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Asian Market Update: Bad Day for Coins – Both Bitcoin and Ethereum Are Down

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The Big Question: Has Bitcoin Reached a Temporary Peak?

Investors might be losing confidence over a recent rally that saw a few record highs in Bitcoin price.

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After trading above $4,300 on Thursday, the price for Bitcoin fell sharply, and is currently trading below $3,700, well below the $4,000 mark.

Some traders are reportedly losing confidence in the recent rally and believe that a correction is in order after bitcoin prices fell under the $4,000 mark several times since it first surpassed it. Others believe bitcoin will consolidate around $4,000.

Meanwhile, Ethereum also took a steep fall on Tuesday. After having gained sharply the day before, Ethereum quickly went into a dive, trading as low as 295 at one point. As of time of this writing, Ethereum was trading just above the 300 level, where it appears to have found some support.

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Main Market Movers – Mid-day Asian Market Update

Indexes Value at Midday Daily Change
Japan-Nikkei Stock Average 225 19,406.61 0.07%
China-Shanghai Composite Index 3,289.75 0.09%
Hong Kong-Hang Seng Index 27,437.92 1.04%
Australia-ASX All Ordinaries 5,801.70 0.83%
India-Mumbai Sensex 31,258.85 -0.84%

Major Asian indexes saw minor gains on Tuesday, led by Hong Kong’s Hang Seng, which saw a 1.04 percent increase.

In Japan, the Nikkei 225 reversed a loss on Monday as it edged up 0.07 percent to 19,406.61.

In China, the Shanghai Composite Index was also slightly up, having gained 0.09 percent to 3,289.75.

In Australia, the benchmark ASX All Ordinaries was up 0.83 percent to 5,801.70.

India’s Mumbai Sensex was down 0.84 percent.

With little broad economic data expected this month, investors are playing close attention to developments in the Korea Peninsula and an upcoming meeting of central bankers in Jackson Hole, Wyoming.

Tensions are high in the Korea Peninsula as US and South Korea militaries continue on a drill in the region. Though the number of US troops participating in the drill is down from previous drills, the drill, coming at a sensitive time, could further escalate the tension. The rogue North Korean government is showing no sign of backing down, calling the drill “reckless” and threatened nuclear war again.

In the short term, though, the gathering of global central bankers could be the main force in moving markets. The focus will be on a scheduled speech by US Fed Chair Janet Yellen in Jackson Hole, as the US is still under a tepid inflation cloud.

US President Donald Trump’s speech on Afghanistan, in which he raised the possibility of increased US military presence in Afghanistan without giving any details, did not appear to bother Asian markets much on Tuesday.

Currencies

The Japanese yen lost 0.25 percent against the US dollar. The USD/JPY exchange was at 1.09.2500 as of press time at 11:50 am.

The Chinese yuan strengthened 0.12 percent against the greenback, trading at 6.6577 per US dollar.

The Australian dollar gained 0.03 percent against the US dollar. The AUD/USD was trading at 0.7941.

Commodities

WTI Oil was up 0.36 percent to $47.54

Brent Crude gained 0.33 percent to $51.83 per barrel

Gold was down 0.18 percent to $1,294.40 an ounce

Business News across Asia

In China, the market is still talking about a restructuring plan from China Unicom, the second-largest telecom carrier in the country. The State-owned company announced a $11.7 billion ownership reform plan, under which private companies such as Alibaba Group and Tencent acquired a total of 35.19 percent. Stocks of China Unicom in Shanghai jumped more than 10 percent immediately after market open, while shares in Hong Kong dipped 1.6 percent.

Take away: The China Unicom move could mean more gigantic State-owned firms could pursue similar ownership shake-up in the coming months.

In Japan, the Bank of Japan is expanding its stock purchase as regional tensions and stagnating domestic economic growth plagued the Japanese stock market. The BOJ bought 3.58 trillion yen of stocks so far in 2017, while foreign investors only purchased 301.6 billion yen, per Nikkei Asian Review.

Take Away: The BOJ has 2 trillion yen more in buying power but negative side effects might surge.

In India: A nation-wide strike at public banks is taking place after unions called for the strike to protect against a government proposal to privatize public sector banks.

Take Away: Though operations at public banks remain open on Tuesday, services might get affected.

