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Friday, 12 January 2024
Daily Technical Trading Strategies
We provide Financial Market Analysis, Trading Education, and Reviews of only Regulated and the most Trusted Forex, CFD, and Crypto brokers.
Thursday, 11 January 2024
Bitcoin’s Price Climbs After ETF Approval, Markets Await U.S. CPI Data
Following an initial delay on January 9, the United States Securities and Exchange Commission (SEC) officially approved spot Bitcoin ETFs on January 10.
This sanction came shortly after reports surfaced about Cboe’s endorsement of the listing of spot Bitcoin ETFs. Consequently, by Thursday, Bitcoin’s price saw a significant surge, crossing the $47,000 benchmark.
BTCUSD Daily Chart
SEC Greenlights Bitcoin ETFs
Bitcoin has recently been on a wild ride, with its price experiencing dramatic fluctuations. This volatility comes in the wake of the US Securities and Exchange Commission (SEC) approving several spot bitcoin exchange-traded funds (ETFs) on Wednesday. Spot bitcoin ETFs are financial instruments that many investors believe could pave the way for mainstream capital to flow into the cryptocurrency market.
The SEC’s stamp of approval was given to ETF applications from some of Wall Street’s biggest players, including BlackRock (BLK) and Franklin Templeton (BEN). Heavyweights like JPMorgan Chase (JPM) and Goldman Sachs (GS) have offered their services to these asset managers to assist in the creation and redemption of shares for their newly minted bitcoin-based funds. Most of these ETFs are expected to kick off trading on Thursday, according to issuers.
A Word of Caution from the SEC
Despite the SEC’s approval, it is crucial to note that this does not equate to an endorsement of bitcoin. SEC Chair Gary Gensler clarified this in a statement on Wednesday, emphasizing that his agency “did not approve or endorse bitcoin”. He further cautioned investors to be mindful of the various risks associated with bitcoin and any products whose value is tied to cryptocurrency.
Bitcoin Liquidations on the Rise
The SEC’s approval triggered a significant uptick in bitcoin price volatility. Over the past 24 hours, the digital asset saw a surge, peaking at nearly $48,000 (£37,675), before dropping back into the $45,000 range, and then bouncing back to currently trade slightly above the $46,000 mark.
These substantial price swings resulted in over $86m in liquidations of leveraged bitcoin (BTC-USD) positions on cryptocurrency exchanges, as per data from Coingecko. Of these liquidations, the lion’s share – approximately $51m – was made up of long positions.
Understanding Liquidations in Volatile Market Conditions
Liquidations typically happen during volatile price swings when prices either skyrocket or plummet. In such market conditions, there is usually a flurry of buying or selling activity.
The bulk of the liquidations over the past 24 hours were long positions held by derivatives traders who were banking on the cryptocurrency’s value to climb. However, the sudden market dip forced them to sell at a loss to mitigate further losses.
EUR/USD Analysis: Anticipating CPI Data
EUR/USD was experiencing a consolidation of gains below the 1.10000 mark in the early hours of European trading on Thursday. A risk-on market mood ahead of the US Consumer Price Index (CPI) data release is supporting the pair as the US Dollar faces challenges.
EURUSD Daily Chart
Bullish Momentum and Resistance Areas
After a subdued European session, the EUR/USD pair gained bullish momentum in the latter half of the day, ending Wednesday’s trade in positive territory above 1.0950. The pair maintains a steady position early Thursday, trading within a close range of the 1.0990-1.1000 resistance area.
Impact of Risk Mood and Inflation
A positive risk mood led to selling pressure on the US Dollar (USD) during American trading hours. Wall Street’s main indexes continued their upward trend after opening with marginal gains, causing the USD Index to retract a significant portion of Tuesday’s gains. Inflation in the US, as demonstrated by the CPI, is predicted to marginally increase to 3.2% annually in December from 3.1% in November.
Prediction for CPI and EUR/USD
The Core CPI, excluding volatile food and energy prices, is expected to rise 0.3% monthly, similar to November’s reading. A smaller-than-expected increase in the monthly Core CPI could further pressure the USD and aid EUR/USD in extending its rebound. Conversely, a higher core inflation figure could bolster the USD.
GBP/USD Analysis: Awaiting Inflation Data
GBP/USD was holding onto gains above 1.2750 during European trading hours on Thursday. A generally weaker US Dollar and risk flows are assisting the pair’s progress. Market participants eagerly await the US Consumer Price Index data for December for new momentum.
GBP/USD Daily Chart
Reaction to Market Mood
The pair entered a consolidation phase above 1.2750 early Thursday after closing positively on Wednesday. Although the optimistic market mood is helping the pair maintain its position in the European session, investors might refrain from making sizable moves ahead of the much-anticipated US inflation report for December.
