This week will see cryptocurrency token unlocks worth approximately $40 million unleashed to the market after their individual vesting periods. Out of these, almost $30 million will be from the Optimism (OP) network, while $2.56 million and $1.72 million will be from the Yield Guild Games (YGG) and SingularityNET (AGIX) networks respectively.
Optimism, Yield Guild Games, and SingularityNET ecosystems have massive token unlocks slated for later this week. Up to 12.42 million YGG tokens will be unlocked on September 27, a day before 9.68 million AGIX tokens are unleashed to the market. On September 30, 24.16 million OP tokens will flood the market. These constitute 6.7%, 0.8%, and 3.0% of their individual circulating supplies.
The events are expected to impact the tokens’ prices because their allocations are likely to inspire seller momentum as recipients look for a quick profit. For the Optimism network, the tokens will be split between core contributors and investors, while for the AGIX ecosystem, the tokens will go toward the AGIX/ADA liquidity.
Regarding the YGG project, tokens will be allocated to the community, investors, treasury, and founders. For the latter, while the treasury and founders may not be eager to sell, the community and investors are likely to pull the trigger as they look to escape being trapped in exit liquidity.
With token unlocks typically presenting as bearish catalysts, the events underline the anticipated slump in prices. For the Optimism token, previous cliff unlocks recorded an average of 15% in price shifts, with a run-up countered by a quick correction.
OP/USDT 1-day chart
On the Yield Guild Games camp, a similar outlook was presented, with YGG price losing all the ground covered ahead of the unlocks as the increased supply provoked massive exits with token holders looking to escape more losses.
YGG/USDT 1-day chart
As regards the SingularityNET price, AGIX suffered just as much, with an almost immediate fallout.
AGIX/USDT 1-day chart
Meanwhile, other networks also have unlock events slated for some time in the week, starting with Pendle, expected to give liquidity incentives in a few minutes from now, constituting up to 56,720 PENDLE tokens. On October 1, the 1Inch network also has an unlock event planned, that will see 15,000 1INCH tokens worth approximately $3,930. This will be a day after the Acala network unleashes 27.43 million ACA tokens worth around $1.35 million to the market.
Huge token unlocks this week
Data by The Tie, a crypto intelligence tracker, shows a steady and sustained increase in trading volumes around token unlocks dates, pointing to volatility. This leaves the onus on traders to exercise caution to avoid being caught on the wrong side of the wave.
The developer or creator of each cryptocurrency decides on the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted by mining, staking or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. Since its inception, a total of 19,445,656 BTCs have been mined, which is the circulating supply of Bitcoin. On the other hand, circulating supply can also be decreased via actions such as burning tokens, or mistakenly sending assets to addresses of other incompatible blockchains.
Market capitalization is the result of multiplying the circulating supply of a certain asset by the asset’s current market value. For Bitcoin, the market capitalization at the beginning of August 2023 is above $570 billion, which is the result of the more than 19 million BTC in circulation multiplied by the Bitcoin price around $29,600.
Trading volume refers to the total number of tokens for a specific asset that has been transacted or exchanged between buyers and sellers within set trading hours, for example, 24 hours. It is used to gauge market sentiment, this metric combines all volumes on centralized exchanges and decentralized exchanges. Increasing trading volume often denotes the demand for a certain asset as more people are buying and selling the cryptocurrency.
Funding rates are a concept designed to encourage traders to take positions and ensure perpetual contract prices match spot markets. It defines a mechanism by exchanges to ensure that future prices and index prices periodic payments regularly converge. When the funding rate is positive, the price of the perpetual contract is higher than the mark price. This means traders who are bullish and have opened long positions pay traders who are in short positions. On the other hand, a negative funding rate means perpetual prices are below the mark price, and hence traders with short positions pay traders who have opened long positions.
The NZD/USD is seeing some consolidation in the short term after slipping from the last swing high into 0.5985.
The Kiwi (NZD) has recovered 2% against the US Dollar (USD) from September’s lows near 0.5850, but remains firmly bearish, down over 7% from July’s peak near the 0.6400 handle.
