Bitcoin bounces back
After months in the doldrums, cryptocurrencies are finally back in the game as the total market capitalisation increases by $173bn to $418bn since the beginning of the month of April. Since the beginning of the week, Bitcoin’s price soared more than 5% and climbed above the $9,000 threshold as crypto’s outlook keeps improving.
Bitcoin is not the only cryptocurrency that enjoyed solid gains lately – it even underperforms most of other coins – as Ethereum rose 90% since April 1st, jumping from $358.4 to $684 this morning, while Bitcoin cash rose 140% to $1,570.
One may wonder why the entire market has been surging lately as no major news was released. However, given the harsh first months of the year, a period of respite was inevitable – and more than welcomed – especially against the backdrop of improving outlook on the regulatory side. It is also worth mentioning that the Lightning Network is maturing as the number of channels increases exponentially. Indeed, data showed that there is around 7,000 active channels which process transactions without impacting systematically the blockchain. Even though the network is still very young (first physical purchase was done in January 2018), it is matching market’s expectations in term of transaction fees and transaction rate: Bitcoin will be able to compete with traditional (read non-decentralized) payment systems.
Given the relative underperformance of Bitcoin compared to the market, we believe there is still upside potential, with the $10,000 mark as next target.
European industry executives’ business confidence fears start fading
Following two straight decline since January 2018, Eurozone Markit purchasing managers index (PMI) data holds steady, given at 55.20 (consensus: 54.80), signaling a rise in business activities following a shaky start in 2018. Supported by a slight acceleration in Services PMI (55) and a decline in Manufacturing PMI (56), both single currency appreciation and threatening commercial instability effects played their role, curbing exports since the beginning of the year.
France and Germany PMI data published on Monday pointed toward the same direction: services remained largest contributor while manufacturing weakened, indicating that the block leaders bolster a solid start for the Eurozone in Q2.
Due on Thursday, European Central Bank Monetary Policy meeting will maintain current interest rate at -0.40% unchanged, as expected by most market participants. Current economic data point toward a recovery in economic growth, supported by cautious normalization policy implementation from European central bankers. No rate hikes are expected for 2018 from today.
Approaching hourly resistance at 1.2165 (17/01/2018 low), EUR/USD is trading at January low. The technical structure suggests short-term downward moves, heading along the 1.2180 range.
