On Friday (May 24), the dollar index rose to 105.06, and the US manufacturing and service PMI exceeded expectations, boosting the hawkish camp pricing. Gold fell to $2,327, and then rebounded to $2,333. Bitcoin suddenly "plugged" overnight to touch $66,324 to liquidate longs, but has now rebounded to above $67,700. US President Biden rarely recruited meme managers, the China Securities Regulatory Commission approved the 19B-4 documents of eight Ethereum spot ETFs, and the US House of Representatives passed the 21st Century Financial Innovation and Technology Act (FIT21).
US PMI exceeds expectations to support dollar index buying
The S&P Global Manufacturing PMI in the United States rose to 50.9 in May, up from 50.0 in April and exceeding the 50.0 forecast by economists.
The services PMI rose to 54.8 from 51.3 last month, exceeding the expected 51.3 on a monthly basis.
The composite PMI in May was 54.4, a significant increase from 51.3 in April and exceeding the expected decline of 51.1.
The U.S. Department of Labor announced that the number of unemployment insurance beneficiaries was 215,000 in the week ending May 18, lower than the expected 220,000 and 223,000 in the previous week, which means that the labor market is resilient.
The Federal Reserve has been cautious about monetary policy adjustments, while advocating continued patience before starting to cut interest rates.
The probability of a rate cut at the September meeting has fallen to below 40%, according to the CME's Fed Watch tool.
Biden's rare recruitment of meme managers stimulates the crypto market
Biden's campaign team rarely recruited a meme manager to increase its appeal to young voters, stimulating Biden-related meme coin Dark Brandon (BIDEN) to soar 1229% at one point, and then fell back to $0.007368 on Friday.
The Biden campaign has also added a new "Partnership Manager" position to initiate and manage daily operations and interact with popular content and meme pages on the Internet. On major social media platforms, this position will cultivate and maintain partnerships with top digital media companies, podcasters, and meme pages.
The community believes that the reason for Biden's drastic change in attitude is that his biggest rival Trump is actively supporting cryptocurrencies, and even announced that he would open up multiple cryptocurrencies such as Bitcoin, Ethereum, Dogecoin (DOGE), and Shiba Inu Coin (SHIB) as campaign donations, which further stimulated the Biden administration to accelerate the change in its position on cryptocurrency policy.
U.S. House of Representatives passes 21st Century Financial Innovation and Technology Act
The U.S. House of Representatives passed the 21st Century Financial Innovation and Technology Act (FIT21) proposed by Republican leaders by a vote of 279 to 136. 71 Democrats and 208 Republicans voted in favor, while 3 Republicans and 133 Democrats voted against. The White House statement acknowledged that they did not support the bill.
The passage of the 21st Century Financial Innovation and Technology Act marks the crypto industry’s most significant legislative achievement in Congress, after which the bill will be sent to the Senate for a vote. The bill, driven primarily by House Republicans, would establish a regulatory regime for the U.S. crypto market and set up consumer protections.
The bill would establish the U.S. Commodity Futures Trading Commission (CFTC) as the primary regulator of digital assets and overseer of non-security spot markets and would more clearly define the criteria that make a crypto token a security or commodity.
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The White House admitted that they do not support the bill, but they will not veto it if it reaches US President Biden's desk. However, the bill has bipartisan support and will introduce a comprehensive regulatory framework for this growing industry.
US approves 19B-4 filing for Ethereum spot ETF
The U.S. Securities and Exchange Commission approved the New York Stock Exchange, Chicago Board Options Exchange and Nasdaq's plans for Ethereum spot ETFs. The regulator has not yet issued full approval for Ethereum spot ETFs and still needs to approve the issuer's plan.
Specifically, the SEC has approved 19B-4 forms for eight Ethereum spot ETFs, including those from BlackRock, Fidelity, and Grayscale. Although the form has been approved, ETF issuers need to make the S-1 registration statement effective before they can begin trading.
The SEC has just begun discussing the S-1 form with issuers, and it is unclear how long the process will take, but some analysts speculate it could take weeks.
“I think regulators have the legal tools in the crypto-securities space and without prejudging that not every crypto token is a security,” said SEC Chairman Gary Gensler.
