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Market Overview: 5 Things to Watch Next Week

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Asset Current Value Weekly Change
S&P 500 2380 -0.45%
DAX 12638 -1.22%
WTI Crude Oil 50.48 4.77%
GOLD 1255.00 2.11%
Bitcoin 1985 13.43%
EUR/USD 1.1205 2.74%

 

1. All eyes on the VIX as volatility is creeping back

The low volatility period that lasted for several weeks, ended abruptly on Wednesday, as we anticipated as the internal weakness of the market caused vulnerability in the broad indices. The US volatility index jumped by a whopping 50% in one session, as stocks experienced their worst one-day selloff in almost 10 months. The VIX then dipped lower as stocks recovered, but some damage has been done, and another long lower wouldn’t be a surprise at this point. With volatility-short strategies dominating the market, a sell-off could quickly accelerate as the said strategies trigger a domino-effect.

2. $50 billion, $60 billion, $70 billion…. $100 billion??

It seems that more and more investors are piling into the cryptocurrency market, as the global low yield environment encourages buyers to look for alternative investments, and the accelerating adoption of the coins provides a solid background for the boom. As Bitcoin is losing market share, despite its climb to new highs, the segment looks more stable with total capitalization steadily climbing amid the “rotation” between the currencies. It seems plausible that the market will soon reach the $100 billion mark, as ICOs are abundant, and more and more minor coins pop up on the radar with stellar gains.

3. The Dollar on the ground, as the Trump-scandal lifts treasuries

The US Dollar fell sharply all week long, as US treasuries jumped higher in the risk-off environment, while US stocks declined from their all-time highs. The USD hit multi-month lows against the Swiss Franc, the Euro, and the British Pound, while the Yen also gained ground thanks to safe-haven buying. As the Fed’s rate hikes are far from being carved into stone, and the French election still has a positive effect, the European majors were the biggest winners of the Dollar weakness.

4. Will oil hold above $50 per barrel after the OPEC meeting?

WTI Crude Oil, 4-Hour Chart Analysis

Oil showed strength throughout the week, as the bullish US inventory data, the OPEC deal-extension talks, and the Chinese correction all helped the commodity in regaining its steep losses once again. The stock market bounce gave another boost to oil on Friday and it finished the week near its highs, back above the key $50 per barrel level. The scheduled meeting of the oil cartel will take place on Wednesday, and the commodity might be vulnerable after the strong rally, in the case of a weak consensus among the OPEC-countries.

5. The Fed minutes in focus as US growth slows

The Federal Reserve dismissed the recent economic weakness in the US as transitional, but the numbers remained subdued since the previous meeting as well. Bond markets still suggest a rate hike in June, although the yields took a hit after Wednesday’s turmoil. The political fears could also make the central bank more cautious, so the minutes of the monetary meeting will be closely watched by traders. Friday’s key economic releases, Durable Goods, and the prelim GDP reading could also be important for stocks.

In Focus: Cryptocurrencies

 

Weekly performance comparison of the major cryptocurrencies, Hourly Chart

The cryptocurrency market continued to expand throughout the week, and the broad rally continued during the weekend, with some of the previous laggards joining the party, like Monero and Dash. Ripple also bounced higher after a correction phase, as Litecoin remained the weakest major coin concerning the week. Bitcoin left the direct vicinity of the $2000 today, while Ethereum also added to its recent lofty gains, as it is almost in par with Ripple regarding market cap once again. NEM is in a narrow consolidation range after its epic rally, while Stellar is drifting higher, probably preparing for its next major move.