Wall Street’s Influence and CPI Expectations
Wall Street’s main indexes gained bullish momentum mid-week, making it challenging for the US Dollar (USD) to attract demand. The Consumer Price Index (CPI) data for December will be released by the US Bureau of Labor Statistics. Investors are likely to react to the monthly Core CPI reading, which isn’t distorted by base effects and excludes volatile food and energy prices.
Predictions for Core CPI and GBP/USD
The Core CPI is forecasted to rise 0.3% monthly in December, matching November’s increase. A weaker-than-expected core inflation figure could revive expectations of a Federal Reserve policy shift in March and compel the USD to continue weakening against its rivals. Conversely, a stronger-than-expected rise in the Core CPI could make markets more cautious and impede GBP/USD’s ability to build on Wednesday’s gains.
Gold Price Analysis: Waiting for Inflation Figures
Gold price (XAU/USD) was attracting some bids on Thursday, maintaining its bid tone during the first half of the European session, although it remains below the $2,040-$2,042 resistance zone. The US Dollar (USD) is trading with a slight negative bias within a familiar range over the past week due to uncertainty over the Federal Reserve’s rate-cut path.
XAUUSD Daily Chart
Impact of Fed Policy and Treasury Yields
Investors have been reducing their expectations for a more aggressive policy tightening by the Fed, given the resilient US economy. This supports elevated US Treasury bond yields and restrains bulls from placing fresh bets on the non-yielding Gold price.
Anticipation for Consumer Inflation Figures
Investors seem hesitant and prefer to wait for the US consumer inflation figures, due later today, for clues about the Fed’s future policy decisions. These figures will influence USD demand and determine the near-term trajectory for XAU/USD. Gold buyers will be keen to see softer data.
Crude Oil (WTI) Daily Chart
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The Unfolding Drama of Bitcoin ETFs: Anticipation, Hacks, and the Awaited Verdict
The journey to the approval of Bitcoin Exchange-Traded Funds (ETFs) in the United States has been nothing short of a rollercoaster ride. Recently, the Securities and Exchange Commission (SEC) found itself in the unusual position of having to refute a false announcement made via a compromised agency account.
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This unexpected occurrence is the latest twist in the long-winded saga of Bitcoin ETFs, which have been the subject of intense speculation for weeks.
A slew of companies, numbering about a dozen, have submitted their applications to list Bitcoin-backed ETFs, anxiously awaiting the SEC’s decision. This anticipation has been stoked by the fact that the price of Bitcoin has more than doubled since the start of the year. The SEC is expected to rule on at least one of these applications by January 10.
The Falsehood Behind the Approval Announcement
The drama escalated late Tuesday when the SEC confirmed that their official account had been compromised. An unidentified individual managed to take control of a phone number linked to the account via a third party. This breach led to the unauthorized proclamation of Bitcoin ETF approval, sending shockwaves through the crypto markets and briefly pushing the price of Bitcoin past $46,000.
The SEC quickly moved to rectify the situation, asserting that the approval announcement was fraudulent and that their Twitter account had been breached. The agency is currently investigating the unauthorized access and has pledged to implement measures to prevent such incidents in the future.
The Real Verdict Still Hangs in the Balance
Despite the social media uproar, the actual decision on Bitcoin ETFs remains pending. The SEC has until Wednesday, January 10, to approve or reject at least one of the 11 applications for spot Bitcoin ETFs. In recent weeks, Bitcoin has been on an upward trajectory in anticipation of regulatory approval, reaching its highest level in about two years.
The approval procedure is a two-step process. Initially, the SEC has to give the green light to the 19b-4 filings from the exchanges, which outline the rule changes necessary for the new class of funds to be traded. Subsequently, the registration statements from the asset managers must be validated before the funds can commence trading.
Bitcoin Price
As of now, the crypto market is witnessing volatile trading as traders eagerly await the SEC’s decision on the approval of spot Bitcoin ETFs. The digital asset market has been buoyed for months by the hopes of ETF approval, with anticipation reaching a fever pitch after Tuesday’s false announcement. At present, the price of Bitcoin stands at $45,340.90, experiencing a slight drop from Monday’s high of $46,990.90.
Disclaimer:
All information has been prepared by TraderFactor or partners. The information does not contain a record of TraderFactor or partner’s prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may read it. Past performance is not a reliable indicator of future performance.
FOLLOW US
Author
We provide Financial Market Analysis, Trading Education, and Reviews of only Regulated and the most Trusted Forex, CFD, and Crypto brokers.