IMF Makes Some Noise

Bitcoin Doesn’t Care

Preface

This week the Boards of Governors of the World Bank Group (WBG) and the International Monetary Fund (IMF) have gathered for their annual spring meeting in Washington, DC. Here’s some of the takeaways so far, in paraphrased points:

• A rough year for crypto markets has underpinned the need for comprehensive and consistent regulation of the sector.
• Stablecoin issuers and crypto conglomerates need to have bank-style capital requirements.
• The collapse of multiple entities in the crypto ecosystem has made comprehensive and consistent regulation and adequate supervision a primary focus, with customer protection and corporate governance at the forefront.
• Regulations should cover crypto storage, transfer, exchange and custody of reserves, with stringent requirements for entities carrying on multiple functions and also for stablecoin issuers.
• The European Systemic Risk Board (ESRB) stated that financial authorities should have the ability to monitor crypto leverage, decentralized finance, and crypto staking & lending.

This highlights the ongoing struggle between blue sky innovation and constrained growth in the leading edges of web3 development. It seems the powers that be want to prevent individuals, entities and groups in the space from becoming too powerful too quickly, which may sound fair on the surface.

However, there is still an overall fear and disdain of crypto among central bankers, finance ministers, parliamentarians, private sector executives, civil society representatives and academics. Even the US Congress holds barely a handful of members with any meaningful understanding of crypto or DeFi.

Despite all this, it’s been an overwhelmingly positive week in the crypto space, with Bitcoin ticking above $30,000 USD for the first time since June 2022!

Latest Economic Data

CPI Inflation

Headline CPI for March came in at 5% versus 5.2% consensus and 6% prior. On the month-over-month basis, CPI rose just 0.1% versus estimates for 0.2% and 0.4% prior.

Core CPI came in right on consensus at 5.6%, up slightly from the prior 5.5%. Core CPI month-over-month also hit consensus at 0.4%, up from 0.5%.

Core CPI is evidently sticky, but a lot of the measures driving it appear to be cooling off, and so we may soon see the core drop off a cliff.

PPI & Core PPI

Headline PPI (YoY) came in at 2.7% vs 3.0% consensus and 4.9% prior.

Core PPI (YoY) came in at 3.4% vs 3.4% consensus and 4.8% prior.

Bulls have to like these prints, as they suggest further declines in CPI and PCE in next months. I believe this has a lot to do with why stocks pumped on Thursday.

Fed Minutes

The minutes from the March Fed meeting are out, and here’s some highlights:

• Several participants considered leaving rates unchanged at this meeting, but noted the actions taken helped calm market conditions and lower short-term risks, allowing them to deem an increase appropriate.
• Participants agreed there was little evidence pointing to disinflation for core services excluding housing.
• Fed economists projected a mild recession starting later in 2023.
• Banking sector developments are likely to cause tighter credit conditions and weigh on activity, hiring and inflation.
• Fed members agreed that the U.S. banking system remains sound and resilient.
• Several participants emphasized the need to remain flexible on the appropriate stance of monetary policy given the highly uncertain economic outlook.
• Some participants observed that downside risks to growth and upside risks to unemployment had increased due to banking-sector developments that could lead to further tightening of credit conditions and weigh on economic activity.

Technical Analysis Corner

Bitcoin 3-Day Chart

We finally broke the 29k resistance area convincingly and these candles are showing a lot of strength. As long as 28.8k is held, I believe we’re on a path to 32.2-34.6k in the coming days. It’s important not to try to be a hero and short this. RSI and other conditions can remain overbought for much longer than expected. Wait for clear signs of weakness to de-risk.

Bitcoin 4H Chart 

If we do get a pullback from here, I’d be eyeing 29.7k for a retest. There’s also support at 30.3k in case of a shallower dip. The orange and teal lines could come into play if we get a bigger shake-out. It’s always good to prepare for volatility after strong moves up.

S&P500 Weekly Chart

We talked about this over and over again, and discussed why it wasn’t all doom and gloom for stocks despite mainstream media telling us there’s no way we should be going up. SPY is inching closer to that prior swing high at 418.31 and it will be a party for the bulls if they can take it out. Still, a very nice move up following the 1D golden cross and bounce from the weekly 50MA. Note the weekly 200 is rising steeply and the 50 is starting to curl up.

Ethereum 3-Day Chart

Here’s the anticipated move for ETH! It’s melted through the prior swing high at $2030 and is on a path toward the next levels. Above $2100 the volume profile thins out, meaning there isn’t a lot of resistance.

As expected, altcoins are taking off.   

TOTAL2 3-Day Chart

The $620B level is decisively broken through, although this candle is only about halfway through. It’s looking quite promising if we get that continued strength into the weekend.

This is the chart of market cap excluding BTC, which is a proxy for trading alts.   

Jay Charles

Editor in Chief, The Trading Tank.

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