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$7.6B Sitting in Stablecoins — Is This Bullish or Bearish for Bitcoin?

$7.6B Sitting in Stablecoins — Is This Bullish or Bearish for Bitcoin?

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Stablecoin holds are at a record high totaling over $7.6bn does this make you bullish or bearish?

It's been another bullish week for Bitcoin (BTC) as the price surged past the critical $7,200 resistance, as mentioned in last week's analysis, all the way to $7,300.

However, the price has corrected slightly and is now sitting just below $7,200. So was this the local top? Or has the leading digital asset got some steam left in it ahead of the halving event that is now about three weeks away?

Daily crypto market performance. Source: Coin360.com

Daily crypto market performance. Source: Coin360.com

Bitcoin’s slow grind to $10K

BTC USD daily chart. Source: TradingView

BTC USD daily chart. Source: TradingView

Starting out with the daily chart for Bitcoin, we can see that BTC has successfully flipped the resistance of the long-standing descending channel into support. The argument for this channel's validity is that in January of this year, the breakout was a bull trap and that for this to occur twice would invalidate this channel.

As such, in the chart above I plotted two different scenarios: “Bullish” and “Permabear.” The bullish channel here is quite a conservative trajectory — one that in all honesty suits my personal belief for Bitcoin — and a new path that shows a slow grind to $10,000 by September 2020.

This sets the resistance for the week ahead at around $7,900 with support on the channel at around $6,400.

A return to the previous descending channel, in another alleged pandemic related sell-off, could put Bitcoin on a trajectory to zero within the same timescale. So for obvious reasons, I have a somewhat bullish bias right now. But ultimately, which scenario looks more likely to you here? No one really expects for Bitcoin to go zero. After all, it's not a DeFi dapp! (Too soon?)

The fact of the matter is that there are some interesting fractals playing out, along with other incredibly bullish signs right now.

The weekly MACD is playing out as it did at the bottom

The weekly moving average divergence convergence (MACD) indicator looks set to cross bullish in a week from tomorrow.

In other words, we are currently seeing exactly the same pattern play out that we saw between July 2018 where we had a false bullish cross followed by a 50% correction that saw the next bullish cross lead to a 266% increase in value for Bitcoin.

BTC USD weekly MACD chart Source: TradingView

BTC USD weekly MACD chart Source: TradingView

I have been mentioning this exact pattern since December last year, and should Bitcoin maintain its upward momentum for another week, one can’t help but get excited about the possible upside ahead of us, especially with the halving being less than 23 days away.

There are of course other factors to consider, and I wouldn’t want to be branded a “bull-tard” based on a couple of trend lines and an indicator. Over recent weeks in the wake of the coronavirus pandemic, the correlation between Bitcoin and the traditional markets has become noticeable, and should we slip into a deeper global depression, it could realistically have a dramatic effect on the price of Bitcoin until there is a decoupling.

Market correlation is strong

The recent correlation since the beginning of 2020 is something that can’t be ignored. However, neither is the last two months of 2019 where Bitcoin slumped during a period of strong economic growth.

BTCUSD weekly Comparison with S&P 500 and Mini Futures chart Source: TradingView

BTCUSD weekly Comparison with S&P 500 and Mini Futures chart Source: TradingView

I suppose one could argue that a Christmas sell-off by retail could have added to the extra selling pressure from miners, but that’s a theory for another day.

Today I want to focus on the now, and the fact that currently, the Bitcoin price action is closely following that of the S&P 500. And as popular YouTuber Sunny Decree has pointed out lately, the S&P Mini futures are serving as a valid indicator for future price action.

In the chart above, you can see the S&P mini futures in blue and the S&P 500 in yellow. The mini futures are showing another spike that both Bitcoin and the S&P are yet to reflect, Thus, the validity of this as an indicator will prove itself throughout the day tomorrow.

However, with all reliable indicators, they are only reliable until they aren’t, and one such example of this is the CME gap filling.

