CRYPTO: Ethereum-Break Below $4100 And Extends Lower As Leveraged longs Squeezed
Ethereum had a range overnight of 3826.18k - 4053.79k, Asia is trading around 3939k, +1.30%. Ethereum has belatedly caught a cold after Bitcoin sneezed, Ethereum is now down almost 15% for the week and 23% from all-time highs just 4 weeks ago. A bad week all round for Crypto as it continues to diverge from inflation and risk hedges such as gold and silver. Having broken big support around $4100 rallies should now be faded initially, as focus will turn towards the next big support around the $3400/$3500 area. Crypto bulls have been using Global M2 liquidity as a key reason to be long and building the case for higher prices, this strong correlation has broken down in the past month as positioning takes precedence.
- Holger Zschaepitz on X: "Does the growing divergence between Gold and “digital Gold” (Bitcoin) signal trouble ahead for crypto?”
- Bloomberg - “Crypto Liquidations Are Bad Omen for Risk Assets. As leveraged bets unwind, crypto once again illustrates how fragile risk appetite can be when conditions sour in this market. Ether dropped firmly below $4,000 and Bitcoin slid back under $110k, extending a $140 billion wipeout in digital assets this week. Coinglass data show long liquidations have dwarfed shorts in recent days -- $1.65 billion flushed on Sept. 21 and another $1 billion on Thursday -- a reminder of how quickly bullish positioning can unravel in this market.”
- Dow on X: “M2 is criticized as an outdated and unstable indicator whose capacity to predict market or economic movements has been undermined by structural changes in the financial system, the evolution of monetary policy, and changes in money demand behaviors.”
- Bloomberg - “While risky assets have moved to records, before easing in recent sessions, Bitcoin and Ether are locked in their own cycle of rallies and sudden slumps. The latest selloff -- sparked by about $1.7 billion in liquidations and with a $22 billion options expiry looming -- is a reminder that crypto trades on microstructure quirks along with global risk sentiment.”
Fig 1: Ethereum spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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CHINA: Industrial Profit Declines Continue
- China's Industrial Profit in July declined, marking a third consecutive month.
- China Industrial Profits YoY contracted -1.5%, following -4.3% in June.
- This is the seventh monthly decline out of the prior 12.
- The Year to date result of -1.70% was in line with the prior month's result of -1.8%.
- The Year to date Industrial Company's Profit was CNY4.02tn.
FOREX: AUD Crosses - Consolidate Recent Gains, CPI Gives A Bump
US Equities once again found buyers on the dip as the market concentrates selectively on the positives of a potentially more dovish Fed. This morning US futures have opened slightly higher, ESU5 +0.05%, NQU5 +0.07%. The AUD was helped by the return in risk appetite at the end of last week and is consolidating those recent gains, This morning's CPI has given them a nudge higher to start the day.
- EUR/AUD - Overnight range 1.7917 - 1.7976, Asia is currently trading around 1.7925. The area just above 1.8100 has seen decent supply cap it the last few months, a sustained move above 1.8100 is needed to see the move extend higher. The pair has drifted back towards 1.7900 where some demand has returned, next support is back towards the 1.7800 area.
- GBP/AUD - Overnight range 2.0742 - 2.0793, Asia is trading around 2.0750. The pair consolidated yesterday and is approaching the pivot toward 2.0700 within its wider range where you could expect some demand first up.
- AUD/JPY - Overnight range 95.55 - 95.84, Asia is trading around 95.50. The pair continues to grind higher back towards the 96.00 area. This pair’s direction will be determined by the market's ability to follow on with this risk-on move or not. A sustained move back above 96.50 would turn the trend higher again but until then sellers should be around looking for this move to top out.
- AUD/NZD - Overnight range 1.1076 - 1.1095, the cross is dealing in Asia around 1.1090. The dovish RBNZ has seen the Cross surge higher breaking back above 1.100 convincingly. This move continues to now see dips supported as it looks to build momentum to push higher.
Fig 1: GBP/AUD spot 2H Chart
Source: MNI - Market News/Bloomberg Finance L.P
AUD: Reaction To CPI
The AUD went into the CPI print trading around 0.6490(-0.06%) and the SPI was trading around 8922.0(+0.30%). “AUSTRALIA JULY CONSUMER PRICES RISE 2.8% Y/Y; EST. 2.3%, *AUSTRALIA JULY TRIMMED MEAN CPI RISES 2.7% Y/Y.” The AUD has bounced in reaction to this print.
- AUD/USD - 0.6500, +0.05%
- AUD/NZD - 1.1105, +0.25%
- EUR/AUD - 1.7895, -0.18%
- AUD/JPY - 9595., +0.25%
- SPI(XPU5) - 8910, +0.15%