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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4.3 stars on average, based on 28 rated postsFredrik Vold is an entrepreneur, financial writer, and technical analysis enthusiast. He has been working and traveling in Asia for several years, and is currently based out of Beijing, China. He closely follows stocks, forex and cryptocurrencies, and is always looking for the next great alternative investment opportunity.




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Analysis

Crypto Update: Correction Continues but Uptrend Not in Danger

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The major cryptocurrencies are consolidating in a choppy range today following yesterday’s sharp pullback, with the total value of the market stabilizing near the $400 billion level. All of the largest coins found support above key support levels, keeping the bullish trend intact, as the overbought readings are being cleared.

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While the correction will likely continue and our trend model is still only neutral from a short-term perspective in the case of most of the coins, the underlying trend is positive, and we expect the recovery to resume after the dip.

BTC/USD, 4-Hour Chart Analysis

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Bitcoin fell below the $9000-$9200 support/resistance zone during the pullback, but it remained above the $8400 level that marks the previous swing high. The MACD indicator is still showing a downswing, but it is now in neutral territory, and the coin could already be ready to resume the uptrend and aggressive traders could enter new positions, using the overnight low as a stop loss level. Below $8400, further support is found near the $7650 level, while targets are ahead at $10,000 and $10,500.

ETH/USD, 4-Hour Chart Analysis

Ethereum found support just below the $600 level and moved back to the vicinity of the $625 support level holding within the steep short-term uptrend.  A break below the trendline is still likely, and a test of the $555 to $575 zone is possible after the strong rally. That said, ETH, one of the leaders of the upswing is expected to resume the recovery after the correction, and long-term investors should hold on to their coins despite the move. Further support is at $500, with targets still ahead near $735, $780, and $845.

EOS Holding Up Well Amid Broad Correction

EOS/USD, 4-Hour Chart Analysis

EOS has been spearheading the broad rally in the segment, and the coin got close to the prior all-time high before the current correction, being the largest coin to do so since January. Although the currency retreated somewhat from the highs, it remains from a short-term perspective and traders should use tight stop losses or reduce their positions as correction risk is high here.

IOTA is the closest to giving a short-term buy signal among the majors, as it began the correction earlier and found strong support near the previous swing high, while there are no negative outliers that would hint on a failed rally off the recent multi-month lows. With that in mind, long-term investors could still use the current correction to boost their altcoin holdings.

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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4.5 stars on average, based on 234 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Bitcoin

Stocks Money is Flowing into Bitcoin

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Despite what is looking to be an outstanding earnings season on Wall Street, stocks yesterday took a major hit. At the same time, Bitcoin and the other cryptocurrencies soared.

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It’s not that it’s unusual for Bitcoin and the Dow Jones to move in opposite directions. In fact, it happens quite frequently. What’s interesting here is that the volumes of the Bitcoin futures on Wall Street saw a major spike yesterday.

The CBOE futures contract that expires on May 16th has been trading between 1,700 and 4,000 Bitcoins over the last week. Yesterday it traded a total of 6,653 BTC.

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The CME contract (expiring this Friday) usually trades less than 15,000 coins, saw the volume spike up to 23,405 Bitcoins. This means that between the two exchanges yesterday’s volume was more than 60% above their weekly averages.

Though it’s still a bit early to draw concrete solutions, this does seem to indicate that at least some of the money that came off the stock market yesterday ended up in the world’s favorite cryptocurrency.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Trumpcron
  • Fed Research on Bitcoin
  • Ethereum Hacked

Please note: All data, figures & graphs are valid as of April 25th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

It was interesting to watch the awkward body language between Donald Trump and his French counterpart over the last three days. However, even though the pair now appear to be friends, it doesn’t seem like much has been accomplished as far as any substantial policy change. At least, nothing that would improve the mood in the markets.

At the moment, the US Treasury Secretary Steve Mnuchin is on his way to China to see what he can do about avoiding an all-out trade war. This is typically something that the Secretary of State takes charge of, but with Rex Tillerson out of the picture, the Trump White House appears to be a bit understaffed.

One thing that seemed to cause some worry in the stock markets and may have been a catalyst for at least some of the selling was the Bond Yields, which spiked up early in the New York trading session.

