Equilibriums
As we rung in the new year and said goodbye to 2022 there was a sense of relief for many around the world. We had seen as much as a 27% drop on the S&P500 last year before getting a some relief in Q4. When looking at the traditional markets, the pullback in 2022 was large enough to create a gap that will be hard to fill in short order. This will take at least another year to even attempt new highs, not to mention the very high possibility of new lows. After getting a nice 10% Q4, rally many of us including myself are pivoting from a strong bearish stance to more of a neutral stance going forward. Gone are the easy trading days of 2021 where one could make money by simply being in the markets; and we are left with lots of choppy price action. On the other hand the easy shorts are also gone, at least for the time. So we sit and observe and take the odd day trade here and there. With downside still a possibility we wait with bated breath for the Fed to pivot from a tightening cycle to one more accommodating. So as the markets come back into balance I expect more of an equilibrium year for 2023.
Happy New Year #FungiFam! Welcome back to yet another edition of #SundaiFungi. I’ve had a much needed break and am excited to be back at my desk on Sunday mornings to put this newsletter together for you all. I hope you all have been having a good time watching the Nightshade conjurings, I certainly have and have even conjured a couple myself so far. Be sure to subscribe above as we have a NFT prize coming out to a random person once we hit 100 subscribers. Each week Fungoshi and I break down the markets, macro economics and of course Crypto and NFT’s. If you are new here, welcome, our little mycelium network continues to grow. Be sure to like and share with your friends. Let’s jump in!
Market Highlights
World Bank to Warn of Global Recession Risk in Economic Outlook. Link
Optimism Makes Comeback on Wall Street With Soft Landing Eyed. Link
Fed’s George Sees ‘Difficult’ Policy Messaging to Balance Inflation, Jobs. Link
Traders Slash Fed Bets After Data; Key Yield Inversion Deepens. Link
Nonfarm payrolls rose 223,000 in December, as strong jobs market tops expectations. Link
U.S. VC funding cools from 2021 record as investors keep their powder dry. Link
ECB Should Hit Terminal Rate by Summer, Then Hold, Villeroy Says. Link
Amazon cuts jobs to reset tech giant after monster growth in the pandemic, but investors still worried. Link
Crypto News
Hedge funds subpoenaed by U.S. prosecutors as Binance probe unfolds. Link
US trustee objects to FTX's planned sale of LedgerX and other units. Link
FTX's US Leadership, Bahamas Liquidators Say They've 'Resolved' Most of Their Issues. Link
Mark Cuban Makes Prediction on Next Crypto ‘Scandal,’ Warns of Potential Implosion if Exposed. Link
Were You Rekt by FTX? This Website Connects You to Law Enforcement. Link
The Good, The Bad And The Ugly From 2022, Bitcoin’s Year Of The Bear. Link
Bitcoin, Sango Coin and the Central African Republic. Link
Crypto Conglomerate DCG Being Investigated by DOJ, SEC. Link
This week was compressed overall leading into the US employment numbers, which were pretty mixed with higher than expected jobs growth but with m/m hourly wages falling below expectations. We did have a strong rally on Friday for a gain over 2% on the S&P500. It is becoming less clear if good economic data is bad for markets as it was in 2022. With tax loss harvesting season over and new capital to deploy we know that lots of participants including VC funding pools are just trying to figure out where the best bang for their buck will go and where being defensive will be the most efficient move. The World Bank is warning of a global recession this year, which we all know that central bankers are just as clueless or more than the average analyst, so we’ll have to see how the next few quarters playout. I expect inflation to be under the 9% it was last June, but still very far from the 2% target the Fed has it’s eyes on. At the same time Wall St, has begun to get giddy again at the prospect of a good rally. Retail will be caught in between as mortgage payments rise and the housing market continues to decline. Oil dropped for another week from $80 to$73 as demand is waning and manufacturing slows. For this coming week all eyes will be on CPI numbers which get released at 8:30am ET on Thursday. Until then I expect some bullish continuation from Friday’s close.
