- Cryptocurrency markets are in consolidation mode ahead of the release of the minutes from the Fed’s June meeting.
- CVX, the best performing top 100 cryptos of the last day, is eyeing a test of its 50DMA at $6.70
- SAND, another strong performer, is eyeing a rally to June highs above $1.50.
Cryptocurrency markets are in consolidation mode ahead of the release of the minutes from the Fed’s June meeting, when the bank raised interest rates by 75 bps, marking the largest rate hike in 28 years. The Fed is in a rush to raise interest rates above the so-called “neutral” rate (around 2.5%) in order to cool the economy, with inflation remaining well above the Fed’s 2.0% target.
Total cryptocurrency market capitalization was last around $890 billion, little changed on the day though about 4.0% higher on the week. Bitcoin was last also trading broadly flat on the day in the $20,200 area, capped for now by its 21-Day Moving Average just under $20,300. Ethereum, meanwhile, was last changing hands just under $1,150 and just to the north of its 21DMA at $1,120.
The Fed minutes will likely signal the likelihood of another 75 bps rate hike later this month, a prospect markets are already pricing in. Indeed, a build-up of expectations for the US economy (and other major economies) to enter recession in the near future has been the main theme driving markets in recent weeks.
This hasn’t necessarily been a bad thing for crypto given that as recession bets rise, US bond yields have pulled lower and Fed tightening bets have been wound down. The upcoming US ISM Services PMI report at 1400GMT will be viewed in that context. Signs of weakness might actually boost crypto if it results in heightened recession bets and a pullback in Fed tightening bets.
Below is a list of Wednesday’s top three trending coins.
Convex Finance (CVX)
CVX, the utility and governance protocol of the Decentralised Finance (DeFi) protocol Convex Finance, is the best performing cryptocurrency in the top 100 (by market cap) over the past 24 hours, according to CoinMarketCap. CVX/USD is up around 21% in the last 24 hours and 45% since the start of the week.
The recent bullish breakout has seen the pair surge to its highest levels in nearly one month and leave its 21DMA at $4.31 per token for dead. CVX/USD came within a whisker of testing its 50DMA at $6.70 on Tuesday and has since pulled back to the $5.70 area, where it continues to trade with healthy weekly gains.
Does the recent rebound which has taken more than 80% higher versus its June lows around $3.10 mark the start of a prolonged rebound?
It remains too soon to say. Even after the recent rebound, the DeFi protocol token still trades about 86% lower versus its start of April highs. Much of the drop in the last three months came in wake of the collapse of Terra’s algorithmic stablecoin UST, which sent a chill across the DeFi space.
If CVX can break above its 50DMA, then it perhaps could be in for a run to test a downtrend near $8.0 per token. A break above that would open the door for a run at $10.
The Sandbox (SAND)
SAND, the native token to The Sandbox’s metaverse, is the second-best performing cryptocurrency in the top 100 by market cap over the last 24 hours, with gains of around 14% according to CoinMarketCap. SAND/USD was last changing hands around $1.25 oer token, below its late June highs in the $1.35 area, but convincingly above its 50DMA for the first time since early April.
If the pair can hold above its 50DMA, some technicians might take this as a signal of a shift in SAND’s near-term momentum. If that is the case and SAND/USD does push beyond its late-June highs soon, the door is open for a test of the late-May/early-June highs just above $1.50.
Any dips back below $1.10 may well be bought into given support in the form of the pair’s 21DMA at $1.04 and an uptrend that has been offering support since mid-June.
PAX Gold (PAXG)
Aside from the highly volatile TerraUST, PAX Gold is the second-worst performing cryptocurrency in the top 100 by market cap on Wednesday, nursing losses of around 2.0% over the last 24 hours, as per CoinMarketCap. PAX Gold is a gold-backed cryptocurrency, with PAX holding exactly one troy ounce worth of gold per PAXG token it issues. PAX has currently issued roughly $590 million PAXG tokens.
PAXG was last trading just below $1760 per token, with its underperformance a reflection of downside in the price of its underlying asset, physical gold. Spot gold prices have been under heavy selling pressure over the past few days as the US dollar strengthens across the board, making USD-denominated gold more expensive for international buyers.
Spot gold was last trading on physical markets also below $1760 and down about 3.0% or over $50 since the start of the week. Global recession fears have been the big driver of USD strength recently and seem to have inadvertently hit the safe-haven precious metal.
Inflation expectations have also fallen recently as commodity prices (like energy and industrial metals) have pulled lower, dimming the appeal of assets seen as a hedge against inflation (like gold). But some have questioned how much further gold has to fall. If the US and global economy are already in a recession/or about to be, then that might support gold.
That is especially the case if a recession helps bring inflation in the US under control, thus easing the pressure on the Fed to be quite so aggressive with its rate hikes. The recent drop in US bond yields and money market Fed rate hike bets reflects markets are already beginning to think this way.
PAXG is eyeing a test of its November 2021 lows in the $1740s. Dip-buyers may be enticed. But should this support fail to hold up, then a drop towards September/October 2021 lows under $1700 is on the cards. Certainly, the technicals are not looking great, with PAXG’s 21 and 50DMAs falling and the cryptocurrency in a downtrend since the start of June.