Bitcoin Short Liquidation Risk Surges as BTC Price Dips Under $64K

Economic

Cryptocurrency

Summary:

Liquidation levels form an increasingly large cloud above BTC spot price as Bitcoin rests near $64,000.

Bitcoin traded lower on April 25 after a fresh knee-jerk reaction to geopolitical news cost bulls up to 5%. Bitcoin Short Liquidation Risk Surges as BTC Price Dips Under $64K_1

Bitcoin Short Liquidation Risk Surges as BTC Price Dips Under $64K_1

BTC/USD 1-hour chart.

BTC price stays sensitive to Middle East

Data from Cointelegraph Markets Pro and TradingView showed BTC price action attempting to form support at $64,000 prior to the Wall Street open.

This followed a dip to $63,575 around the previous daily close, resulting from renewed Middle East tensions.

According to the latest figures from monitoring resource CoinGlass, liquidity increased on both sides of the spot price across crypto exchanges on the day.

Notably, a large cloud of asks had appeared, beginning with around $75 million at $64,765 and laddering up to $67,700.

To the downside, there was comparatively modest bid interest focused on $63,500 — the local low. Bitcoin Short Liquidation Risk Surges as BTC Price Dips Under $64K_2

Bitcoin Short Liquidation Risk Surges as BTC Price Dips Under $64K_2

Bitcoin liquidation heatmap.Source:CoinGlass

Bitcoin managed to fill one of two recently-created CME Group futures gaps with its latest downside.

Commenting on the current status quo, popular trader Daan Crypto Trades reiterated the “healthy” state of funding rates as a basis for a slow but steady BTC price recovery going forward.

“Keep it this way as we grind up and we should have a solid base for higher. Don’t want to see longs ape back in on the next best green candle,” he wrote in part of commentary on X alongside CoinGlass data. Bitcoin Short Liquidation Risk Surges as BTC Price Dips Under $64K_3

Bitcoin Short Liquidation Risk Surges as BTC Price Dips Under $64K_3

Bitcoin funding rates heatmap (screenshot). Source: CoinGlass

In the latest edition of its “New York Color” market updates sent to Telegram channel subscribers on April 24, trading firm QCP Capital revealed shifting crypto sentiment on low-timeframes.

“The market is expecting upside to be capped and for spot price to consolidate in the short term,” it wrote.

Bitcoin ETF flows tread water

Meanwhile, the United States’ spot Bitcoin exchange-traded funds (ETFs) returned to net outflows on April 24.

These were driven mostly by outflows from the Grayscale Bitcoin Trust (GBTC), data from sources including United Kingdom-based investment firm Farside shows. Bitcoin Short Liquidation Risk Surges as BTC Price Dips Under $64K_4

Bitcoin Short Liquidation Risk Surges as BTC Price Dips Under $64K_4

Bitcoin spot ETF flows (screenshot). Source: Farside

In an unusual event, as Cointelegraph reported, the largest ETF offering from asset manager BlackRock saw zero inflows.

Spot ETFs are due to begin trading in Hong Kong on April 30, marking another first for Bitcoin institutional adoption.

Source: Cointelegraph

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Warren Takunda

Economic

Forex

Japanese authorities are facing renewed pressure to combat a sustained depreciation in the yen, as traders drive down the currency on expectations that any further interest rate hikes by the central bank will be slow in forthcoming.

Below are details on how yen-buying intervention works:

LAST CONFIRMED YEN-BUYING INTERVENTION?

Japan bought yen in September 2022, its first foray in the market to boost its currency since 1998, after a Bank of Japan (BOJ) decision to maintain its ultra-loose monetary policy drove the yen as low as 145 per dollar. It intervened again in October after the yen plunged to a 32-year low of 151.94.

WHY STEP IN?

Yen-buying intervention is rare. Far more often the Ministry of Finance has sold yen to prevent its rise from hurting the export-reliant economy by making Japanese goods less competitive overseas.

But yen weakness is now seen as problematic, with Japanese firms having shifted production overseas and the economy heavily reliant on imports for goods ranging from fuel and raw materials to machinery parts.

