Commodities and Cryptos: Oil rallies, Gold drops, Bitcoin ETF Approval is coming

Oil

Crude prices are rallying after another round of strong earnings and economic data suggests the economy can still handle the current surge in energy prices. The oil market deficit will only get wider as global stockpiles remain at low levels, unexpected demand comes from colder weather, and on surging jet fuel demand as the US opens up international travel.

It will take a trifecta of events to derail this oil price rally: OPEC+ unexpectedly boosts output, warm weather hits the northern hemisphere, and if the Biden administration taps the strategic petroleum reserves.

Gold

Gold was unable to hold onto the $1800 level after a better-than-expected retail sales report and strong round of earnings sent US Treasury yields higher, denting appeal to non-interest-bearing assets. Gold was ripe for profit-taking, but the downward move could extend if Wall Street continues to pump up equities. Gold needs to see some safe-haven flows and that might not happen as much of this week’s news painted an upbeat picture of the economy.

Gold bulls still need to be patient. Gold appears poised to consolidate here, but the start of a new bullish trend is around the corner once the global economic recovery gets on track and the dollar loses its dominance.

Bitcoin

Bitcoin prices are surging in anticipation of a potential SEC approval over the first US Bitcoin futures exchange-traded fund. Since 2013, the crypto industry has been trying to get an ETF done and now it seems like it will finally happen on Monday. An SEC Bitcoin ETF approval is a watershed moment for the crypto industry as this could be the key driver for getting the next wave of crypto investors.

A successful Bitcoin ETF launch next week could easily support Bitcoin’s run to record territory. Bitcoin mania has been brewing on social media platforms over the past couple weeks and while some traders may look to fade the SEC decision, it looks like many are adopting the long-term hold approach.

If ProShares and Invesco Ltd. have their respective Bitcoin ETF applications get approved next week and initial trading volumes are strong, Bitcoin could have enough momentum to target the $74,500 region. If the global energy crisis fears ease in the coming months, Bitcoin could have a path towards $85,000.

Despite all the excitement, Bitcoin still has regulatory hurdles and could see scrutiny over the amount of energy consumed as natural gas, coal, and crude prices skyrocket. Bitcoin is always vulnerable to a 20% plunge and traders should anticipate heightened volatile for the rest of the year.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya