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Asian Market Update – Friday: Cryptocurrencies retreat; Asian stocks muted

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Morning after

The Big Question: Is the party over for bitcoin?

Cryptocurrencies seem to have taken a pause on Friday after a historic bull run that pushed prices of the main coins through the roof. As of midday in Asia on Friday, prices of bitcoin, ethereum and litecoin were all in red, though only slightly, and well below earlier record highs.

Bitcoin lost 2.10 percent to about $9,695 at midday, well below the recent record high of about $11,264 reached late last night. Bitcoin has been trading down sharply since early this morning, falling to as low as $9,422, before regaining some ground.

Ethereum trimmed off 0.69 percent to $431 by midday. The coin dropped sharply overnight, falling from a record high of $518 on Wednesday to as low as $412 this morning. Ethereum now appears to have found some support above the $430 level.

Litecoin was down 0.79 percent to $85.14 at midday in Asian trading. The coin has been in a steep downtrend since Wednesday night, when it reached a record high of $103. However, it has later erased much of the gain, trading down more than $20 at one point.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan- Nikkei 225 22,724 0.00%
China-Shanghai Composite Index 3,305 -0.35%
Hong Kong –Hang Seng 29,122 -0.19%
South Korea-KOSPI 2,481 0.20%
Australia-ASX 200 5,982 0.21%
S&P 500 E-Mini Futures 2,641 -0.04%

Major Asian equity markets were muted, with only fractional gains or losses in most markets, as the US tax overhaul returns to focus.

In Tokyo, the Nikkei 225 Index erased earlier gains of nearly 1 percent and was flat at 22,724 before midday in Asia.

On the Chinese mainland, the Shanghai Composite Index was down 0.35 percent to 3,305 after it opened 0.19 percent lower. Investors have been cautious lately, with more bad news coming in today about a closely-watched gauge of factory activity coming in short of expectations.

The Caixin/Markit manufacturing purchasing managers’ index (PMI) stood at 50.8 in November, down from 51 in the previous month. The Caixin/Markit index tracks medium and small firms, while the official index tracks large state-owned firms. The official PMI was more positive at 51.8, but the official numbers out of China are often questioned by skeptical market participants.

In Hong Kong, the Hang Seng Index lost 0.19 percent to around 29,122.

In South Korea, the Kospi edged up 0.2 percent to around 2,481 shortly after midday.

Down under, the ASX 200 picked up 0.21 percent to 5,982 at midday.

The S&P 500 E-Mini Futures was down 0.04 percent to 2,641 at midday.

Asian investors are now watching the developments in efforts to reform the US tax code. The latest was that Republican lawmakers were forced to delay a vote on the tax reform plan in the Senate after a hiccup on Thursday that prompted lawmakers to make changes to the plan last minute. Initial signs show that Republican lawmakers might have enough votes to pass the plan.

Currencies

The Japanese yen was flat against the US dollar at midday Friday, changing hands at 112.53 per dollar.

The Chinese yuan was down 0.08 percent against the US dollar at 6.6149 per dollar.

The Australian dollar lost 0.05 percent on the dollar, changing hands at 1.3223 per dollar at midday.

Commodities

WTI Oil was up 0.26 percent to $57.55 per barrel.

Brent Crude gained 0.27 percent to $62.88 per barrel.

Gold was up 0.03 percent to $1,275 an ounce.

News across Asia

In China, officials and experts are pushing back a couple of measures from the US against China in trade, saying that the US is taking protectionist actions. Those actions include a first-in-decades anti-dumping and countervailing duty probe into Chinese aluminum sheets and declining to view China as a market economy.

Take away: Though a trade war between the two countries is unlikely, tensions remain high for the most important bilateral relationship in the world.

In Japan, an official date has been set for the planned abdication of Japanese Emperor Akihito: April 30, 2019. Akihito had previously agreed to step down – the first to do so in centuries – but details remained elusive.

Take away: Akihito rarely appear in public and doesnt have any real power in Japan, and his departure would hardly have any impact on Japan. 

Featured image from Pixabay.

Disclaimer: The author owns bitcoin, ethereum and litecoin. He holds investment positions in the coins, but does not engage in short-term trading.

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 37 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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Market Overview

MindChain Conference: ‘Blockchain Isn’t Our Saviour’; Romania’s Growth Says Different

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Blockchain was picked apart at the MindChain conference this week, where one prominent commentator said blockchain won’t make the world a better place, and that it won’t be our saviour.

Blockchain Won’t Make the World a Better Place

One of Forbes’ ‘30 Influential Europeans Under 30’, Cornel Amariei took aim at blockchain, which he said was a buzzword, and that there weren’t too many places it could be applied:

“I hate buzzwords because they give a false impression about what is happening. Blockchain is a buzzword – I’m not a big fan, and I’m not against it either – but it’s nothing more than an encryption and decentralization technology – there aren’t that many areas where it can really be applied well.”

