Cryptos in free-fall
Cryptocurrencies faced another sharp sell-off this week, with Bitcoin dropping from $7,370 to $6,420 in less 24 hours. The entire market was dragged in negative territory as optimism about positive development in the legal environment for cryptos. The total market capitalisation slid to $202bn, down $37bn in the last day. Ethereum also fell off a cliff as it hit $210 this morning, the lowest level since September last year.
Investors’ optimism continues to fade away as regulators persist to refuse Bitcoin a legitimate status. Persistent uncertainties in the regulatory environment have convinced Goldman Sachs to reduce its level of ambitions regarding the creation of a crypo exchange. The bank has not closed the door but is readjusting its scope.
From a technical standpoint, the top of the multi-month downtrend channel continues to act as a strong resistance (currently around the $7,500 level), while on the downside, the $5,600-$5,700 support area is still holding. In the short-term, we expect Bitcoin to continue grinding toward the $6,000 level before bouncing back toward the $7,500 resistance.
Swiss economy robust, but threats loom
Switzerland’s economy is on the rise and appears unaffected by geopolitics. GDP is up 3.4% annually, a pace not seen in the last 8 years! The quarterly GDP advance of 0.7% remains above average (0.4%) for the fifth consecutive time. Key contributors are manufacturing and energy, which benefited from exports and a favourable exchange rate. The CHF has depreciated against the Euro, from 1.09 in September 2015 to 1.13 now, a boost for Switzerland’s export-oriented businesses.
However, the trend is turning. Risks include Turkey’s plunging lira, Italy’s budget deficit and US duties on EU auto imports. The Swiss National Bank expects GDP growth to slow to 2% by the end of the year (still, a rate not seen since 2014). With solid growth and a strong franc, the SNB is not expected to raise interest rates any time soon. Currently trading along 1.1282. EUR/CHF is declining further, heading to 1.1265 in the short-term