With little data to drive the Kiwi on the economic calendar, market flows will be driven from the Greenback side.
Tuesday will bring US Housing Price Index growth for July, which is forecast to decline slightly from 0.3% to 0.1%. On Wednesday, US Durable Goods Orders for August are seen declining by 0.4%, but still an improvement on the previous month’s -5.2%.
High-impact data kicks off on Thursday with US Gross Domestic Product (GDP) numbers for the second quarter; annualized quarter-on-quarter GDP growth is expected to improve slightly from 2.1% to 2.3%.
Improving GDP growth figures could see further gains for the US Dollar if the numbers manage to meet or beat forecasts.
Thursday will also be bringing a speech from Federal Reserve (Fed) Chair Jerome Powell, followed by New Zealand’s only representation on the economic calendar this week with mid-tier consumer confidence figures.
The ANZ Roy Morgan Consumer Confidence survey index for September will be landing at 21:00 GMT on Thursday. The indicator last printed at 85 back in August.
The Kiwi-Dollar pair is slowly recovering on daily candlesticks, and the NZD/USD is currently pinned to the 34-day Exponential Moving Average (EMA). Overall trend momentum remains decidedly bearish, with current price action trading well below the 200-day Simple Moving Average (SMA) crossing below 0.6200.
If bears manage to regain control of the NZD/USD, prices will be set to break into new lows for the year, and little technical support would remain until last’s years lows near 0.5600.
US President Joe Biden and one of his senior advisers warned on Monday that a federal government shutdown may result in widespread difficulties, including the loss of food benefits for almost 7 million low-income women and children, per Reuters.
He said he and House Speaker Kevin McCarthy had agreed a few months ago on spending levels for the government. The Republican-controlled House of Representatives may seek this week to approve drastic budget cutbacks that the Democratic-controlled Senate would almost likely reject. While the changes would not become law, a failure by both houses to reach an agreement might result in a partial government shutdown by next Sunday.
As of writing, the US Dollar Index (DXY) was down 0.02% on the day at 105.92.Full Article
China will be out on Friday September 29 for a national holiday, and then will also be out on Monday to Friday (inclusive) the following week (October 2 – 6).
ANZ comments on oil implications:
The Australian Dollar (AUD) lost some ground against the US Dollar (USD) as the latter strengthened the most in nine months, underpinned by elevated US bond yields. Hence, the AUD/USD is trading at 0.6423, printing minuscule gains as the Asian session begins, but on Monday, it dropped 0.25%.
Wall Street finished Monday’s session with gains led by the Nasdaq and followed by the S&P 500. The Greenback remains in the driver’s seat as investors brace for the US Federal Reserve’s mantra “higher for longer,” as US Treasury bond yields touch multi-year highs. The US 10-year T-bond rate hit 4.533% during the session, while the US Dollar Index (DXY) rose to a ten-month high at 106.09.
Data-wise, the Chicago Fed National Activity Index plunged to -0.16 in August from 0.07 in July, while the Dallas Fed Manufacturing Index plummeted to -18.1 in September from -17.2 the prior month.
Federal Reserve speakers in the central bank adopted a cautious stance, mainly Boston and San Francisco Fed Presidents Susan Collins and Mary Daly. Both stressed the Fed should be patient on monetary policy but haven’t ruled out another rate hike. Recently, the Chicago Fed President Austan Goolsbee said that a soft landing is possible, but inflation risks remain tilted to the upside.
Meanwhile, AUD/USD traders would take cues from the Australian economic docket with the release of the Reserve Bank of Australia (RBA) Conference in inflation. On the US front, the docket would release the S&P/Case-Shiller Home Prices, alongside housing data and the CB Consumer Confidence.