The 22 year old inventor and author suggested blockchain’s reach will be more limited than most in the crypto space would like to believe. He said:

Blockchain will solve a lot of issues, but it won’t really make the world a better place. It’s not our saviour.

Romania: Blockchain and Crypto Tech Hub

Held by Business Review, the conference comes from Romania – the latest addition to the European Union having joined in 2007. Romania’s economy has grown at twice or even three times the rate of its larger EU neighbours in recent years. Its approach to tech innovation is a big reason why.

Sixteen blockchain and cryptocurrency startups have launched in Romania in the past year, while Google, Facebook, Amazon and Microsoft all have offices scattered around its major cities.

Those startups include a blockchain-based energy supplier, an augmented reality (AR) project, and many more, including the recently covered Ark (ARK).

Romania’s new role as a tech hotspot can largely be attributed to its encouraging tax policies – the country’s corporations are taxed at 16%, hence the arrival of Google, Amazon, et al. Meanwhile, low income earners only have 10% of their earnings taxed.

If that sounds good get this: if you work in the IT industry your income doesn’t get taxed at all. Same goes for R&D workers and those involved in technological development. (Side note: construction workers are also exempt from income tax).

Breakdown of Romania’s tax exemption policies – designed to encourage growth and worker participation.

New Transylvanian Silicon Valley

It’s thanks to policies like these that Romania recorded 5.7% growth year-on-year leading into 2017 – the fastest rate of growth in the European Union. Romania’s tech growth has been such that it has drawn comparisons with Berlin; while Techcrunch once referred to the nation as the ‘Silicon Valley of Transylvania’.

Blockchain is currently benefiting from this new wave of Romanian innovation and optimism. Sixteen crypto startups from a population of just 19 million – all within the past year or so – must be one of the strongest ratios in existence right now.

It’s true that blockchain didn’t have much of a hand in Romania’s glowing recent past, but it may yet have a big role to play in its future.

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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4.5 stars on average, based on 147 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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Market Overview

How to Escape Inflation

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Hi Everyone,

After years of economic crisis and hyperinflation, it seems that Zimbabwe may finally be taking their first steps toward stabilization.

For more than a decade the African nation has been relying on a multi-currency system that relies heavily on the US Dollar. However, in a country of 16 million people, there aren’t always enough dollar bills to go around. Talk about a liquidity issue.

So most Zimbabweans receive their monthly paycheck by electronic transfer to their bank account, which they then need to figure out how to spend in the grocery store.

In 2016 the government issued a new currency called a bond note, the exchange rate of which has been controlled by the government. In a recent update, the Reserve Bank of Zimbabwe has ditched capital controls and is now allowing bond notes to trade according to the free market.

In a country that has full mobile penetration, it’s really a wonder to me how cryptocurrencies are not playing a larger role.

Hint hint, wink wink, to Dash, Bitcoin Cash, and Litecoin.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • US-China trade deadline: 7 days | Days to Brexit: 35
  • Crypto Changing Landscape
  • Ethereum’s Rate of Inflation

Please note: All data, figures & graphs are valid as of February 22nd. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Stocks pulled back a bit yesterday but this morning investors are looking to reverse the losses. We’ve been counting down on geopolitical timers for so long that many market participants are already dreaming of a day when those counters get to zero and all is resolved.

The tricky one remains Brexit. At this point, analysts have identified three possible yet unlikely outcomes.

1. No deal Brexit
2. Theresa May’s deal, or some variation
3. A time extension

Each of the above seems to be extremely unlikely yet we know that one of them has to happen. Should option one materialize, it’s very likely that the British Pound will fall, and in the event of option two, the Pound should rise.

The Pound has been falling pretty steadily since May. Here we can see the GBPJPY kissing her 200-day moving average (blue line).

Also, the New York session today should be really interesting as we’ll hear from a slew of central bankers including Mario Draghi and no less than four Fed members as well as receiving a monetary policy report from the Fed.

Remember, these are the guys who drive the markets. So it pays to pay attention.

SEC Watchers

Just as traders in traditional markets watch the Fed, cryptotraders seem to be forming a habit of watching the SEC.

Today, we got some pretty astonishing news that an ICO called Gladius Network LLC received a pass from the SEC despite them selling $12.7 million worth of unregistered securities tokens. This is quite a different outcome than the SEC took with Paragon and Airfox just three months ago, who each needed to pay a fine of a quarter million dollars.

While the SEC is the most important regulatory body in the United States when it comes to securities, other regulators may be influencing policy as well. Our US Managing Director Guy Hirsch wrote me this morning…

How about the Crypto Rally?

Well, excitement is still high but seems to be fading. Volumes did peak out at $35 billion during the full moon on Tuesday, February 19th. Today we’re down to $23 billion traded across global crypto exchanges.

