CRYPTO: Bitcoin Bounces Off Support As US/China Tensions Are Lowered, For Now
Bitcoin had a range Friday night of $104 915k - $122 571k, Asia is currently trading around $115 480k, +0.40%. Bitcoin capitulated as risk took a big hit as tensions between the US and China were reignited on the back of new rare earth controls. Over the weekend both sides have tried to placate markets, the Chinese by explaining the new controls are neither a prohibition nor a ban. The US have walked back some of their aggressive posturing in response and JD Vance said President Trump is willing to be a reasonable negotiator with China. In what has been described as the worst liquidation event in Crypto history after dropping almost 15%, Bitcoin found bids in its support area between $100-$108k and has since bounced 10% recovering a large part of Friday’s losses.
- With a lot of leverage having been wiped out on this move the bulls will now say it can move higher from here, but historically when we have an unwinding of such large positioning it can dent the markets confidence, so perhaps the market looks to consolidate within its $100k-$125k range until we get a better idea of how these new export controls will impact the US and what their counter measures might eventually look like.
- CoinDesk wrote a Bitwise portfolio manager estimated roughly $65 billion in open interest was erased, resetting positioning to levels last seen in July.
- Dr Martin Hiesboeck speculated on X that it looked like a targeted attack: “The crypto market crash on October 11 is suspected to be a targeted attack that exploited a flaw in Binance's Unified Account margin system. The attack was timed to exploit a window between Binance's announcement of a fix and its implementation. This event highlights critical risks in exchange collateral policies and risk management.”
Fig 1: Bitcoin spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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AUSSIE 3-YEAR TECHS: (U5) Bounces Further Off Support
- RES 3: 97.190 - High May 5 2023
- RES 2: 96.932 - 76.4% of Mar-Nov ‘23 bear leg
- RES 1: 96.860 - High Apr 07
- PRICE: 96.550 @ 15:36 BST Sep 12
- SUP 1: 96.430/95.900 - Low Sep 3 / Low Jan 14
- SUP 2: 95.760 - Low 14 Nov ‘24
- SUP 3: 95.480 - Low Jan 11 2023 and a major support
Aussie 3-yr futures are trading off recent lows. A resumption of gains from here would further narrow the gap with resistance at 96.730, the Sep 17 ‘24 high, leaving 96.860 as the next key level. Any continuation lower would instead strengthen a bearish threat. This would refocus attention on 95.760, the 14 Nov ‘24 low. Conversely, a reversal higher would open 96.860, the Apr 7 high.
FED: MNI Fed Preview-September 2025: A Reluctant Return To Easing
We've published our preview of the upcoming FOMC meeting - Download Full Report Here
- The Federal Reserve is set to resume its easing cycle at the September 16-17 meeting with a 25bp cut to the funds rate range to 4.00-4.25%.
- The decision to cut after a 5-meeting pause was well-telegraphed by Chair Powell, whose Jackson Hole speech described a “shifting balance of risks” toward a weaker labor market that “may warrant adjusting our policy stance”.
- The updated quarterly projections aren’t likely to bring many changes to the macroeconomic variables, but as usual the signal sent from the Fed rate “Dot Plot” will garner attention. A Committee split between expecting one or two further cuts this year is likely, keeping each of the remaining meetings of 2025 “live”.
- The Statement will downgrade the description of the labor market to reflect a rise in the unemployment rate and poor payrolls growth, and is likely to include at least one dissent to the rate decision.
- But with a Committee that is fairly divided on the way forward, Powell will be noncommittal on future action, reiterating that policy is not on a preset course, and upcoming decisions will be data-dependent.
- A key undercurrent is an increasingly activist approach to Fed personnel management from the White House, which leaves the composition of the FOMC uncertain not just over the medium-term but also at this meeting.
MNI’s separate preview of sell-side analyst summaries to follow on Monday Sep 15
RATINGS: Fitch: France Cut To A+ From AA, Portugal Up To A From A-
Fitch has downgraded France's sovereign rating to A+ (with stable outlook) from AA-. Release here.
- Among other factors in the decision, Fitch cites "High and Rising Debt Ratio", "Political Fragmentation Hinders Consolidation", "Weak Fiscal Record", "High 2025 Deficit", "Uncertain Fiscal Consolidation Path", and "Fiscal Rigidities".
- In "Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade", Fitch cites "Public Finances: A sustained increase in government debt/GDP over the medium term, due to failure to implement fiscal consolidation measures and/or a persistent increase in financing costs" and "Macro: Materially lower economic growth prospects and weakened competitiveness." Conversely, potentially leading to positive ratings action would be "Public Finances: Confidence that government debt/GDP will be put on a downward trajectory over the medium term, for example, due to fiscal consolidation and/or stronger economic growth".
- Fitch also raised Portugal to A (stable outlook) from A-, while elsewhere, S&P raised Spain to A+ (stable outlook) from A.
- As MNI wrote earlier, we expected France to be downgraded to A+ and Portugal to be upgraded to A.