I’ve been having a bit of a difficult time determining whether Crypto is leading traditional markets, or a laggard. When you look at BTC/NASDAQ we’ve had 6 consecutive weeks of gains, however it hasn’t been BTC in USD dollar terms that has been rising, but more that Crypto has been flat while traditional markets sold off, especially the tech sector. In some ways I think the short term bottom is in for Crypto, but in others feel like another leg down is possible. We had some prognostications from Mark Cuban this week that suggested that the majority of Crypto volume on centralized exchanges is wash trading. I’m not sure exactly if that is true or not, but if so, the crypto markets have a lot longer to go to find proper supply balance. We have more than enough news to follow for the rest of 2024, between the FTX case, the bankruptcy filings by Celcius and Blockfi, the payback to clients of Mt.Gox, not to mention all the SEC subpoenas of DGC, Binance, etc. One thing is certain for 2023, regulations are only going to increase and oversight will be scrutinized much more closely. Collateral damage will continue and counter lawsuits will transpire. The lawyers will certainly line their pockets along the way.
The following charts are for informational purposes only and not to be construed as financial advice. Charts in White are Fungoshi’s and those in Blue are my own. Always do your own research before investing or trading.
Gm gm #FungiFam. Happy new year and happy to be back doing Sundai Fungi. Since our last analysis, we have moved closer to our expected target of 103.244 for the dollar. We seem to be reversing from where we are at right now, but with very high conviction I can say that we might make a quick wick to our target and maybe down to 102.647 as well. Then we have a high probability to reverse and go for 109.167. Seasonality is important in Q1 and seems like a highly likely scenario because DXY has a bullish seasonal tendency up until March and the beginning of April.
DXY Weekly
Since it’s peak in September we can see that the Dollar has steadily sold off, helping with the Q4 rally in traditional markets. However, this consolidation lost the Fib382 meaning the retracement is greater than what would be considered a bull flag. To me, this means that even it if rallies from this point, we’d be scouting a lower high below the 114 peak. With a lower high in mind, it could be the beginning of a multi quarter equilibrium and then further selloff, creating a good catalyst for good market rallies into 2024.
DXY Daily
Although we had a pretty good rally in the dollar, Tuesday-Thursday last week, Friday’s selling negated most of the weekly gains. As long as MA50 is overhead and also MA200 I expect the dollar to stay stable or have selling pressure. This will be good for markets to start the week as we await CPI numbers on Thursday.
ZB (Bonds)
For analysis on bonds I will be switching over to ZB futures instead of the TLT ETF, because ZB futures provide much cleaner price action. We are in a tricky spot at the moment, as 132’16-129’19 is the area that price is sensitive to and likely to react from. I will be just observing how price behaves for now. We could also have a big momentum bar and a breakout from here but then go much more deeper into resistance, as well. For now, just wait and observe mode is on. The overall longer term trend hasn’t changed yet, its still down but how far we will go on this rally needs to be taken into consideration.
Gold
Lol! My favorite instrument to do calls since late February, early March last year. I have got most of my targets right, and I am going in for another one. Since, the last analysis PA has played out well in our favour 1892.4 is still on the table. We should see some type of topping formation in Gold to validate a reversal. If not we are in an area where we would require some strong momentum to breakout and continue.
ES
Since our last analysis 4368 has been the primary target but we failed at around 4175. One point to take into account is that, around same time Gold was able to continue going up and ES failed, this tells us that the inflation narrative is still very strong and stocks are still not as attractive as much gold is. This is the behavior of a lagging asset class, which is what makes trading laggards difficult. The accuracy in calls for gold is attributed to it’s strong narrative against inflation, making it a leader in current environment. There is still some hope for ES and stocks because we have not yet seen a complete reversal in the other inversely correlated and positively correlated asset classes. For now 4019.75- 3940.75 are out main areas of interest to look for reversal, a resolution to this reversal would only be from a strong momentum bar. Which is what we would be looking for in other positively correlated assets like Bonds and Gold as well.
ES Daily
Last newsletter I was looking at this ascending wedge on ES and we can see we broke bear since that time but with little follow through. This tells me we are likely in a consolidation range and near a point of control. This selloff coincided with the loss of the psychological level of 4000. The 200MA is now sitting around that psychological level as resistance. Bulls have some work to get back over that level again otherwise the bears will take back control here. To start the week, we are positioned to break and hold the 50MA and set some supports there for some continuation. I expect some big volatility as bulls had the big win on Friday and bears will want to try and push back and hold the rally where it’s at. How Monday opens will likely dictate the sentiment for the rest of the week.
BTC Weekly
To keep the bigger picture in mind, BTC still is below the EMA12 as resistance and the last weekly rally there was rejected strongly. We are still below the Feb 2018 level of $17,200 and need to be wary of any big prognostications to the bull side until we break through that level with volume.
BTC Daily
Not much to report on the BTC daily chart as we’ve been in a range between $16,300 and $17,060 for 21 days already. Everyone got excited by the rally on Friday, but if BTC can’t break $17,060 in the next day, we are looking for longer consolidation in this range. I’ll start trading crypto more aggressively if we can break out of this short term daily range.
BTCDOM PERP
Though we may see the odd BTC dominance rally here or there, the drawdown has been too great now and a lower high would be the next expected outcome and further downside thereafter. I really don’t see a big BTC dominance rally for awhile which means alts will have there time to shine for a bit.
Yes! I (fungoshi) will be focusing more on ETH now, instead of BTC. The reason why I have shifted my focus on ETH is because ETH has more volatility than BTC and in the past month I have been doing some back testing and R&D with ETH which has helped me to improve accuracy and aim at more high probability opportunities. What you can see on the chart is the ETH/BTC ratio below the ETH chart. I would be looking for some shorting opportunities in the coming week, if I see some divergence between the ETHBTC and ETHUSD pair and 1228 would be my first area of interest if we do get an opportunity to short.
ETH/BTC Daily
Although ETH is having a good run and dominating BTC, we are coming to a key S/R level (mentioned in a previous newsletter) and the ETH bears may put up more of a fight. That being said if the bulls can get a major volume push there could be a big cascading liquidation event above this level sustaining the rally even further. The next few days will be key for ETH bulls.
Crypto Fear and Greed Index
CBBI Index
The CBBI is a Bitcoin index that utilizes advanced, real-time analysis of 10 metrics to help us understand what stage of the Bitcoin bull run and bear market cycles we are in. The CBBI is time-independent and price-independent. It simply indicates whether it believes we are approaching the top/bottom of a Bitcoin cycle. Link.
Crypto Net Unrealized Profit/Loss Link
NFT News
NFT Marketplace SuperRare Cuts 30% of Staff: 'We Over-Hired'. Link
Financial Giant Fidelity Files Trademark Applications for NFT Marketplace in the Metaverse. Link
Bluechip NFT project Moonbirds signs with Hollywood talent agents UTA. Link
NFT influencer falls victim to cyberattack, loses $300K+ CryptoPunks. Link
OpenSea adds support for Arbitrum Nova. Link
Arrested Mutant Ape Planet Founder May Have Pulled Off Multiple Other NFT Rug Pulls. Link
Whoo hoo, Conjuring finally got off the ground. For those of you who have been away from the Fungible Fungi project for awhile it has been a whirlwind month. Users have been adding their shrooms into conjuring rings, paying for them in SPORES tokens and now. It’s worth going to the discord and reading the following channels: Announcements, Minor-updates, how-to-conjure, and most importantly watching the collection grow at https://opensea.io/collection/thenightshades
I’ve managed to conjure up a couple to my collection already and it’s been a treat watching new ones pop up daily at noon ET. Here is one of the Nightshades I was lucky enough to conjure last week, with a cool emanation.
Enjoy the build out of this project fam. It is truly unique in the space and a front runner in animated NFT’s. We are just getting started. Let’s go!
Have a safe week out there #FungiFam! Be kind, treat others better than yourself. As always, #MushLove. —Farfromover403