Here we can see the US 10 Year Yield since the financial crisis. That 3% level has been a psychological pain point that has not been crossed since 2011.

Fed Research on Bitcoin

This research really speaks for itself but I did want to mention this outstanding report that was just published by the Federal Reserve Bank of St. Louis.

It gets a bit complicated but their general conclusion seems to be that Bitcoin is a very good middle ground between governments who have the obligation to control money flows as best they can and citizens who have the incentive for money to be more independent.

I must admit that it did take me a few minutes to wrap my head around this graph but once I did it really makes a lot of sense.

It’s really incredible to see such outstandingly positive research coming from a central bank in the United States. This really fits into the narrative that I’ve personally been advocating for a while now, that Bitcoin should be an excellent compliment to the current global monetary system.

Ethereum Hacked

A few of Google’s servers fell yesterday causing a disruption in Internet service in some parts of the world.

This is not all that uncommon and the incident is still being investigated. The bigger issue is that it seems some hackers managed to exploit the downtime to hijack MyEtherWallet.com (MEW)

MEW is the main website that many crypto enthusiasts use to store their Ethereum and Ethereum based tokens, so this is kind of a big deal. Some people who tried to access the website at that time were redirected to a lookalike phishing site that then gathered their login information (private keys) and emptied their wallets.

Word quickly spread throughout the cryptowebs and a patch was quickly released. All in all, it seems that only 216 ETH was stolen.

This is a reminder that in these early days of crypto and blockchain we must remain alert. Always check the URL of the website you’re visiting and if you do see any security warnings like the one below, please do not ignore them.

The crypto-market was in the thrall of a raging bull run but it does seem that the hack may have stopped it in its tracks. The initial reaction in Ethereum (yellow circle) was quite small…

…but it does seem that this morning we’re seeing a wider pullback across the board this morning.

Over the next few hours, we should be able to get a good test of cryptotrader sentiment and see how dedicated they are to buying the dips.

Have an amazing day ahead!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Best regards,
Mati Greenspan
Senior Market Analyst

eToro: @MatiGreenspan | Twitter: @MatiGreenspan | LinkedIn: MatiGreenspan | Facebook:MatiGreenspan

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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Analysis

Crypto Update: Majors Down by Double Digits as Correction Begins

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The segment entered a broad correction today in early trading, with the largest currencies erasing a part of their recent lofty gains. The overbought momentum readings that led to short-term sell signals in our trend model are the main reason for the pullback, with no major new catalyst behind the move. The newly established uptrend is not in danger because of the move for now, and we expect the rally to resume after the correction.

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With the long-term setups being bullish, investors could use the dip to accumulate the majors, while short-term traders should wait until the overbought readings are cleared before re-entering the market. The recently weaker coins, such as BTC and LTC could gain relative strength during the move, as a sign of bullish rotation.

BTC/USD, 4-Hour Chart Analysis

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BTC reached an overnight high near $9800, just shy of the key $10,000 level, before turning lower together with the broader market, and the most valuable coin is now testing the $9000-$9200 zone yet again. The bullish long-term setup is clearly intact, but a test of the $8400 level is in the cards during the current move, with further strong support is found in the area above the $7650 level.

ETH/USD, 4-Hour Chart Analysis

Ethereum, which has been leading the market higher, is now back near the $625 support level after triggering a sell signal yesterday, and given the almost 100% rally off the lows, a drop to the $555 to $575 zone is possible in the coming days as the short-term momentum indicators are still in overbought territory. Further support is at $500, while targets ahead are near $735, $780, and $845.

Correlations Spike Higher as Volatility Returns

The majors are falling in a concerted fashion, as usual, but we expect positive divergences to emerge soon, as the bull run will likely resume after the correction. Volatility is also much higher than in recent weeks, so day-traders should be aware of the heightened risks.

IOTA/USD, 4-Hour Chart Analysis

Although the largest digital currencies are all lower, IOTA was the first to provide a short-term sell signal, and the coin which was leading the market higher before could be among the first to form a bottom. That said, traders should wait before entering new positions here, with support zones found near $1.70 and $1.50.

As the correction is dominantly technical in nature, traders and investors should be looking for reversals near the key levels in all of the coins in the coming days, so stay tuned for our detailed technical analysis coming out later on today.

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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4.5 stars on average, based on 234 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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