He continued: “We are committed to complying with the legal requirements for cryptocurrency ETF applications. There are serious conflicts of interest in cryptocurrency exchanges. The cryptocurrency market needs referees on the field. The SEC has performed well in court in cryptocurrency cases. Regulators have legal tools in cryptocurrency, but more resources are needed.”
US Dollar Technical Analysis
FXStreet analyst Patricio Martín said that the indicators on the daily chart of the US dollar reflect the stalemate between bullish and bearish views. Despite the efforts of the bears to win, the index is still above the 100 and 200-day simple moving averages (SMA), which strongly proves the existence and resilience of buying momentum. However, the relative strength index (RSI) is close to the negative zone, indicating that bearish pressure may be coming.
Additionally, the Moving Average Convergence Divergence (MACD) is showing flat red bars, a neutral to bearish signal that could indicate a possible shift in momentum or continued sideways movement.
Gold Technical Analysis
Bruce Powers, an analyst at FXEmpire, said gold was sold off again on Thursday, breaking through several potential support points and falling to a low of $2,332. Trading continues near the day's lows, and gold may continue to move lower. Several trendline support areas failed to stop the decline, and the 20-day moving average broke down.
In addition, the daily closing price seems likely to fall below the 20-day line, and the current low is also the weekly low from last week. If gold falls below last week's low and stays at this level, it will trigger a bearish weekly reversal. Whether gold continues to move higher from there will be key.
If a more significant pullback occurs than the recent one, the 50-day EMA will become the next key support at $2,306. Gold has been trading above the 50-day line since momentum accelerated following the symmetrical triangle breakout on February 29. If it falls below $2,277, the recent swing low support at $2,277 is likely to be broken. This could easily lead to a test of support around $2,195, the previous swing high. Below that is the previous swing high at $2,135.
As of this week's high of $2,450, gold prices have risen $465.80, or 23.5%, from the mid-February low of $1,984. Current price action suggests that the risk of a further correction is increasing since the mid-February bottom. There are three trend lines that cross slightly above the 20-day moving average, forming a potential support area. This area failed on Thursday, and gold prices fell below each trend line. In addition, the recent trend indicator 20-day moving average is trying to continue to provide dynamic support for the upward trend, as gold prices recently fell below this area and then rebounded above it.
On the upside, gold needs to at least break Thursday's high of $2,384 to initially show strength. Gold should then close above that level on a daily basis. But as mentioned above, the next move for gold seems more inclined to the downside than the upside.
Bitcoin Technical Analysis
CoinGape noted that Bitcoin has gradually retreated from its weekly high of $72,000 to $67,908 during Thursday’s U.S. trading session. This has sent mixed signals to the market, with some wondering whether the pullback will continue to $60,000 or whether the uptrend will resume to new highs of $80,000.
On the bright side, an Ethereum spot ETF may finally be approved, which could encourage investors to seek more exposure to Bitcoin and the leading altcoin, a scenario that would translate into a surge in momentum supporting a larger breakout in the coming days.
After weeks of continuous outflows, Bitcoin spot ETFs have returned to profitability, indicating a positive shift in market sentiment. SoSoValue data shows that the total daily net inflow on May 22 was $153 million.
BlackRock and Fidelity Bitcoin spot ETFs performed well, with net inflows of $92 million and $75 million, respectively. Ark Invest had a net inflow of $3 million, while other ETFs except Grayscale had zero inflows. Grayscale is still dealing with outflows, considering the $16 million recorded on Wednesday. However, the size of outflows has been significantly reduced.
The ongoing correction in Bitcoin price is putting pressure on the support area. As things stand, a drop below $67,000 is likely. Subsequently, the pullback in the Relative Strength Index (RSI) reinforces the short-term bearish outlook.
The indicator currently holds at 54 points, above the weekly high of 66 points, while slipping within the neutral zone. This outlook could be interpreted as a reason to short Bitcoin or liquidate open options, thereby increasing selling pressure.
The support area below $67,000 includes the 20-day exponential moving average (EMA), the downtrend line, and the 50-day EMA. If the sellers do not relent, a drop to $60,000 cannot be ruled out at this point.
The resumption of the bullish trend will depend on the progress of the Ethereum spot ETF, the $67,000 support level, and the ability to reclaim $72,000. Beyond this level, the bulls may quickly push to $80,000, setting a new precedent for the bull run targeting $100,000 in 2024.