WHAT HAPPENS FIRST?

When Japanese authorities escalate their verbal warnings to say they "stand ready to act decisively" against speculative moves, that is a sign intervention may be imminent.

Rate checking by the BOJ - when central bank officials call dealers and ask for buying or selling rates for the yen - is seen by traders as a possible precursor to intervention.

WHAT HAPPENED SO FAR?

Finance Minister Shunichi Suzuki told reporters on March 27 that authorities could take "decisive steps" against yen weakness - language he hasn't used since the 2022 intervention.

Hours later, Japanese authorities held an emergency meeting to discuss the weak yen. The meeting is usually held as a symbolic gesture to markets that authorities are concerned about rapid currency moves.

After the warnings failed to arrest the yen's fall, South Korea and Japan won acknowledgement from the United States over their "serious concerns" about their currencies' declines in a trilateral meeting held in Washington last week.

The market impact of the agreement did not last long. The dollar continued its ascent and notched a 34-year high of 155.74 yen on Thursday, driving past the 155 level seen as authorities' line in the sand for intervention.

NEXT LINE IN THE SAND?

Authorities say they look at the speed of yen falls, rather than levels, and whether the moves are driven by speculators, to determine whether to step into the currency market.

While the dollar has moved above the psychologically important 155 level, the recent rise has been gradual and driven mostly by U.S.-Japanese interest rate differentials. That may make it hard for Japan to argue that recent yen falls are out of line with fundamentals and warrant intervention.

Some market players bet Japanese authorities' next line in the sand could be 160. Ruling party executive Takao Ochi told Reuters the yen's slide towards 160 or 170 to the dollar could prod policymakers to act.

WHAT'S THE TRIGGER?

The decision is highly political. When public anger over the weak yen and a subsequent rise in the cost of living is high, that puts pressure on the administration to respond. This was the case when Tokyo intervened in 2022.

Prime Minister Fumio Kishida may feel the need to prevent further yen falls from pushing up the cost of living with his approval ratings faltering ahead of a ruling party leadership race in September.

But the decision would not be easy. Intervention is costly and could easily fail, given that even a large burst of yen buying would pale next to the $7.5 trillion that change hands daily in the foreign exchange market.

HOW WOULD IT WORK?

When Japan intervenes to stem yen rises, the Ministry of Finance issues short-term bills, raising yen it then sells to weaken the Japanese currency.

To support the yen, however, the authorities must tap Japan's foreign reserves for dollars to sell for yen.

In either case, the finance minister issues the order to intervene and the BOJ executes the order as the ministry's agent.

CHALLENGES?

Japanese authorities consider it important to seek the support of Group of Seven partners, notably the United States if the intervention involves the dollar.

Washington gave tacit approval when Japan intervened in 2022, reflecting recent close bilateral relations.

Finance Minister Suzuki said last week's meeting with his U.S. and South Korean counterparts laid the groundwork to act against excessive yen moves, a sign Tokyo saw the meeting as informal consent by Washington to intervene as needed.

A looming U.S. presidential election may complicate Japan's decision on whether and when to intervene.

In a social media post on Tuesday, Republican presidential candidate Donald Trump decried the yen's historic slide against the dollar, calling it a "total disaster" for the United States.

There is no guarantee intervention will effectively shift the weak-yen tide, which is driven largely by expectations of prolonged low interest rates in Japan. BOJ Governor Kazuo Ueda has dropped hints of another rate hike but stressed that the bank will tread cautiously given Japan's fragile economy.

Source: Reuters

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Alex

Economic

The latest Retail Radar Survey reports 64% of members did not meet sales targets for the January-March period, which Retail NZ chief executive Carolyn Young described as "pretty significant".

"We're heading into those quiet months between autumn and winter and if you look at the data from April through to September, those months [are] quite flat with traditionally lower sales periods."

"The numbers are all down, the sentiment is down, hitting targets is down, so all the data tells us we're heading into the quiet winter months with a lower base and we know that consumer confidence is well down compared to where it was previously."

She said the sector would "continue to head in that direction," with over half of respondents reporting they did not expect sales to improve in the coming April-June quarter and likely would not meet those targets either.

