Bitcoin rebound in doubt amid Crypto market woes as APAC markets eye risk-on session

Friday’s Asia-Pacific outlook

• USD

Asia-Pacific markets are looking at a risk-on session after the US dollar plummeted alongside Treasury yields after US inflation slowed in October, according to the consumer price index (CPI). Traders trimmed Fed rate hike bets, dragging the implied policy rate for 2023 below the 5% mark. The easing in Fed funds futures saw the US dollar DXY Index post its biggest daily decline since 2009.

• Bitcoin

Bitcoin prices climbed over 10%, but that wasn’t enough to trim its weekly loss of around 16%. FTX faces a liquidity gap of nearly $8 billion. The crypto exchange’s founder is scrambling to raise funds, but investor confidence in the crypto space has been severely damaged. The fallout will likely weigh on crypto sentiment for months or even years. The US SEC has opened a probe, and more regulatory scrutiny is likely to follow.

• China

China continues to grapple with rising Covid cases. Several large cities, including Guangzhou, remain under varying degrees of restriction, which will likely impact economic output, although to what degree is uncertain. If the yuan manages to extend the current bout of strength against the US dollar, Chinese policymakers would be afforded more room to ease policy and boost credit growth without worrying about triggering capital outflows.

China’s lending in October fell to 615 billion yuan, according to yesterday’s data. That was down sharply from 2.4 trillion yuan in September.

• Market sentiment

New Zealand’s BusinessNZ manufacturing PMI fell to 49.3 in October from 52 the prior month. Japan will release factory gate prices for October, which are expected to slow from a year ago. Later today, India’s industrial and manufacturing production numbers for September are due. Outside of grains, most commodities rallied.

WTI crude oil prices rose around 0.5%, gold and silver gained nearly 3%, and platinum rose almost 5%.

• Bitcoin technical outlook

A sharp reversal saw BTC rise 12%, but prices remain below the 50-day Simple Moving Average (SMA) and a zone of recently broken support that underpinned a consolidation period spanning back to June. If prices close a weekly candlestick below the former support zone, more downside may occur.

BTC/USD daily chart

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