Market Update by Solidecn.com

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Ethereum

Sentiment in the cryptocurrency market remains mixed, with major projects moving in a sideways trend. Investors are concerned that Ethereum's correction after the Shapella upgrade will result in more sell-offs.


What after the Shapella Upgrade?

• Since December 2020, investors have been able to deposit their ETH on the Ethereum Beacon chain and receive blockchain rewards and profits. However, they couldn't withdraw those funds until the recent upgrade. So far, the declines after the Shapella are relatively small;
• Before the update, all staked ETH was worth nearly $32 billion (about 15% of supply). According to K33 Research, even with small withdrawals, about $2.4 billion in ETH could hit the market as investors will want to withdraw some funds from the Beacon chain. With crypto market liquidity drying up, this could trigger a deeper correction;
• On the other hand, Bernstein Fund analysts pointed out that of the 18 million ETH staked, nearly 70% were locked into liquidity protocols, allowing investors to de facto trade funds through decentralized Lido-type protocols, which will take off much of the downward pressure.
• According to analysts, the 30% of investors who deposited ETH in the Beacon chain without using liquidity protocols are likely to have the highest level of conviction and will not be willing to sell. It is also worth noting that the seamless ability to deposit and withdraw ETH may encourage more investors to staking and drive capital flowing into the chain;
• Passive ETH returns of 5 or 6% per year are no longer as attractive compared to the 0 interest rate period, when investors could not count on comparable yields from regulated fixed income assets. In addition, staking is to some extent subject to risks associated with crypto market regulation. Rewards for ETH staking will decline as the number of stakers increases.

News

• According to the Block 'open interest' report, the ETH options market (call options vs. put options) before the update showed the highest level since May signaling possible downward pressure
• The U.S. Treasury Department has indicated that the decentralized asset market poses a threat to national security.
• Divly revealed a report according to which only 1.62% of US cryptocurrency holders paid tax on their investments. The report is disputed by tax law specialists;
• According to Bloomberg, Singaupur's central bank is working to unify cryptocurrency-friendly regulations
• According to a survey by CoinGecko and Blockchain Research, 75% of cryptocurrency investors hold NFTs

Ethereum chart, H4 interval. Looking at the chart, we can see that the price reached before the Shapell update was roughly similar to the peak of the price rally before the Ethereum Merge. If the declines accelerate the key for the price could be the demand reaction around $1700 zone, where we can see SMA200 (red line), 23.6 Fibonacci retracement of the upward wave started last June and previous important price reactions.

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EURUSD


USD is trading slightly higher today but EURUSD remains above 1.09 mark and maintains the uptrend. The latest drop in US yields shows that USD still has room to drop. If NFP data shows sub-200k jobs gain, it would be a strong sign of the labour market cooling down. However, it will not be a sign of a crisis yet. Nevertheless, readings that are significantly below 200k would likely encourage the Fed to pause the rate hike cycle and not raise rates at the May meeting. On the other hand, should we once again see strong job gains and strong earnings growth, rate hike at the May meeting may be still in play.

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DOGECOIN

• Wall Street finished yesterday's trading higher as market odds for Fed rate hike in May dropped following another streak of disappointing data from US jobs market
• Market now sees around 50% chance of 25 bp rate hike in May and around 50% chance of Fed leaving rate unchanged and pausing rate hike cycle
• S&P 500 gained 0.36%, Dow Jones traded flat, Nasdaq rallied 0.76% and Russell 2000 moved 0.13% higher
• Indices from Asia-Pacific traded higher today - Nikkei gained 0.1%, Kospi added 1.3% and indices from China traded up to 0.8% higher
• Liquidity during today's European trading session is expected to be very thin as majority of stock exchanges from the Old Continent will be shut in observance of Good Friday
• Japanese household spending increased 1.6% YoY in February (exp. 4.2% YoY)
• Major cryptocurrencies trade mixed - Bitcoin drops 0.1%, Litecoin gains 0.1%, Ethereum trades 0.3% higher and Dogecoin slumps 2.8%
• AUD and NZD are the best performing major currencies while JPY and CAD lag the most

DOGECOIN is one of the worst performing cryptocurrencies today. The coin has almost fully erased the price jump triggered by Elon Musk changing Twitter logo to Shiba Inu.

