto market in the last 5 days
    • Ethereum and Dogecoin were clear winners of the market pump leading up to and immediately after Elon Musk buying Twitter on Friday

    How Markets Will React to FOMC:

    • 75bps is expected, so the market is likely to have this priced in
    • If Powell raises rates by only 50bps, we’ll see a strong bear market rally
    • If rates are raised to 75bps, the rally or dip will ultimately come down to the tone set in Powell’s announcement – will the fed remain hawkish or pivot dovish?

    S&P 500 / $SPY:

    • Last Monday and Wednesday we identified a new line of resistance on the $SPY and watched price action test that level
    • On Friday, that resistance line was tested and price action during pre-market this morning tells us it’s unlikely we’ll get a clean breakout
    • This price level here could be a good place to sell ahead of FOMC on Wednesday (possibly a good position to de-risk depending on your risk tolerance and time horizon).
      • RSI is overbought
      • MACD is peaking

    Tech Earnings vs. Commodities:

    • Tech stocks took a major hit last week after Q3 earnings performed poorly for Microsoft, Meta, and Amazon
    • Meta is down roughly 70% from February 2022, taking price back to 2015 levels
      • 6 years of gains liquidated in 8 months
      • This is the market responding to Mark’s Zuckerberg’s focus on the “metaverse” versus improving products like Facebook and Instagram
    • Commodities are holding strong
      • Agriculture stocks like MGP Ingredients and Archer-Daniels-Midland continue to perform well
      • Exxon Mobile and GM are both up

    Crypto / Total Crypto Market Cap:

    • The breakouts over the weekend confirm this is an accumulation phase
    • Ethereum and Dogecoin led the market, but Doge beat Ethereum in price action
      • With Bitcoin lagging, it’s difficult to see this as bullish
      • Ethereum beating Bitcoin (in price strength, not market cap) means the market is betting on proof-of-stake alternatives to Bitcoin’s proof-of-work
    • All other altcoins severely lagged behind Ethereum (and Doge)
      • Either Ethereum was coupled with the Doge pump around news of Elon Musk buying Twitter
      • Or Ethereum is where smart money is placing its bets for the next bull run

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