Weekly Forecast: The Search for Volume Continues as Bitcoin Eyes Breakout
Dogged by weak trading volumes, regulatory constraints and a lack of direction, cryptocurrency prices have failed to make headway over the past two months. The search for volume continues over the next seven days as bitcoin’s bulls eye a potential breakout following the successful defense of $6,000 – a key technical and psychological threshold.
Economic data, corporate earnings and a high-profile meeting between two heads of state will influence traditional markets this week.
Cryptocurrency Market in Search of Direction
After posting their first weekly gain in a month, cryptocurrency prices were back on the defensive last week as tepid trading volumes and a lack of momentum drove investors to the sidelines.
The bulk of the declines last week occurred between Monday and Tuesday, with the total market capitalization falling more than $20 billion over that brief stretch. For the remainder of the week, bitcoin and its altcoin counterparts held within a relatively narrow range as trading volumes continued to drop. On Saturday, volumes reached their lowest levels of the year, according to CoinMarketCap.
The cryptocurrency market has been capped below $300 billion since June 10. However, the downturn appears to have reached its climax following bitcoin’s repeated defense of a key psychological marker.
Bitcoin’s price is making headway toward $6,400 as the market continues to place a floor at roughly $6,000. If bitcoin continues to defend this level in the coming days, investors should reasonably expect another bullish breakout attempt targeting the July 8 high near $6,900. The broader market will likely follow suit given bitcoin’s 43% dominance.
U.S. stocks ended the week in positive territory as earnings optimism and tech-driven gains propelled the major indexes higher. The Nasdaq Composite Index recorded back-to-back record closes Thursday and Friday.
A trio of bank earnings Friday marked the unofficial start to corporate reporting season. Three additional banks are scheduled to report between July 16-18: Bank of America (BAC), Goldman Sachs Group (GS) and Morgan Stanley (MS). Dow industrials Johnson & Johnson and UnitedHealth Group Inc. (UNH) are also due for Q2 results.
So far, 5% of S&P 500 companies have reported second-quarter results. Among them, 89% have posted better than expected earnings and 85% have reported a positive revenue surprise, according to FactSet.
From the perspective of stocks, commodities and currencies, the following events will influence investor sentiment this week.
U.S. President Donald Trump and Russian counterpart Vladimir Putin will meet Monday mere days after 12 Russian intelligence officials were charged by a federal grand jury for meddling in the 2016 presidential elections.
President Trump says he has “low expectations” for the summit but reassured that “nothing bad” will come out of the meeting with Putin.
In economic data, the Chinese government will release second-quarter GDP data on Monday, along with a batch of reports covering retail sales, industrial production and fixed-asset investment.
In the United States, the Commerce Department will release the latest retail sales figures for June.
The U.K. Office for National Statistics will release the latest employment and wage figures for the month of May. Meanwhile, the U.S. Federal Reserve will report on June industrial production.
Fed Chair Jerome Powell is scheduled to testify before Congress Tuesday with a follow-up panel scheduled for Wednesday.
Final Eurozone consumer inflation data for June will make the rounds Wednesday. In the U.S., housing starts and building permits will be in the headlines. The U.S. Energy Information Administration (EIA) will also release its weekly crude inventory report for the period ended July 13.
Economic data is once again in the spotlight on Thursday, with Australian employment and U.K. retail sales being the main focus.
In the U.S., the Labor Department will report on weekly jobless claims and the Philadelphia Fed will unveil its July manufacturing survey.
In the final session of the week, the Canadian government will report on consumer inflation and retail sales – the first major reports since the Bank of Canada (BOC) voted to raise interest rates for the fourth time in 12 months.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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