The Aussie’s daily chart portrays the currency pair as neutral to downward biased. Currently is consolidated at around the 0.6400 mark, but a bearish-harami candlestick chart pattern could pave the way for further losses. The first support is seen at the current exchange rate, at around two and a half years of support trendline. A breach of the latter would open the door to test the September 4 low of 0.6357, followed by the November 22 swing low of 0.6272. Conversely, if the pair climbs past the 0.6500 figure, the next resistance is at the 50-day moving average (DMA) at 0.6671.Full Article
The USD/JPY pair consolidates its recent gains after reaching the highest since October of 149.00 during the early Asian session on Tuesday. The stronger US Dollar (USD) is the main driver for the pair as the 10-year yield climbed to 4.53%, a level not seen since October 2007. The pair currently trade around 148.81, losing 0.04% on the day.
Meanwhile, the US Dollar Index (DXY), a measure of the value of the USD relative to a basket of foreign currencies, hovers around 105.95 after retreating from the highest level since November of 106.09 amid the fear of intervention by the Japanese authorities.
The higher for longer narratives in the US boosts the Greenback broadly. The Federal Reserve (Fed) is expected to hike rates one more time by the end of the year. The Federal Reserve Banks of Boston and San Francisco Presidents, Susan Collins and Mary Daly, emphasized that although inflation is cooling down, additional rate hikes would be necessary. While the Chicago Fed President Austan Goolsbee said that a soft landing is possible, inflation risks remain tilted to the upside and the Fed should have a 100% commitment to returning inflation to 2%.
On the other hand, Bank of Japan (BoJ) Deputy Governor Shinichi Uchida said on Monday, that the central bank needs to patiently continue monetary easing and needs to closely watch currency market moves. Similarly, the Bank of Japan (BoJ) Governor Ueda emphasized the need to spend more time assessing data before raising interest rates. This, in turn, might cap the upside of the US Dollar (USD) and act as a headwind for the USD/JPY pair.
Looking ahead, Japan’s Tokyo Consumer Price Index (CPI) for September, Industrial Production, and Retail Sales will be released on Friday. The attention will shift to the highly-anticipated US Core Personal Consumption Expenditure (PCE) Price Index, the Fed’s preferred measure of consumer inflation. The annual figure is expected to drop from 4.2% to 3.9%. Traders will take cues from these figures and find trading opportunities around the USD/JPY pair.Full Article
The USD/CAD slipped a scant 0.2% for Monday, after tapping into a mild intraday high of 1.3491.
The pair has fallen about 1.7% from September’s peak near 1.3694. Oil prices have been squeezing higher on market-wide supply constraint fears, which has been bolstering the commodity-based Loonie (CAD) despite the US Dollar’s (USD) broad rise across the market.
There is little of note on the economic calendar for Canada this week, and focus will squarely be on USD data impact.
Thursday will see US Gross Domestic Product (GDP) figures, as well as a speech from Federal Reserve (Fed) Chair Jerome Powell. Annualized GDP for the second quarter is forecast to tick higher from 2.1% to 2.3%.
On Friday, we will see US Personal Consumption Expenditure (PCE) data, which is expected to hold steady for the month of August at 0.2%.
Canadian GDP numbers will also land on Friday, but market impact is likely to be muted as US data churns the charts.
Canadian GDP for the month of July is expected to print at a flat 0%, but still an improvement over the previous month’s 0.2% decline.
The USD/CAD saw a clean rejection of the 200-hour Simple Moving Average (SMA) in intraday trading, and is set for a challenge of a rising near-term trendline from last Wednesday’s swing low near 1.3400.
On daily candlesticks, the USD/CAD is strung along the 200-say SMA. A bearish push from this region will see the pair lose the 1.3400 major handle, while a bullish rebound will need to reclaim the 1.3600 level before pushing to new highs.
Wall Street finished Monday’s session with solid gains, while the Greenback extended its gains to a new year-to-date (YTD) high; at the same time, US Treasury bond yields climbed.
The S&P 500 registered gains of 0.40% and ended at 4,337.44, while the heavy-tech Nasdaq led US equities gains with a .45% advance, closing at 13,271.32. The Dow Jones Industrial barely missed gains and was last up 0.13%, at 34,006.88.
Sector-wise, the biggest gainers were Energy, Materials, and Consumer Discretionary, each gaining 1.28%, 0.80 %, and 0.67%. The laggards were Consumer Staples, Utilities, and Real Estate, erasing from its value 0.43%, 0.20%, and 0.17%, respectively.