The CME gap at $8,490

BTCUSD weekly CME chart Source: TradingView​​​​​​​

BTCUSD weekly CME chart Source: TradingView

Throughout 2019 and early 2020 this was an incredibly reliable indicator, but it hasn’t really been a thing since “Black Thursday.” That isn’t to say that it won’t fill again though, especially now that the price is starting to pick up.

Combining the recent growth of Bitcoin over the last few weeks and the correlation appearing with the S&P mini futures, a spike next week could see the gap at $8,490 close, which would represent 18% growth from the current price.

This again is another bullish case for Bitcoin to continue on its upward path, and this is further echoed by the increase in mining difficulty, which is now set to wipe out the drop incurred as a result of the March 12 price plunge.

Mining difficulty back on the rise

BTC mining difficulty. Source: BTC.com

BTC mining difficulty. Source: BTC.com

In a little over 24 hours, the mining difficulty is expected to increase by nearly 9%. Earlier in 2020, this saw the price follow by a greater percentage.

With this in mind, an increase of 9% in difficulty could lead to an increase of price greater than 10%, which could see the leading digital asset reclaim that important $8K zone, which in turn, makes the CME gap-filling look increasingly likely.

However, all of these indicators only point up, and it would be naive to assume that this is the case for Bitcoin. So what bearish indicators are there?

One metric that's been building up over the last few weeks is the sheer amount of value across major stablecoins.

$7.6 billion sitting on the sidelines

According to data on Coin360, there is currently nearly $7.6 billion parked in stablecoins. This is made up as follows:

  • USDT = $6.37BN
  • USDC = $732M
  • PAX = $265M 
  • BUSD = $35M 
  • TUSD = $221M

Wearing a bull hat, this could be interpreted as the most bullish indicator of all time. This is enough to buy over 1 million BTC.

If you combine this with the narrative that miners led the 50% dump on March 12 with around 300K BTC as covered in my analysis on March 22, you can then put together a picture that potentially a third, if not more of the stablecoins being held, could be in the hands of larger miners waiting to the drive the price.

In fact, it's my personal belief that both large miners and large exchanges make up the vast majority of those that hold stablecoins.

However, when wearing a bear hat, and assuming that it is not exchanges and miners holding the lion share of stablecoins, you have to ask the questions: what do these holders know that I don’t? And is another leg down something that those holding stablecoins are anticipating, and if so, why?

Once such chart that caught my eye was that of twitter user EscobarTrader:

Source: Twitter @EscobarTrader

Source: Twitter @EscobarTrader

Much like my case for Bitcoin going to zero, this chart on the 2 weekly view shows that we remain in a valid downward channel that we are yet to break out of.

Should Bitcoin fail to establish a new ascending pattern, this particular chart points to sub $2K accumulation levels by the end of this year. Perhaps this is the chart those holding on to stablecoins are holding out for, and falling below $6,400 over the coming week would give weight to this theory.

The views and opinions expressed here are solely those of @officiallykeith and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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Economics

Weekly investment update – Weaker economic outlook weighs on markets

Global equities have continued their sell-off over the last week. What is new is that markets are now reacting to risks of weaker economic data weighing…

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Global equities have continued their sell-off over the last week. What is new is that markets are now reacting to risks of weaker economic data weighing on earnings. Real bond yields, whose rise triggered the recent drop in equity markets, have fallen as investors price a higher probability of a recession.   

Yields of US Treasury bonds have slipped since reaching around 3.12% in early May (see Exhibit 1). The rally has been driven by fears of a global recession due to poor economic data, strong inflation numbers, aggressive talk from central bankers and concerns over the consequences of Covid in China.

Recent data that contributed to the bond market’s unease about the prospects for the US economy includes: 

  • The Richmond Federal Reserve Manufacturing survey, which fell to its lowest since 2020 at -9.
  • The monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York fell to -11.6, with the shipment measure falling at its fastest pace since the start of the pandemic two years ago.
  • The Federal Reserve Bank of Philadelphia’s May business index dropped 15 points to 2.6, with the six-month outlook falling to its lowest since December 2008 (though the underlying details were better than the headline number).
  • Existing and new home sales dropped for a third month, to its lowest since 2020, held back by lean inventory, rising prices and higher mortgage rates. 