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Bitcoin

Cryptocurrencies are retreating from recent record highs as the sell-off on the Nasdaq gains strength and concerns around a slowing US economy have increased. A weakening consumer could mean lower risk appetite and a narrower range of potentially interested buyers of speculative assets. A recession would likely do nothing good for the crypto market. With its declining reaction in recent days, bitcoin has confirmed that its role as a recession or banking crisis hedging asset is still uncertain. Is the king of cryptocurrencies in for a trend change?


A change in the crypto trend?

The on-chain market sentiment vector is pointing to levels close to greed, which could signal an impending correction. It's also worth noting that BTC's volatility has been drying up in recent days, which has historically heralded an imminent, sudden price movement.



Looking at the chart of BITCOIN on the D1 interval, we can see that the RSI indicator has risen since the beginning of the year, but since then it has been recording lower and lower levels, although the price of the largest cryptocurrency has been steadily rising. This phenomenon is called a bearish divergence, and it can signify the weakening strength of buyers and a change in the trend. The closest support level for declines is the 23.6 Fibonacci retracement of the upward wave initiated on March 11, when the cryptocurrency rebounded sharply amid the collapsing SVB.

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USCAD drops after Candian jobs data beat

The Canadian jobs report for March was released today at 1:30 pm BST. Report release was brought a day forward as Canada will be observing Good Friday tomorrow. Data turned out to be a huge positive surprise. Employment change turned out ot be much higher-than-expected with both full-time and part-time jobs showing decent increases. As a result, the unemployment rate avoided an expected uptick to 5.1% and stayed unchanged at 5.0% instead.

Canada, jobs report for March

• Employment change: +34.7k vs +12.9k expected (+21.8k previously)
• Unemployment rate: 5.0% vs 5.1% expected (5.0% previously)
• Full-time employment: +18.8k vs +31.1k previously
• Part-time employment: +15.9k vs -9.3k previously

USDCAD climbed to the short-term resistance zone near 1.3490 prior to the release. However, the pair pulled back following better-than-expected data. A support zone near 1.3460 handle, marked with previous price reactions as well as the lower limit of the upward channel. However, bulls managed to defend the area and erased the majority of the drop in the first minutes following the release.

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May ECB rate hike unsure after Lane comments


Lane, the ECB's chief economist gives a question mark on the May decision, pointing out that it will depend on inflation perpsectives, including the underlying ones. In view of this, Lane stresses that this is why the ECB does not give guidance for the next meeting and everything depends on the data and its outlook. On the other hand, he says that if the data performs as in the projections, May should bring a hike. However, it is unclear what kind. The market, on the other hand, is currently pricing that it should be a smaller hike, or 25 bps.





The EUR is not reacting to these reports, although we have seen slight increases on the pair in recent minutes. Further strong declines in US and European yields are progressing. U.S. yields are down 2.8 basis points today, and European yields are down 2.7 basis points.

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USDCHF rebounds to the 38.2% retracement of the week's trading range


The USDCHF fell sharply in the early NY session and in the process moved below the swing low going back to early August 2021 at 0.90178 (see red numbered circles on the daily chart above). The low price today reached to the nice round number of 0.9000 where some traders put a toe in the bearish water. Those buyers are breathing a sigh of relief as the price has indeed rebounded. The price has rebounded to a high of 0.90756.





That has taken the price above the February 2 low at 0.9058, and tested the swing low from March at 0.90706. The high correct price has extended to 0.90756 just above the March low.


Looking at the hourly chart, the move up off the low tested the 38.2% retracement of the week's trading range at 0.9075. Getting above the 38.2% retracement is the minimum retracement target of a trend like move i.e. the move down from Monday's high.





A move above the 38.2% retracement would next target the 50% retracement at 0.9098. Move above that and focus will turn toward the falling 100 hour moving average and swing area near 0.9120. Getting above all those levels would ultimately be needed if the buyers are to be taken more seriously.


Nevertheless, they could still get short-term satisfaction on a move above the 38.2% retracement.

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Dogecoin - Chart of the Day

Dogecoin saw massive moves yesterday in the evening, with the coin rallying around 30% in less than 2 hours. While other cryptocurrencies also saw some gains, none experienced as big a jump as Dogecoin. It should not come as a surprise as a trigger for the move higher was Dogecoin-specific. Elon Musk changed Twitter's logo to Shiba Inu dog, a 'logo' of Dogecoin and its supporters. The move triggered an instant rally in Dogecoin, sending it to the levels not seen since early-December 2022. Musk himself explained that he is simply delivering onto promise he made in a tweet some time ago that he will buy Twitter and change its logo to Dogecoin logo.



Taking a look at the Dogecoin chart at the D1 interval, we can see that the strong upward move launched yesterday in the evening is continuing today. While price erased some of initial gains yesterday, Dogecoin bulls regained ground today and are pushing the coin towards the 0.10 area. A point to note is that the price of cryptocurrency managed to break above a mid-term support zone in the 0.0890 area, marked with previous price reactions as well as the downward trendline. A break above this area brightened technical outlook for the bulls and a test of the resistance zone ranging below 0.11 handle cannot be ruled out in the coming days.

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Gold

• OPEC+'s surprising decision to cut production has lifted oil prices. OIL.WTI quotations jumped above the $81 level.
• Germany's DAX tested Friday's highs, but ultimately closed the day 0.3% lower. In turn, we saw slight increases in France, where the CAC40 added 0.32%, or the UK, the FTSE100 gained 0.54%.
• Gold is doing quite well on Monday, with the precious metal's quotations rising less than 1% and approaching once again the $2,000 barrier, which should be seen as short-term resistance.
• Treasury bonds are gaining on a wave of manufacturing ISM data, which eased concerns about lingering inflationary pressures in the U.S. and overshadowed the potential impact of OPEC+ oil production cuts on another jump in the economy's goods and services prices. U.S. TNOTE's and German BUND's are both gaining more than 0.3% in today's session.
• US industrial activity indicators published today came in below expectations. Both the PMI and ISM readings showed that actuality in the sector is declining.
• Looking at the forex market, we can observe weakness in the US currency. The EURUSD pair even managed to go above 1.0900, but we are seeing a slight pullback in the evening hours. Nevertheless, the main sentiment on the pair remains upward in the medium term.
• The crypto market did not show any decisive direction today. The major digital currencies are trading mixed. In the evening hours, bitcoin remains in the regions of the reference level.

GOLD quotes are currently testing resistance stemming from the line drawn after the recent tops. If pierced above, resistance at the $2,000 level may be tested. In turn, its crossing may lead to the generation of another upward wave.

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Oil

OPEC+ members announced massive voluntary oil output cuts over the weekend, triggering a spike in oil prices at the beginning of new week's trade. A total cut of 1.157 million barrels was announced by 8 OPEC and non-OPEC countries. Those cuts will take effect from May and will remain in force until the year of the year. On top of that, Russia announced that its 500 thousand barrel output cut, which was set to end by the end of June 2023, will be extended until the end of 2023. This is a massive reduction in supply, amounting to more than 1% of global output, and it should not come as a surprise that oil prices jumped over 5% at the beginning of a new week. However, it should be noted that such massive oil output cuts may also hint that OPEC has some serious concerns about demand outlook. Having said that, this may not be bullish for oil prices in the long-term. OPEC+ Joint Minister Monitoring Committee is meeting today and will provide recommendations on policy. It was widely expected that recommendation will be for no change in the output but weekend announcements created uncertainty.


OPEC: 1,079k bpd

• Saudi Arabia: 500k bpd
• Iraq: 211k bpd
• United Arab Emirates: 144k bpd
• Kuwait: 128k bpd
• Algeria: 48k bpd
• Oman: 40k bpd
• Gabon: 8k bpd

OPEC+: 578k bpd

• Kazakhstan: 78k bpd
• Russia: extension of 500k bpd cut until end of the year (was set to end in June)

Brent (OIL) launched this week's trading with a big bullish price gap but those gains started to be erased later on. Nevertheless, oil continues to trade around 5% higher on the day. A point to note, however, is that price did not manage to reach a key resistance zone in the $87 area, marked with previous price reactions and the upper limit of the Overbalance structure. This means that the outlook remains bearish and an attempt to fill the bullish price gap cannot be ruled out. The $80 area is the first support to watch in such a scenario.