Bitcoin Run-Up Shows Vulnerability to Unwinding — Market Talk

1506 ET - Bitcoin is down 0.8% to $65,884 — hitting resistance at $66k to $68k and potentially unwinding further, says analysts with Bitfinex in a note. That's because spot trading volume is light meaning that there's little underpinning the current rally. "The recovery appears to be driven primarily by derivatives positioning and a lack of sellers rather than an influx of fresh capital," says Bitfinex. Data from Deribit shows a spike in calls around $70k to $72k, the majority dated for July 31. Light volumes could result in extreme choppiness in reaction to some sort of event, says Bitfinex. "A market that climbs on thin participation can travel quickly in either direction, because there is little resting liquidity to absorb a shift in flow," the firm says. ([email protected])1349 ET - Only 10% of investors expect rates to remain steady at the current target range of 3.50-3.75% by year's end, according to CME Group's FedWatch tool. Ahead of the committee's July meeting next week and amid a quiet period for U.S. economic indicators, markets expect the Fed to hold rates steady. The 10-year yield rises to 4.654%. A surge in oil prices on renewed hostilities in the Middle East, pushes gas prices at the pump above $4 a gallon.([email protected])1335 ET - Oxford Economics is the latest forecasting firm to play down the economic impact for Canada from President Trump's plan to impose a 50% tariff on a range of Canadian-made goods. The 50% tariff targets a select group of goods. Should they be implemented as planned on Aug. 19, the impact would shave about 0.2 percentage points from Canada's level of GDP in 2027, Oxford says. Further, the tariff could reduce growth next year by up to 0.2 percentage points, through weaker exports and business investment. "The targeted nature of the tariffs means the biggest impacts would be at the sectoral and regional level," Oxford says. The firm projects Canada-based plastics, electrical machinery, forest products and beverage companies to be most affected. ([email protected]; @paulvieira)1147 ET - Investors question if the rules for bitcoin have changed, says Zach Pandl with Grayscale in a note Wednesday. There's two ways to evaluate how bitcoin has moved, he says. One is using the so-called "four-year cycle" — a pattern persistent since the early days of bitcoin- where prices typically rise ahead of and after bitcoin experiences a "halving". A "halving" is when rewards from a mined bitcoin block are cut in half from their prior amount. The last halving happened in 2024, reducing the reward per mined block to 3.125 BTC. Pandl notes that bitcoin may not be moving along that cycle anymore, instead moving more like a typical asset. "If macro factors are in the driver's seat, bitcoin's price could bottom when these macro factors turn around," says Pandl. ([email protected])1050 ET - Yields on U.K. 10-year government bonds, or gilts, rise to a two-month high due to concerns about the potential impact of the Middle East conflict as well as uncertainty surrounding domestic fiscal policy. Investors worry that rising oil prices could push up inflation and cause the Bank of England to increase interest rates in the coming months. Uncertainty around fiscal policy under a new U.K. government is also causing investors to price in a risk premium into gilts. Ten-year gilt yields rise around 3 basis points to a two-month high of 5.065%, Tradeweb data show. ([email protected])1045 ET - The Bank of England could cut sales of long-term U.K. government bonds, or gilts, under its quantitative tightening program, TD Securities' Pooja Kumra says in a note. Quantitative tightening is the process in which the BOE reduces bond holdings acquired during previous periods of quantitative easing. The size of the BOE's long-dated gilt assets has declined due to the gilt sales program, which began in 2022. The BOE could reduce long-term gilt sales starting October to reflect the limited stock of these bonds remaining on the BOE's balance sheet, Kumra says. ([email protected])1036 ET - Bitcoin is down 1.2% to $65,613, after climbing over $66,000 for the first time since early June yesterday. Inflows continue to be seen for bitcoin ETFs, according to data from CoinGlass — with $203.2 million in inflows in those ETFs yesterday. That makes it six straight days that bitcoin ETFs have seen net inflows, which is encouraging after weeks of net outflows. But the amount of money that's come back to ETFs isn't meaningfully changing the fundamental outlook for bitcoin, says Li Xing of Exness in a note. "The recovery remains modest in a broader context, with July's inflows still well below the combined $6.9 billion of net outflows recorded during May and June," says Xing. ([email protected])1035 ET - Any interventions from Japanese authorities to shore up the yen are unlikely to have a lasting impact until the market becomes more confident in Japan's fundamentals, Rabobank's Jane Foley says in a note. For the yen to strengthen in coming months, further reassurances on fiscal policy will be needed and the Bank of Japan will have to signal a faster pace of interest-rate rises, she says. Many market participants are worried about expansionary fiscal policy and the BOJ's slow pace of tightening, she says. Rabobank expects the dollar to fall to 159 yen within three months, from 163.05 currently, if the BOJ signals more aggressive tightening and the Federal Reserve sounds cautious about raising rates. ([email protected])1030 ET - Bank of Nova Scotia sticks to its call for Bank of Canada rate increases later this year despite the threat of new U.S. tariffs. Economist Derek Holt says the threat of 50% tariffs likely represents a negotiating ploy — something that USTR Jamieson Greer hinted at in remarks to CNBC. Holt reckons Trump may want a USMCA deal before the midterms because "he needs some wins" given fallout from Iran war and affordability. Further, Holt says Canada has shock observers to withstand this latest trade hit. First, a weaker Canadian dollar would buoy exports; and elevated commodity prices stemming from the war in Iran, which will lift national income. Holt adds risks are building that firms eventually pass on the higher fuel costs to stop profit-margin deterioration. ([email protected]; @paulvieira)1009 ET - More than half--53%--of U.S. residents oppose the construction of an AI data center in their neighborhood, Redfin says. Roughly one-third, or 34%, support it. AI data centers are controversial largely because they reportedly strain electricity and water resources, which can push up energy costs and spark environmental concerns. They can also disrupt communities with noise and large, industrial-looking structures. For some people, AI data centers also represent broader fears about AI: 58% of U.S. residents believe that advances in AI will eliminate jobs and make it harder to afford homes. Real-estate agents say concerns about nearby data centers are becoming increasingly common among homebuyers. Older generations are more likely to oppose data centers in their area. ([email protected])1002 ET - HSBC sees value in long-dated U.S. inflation-protected Treasurys, or TIPS, strategist Dhiraj Narula says in a note. Yields on TIPS are now at multi-decade highs. "The surge in real rates in recent weeks notably contrasts with the collapse in inflation breakeven spreads, which have remained low despite the uptick in oil prices amid renewed geopolitical tensions in the Middle East," the strategist says. The key reason for this is the more decisive messaging on price stability from several Federal Reserve members, emphasising a commitment to the 2% inflation target, he says. HSBC maintains a neutral duration--a measure of a bond's sensitivity to interest-rate changes--position on nominal U.S. Treasurys. ([email protected])0941 ET - Sterling falls to a one-week low against the dollar and the euro as investors weigh U.K. fiscal uncertainty, lower-than-expected inflation data for the country and escalating U.S.-Iran tensions. New U.K. Prime Minister Andy Burnham announced a cap on bus fares across England and VAT cuts on electricity bills. This points to a government willing to use fiscal space early, Tickmill Group's Patrick Munnelly says in a note. Data earlier showed U.K. inflation eased more than forecast to 2.6% in June, dampening interest rate rise expectations. President Trump warned of further military strikes against Iran on his Truth Social platform Wednesday. Sterling falls to as low as $1.3352 and the euro rises to as high as 0.8539 pounds. ([email protected])