Taken together, the various regional Federal Reserve surveys suggest that the ISM Report for Business may come in at around 53, above 50 so still clearly in expansion territory for the US economy, but down noticeably from the upper 50s/lows 60s readings to which markets have become accustomed.

US equities still weak

US equities have remained weak as the down move continues for its seventh week.

It has been apparent that, in contrast to the start of the year when rising real bond yields were undermining equity markets, it is now fears of falling earnings due to a weaker economy that are weighing on stocks.

The last week has seen, in accordance with the risk-off regime, more buying-the-dip and selling-the-rally. There has also been a rotation out of growth and cyclicals into value and defensives (healthcare, real estate, utilities and staples).

European markets under the cosh

Bearish sentiment is prevalent in Europe, too, with investors cutting exposures to European equities.

There was another outflow in the week to 18 May, taking the total to 14 weeks of outflows in a row. Cyclicals, in particular, saw strong outflows, led by the materials, financials and energy sectors.

Our multi-asset team are inclined to reduce exposure to equity markets given the deterioration in the outlook.

European economy resists

Economic activity indicators have fallen so far in May, but remain above 50. Activity edged up in the manufacturing sector despite the fallout from the Ukraine war and supply chain disruptions that have intensified with China’s coronavirus lockdowns.

Although factories continue to report widespread supply constraints and diminished demand for goods amid elevated price pressures, the eurozone economy is being boosted by pent-up demand for services as pandemic-related restrictions are wound down.

While purchasing manager indices are still pointing to growth, it may be that these surveys understate the shock to activity, while sentiment surveys likely overstate the shock. Markets are increasingly tilting towards anticipation of a contraction in the coming quarters.

Higher food prices

Restrictions on the export of Ukrainian cereals continue and risks increasing food insecurity as the UN World Food Programme has highlighted.

As much of Russian and Ukrainian wheat goes to poorer nations, hunger could be a critical risk, driving up political instability.

The risk of further rises in food prices will be a key driver of inflation, particularly in emerging markets, the worst-case scenario being that the situation worsens significantly.

Moreover, lower fertiliser supply will have a greater impact on the next few months’ harvests, while the pass-through of costlier logistics and input prices is likely to drive food prices even higher.

Coming up…

Minutes of the meeting of the US Federal Open Markets Committee on 3-4 May will be published later on Wednesday.

However, market conditions have soured appreciably since the Fed’s first 50bp rate rise, so some of the language in the minutes pertaining to financial risks and market conditions will be outdated.

Instead, the three major focus points for market participants will likely be: 

  • Policymakers’ views on the conditions which could lead to a shift down, back to a pace of raising rates by 25bp at each FOMC meeting;
  • Any hints as to how far and for how long policymakers intend to push policy rates into restrictive territory;
  • Guidance shaping expectations for the next Summary of Economic Projections — aka the dot plot — due to be released at the June meeting. 

Forthcoming economic data  

US personal income and spending data for April should give investors an insight into the US consumer’s behaviour: Are they tightening the purse strings? The report may also show the Fed’s preferred inflation gauge (core PCE deflator) starting to decelerate.

Perhaps equally important, the report should shed light on how consumers are responding to the current high inflation environment, indicating how wages are performing relative to inflation and how aggressively consumers are tapping into the USD 2.5 trillion of accumulated savings from the pandemic period.

Disclaimer

Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. The views expressed in this podcast do not in any way constitute investment advice.

The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns.

Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions).

Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.

Writen by Andrew Craig. The post Weekly investment update – Weaker economic outlook weighs on markets appeared first on Investors' Corner - The official blog of BNP Paribas Asset Management, the sustainable investor for a changing world.

