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April 29: Don't Fight the Fed for Now

Matrixport Lookout   Apr 28, 2020 16:00 3 Min Read


BTC is up for the past 7-days with Bitcoin and Ethereum hovering right below $7,800 and $200 key short-term levels. While the top two coins are both hesitating for a decisive move higher,  Ripple (XRP) has been making a big splash over the past 24 hours up 10%. History has shown that XRP has the ability to trade like that without many headlines or catalysts. 

In my previous analysis, I shared that the recent rally has been driven mostly by liquidations of shorts. Another salient driver could be increased spot buying. This is perhaps why futures are mostly trading at a discount to spot. And it isn't entirely surprising either as leveraged traders in crypto are likely more skeptical after March's crash. Evidence of spot buying through headlines like this "Grayscale is buying half of all newly minted Ethereum". In short, the backdrop for a longer-term bull market is constructive, and definitely a healthier rally than the earlier one we had this year.

With today's spotlight on FOMC and a few large tech (FB, Microsoft) earnings, I suspect risk assets to trade well into, and may potentially sell after "the fact". So BTC is going to be well bid, and until we close above the 200 DMA at $7,980 with strong volumes, we can test the $8,200 region. With implied volatility quite cheap, tight $300 range over the past five days, halving in 12 days, persistent negative funding, record USD stable coin balances in exchanges and Fed's "whatever it takes" attitude. It's hard to argue against such asymmetric risk-reward in the short-term, so I continue to advocate buying on dips around $7,200 region and BTC calls i.e. $8,250 expires in 9 days. Many are puzzled with equities performance; for example, Nasdaq is now almost unchanged year-to-date, this is why you don't want to fight the Fed. At least, not for now, live, let's live to fight another day... Good luck!

Two key levels to watch.... $8,200 and $7,200... If we break $8,200 there's gonna be fireworks, otherwise buy on dips towards $7,200 region... 

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BTC's three month implied volatility is cheap compared to its three month realised volatility.... This is why better to buy volatility (i.e. options) ahead of halving...
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Equities should be supported in the short run, but how long? Nasdaq uptrend channel intact but lower highs.... You see my point...
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Bio of Eugene: 

Eugene is currently a sales and business development director for Matrixport. He has 10 years of experience in institutional trading, financial derivatives and sales in Citibank, Barclays Capital and Deutsche bank. Eugene started investing in cryptocurrencies in 2017, and has since advised multiple projects worldwide, raising more than U.S. $50 million. Because of his active involvement in fundraising, Eugene is well-connected with the crypto ecosystem. Beyond advising projects, Eugene takes a keen interest in trading and managing his personal portfolio. He has been featured on Bloomberg, Forbes and Yahoo.

 
Disclaimer
Opinions expressed are solely the analyst's own and do not express the views of Matrixport the company.
The views and opinions expressed in this article are those of the contributor and do not necessarily reflect the view of Blockchain.News.


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