Crypto Market Focuses on FOMC Meeting and NFP Release

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FOMC Meeting and NFP Release Focus of the Week as Crypto Market Consolidates in Cone Patterns. Is it time for alts?

Week-over-week performance:

BTCUSD: 28,121, +2.61%ETHUSD: 1,836, 0.55%US02Y: 4.12%, +6 bpsDXY: 101.95, +0.51%OR (USD/OZ): 1,982, – 0.60%NDX: 13,321, +1.10%VIX: 16.38, -7%VIX: 88, -6.38%

Macro side:

On a larger scale, this week’s focus goes beyond the recent banking crisis that hit First Republic Bank ($FRC).

Key events include the FOMC meeting and press conference on Wednesday at 2:00 p.m. ET, with an expected 25 basis point rise (the last?), and the NFP release Friday at 8:30 a.m. ET.

In my opinion, the FOMC press conference is the most important, as any indication of a Fed pivot could greatly benefit bitcoin. However, it seems that market participants, including those in the crypto space, have already positioned themselves well for the upcoming events, as evidenced by the low VIX and VVIX levels, both below 17 and 90, respectively. in traditional financial markets.

On the crypto side:

BTCUSD 1dBTCUSD on a daily chart is currently forming a cone pattern and trading at the POC level between March and May at $28,000.

Given the upcoming FOMC meeting, it seems reasonable to expect BTCUSD to continue trading within this range. interesting entry possibilities.

In the event that the cone pattern is broken on the downside, there should be support between $23.5k and $25.2k. On the other hand, if the pattern breaks higher, the initial target is $32.4k, followed by $36k.

The 7-day realized volatility is currently trading at 39%, slightly above the historical 25% of the distribution, while the ATM implied volatility is at 50.6%.

For the May 5 Deribit expiry, the ATM breakevens are $26.9k and $29k (+/- 3.6%), while for the May 12 expiry, which encompasses the FOMC decision, the break-even points are $26.2k and $29.9. k (+/- 6.7%).

ETHUSD 1dETHUSD is currently forming a cone pattern from the downside and completes a head and shoulders pattern. If the cone pattern breaks lower, we could see a potential retest of $1.7k.

Alternatively, a break of the shoulder at $1.96k could push the target price to $2.1k initially and $2.5k thereafter.

The RSI-14 indicator is currently trending down and trading in the 40s, indicating waning momentum. Additionally, the 7-day realized volatility (RV) is currently trading at 28%, which is a discount to BTC. However, this trend is unlikely to last long and a revival of VR is likely in the near future.

In the derivatives market, ATM implied volatility for ETH versus bitcoin trades at a zero premium for up to 30 days and at a discount for longer durations. This is historically rare and is a perfect scenario for a relative volatility trade. Two potential trades that could be considered are steepers, which should benefit from changes in ATM, and chokes, which should benefit from changes in ATM and ETH wings becoming more expensive. Both trades involve taking a long position in ETH volatility and a short position in BTC volatility while playing with the ratios for the desired Vega/Theta exposure.

LTCUSD 1dLitecoin halving is expected to take place at the end of July, leading to a significant reduction in supply. Historically, LTC had a brief pre-halving pump in a risky market, followed by a further drop before the supply shock triggered a rally.

Currently, the LTC chart shows that we are trading in a consolidation zone after rising more than 2x from the June low at $41. If we trigger the $84 level, we could retest $74, which looks like an attractive entry point for a potential rally. Long term support is at level 45.

On top of that, bitcoin’s dominance was dismissed at 48.7%, suggesting a catalyst for the altcoin’s outperformance. A promising trade setup is to go long LTC and short BTC, which is currently trading at 0.003105 (low from March 17). If the LTC rally begins, the first take profit level (TP1) is at 0.0038 BTC, followed by TP2 at 0.0048 BTC.

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