Blocksmith Says: Markets Remain “Tricky”

21 October 2022

We are at one of those tricky moments where things could go either way.  At the moment the three keys to the market (and by extension blue chip crypto) and all related to one another are:  the US Dollar, the US ten year yield and Gold.  The US dollar sits at 113 and change and is close to breaking out and continuing its uptrend to 115+.  My previous stance was down to 108 into the 80 day cycle low which was due this week but this low now looks to be in place which should provide uplift if we get the breakout.   The ten year yield has not had a down week since the start of August and looks to be headed for at least 4.75%.  Gold futures are still pressing down and look set to slice through a key channel low.

The tricky thing at the moment is that if the dollar does not break out, then all of this reverses and it’s a tailwind for crypto.  This week Bitcoin has a 93% correlation with Gold, a minus 92% correlation with the Dollar and a minus 95% correlation with yields – so you can see how important these macro signals are.   And yet at the same time, and as we have covered recently, Bitcoin is very well supported here… As I said, its one of the moments.  Hopefully the picture will be clearer next week.  

Christopher Grafton
Christopher Grafton

Chris has been working in the markets for over 15 years variously as a broker, analyst and researcher. He is the author of a well-known book on Hurst cycles analysis, and runs his own market analysis software platform on Bloomberg. He’s also a keen student of both the cello and Brazilian Jiujitsu.

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