SignalPlus Macro Research Report (20230807): Encryption market continues to consolidate, replicating the trend of 2018?
Friday's market closed a volatile week, starting with "mixed" employment data. The overall employment population increased by 187,000, lower than expected, and the previous value was revised down by 50,000. However, the unemployment rate ( 3.5% ) decreased, and wage growth exceeded expectations. After dissecting the data, it can be seen that employment in the healthcare and education sectors in the service industry showed strong performance, but this was offset by the slowdown in the leisure and hotel industry.
The non-farm employment data presents mixed information, enough to put the "data-dependent" Fed in a dilemma (as of Friday's close, the possibility of a rate hike before the end of the year is still less than 20%), and US bonds finally experienced a relief rebound, with the 10-year yield falling 11 basis points during the day, but this is still not enough to salvage the tough week. US bonds saw the largest weekly volatility since February, and the SPX index experienced its worst week since March, and despite a more than 10% increase in oil prices, commodities performance is still the worst since June.
As expected, in the past week, tech stocks and rate-sensitive sectors performed poorly due to rising interest rates, while energy stocks were the only sector to rise, with crude oil futures prices up 20% since the low point at the end of June. Persistent inflationary pressures, oil production cuts from Saudi Arabia, OPEC+ countries, and historically low US strategic petroleum reserves (SPR) have collectively driven the trend of oil prices, and this trend is expected to continue in the short term.
In terms of the stock market, due to lukewarm employment data, the market believes it is enough to prevent the Fed from further raising interest rates. The stock market is attempting another rebound in this narrative. However, after 1 pm New York time, the market suddenly started selling off, and the SPX index rapidly dropped 1.5% without any news. This is a bearish technical trend we haven't really seen since the rebound started in March. In addition, after the release of the second-quarter earnings report, Apple has completely broken its upward trend this year and reversed downwards. The stock market's VIX has also finally awakened from a four-month slumber. At this moment when most market participants are bullish and long positions are at historical highs, are we finally seeing a temporary top in the stock market, coinciding with the seasonally challenging autumn? Only time will tell, but Wednesday's CPI data may provide another key clue.
In the cryptocurrency market, BTC has once again entered a sideways trend, with the closing price changing by less than 1% for eight consecutive trading days. This is the longest sideways trend since the 2022 Christmas/New Year holiday, and the last time this happened was in 2018.
In the DeFi sector, the Curve incident is not yet over, but the worst seems to be behind us. Hackers have started returning some of the stolen funds (Alchemix has recovered 12 million ETH, JPEG has recovered 10 million), and Curve founder Michael Egorov seems to have repaid around 50 million in DeFi loans by selling CRV tokens to OTC buyers (at a price of approximately $0.40 vs spot price of $0.62). Hopefully, this is the end of this wave of FUD, although the negative impact on liquidity may persist for some time.
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