Some have pointed to the volumes on Wall Street’s bitcoin futures, provided by the CME group, which reached a new record high of 18,338 contracts during Tuesday’s madness. That comes out to a total volume of approximately $357 million, or approximately 1% of the amount traded on exchanges.

Also, the major price surge actually happened on Monday, when the CME was closed for President’s day. So, it’s clear that Wall Street is the passenger here and not driving.

So, to find out whether this rally is about to continue or claw back we need to look at the root. As we’ve been discussing, this entire rally seems to have been caused by a shortage in the supply of new Ethereum.

Historically, the Ethereum network produces about 20,000 to 30,000 new ETH per day. However, since the beginning of the year the amounts have been tapering off and as of last week, the new supply was more like 13,000 per day.

The Constantinople upgrade which is currently scheduled for block height 7,280,000 (approximately February 27th), is supposed to stabilize supply to about 5,700 blocks per day and reduce the block reward from 3 ETH to 2 ETH per block. So, by these metrics, we can deduce that new production after the fork will be about 11,400. Far less than the current rate mentioned above.

Now, another part of Constantinople is that it’s supposed to reduce the amount of gas needed per transaction. However, it’s not apparent how the new gas fee structure will affect demand.

So even though we know supply will be reduced drastically, we don’t know if this will affect bottom line inflation because we don’t know exactly what demand will look like under the new system.

Clearly, forward guidance on monetary policy is not the largest concern for Ethereum’s community leaders.

As far as the rest of the crypto market, this recent rally certainly has the big fish nibbling. We’ve been in the accumulation zone for a while now and this latest push off the floor might just be enough to bring the market out of a slump, but there are several technical levels that need to be broken before that happens.

Wishing you an awesome weekend!

Best regards,

Mati Greenspan
Senior Market Analyst

Connect with me on….

eToro: @MatiGreenspan Twitter: @MatiGreenspan LinkedInMatiGreenspan |Facebook:MatiGreen

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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Market Overview

U.S. Stocks Post Biggest Drop in Two Weeks as Business Investment Spells Trouble for the Economy

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The U.S. stock market declined on Thursday, snapping a three-day winning streak and heading for its worst loss in two weeks after the latest report on durable goods revealed a sharp slowdown in business investment. Crypto markets corrected lower as trade volumes continued to unwind from their yearly peak.

Stocks Retreat

All of Wall Street’s benchmark indexes headed for losses, with the Dow Jones Industrial Average falling 103.81 points, or 0.4%, to close at 25,850.63. The broad S&P 500 Index fell 0.4% to 2,774.88, with seven of 11 primary industries reporting losses. The technology-focused Nasdaq Composite Index closed down 0.4% at 7,459.71.

Disappointing quarterly results weighed on the major indexes after Domino’s Pizza Inc. (DPZ) reported earnings and revenue that disappointed investors. Hormel Foods Corporation (HRL) also missed analysts’ expectations.

S&P 500 companies have mostly beaten quarterly earnings estimates, but that could soon change, according to FactSet. The research firm anticipates a sharp downturn in profitability for Q1 2019 based on January EPS estimates. More on that story can be found here.

Economic Data Mostly Positive, with One Big Caveat

U.S. economic indicators were largely positive on Thursday, with one very big caveat: a gauge of business investment fell for the fourth time in five months.

The Commerce Department reported on Thursday that durable goods orders – a proxy for manufacturing demand – rose at a seasonally adjusted 1.2% in December. When removing the volatile transportation category, orders rose at a much slower 0.1% pace. A closer look at the report revealed that new orders for nondefense capital goods, a bellwether for business investment, fell 0.7% in December. Clearly, American businesses are feeling the effects of global economic uncertainty.

Most of the other major releases Thursday were positive. Initial jobless claims fell by 23,000 to a seasonally adjusted 216,000 in the latest week, the Labor Department said.

A measure of U.S. private-sector business known as the Composite purchasing managers’ index (PMI) improved to eight-month highs in February. Markit’s PMI gauge climbed to 55.8 from 54.4 in January. All of the monthly gains were attributed to the services sector, which accounts for the vast majority of economic output.

Cryptocurrencies See Minor Pullback

The major cryptocurrencies posted modest declines on Thursday, as the total market cap fell by around $3 billion. Daily exchange trading has also fallen by roughly $10 billion from its peak on Tuesday. As far as we can tell, the daily turnover printed on Tuesday was the highest in at least ten months.

Crypto Update: Litecoin Leads Pullback in Majors

Litecoin (LTC) led the pivot lower among the majors, falling 4% to $49.12. The LTC price peaked at four-month highs earlier this week.

Bitcoin cash (BCH) posted a drop of 2.9% to $142.72. XRP`s price broke below 32 cents after falling 2.4%. Ethereum (ETH) edged down 1.2% to $145.83.

Losses for Bitcoin (BTC) were capped at 1% during the day. It was last down 0.9% at %3,948.36, according to aggregate data from CoinMarketCap.

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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4.7 stars on average, based on 773 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




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