This week and the last have been very eventful for the crypto and the stock markets.
Bitcoin and Ethereum, the two biggest cryptocurrencies by market cap, witnessed periods of high volatility last week, with bitcoin even going below $20k a few days ago and Ethereum bottoming out and briefly touching the $1300 level.
The stocks of top companies like FexEx have suffered earnings misses as well, with others like the S&P 500 seeing earnings-increase projections much lower than what they were in Q3 of 2020
This article is about the top crypto, stocks, and other charts we think are interesting enough to watch amid all the 'drama' going on in finance lately. Taking these charts into account might serve as an insight as to what is going on in the markets and as a way to make predicting where the markets might be headed easier.
The comparison between Bitcoin and Ethereum's prices and charts is by no means a fair one.
Ethereum has recently witnessed far more volatility than Bitcoin, especially with the merge and all the speculation that came with it. However, comparing these cryptocurrencies can be an important factor, considering how they are the biggest two in the market.
The relative prices between the two can effectively judge the sentiment of the crypto market.
Speculating what might happen with Ethereum after the merge is still very much alive and affects its price nonetheless.
This speculation about Ethereum has also led to speculation about when the next general market bull run might be coming in.
The chart on FedEx, in a way, serves as a gauge of sorts for economic conditions in general.
Over the last week, FedEx had one of the largest earnings misses in its history. Its CEO, Raj Subramaniam, had earlier highlighted his expectations for a global recession. FedEx's stock saw its largest loss in a single day and one of the biggest weekly drops it had ever experienced.
As you can see, the market conditions in the chart above are steeply declining.
According to predictions, a wave of Q3 earnings reports is expected from the market, showing updates on how inflation and wage growth has affected the market.
There are many ways the Stock's EPS (earnings per share) can still worsen. For example, things aren't looking so good on the S&P 500 in Q3, as analysts expect a 3.7% earnings increase, from an estimate closer to 9% around July.
If the 3.7% earnings growth happens, it will be its lowest since Q3 in 2020.
Last year, the one-year treasury bond went up and above 4%, which is a bad sign for the future. When this happened, everyone knew things would likely break very soon.
However, recently, the whole curve has almost inverted and flattened across the US01Y to the US10Y, showing the market's demand for higher rates in what may very well be the most unfavorable years for the US government in terms of debt throughout history.
The Federal Open Market Committee (FOMC) will be having its meeting in the coming days, which will likely cause a hike of about 75 basis points. However, the market has to move concerning the probability of a 100 BPS move.
The US dollar is one of the strongest currencies in the world, and liquidity shortages affect everyone regardless.
Foreign currencies have been falling relative to the dollar for a while now, and things don't appear to be stopping anytime soon, especially as interest rates are rising and borrowing costs continue to follow.
In general, this means that most of the world is losing the purchasing power to service the USD's denominated interest and is running out of the means to refinance when these rates inevitably go higher.
Other assets also appear to be losing compared to the US dollar despite inflation and debasement concerns. One such asset, as most people know, is bitcoin. The benchmark cryptocurrency.
Although there are signs that the USD is about to hit its highs and potentially reverse, traders and general market participants have to ask when this reversal is bound to happen constantly
An inverse correlation between the US10Y and gold has been observed, and it appears that this correlation lives on. As the US10Y soars higher and the expectations on long-term inflation continue to climb, gold appears to be headed for the downside over the foreseeable future.
The correlation between these two has historically held despite deteriorating market conditions and continues to play out, even today.
As it is in recent times, with inflation and monetary debasement, gold still appears to be following its old patterns and fails yet again to act as a monetary hedge.
Disclaimer: The author's comments and recommendations are solely for educational and informative purposes. They do not represent any financial or investment advice. Always DYOR (do your own research)