According to the report, 62% of retailers listed inflation as their most significant issue, followed by insurance cost increases (55%) and wage increases (52%). Young also said freight and lease costs going up were making things "really difficult" for retailers.

"There's a whole range of things that are impacting retailers in terms of their expenses which are cutting into margins and making it really difficult. That uncertainty is rolling through into their confidence around how they feel they'll survive in the next 12 months, knowing that the economy is really tough," said Young.

She said almost a third of businesses were unsure whether they could survive the next 12 months with the resources they currently had.

Young cited consumer confidence as a factor, saying people are still going into stores but not spending as much as they typically used to or have less money in the discretionary spending area, which is a "large part of retail".

"The thing to consider is that once the Reserve Bank reduces interest rates, people's mortgages won't change immediately. It will only be when they come up for renewal, so there will be that lag-factor of when that actually occurs and how long it takes for people to notice a difference in that wallet."

She said families will be looking to tighten discretionary spending over the next nine-month period and redirect unnecessary spending into essentials such as heating the home and putting food on the table.

Retail businesses are reporting bleak trading prospects for the first quarter of the year — with a third concerned they won't be able to make it through the next 12 months, according to a Retail NZ report.

The latest Retail Radar Survey reports 64% of members did not meet sales targets for the January-March period, which Retail NZ chief executive Carolyn Young described as "pretty significant".

"We're heading into those quiet months between autumn and winter and if you look at the data from April through to September, those months [are] quite flat with traditionally lower sales periods."

She said almost a third of businesses were unsure whether they could survive the next 12 months with the resources they currently had.

Source: 1news

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FastBull Featured

Remarks of Officials

On April 25, local time, Isabel Schnabel, a member of the Governing Council of the European Central Bank (ECB), delivered a speech, the words are as follows:

The last mile of inflation coming down to 2% in the Eurozone will be "bumpy", with the main risk factors including declining productivity and persistently high inflation in the services sector.

Currently, the ECB is focusing on the evolution of future labor costs. At the moment, wage growth remains relatively strong, but appears to be showing signs of a gradual slowdown, which is in line with our expectations. However, productivity growth in the Eurozone has been negative for several consecutive quarters, which makes it important to assess how much of this is due to cyclical factors and how much is due to structural factors.

If the GDP deflator is used as a measure of inflation in the Eurozone, the upward pressure on inflation from labor costs is very strong. At the same time, the upward pressure on inflation from corporate profits has fallen sharply. This suggests that corporate profits are continuing to absorb the impact of wage increases.

Right now, services inflation is the main risk to headline inflation, as most goods inflation is already below 2%. In addition, the transmission of wage prices in the service sector is much stronger than that of goods, and strong demand for the service sector may be one of the reasons.

More importantly, the ECB needs to consider new potential risks to supply chain shocks, such as intensifying geopolitical conflicts and surging energy prices. So far, however, the impact of geopolitical conflicts on energy prices is limited.

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Samantha Luan

Economic

Commodity

Energy

Consumption growth was concentrated in manufacturing (+112 billion kWh) as factories returned to normal operations after widespread disruptions caused by lockdowns in 2022 and 2023.

But there was also significant growth from services firms (+53 billion kWh), residential users (+41 billion kWh) and primary industries such as agriculture and mining (+3 billion kWh), according to the National Energy Administration.

Generation from large-scaled grid-connected power plants increased by 166 billion kWh (+8%) in the first three months of 2024, according to separate data published by the National Bureau of Statistics.

Most of the extra generation was provided by thermal power plants (+108 billion kWh) primarily fired by coal with a small percentage burning gas.

There were smaller contributions from wind farms (+34 billion kWh), grid-connected solar generators (+17 billion kWh) and hydroelectric generators (+7 billion kWh).

Thermal generation rose 7% from the previous year to a seasonal record of 1,603 billion kWh and accounted for 72% of all grid-connected output.

By contrast, hydro generation increased by just 3% to 210 billion kWh and was well below the seasonal record of 221 billion kWh set in the first quarter of 2022.

Hydro has been depressed by the persistent drought across southern China that started in 2022 and lasted through 2023.

But southern areas have been hit by unusually early and heavy rains since early in April which should recharge water resources and boost hydro output from May onwards.

SPRING RAINS

China's rainfall and hydro generation are concentrated in the southern part of the country, where spring rains are followed by heavier precipitation during the wet phase of the East Asian Monsoon from June to September.

South China accounts for 36% of the country's land area but 81% of its total water resources, according to data compiled by the central government's Ministry of Water Resources.

Four massive drainage basins in the south (covering the Yangtze River, Pearl River, Southeast Rivers and Southwest Rivers) account for more than 80% of the country's hydro generation.

South China experienced unusually low rainfall during the wet phase of the East Asian Monsoon in 2022 and precipitation remained below average throughout 2023, curtailing river levels and generation.

In 2024, however, the spring rains arrived unusually early and have been heavy, reaching records in some areas, which should boost hydro generation.

Guangdong province experienced its first major flood this year on April 7, the earliest since at least 1998, according to the water ministry.

Rainfall so far in April in the city of Yibin at the confluence of the Min and Yangtze rivers, and on the border between Sichuan and Yunnan, the two massive hydro producers in the southwest, has been the highest since 2022 and, before that, 2016.

Like rainfall, hydro generation follows a pronounced seasonal pattern - lowest in the first quarter before rising sharply in the second and third quarters with the spring and monsoon rains, then tapering in the fourth quarter.

Relatively heavy spring rains should bring a big boost in hydro generation during the second quarter this year, which will continue throughout the third quarter if the monsoon reverts to normal.

COAL RELIEF

China relied heavily on coal-fired generators during the winter of 2023/2024, running existing generators for more hours and starting up a number of new power plants to meet electricity demand.

But record amounts of solar generation were installed in 2023 and the massive deployment has continued in the first three months of 2024. Solar generation capacity has doubled since 2021 and quadrupled since 2018.

The combination of rapid growth in solar with a post-drought recovery in hydro generation should limit the need for so much coal combustion in the second and third quarters of 2024.

Provided the monsoon rains are near-normal, coal-fired generation will grow more slowly over the rest of the year.

China's underlying growth in electricity consumption is so huge the government has no choice but to pursue an "all-of-the-above" strategy embracing a mix of coal and renewables.

The scale of the consumption growth means that coal-fired generation could continue to rise in 2024 and for a few more years.

But the massive deployment of renewables is already bending the coal consumption curve lower and emissions are likely to peak before the end of the decade in line with the government's announced target.

Source: Reuters

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Warren Takunda

Economic

Forex

The prospect of another interest rate hike has become more likely after Australia's first-quarter inflation figures revealed the process of disinflation was at risk of stalling, with some key measures starting to rise again.

"Time to worry about a hike?" asks David Forrester, Senior FX Strategist at Crédit Agricole in Singapore. "Australia’s inflation has slowed by significantly less than the RBA had hoped."

The Australian Dollar was the best-performing major currency on the day the ABS said CPI inflation rose 3.6% year-on-year in the first quarter, which was stronger than the 3.4% outturn the market was expecting.

It was the report's details that will worry the RBA: inflation accelerated on a quarter-to-quarter basis from 0.6% in Q4 to 1.0% in Q1 which indicates the more timely measures show inflation is picking up again.

The core measures of inflation that the RBA tracks closely also showed signs of increasing price pressures: the weighed mean accelerated from 0.9% to 1.1% q/q while the trimmed mean quickened from 0.8% to 1.0% q/q.

"All told, the data reinforce our conviction that the RBA is unlikely to cut rates before Q4. If anything, the slew of upside surprises raise the risk that the Bank will feel the need to hike rates further," says Abhijit Surya, Australia and New Zealand Economist at Capital Economics.

Crédit Agricole says the RBA will have to revise up its inflation forecasts given recent trends and delay the return of inflation to its target band 2-3% target band, "which the central bank has indicated in the past would trigger a rate hike".

"The Australian Dollar would be in a position to make further gains against the likes of the Pound and Euro in the coming months if the RBA does proceed with an interest rate hike," says Russell Gous, advisor at MoneyTransfer.com.au.

