What’s Next?
Equity markets moved to correction territory this morning ahead of the two day Federal Open Market Committee meeting starting tomorrow. Focus will be on the Fed’s strategy fighting inflation with investors looking for color on the first quarter plan on finishing the asset buying program sooner than expected, in addition to a more detailed schedule for rate hikes this year. Building military escalation between Russia and Ukraine over the weekend, on top of a busy corporate earnings report schedule ahead this week, have made investors timid and hoping patience will be the key for better direction in the near term.
The S&P 500 and Nasdaq composite indices are both down 10% year to date with levels not seen since early summer last year. The 10 year treasury yield declined to 1.72%, after reaching almost 1.90% last week. Crude oil futures also dropped this morning to the $82 dollar level, after an almost $88 level reached last week, while starting the year at about $75 per barrel.
On-Chain Update
Price volatility for Bitcoin (BTC) and Ethereum (ETH) has increased substantially after reaching a multi-month lull last week. Both assets are now down 50% or more from their respective November all-time-highs and bearish momentum continues to persist.
Although BTC remains within the 2021 price range from $30,000 to $60,000, a bearish continuation chart pattern has now been confirmed. This head and shoulders support breakdown over the past few days now carries a 1.618 fib extension target of $25,000. A yearly support pivot, based on the 2021’s highs and lows, also sits at $26,250.
This week, ETH will confirm a death cross, a 50 day over 200 day moving average cross, the first since May 2020. The nearest horizontal support for ETH sits between $1,800 to $1,900, based on the local highs and lows of early and mid 2021. A yearly support pivot also sits at $1,300.
The Relative Strength Index (RSI) for both assets continues to push into oversold territory and lower lows in price should be expected until a higher high in price is made or a bullish divergence begins to form on RSI.
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The Portfolio Management Team
Steven McClurg, CIO
Bill Cannon, Portfolio Manager
Wes Cowan, Portfolio Manager, Head of Defi
Josh Olszewicz, Head of Research
Sean Rooney, VP Research and Trading
Will McDonough, Vice Chairman, Investment Committee
Leah Wald, CEO, Investment Committee
Shannon Smith, Head of Investor Relations
