In the latest analysis of X, Daniel Yan, founder of Matrixport and CIO at Kryptanium Capital, provided a detailed comparison between the current crypto market dynamics and those seen in early June. His insight is especially important as the market approaches several key economic releases that could have a major impact on the trajectory of major cryptocurrencies such as Bitcoin (BTC) and Solana (SOL).
Is History Repeating For The Crypto Market?
Yan’s analysis began with an overview of the current market recovery, noting that both BTC and SOL are “grinding at key technical levels well now,” suggesting a possible setup for a breakout similar to the situation in early June. At the time, Bitcoin was challenging a major resistance level at $71,500, influenced by Personal Consumption Expenditures (PCE) data and weaker-than-expected ADP employment change numbers, fueling optimism about a possible stance from the Federal Reserve.
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However, Yan drew attention to the volatility that followed, when a stronger-than-expected Non-Farm Payroll (NFP) report reversed bullish sentiment, causing Bitcoin to fall from $72,000 to around $58,000 over the course of two weeks. He highlighted this pattern to warn investors about the potential for a similar market reaction to the current situation.
Looking ahead, Yan expressed a positive outlook for Q3 2023, citing the improvement in liquidity conditions and the resolution of the Mt. Gox, which has been booming in the market for years. However, he is still wary of the short-term impact of the NFP release, which is scheduled for this Friday. “I’m careful when I enter NFP on Friday – the same could happen in the first part of the pattern,” he warned.
Yan also pointed to the release of the CPI as the next key data point, with the Cleveland Fed providing lower estimates for June but less favorable estimates for July. He emphasized the impact of summer energy prices on inflation metrics, noting that the increase in crude oil and gas prices since the beginning of June may have influenced both the headline CPI and PCE directly, and the main inflation numbers indirectly.
“MoM Core CPI expectations of 0.3% are already negative, think it looks worse,” he noted, emphasizing the potential of these figures to exceed expectations, complicating the Fed’s efforts to control inflation.
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The immediate focus for Yan and many in the crypto community is Federal Reserve Chairman Jerome Powell’s speech tonight at the European Central Bank. His comments are highly anticipated for views on how the Fed views current macroeconomic conditions and possible policy actions in the near term. “Let’s see what you think about the current conditions,” Yan said, indicating the potential for market movement in Powell’s address.
Bitcoin Breakout Needs Verification
Matrixport released a “Daily Chart” containing Bitcoin price movements from June 2 to July 1, highlighting the cryptocurrency’s recent break from a short-term decline. After signing down on June 25 in their Matrixport Greed & Fear index—a tool often used to predict potential reversals—Bitcoin showed signs of an oversold condition, which usually precedes a price recovery. Indeed, the price of Bitcoin began to rise subtly over the weekend, overcoming some of the most immediate technical obstacles.
Although the market appears to be preparing for a potential rally, Yan’s analysis and upcoming economic updates suggest that investors should be on the lookout for potential volatility. As these events occur, the crypto market’s response to economic indicators and central bank communications will be crucial in shaping its short-term direction.
At press time, BTC traded at $62,802.
The featured image was created with DALL·E, a chart from TradingView.com
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