Currency Weekly Volume Monthly Volume Market Cap
Bitcoin 5,861 20,450 34,400
Ripple 1,829 4,302 13,577
Ethereum 1,715 5,840 13,000
NEM 218 470 2,160
Litecoin 637 3,733 1,360
Dash 109 544 731
Ethereum Classic 223 1,179 702
Stellar Lumens 300 1437 533
Monero 80 361 524

 

Key Economic Releases of the Week

Day Country Release Expected Previous
Monday EUROZONE Eurogroup Meeting
Tuesday EUROZONE Manufacturing PMI 56.7
Tuesday EUROZONE Services PMI 56.4
Tuesday CANADA Wholesale Sales -0.20%
Tuesday US New Home Sales 621,000
Wednesday EUROZONE ECB President Draghi Speaks
Wednesday CANADA BOC Rate Decision 0.50% 0.50%
Wednesday CANADA BOC Statement
Wednesday US Existing Home Sales 1.26 mill 1.22 mill
Wednesday US Crude Oil Inventories 1.22 mill
Wednesday US FOMC Meeting Minutes
Thursday UK Revised GDP 0.30%
Thursday US Initial Jobless Claims 236,002
Friday JAPAN National Core CPI 0.40% 0.20%
Friday US Core Durable Orders 0.00%
Friday US Prelim GDP 0.70%
Friday US UOM Consumer Sentiment 97.7
Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Altcoins

Bitcoin Price Defends $6,000 as Crypto Market Cap Returns Above $200 Billion

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Bitcoin rebounded sharply on Wednesday after a bear market breakdown dragged prices to within $100 of yearly lows. Although the technical indicators have improved, significant downside risks remain.

BTC/USD Update

Bitcoin’s price was up 4.6% on Bitfinex to trade at $6,483. The leading digital currency reached a session high of $6,483, having recovered more than 8% from Monday’s swing low. Bitcoin’s 24-hour trade volumes averaged $4.6 billion on Wednesday.

The $6,000 price point has emerged as an important support level for bitcoin. As Hacked previously reported, this level is not only psychologically significant, it represents more or less the break-even rate for miners.

The monthly technical chart shows improving conditions in the bitcoin price, though this should be taken with a grain of salt given the market’s extreme moves as of late.

At current levels, bitcoin has a total market capitalization of $109.8 billion, which represents 53.6% of the total cryptocurrency market.

Altcoins and tokens collectively rose by $8 billion on Wednesday to reach a total value of $94.4 billion, according to CoinMarketCap. The value of all digital assets was $204.6 billion.

The Market’s Next Move

Although predicting bitcoin’s next move is notoriously difficult, a successful defense of the $6,000 floor is an important step in facilitating the next rally. That the yearly low ($5,755) wasn’t breached during the latest downtrend suggests the bulls may be running out of steam.

That said, bitcoin’s dominance rate reveals structural weakness in the cryptocurrency market, not to mention damaged investor psychology. As Hacked reported Tuesday, cash-out from the ICO boom appears to be largely responsible for the latest reversal, a sign that investors were losing confidence in riskier assets. This is further corroborated by Ethereum’s dramatic selloff over the past seven days. The so-called developer’s cryptocurrency has been responsible for three-quarters of initial coin offerings.

According to BitMEX CEO Arthur Hayes, investors shouldn’t expect a large price recovery at this stage given the general lack of momentum, volume and stability in the market. Trading volumes – a key proxy for demand in the cryptocurrency market – averaged $13.4 billion on Wednesday, based on latest available data.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 547 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Analysis

Crypto Update: Market Surges 10% but Downtrend Still Intact

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Following two days of almost constant selling, the cryptocurrency segment experienced an oversold rally, with the major coins recovering a small part of their recent losses. The technical setup is little changed so far, with the steep short-term trendlines being intact in most cases, and with the key resistance levels towering ahead of the top altcoins.

That said, as the longer-term charts have become clearly oversold, and as the selloff accelerated with signs of forced liquidations across the board, such as huge volumes and very high correlations between the majors, a durable bottom could already be forming in the segment. The next few days will be crucial in deciding that, as a successful test of the lows, and the formation of a relatively strong leadership could set up a broader short-term trend change.

For now, our trend model remains on a sell signal in case of the top coins, with Bitcoin being the closest to a reversal from a technical perspective. Ethereum bounced off the $260 level, Ripple found support near $0.26, while BTC recovered above $6275 but been stopped by the $6500 resistance, failing to trigger an upgrade in the trend model.