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Economics

5 Top Consumer Stocks To Watch Right Now

Are these consumer stocks a buy amid the earnings season?
The post 5 Top Consumer Stocks To Watch Right Now appeared first on Stock Market News, Quotes,…

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5 Trending Consumer Stocks To Watch In The Stock Market Now         

As we tread through the earnings season, consumer stocks could be worth watching in the stock market this week. This would be the case since a number of big consumer names such as Costco (NASDAQ: COST) and Macy’s (NYSE: M) will be posting their financials for the quarter. As such, investors will be keeping an eye on these reports for clues on the strength of consumer spending amid this period of high inflation.

However, despite the soaring prices across the economy, it seems that consumers are surprisingly showing resilience. According to the Commerce Department, retail sales in April outpaced inflation for a fourth straight month. This could suggest that consumers as a whole were not only sustaining their spending, but spending more even after adjusting for inflation. Ultimately, it could be a reassuring sign that consumers are still supporting the economy and helping to diminish the narrative of an incoming recession. With that being said, here are five consumer stocks to check out in the stock market today.

Consumer Stocks To Buy [Or Sell] Right Now

Nordstrom

retail stocks (JWN stock)

Starting off our list of consumer stocks today is Nordstrom. For the most part, it is a fashion retailer of full-line luxury apparel, footwear, accessories, and cosmetics among others. The company operates through multiple retail channels, boutiques, and online as well. As it stands, Nordstrom operates around 100 stores in 32 states in the U.S. and three Canadian provinces.

Yesterday, the company reported its financials for the first quarter of 2022. Starting with revenue, Nordstrom pulled in net sales worth $3.47 million for the quarter. This marks an increase of 18.7% from the same quarter last year. Its Nordstrom banner saw net sales rise by 23.5% year-over-year, exceeding pre-pandemic levels. Next to that, its Nordstrom Rack banner saw a 10.3% increase in net sales from last year. Besides, net earnings were $20 million, with earnings per share of $0.13 for the quarter. Considering Nordstrom’s solid quarter, should you invest in JWN stock?

[Read More] Best Stocks To Invest In Right Now? 5 Value Stocks To Watch This Week

The Wendy’s Company

best consumer stocks (WEN stock)

Next up, we have The Wendy’s Company. For the most part, it is the holding company for the major fast-food chain, Wendy’s. Being one of the world’s largest hamburger fast-food chains, the company boasts over 6,500 restaurants in the U.S. and 29 other countries. The chain is known for its square hamburgers, sea salt fries, and the Frosty, a form of soft-serve ice cream mixed with starches. WEN stock is rising by over 8% on today’s opening bell.

According to an SEC filing, Wendy’s largest shareholder, Trian Partners, is looking into making a potential deal with the company. Trian said that it is considering a deal to “enhance shareholder value.” Also, the firm adds that this could lead to an acquisition or business combination. In response, Wendy’s stated that it is constantly reviewing strategic priorities and opportunities. It added that the company’s board will carefully review any proposal from Trian. Given this piece of news, will you be watching WEN stock?

[Read More] 4 Semiconductor Stocks To Watch In The Stock Market Today

Foot Locker

FL stock

Another stock investors could be watching is the shoes and apparel company, Foot Locker. In brief, the company uses its omnichannel capabilities to bridge the digital world and physical stores. As such, it provides buy online and pickup-in-store services, order-in-store, as well as the growing trend of e-commerce. Some of its most notable brands include Eastbay, Footaction, Foot Locker, Champs Sports, and Sidestep. Last week, the company reported its results for the first quarter of the year.

For starters, total sales came in at $2.175 billion, a slight uptick compared to sales of $2.153 billion in the year prior. Next to that, Foot Locker reported a net income of $133 million. Accordingly, adjusted earnings per share came in at $1.60, beating Wall Street’s expectations of $1.54. CEO Richard Johnson added, “Our progress in broadening and enriching our assortment continues to meet our customers’ demand for choice. These efforts helped drive our strong results in the first quarter, which will allow us to more fully participate in the robust growth of our category going forward.”  As such, is FL stock one to add to your watchlist? 

Tyson Foods 

TSN stock

Tyson Foods is a company that built its name on providing families with wholesome and great-tasting protein products. Its segments include Beef, Pork, Chicken, and Prepared Foods. With some of the fastest-growing portfolio of protein-centric brands, it should not be surprising that TSN stock often comes to mind when investors are looking for the best consumer stocks to buy. 

Earlier this month, Tyson Foods provided its fiscal second-quarter financial update. The company’s total sales for the quarter were $13.1 billion, representing an increase of 15.9% compared to the prior year’s quarter. Meanwhile, its GAAP earnings per share climbed to $2.28, up 75% year-over-year. According to Tyson, these financial figures are a reflection of the increasing consumer demand for its brands and products. To top it off, the company was also able to reduce its total debt by approximately $1 billion. Thus, does TSN stock have a spot on your watchlist?

[Read More] Stock Market Today: Dow Jones, S&P 500 Rise, Wendy’s Stock Gains On Potential Deal

DoorDash

food delivery stocks (DASH Stock)

DoorDash is a consumer company that operates an online food ordering and delivery platform. In fact, it is one of the largest delivery companies in the U.S. and enjoys a huge market share. The company connects hundreds of thousands of merchants to over 25 million consumers in the U.S., Canada, Australia, and Japan through its local logistics platform. Accordingly, its platform allows local businesses to thrive in today’s “convenience economy,” as the company puts it.

On May 5, the company reported its first-quarter financials for 2022. Diving in, it posted a revenue of $1.5 billion, growing by 35% year-over-year. This was driven by total orders that grew by 23% year-over-year to $404 million. Along with that, it reported a GAAP gross profit of $662 million, an increase of 34% year-over-year. The company said that it added more consumers than any quarter since Q1 2021, due in part to the growth of its DashPass members. The growth in Monthly Active Users and average order frequency has helped it gain share in the U.S. Food Delivery category this quarter as well. Given DoorDash’s performance for the quarter, should you watch DASH stock?

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The post 5 Top Consumer Stocks To Watch Right Now appeared first on Stock Market News, Quotes, Charts and Financial Information | StockMarket.com.

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Economics

Finding Shelter in an Inverse ETF

As the old saying goes, “What goes up must come down.” Indeed, up until the recent selling wave caused by Russia’s war against Ukraine and the continued…

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As the old saying goes, “What goes up must come down.”

Indeed, up until the recent selling wave caused by Russia’s war against Ukraine and the continued effects of supply chain disruptions amid the COVID-19 pandemic, tech stocks, including semiconductors, were the darlings of the investment world. That is, it seemed as if the sky-high valuations of some tech stocks were sustainable in an atmosphere of seemingly perpetual growth.

That, of course, was not the case, and the too-good-to-be-true valuations were quickly brought down to earth by the forces of inflation and tight monetary policy. As a result, the tech-heavy Nasdaq entered a free-fall that has not yet found a bottom.

At the same time, that does not mean that we should abandon the sector as a lost cause. One such way to play the sector during its downhill slide is the exchange-traded fund (ETF) Direxion Daily Semiconductor Bear 3X Shares (NYSEARCA: SOXS).

As its title suggests, this is an inverse ETF, meaning that it is built to go up in value when its parent index goes down. Specifically, SOXS provides three times leveraged inverse exposure to a modified market-cap-weighted index of semiconductor companies that trade in American markets by using swap agreements, futures contracts and short positions.

While the index’s holdings are weighted by market capitalization, the fund’s managers cap the weights of the top five securities in the portfolio at 8% each. The weight of the remaining securities is capped at 4% each.

As of May 24, SOXS has been up 0.37% over the past month and up 24.73% for the past three months. It is currently up 60.47% year to date.

Chart courtesy of www.stockcharts.com

The fund has amassed $258.15 million in assets under management and has an expense ratio of 1.01%.

In short, while SOXS does provide an investor with a way to invest in an inverse ETF, this kind of ETF may not be appropriate for all portfolios. Thus, interested investors always should conduct their due diligence and decide whether the fund is suitable for their investing goals.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

The post Finding Shelter in an Inverse ETF appeared first on Stock Investor.

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