Macro and Overall Risk Sentiment
In a week without major economic data releases, the outlook for U.S. equities remains dim as concerns over a possible recession in 2023 and declining earning projections from major index heavyweights dampened investors’ sentiment. It’s noteworthy that the focus in the mainstream media has shifted from inflation worries to recession woes.
Interestingly, the broader cryptocurrency market has experienced extraordinarily low volatility as equities experience large price swings, with BTCUSDT and ETHUSDT pairs ending the week with decreases of 1.3% and 1.7%, respectively.
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BTCUSDT Perpetual
Bitcoin broke down from a consolidation channel that has formed since November and has since moved in a narrow range between $16.5k and $17k. A bearish pennant, which features a shoot-down followed by an ascending triangle, has been forming after the breakdown. However, there are still bright spots indicating that a downside is limited as professional traders have turned cautiously optimistic.
With open interests in terms of BTC at a stable level, the funding rate weighted by open interests has persistently remained positive, indicating an absence of widespread bearish bets on the largest cryptocurrency. Furthermore, the daily basis between the BTC spot and the nearest quarterly futures has flipped to positive, changing from a deep backwardation to a contango, painting a positive near-term picture. The long-short ratio of top trader accounts in centralized exchanges showed the bull has persistently taken the upper hand, suggesting an improved trader sentiment.
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ETHUSDT Perpetual
A downward trend has been observed in Ether’s 4-hour chart, facing an immediate resistance level at a 20-day EMA of $1,218. From the technical point of view, RSI remained within a neutral area on the daily chart and the Average Directional Movement Index, a technical indicator that measures the overall strength of a trend, remained below 20 in the past week, indicating a lack of direction in the market.
The bright spots are a stable and positive reading of the perpetual funding rate, while the daily basis of Ether between spots and the nearest quarterly futures is close to the neutral level in centralized exchanges. Similar to BTC, Ether has not shown signs of a trend reversal, but the downside may be limited.
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Market Movers (Week-on-Week)
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BITUSDT (+16.5%)
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LDOUSDT (+7.2%)
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ICPUSDT (+5.6%)
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XCNUSDT (-32.9%)
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LPTUSDT (-21.7%)
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WAVESUSDT (-20.2%)
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Source: Bybit Blog | Market Turns Cautiously Optimistic After BTC and ETH’s Breakdowns
