Sat, Oct 23, 2021 @ 00:32 GMT
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Crypto Stabilization Ahead?

What looked like a technical collapse in crypto prices on Tuesday turned into an improbable turnaround with bitcoin finishing higher. In FX, last week’s US dollar rally continued to unwind with a growing chorus of Fed speakers underscoring patience before making any moves on a taper. Ashraf cautions us to watch the renewed outperformance of Tech stocks vs cyclicals –which could mean yields may not be rebounding above 1.53/4% anytime soon, raising questions about growth and inflation.

Even by the wild standards of the crypto market, Tuesday’s move was impressive. It looked grim for bitcoin early in New York trade as it broke through $31,000 and then cascaded down to $28,800 in a quick but orderly move.

As headlines flashed that it had wiped out all the gains for 2021, it came back to life. Evidently there were buyers waiting for a dip below $30,000 and they pounced. That was followed by a FOMO rally that took it to $34,200 at the time of writing.

The pain elsewhere was larger and the bounces haven’t been as impressive. That may be a hint that flows are traveling from alt coins into bitcoin. If that’s the case, it may only be a temporary respite. That said, price action can turn into its own fuel for a rally.

Overall, the breaks of some key support levels throughout the market aren’t a great sign. There is a chance for a false breakout and reversal here but that would be a rare feat. We will be watching very closely and staying nimble in the days ahead.

One slight tailwind for crypto has been the continued decline of the dollar. We’re watching AUD/USD very carefully as it re-tests the break of the 200-day moving average and the prior lows of the year, which are now resistance.

Ashraf Laidi
Ashraf Laidi is an independent strategist and trader, founder of Intermarket Strategy Ltd and author of "Currency Trading & Intermarket Analysis". He is the former chief global strategist at City Index / FX Solutions, where he focused on foreign exchange and global macro developments pertaining to central bank policies, sovereign debt and intermarket dynamics. Ashraf had also served as Chief Strategist at CMC Markets, where he headed a global team of analysts and led seminars and trainings in four continents. His insights on currencies and commodities won him several #1 rankings with FXWeek and Reuters. Prior to CMC Markets, Laidi monitored the performance of a multi-FX portfolio at the United Nations, assessed sovereign and project investment risk with Hagler Bailly and the World Bank, and analyzed emerging market bonds at Reuters. Laidi also created the first 24-hour currency web site for traders and researchers alike on the eve of the creation of the euro. Laidi's analysis of currency markets stand out based on his distinct style in bridging the fundamental and technical aspects of the markets. Laidi regularly appears on CNBC TV (US, Europe, Arabia and Asia/Pacific), Bloomberg TV (US, Asia/Pacific, France and Spain), BNN, PBSs Nightly Business Report, and BBC. His insights also appear in the Financial Times, the Wall Street Journal and Barrons. He has given numerous interviews and lectures in Arabic, French, and to audiences spanning from Canada, Central America and Asia/Pacific.

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