ETH/USD, 4-Hour Chart Analysis

Ethereum surged higher after the US close yesterday and although it failed to add to those gains in early trading today, the coin is holding up just above the $275-$280 zone, but the steep downtrend is clearly in place. ETH has been very weak for more than a month, and especially since breaking below the $400 level last week, and more signs of strength would be needed for a trend change. Key resistance is ahead at $300, while further support below $260 is found at $235.

BTC/USD, 4-Hour Chart Analysis

On a positive note, Bitcoin joined the oversold rally after holding up well above the $6000 level and the key long-term zone near $5850. The coin also moved above declining trendline, but for now, the pattern of lower lows and lower highs is intact and the coin remains on a short-term sell signal.

BTC is clearly in the strongest technical position among the majors, and it could be the leader in a recovery, should it manage to build a bottom in the coming weeks.  Resistance above $6500 is ahead at $6750, and $7000, while further support is found between $5000 and $5100.

Correlations Remain High as Bearish Conditions Persist

XRP/USDT, 4-Hour Chart Analysis

While Ripple managed to hold up above its spike low below the strong $0.26 level and the bounce took it as high as $0.30, the steep downtrend remains intact and bulls would need further confirmation before entering new positions here. The coin is still deeply oversold from a longer-term perspective, and we expect a more durable bottom to form soon. Further resistance is ahead at $0.32, while support below $0.26 is found near $0.23.

LTC/USD, 4-Hour Chart Analysis

Looking at the bearish leaders, most of the coins are in very similar setups, as correlations are still very high, and Litecoin and Monero are still slightly more promising than the likes of Dash, Neo, and IOTA, which remain very weak from a technical standpoint. LTC is trading near its recent swing low at $56 and should the coin manage to hold above that durably, a short-term bottom could form, which would be a positive sign for the segment.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Altcoins

Crypto Market Cap Falls Below $200 for the First Time Since November Amid ICO Backlash

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Cryptocurrencies extended their selloff overnight Tuesday, as the total market capitalization pierced below $200 billion for the first time since November. The decline was far-reaching and severe, with 78 of the top 80 altcoins recording double-digit percentage losses.

Crypto Market Update

Roughly $26 billion was wiped from the cryptocurrency market overnight, a sign that the bears were firmly in control and not giving up their position anytime soon. The market bottomed at $189.6 billion late Monday and has since recovered to around $193 billion. Twenty-four hours ago, coins were collectively worth more than $217 billion.

Below are two snapshots of the crypto top-50, as reported by CoinMarketCap.

Although the declines were largely concentrated in altcoins, bitcoin also experienced a tumultuous overnight session, with prices coming within $100 of a new yearly low. The bitcoin price bottomed at $5,858.60 on Bitfinex but has since recovered above $6,100.

Ethereum’s downward spiral intensified Tuesday, with prices crashing to fresh 14-month lows. At press time, ether was down 16.6% at $267. The second-largest cryptocurrency by market cap has shed more than 35% over the past seven days.

The Market’s Next Move

The rout in altcoins has left bitcoin with a 54.1% share of the total cryptocurrency market – the highest since December. Although this gives bitcoin a stronger gravitational pull on other digital assets, it’s also an indicator that investors are shifting their portfolios away from more speculative altcoins and tokens.

As Bloomberg pointed out on Monday, Ethereum’s massive decline could be a sign that ICOs are cashing out. If this is true, ether could face a deeper short-term correction as token offerings fizzle out.

Biswa Das, the head of quantitative hedge fund BloomWater Capital, said the following of ICOs:

“These startups are raising a lot of funds but they don’t have treasury management or enough cash management experience, so they’re selling too early and causing a lot of pressure in the market. It was fine last year but right now the market is so fragile that it causes a lot of pressure.”

The cryptocurrency market has lost a staggering $140 billion since June 1, and a look at bitcoin’s technical chart suggests more pain could be on the way. The bitcoin price faces a critical support test at $5,800; a break below that level could expose the digital currency, and the broader market, to new yearly lows as early as this week.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 547 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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