Higher interest rates at the RBA will trigger higher rates on consumer- and business-facing loans, which will slow economic activity and bring inflation down. But, it also makes the vast Australian debt markets more attractive to international investors as higher interest rates mean a higher return. Australian Dollar: Next Move Could be an Interest Rate Hike Warn Economists_1

Australian Dollar: Next Move Could be an Interest Rate Hike Warn Economists_1

Above: The AUD is the best performer in G10 when screened over the past week.

This can attract capital into Australia, thereby boosting the value of the Aussie Dollar, particularly against currencies belonging to central banks that are cutting interest rates.

Michele Bullock, the RBA Governor, said in February, "we haven’t ruled anything out and we haven’t ruled anything in," regarding whether it will cut or raise interest rates.

She added that the Board has a low tolerance for upside inflation surprises and a later return of inflation to the target band.

"The RBA will come out hawkish at its 7 May meeting and it is appropriate for the market to price out rate cuts for 2024, for now. A rate hike is unlikely at this stage as a second wave of large mortgage rollovers began in March and peaks in June. The RBA will want to see the impact of these rollovers on households before making its next move," says Forrester.

Crédit Agricole thinks a November rate cut is still likely, a view shared by the majority of domestic banks.

Nevertheless, we expect to see increased chatter of a rate hike, and this can act to underpin the Australian Dollar.

"For the AUD, we feel that diverging monetary policy expectations, widening yield differentials, and Australia’s sturdier economic fundamentals should support pairs like AUD/EUR, AUD/GBP, and AUD/NZD," says APAC currency strategist Peter Dragicevich at Corpay.

Source: Poundsterlinglive

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Ukadike Micheal

Economic

Forex

Nearly every economic indicator suggests that the US economy has remained resilient over the past three months, painting a positive picture for the first quarter's growth trajectory. The anticipation is high as economists await the Bureau of Economic Analysis' (BEA) release of the first estimate of the inflation-adjusted gain in gross domestic product (GDP) for the quarter, scheduled for Thursday morning at 8:30 a.m. Eastern. Initial projections from economists surveyed by FactSet suggest a moderate growth rate of around 2.2%, in line with the New York Fed Staff Nowcast's forecast.

However, the landscape of predictions is diverse, with some institutions forecasting higher growth rates. Goldman Sachs, for instance, anticipates a more robust 3.1% annualized GDP growth, signaling potential optimism about the economy's performance. On the other hand, the Atlanta Fed's GDPNow model suggests a slightly lower growth rate of 2.7%. Morgan Stanley and EY chief economists are also aligned in forecasting growth rates around 2.6%. Despite the variations in forecasts, all indications point to a deceleration in growth compared to the robust 3.4% pace witnessed at the end of the previous year.

Consumer spending emerges as a key driver of first-quarter growth, demonstrating the continued resilience of US households. However, there are indications of a potential slowdown in goods purchases compared to the end of 2023, although strong services consumption is expected to partially offset this decline. This nuanced view of consumer behavior underscores the complexity of economic dynamics and the various factors influencing spending patterns.

A significant contributing factor to consumer confidence and spending has been the robust labor market, characterized by consistent monthly job gains averaging close to 300,000 positions. The unemployment rate remains at historically low levels, further bolstering consumer sentiment. Additionally, wage growth continues to outpace inflation, providing support for consumer purchasing power and overall economic activity.

Beyond consumer spending, residential investment is expected to make a modest contribution to first-quarter GDP growth. However, challenges may arise in other investment sectors, particularly amid the backdrop of rising interest rates. The current environment of higher borrowing costs could dampen business spending, potentially exerting downward pressure on overall economic growth.

While the US economy is positioned for another quarter of expansion, the forecasts signal a moderation in growth compared to previous quarters. The release of the GDP report will offer valuable insights into the health and resilience of the economy amidst evolving economic conditions. As policymakers and market participants await the data, attention will be focused on key indicators such as consumer spending, investment, and employment trends to assess the trajectory of economic recovery and expansion.