April 22 REX Wire Market Outlook

War indicators following Israel's (very restrained) retaliatory strike on Iran are now cooling. There's still some question about Iran's response, but matters appear to have returned to something closer to the status quo.

Oil is down almost 10% from its highs earlier this month, when it there was greater uncertainty about how the situation in the Middle East would play out. Gold, too, is off its all-time high of $2,432, which it made on April 12. It's currently trading around $2,357, or roughly 3% down from the peak.

The DXY, meanwhile, is still trading around 106. This is far above where it was just a few weeks ago, following a breakout from resistance. The next major resistance is 107, where it peaked in October last year. It remains to be seen whether it will roll over here or challenge that level, providing a further headwind to risk assets. Absent any further global tensions, a weaker dollar is the base case.

The mid-cycle correction is deepening for stocks, with the S&P losing the 5,000 level and potentially targeting its old all-time high of $4,800. This is normal for this point in the election cycle; as numerous analysts have pointed out, stocks typically pull back or consolidate for a few months mid-year, before the rally continues into the election.

Bitcoin Shows Strength

Bitcoin put in a healthy bounce following a brief crash to a new local low ($59,600) on Friday morning. The catalyst for the $4,000 drop was Israel's retaliatory strike on Iran's Isfahan airbase. However, this was the trigger for buyers to come out out in strength, and the market has not looked back since.

Bitcoin is now trading above $66,000 for the first time in two weeks, and the overall picture looks broadly positive. Bitcoin has now established a range between $60k and $74k (round numbers), and is trading back above the 50-day moving average. Reclaiming the 50% level ($67,000) would give the market greater confidence, but for now it seems that the danger of a fall below $60k has receded.

The long-awaited Halving occurred on Saturday morning. Bitcoin's block rewards have now fallen to 450 BTC per day. This is likely to have a cumulative effect over time, since there is less new supply to come onto the market. In the short term, there may be a drop in hashrate as unprofitable miners go offline.

Hashrate And Halvings: What’s In Store?

Bitcoin’s network typically adapts rapidly to the cut in mining revenues.

REX WireBender Smort