A somewhat tumultuous day, markets ended up trading muted yesterday. Clarity on the presidential election, thanks to the official nomination by the electoral college, and development in regards to vaccine production were positives; however, the alarming number of cases and contagion rate along with uncertainty regarding a stimulus bill were clearly negatives.
We saw the dollar drop and retest recent lows. Equities jumped up but then retraced later in the session. Bonds were bought in a classic risk-off move, pushing the 10-year yield down just below 0.90%. Gold fell as well. Copper, typically a good indicator of global economic activity, retraced for a third session and looks set to go lower.
In these markets, it’s nice to see that crypto is holding up. BTC rose just under 1% but decidedly above 19K, now at $19,300.
ETH is closing essentially flat, at $588. LINK, LTC, DOT, XMR, and XLM had a similar session. ADA and BCH were interestingly up, copying BTC instead.
That’s a recap of yesterday’s session, but, what now? We’re very close to 20K, a big round number that gets people either very anxious or excited. In the past 2–3 weeks, there has clearly been enough selling pressure to stop prices going further upward.
We’re seeing conflictual signals from on-chain economics, if you will. The USDT market cap just hit $20 billion. That’s a lot of dry powder to buy BTC or cryptocurrencies. Conversely, the deposits to exchanges are still rising, suggesting large players are ready to sell.
On the CME, you can see the commitment of traders (COT) showing an increasing bullishness by retail investors and a continued bearish view by hedge funds. One would assume this spread should eventually narrow.
In any case, the coming days will be fascinating to watch. Last week could’ve closed deep in the red, but instead bounced back up with a long bottom wick (typically bullish). Let’s see what this week has in store for us.