Equities climbed despite last week’s US Federal Reserve’s (Fed) decision to hold rates unchanged but upward revised forecast for the following year. The Federal Fund Rates (FFR) is expected to stay above 5% for 2023 and 2024, as revealed by the latest “dot-plots.”
Therefore, US Treasury bond yields exploited to the upside, with the 10-year benchmark note touching a 16-year high at 4.533%. The Greenback followed suit, with the US Dollar Index (DXY), which tracks the buck’s performance versus six currencies, touching 106.10, a level last seen in November 2022.
Federal Reserve speakers continued to cross newswires with Austan Goolsbee from the Fed of Chicago, saying the path for a soft landing is possible, though a “lot of risks and the path is long and winding.” Last week, two Fed officials called for patience on the US central bank, Boston and San Francisco’s Fed Presidents Sussan Collins and Mary Daly.
In the meantime, Fed Governor Michelle Bowman stressed an additional rate hike is needed, maintaining her hawkish stance.
Gold remained pressured at around the $1,915.00 zone in the commodity space, weighed by the rise in US bond yields. WTI lost 0.50% in the day, as a strong US Dollar and Russia’s lifting fuel ban weighed on the “black gold” price, despite being underpinned by tight supplies after Saudi Arabia and Russia’s 1.3-million-barrel crude oil cut.
Goldman Sachs says that while a sustained climb in oil prices could slow consumption and economic growth it will be a “manageable headwind” for the U.S. economy.
The note from GS economists goes on to discuss four key reasons why the Goldman team isn’t too concerned about the surge in oil prices. In summary:
“Oil prices have risen by $20 per barrel — compared to +$40 in the first half of 2008 and +$45 in the first half of 2022 — and our forecast of retail gasoline prices using futures and wholesale markets indicates that most of the rebound has already occurred,”
“The Fed should worry about the implications for price stability only if higher oil prices contribute to a de-anchoring of inflation expectations … We are relatively unconcerned about this risk and we do not expect the recent oil move to meaningfully boost consumer inflation expectations.”
The GBP/JPY spread the middle for Monday, with neither the Pound Sterling (GBP) nor the Yen (JPY) finding momentum to get the chart kickstarted for the new trading week.
The GBP has struggled to find support on the charts after the Bank of England (BoE) held rates steady last week in a split vote, and it appears the end of the rate hike cycle for the UK has landed much sooner than many analysts expected. With the UK’s domestic economy teetering in the fundamental data, the BoE is hoping interest rates are high enough to keep inflation capped moving forward.
On the JPY side, the Bank of Japan (BoJ) Governor Kazuo Ueda and Deputy Governor Shinichi Uchida hit news wires on Monday. The BoJ officials talked down any hawkish expectations, reiterating the BoJ policy stance that inflation is at risk of dipping below 2%, the Japanese central bank’s minimum target before a reversal of the BoJ’s negative rate regime can be considered.
The early week sees little of note for the GBP/JPY on the economic calendar, and traders will be looking towards Thursday’s Tokyo inflation reading and Friday’s Gross Domestic Product (GDP) figures for the UK.
Japan’s Tokyo Consumer Price Index (CPI) reading is slated for 23:30 GMT late Thursday, and the core annualized figure is forecast to tick lower from 2.8% to 2.6%.
On the UK side, GDP numbers are forecast to hold steady, with the annualized GDP growth rate for the second quarter expected to print at 0.4%, in-line with the previous reading.
Intraday action has the GBP/JPY hamstrung just below the 182.00 major handle, and the pair is set to build in a floor from 181.00 as bidders look for a re-challenge of the 200-hour Simple Moving Average (SMA) settling into 182.70.
Daily candlesticks see the Guppy settling back into the 100-day SMA, with the long-term bull trend leaving the GBP/JPY well above the 200-day SMA near 172.00. The pair has slipped below the 34-day Exponential Moving Average (EMA) in the near-term, and buyers will need to remount the 186.00 handle from August’s last swing high before establishing a continuation of the bull trend.
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