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Asian Market Update – Wednesday: Bitcoin Nears $7,000; Party Over for Asian Stocks

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Party over

The Big Question: Has the Asian stock market rally ended?

Prices of main cryptocurrencies were in a mixed mode during the Asian trading session on Wednesday, with strong gains seen in bitcoin and litecoin prices and minor losses in the price of ethereum.

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Bitcoin gained 4.37 percent to about $6,897 just before before midday in Asian trading on Wednesday. The virtual currency started moving up strongly at around 8 AM in Hong Kong, jumping more than $300 to near the $7,000 level over the next three hours. This marks the first in five days that the bitcoin price is close to the $7,000 level after dropping below that level on Friday.

China is back in news again, after rumors surfaced that a State-owned electricity firm is planning on cutting cheap power to bitcoin miners in Southwest China’s Sichuan Province. Though the company denied the rumors of such ban, it’s worth noting that it shouldn’t come as a surprise given that the Chinese government has taken a tough stance on cryptocurrencies, having already banned ICOs and trading activities.

The price of ethereum was down 0.95 percent to about $333 before midday in Asia, following strong gains in price yesterday.

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Litecoin added a slight 0.92 percent to $62.56 at midday.

Also in the news: the UK’s Financial Conduct Authority has warned against cryptocurrency CFDs, saying such derivatives are highly risky. The market regulator said that it has been watching the CFD market, and warned that only experienced traders should trade with leveraged products like CFDs.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan- Nikkei 225 22,142 -1.06%
China-Shanghai Composite Index 3,404 -0.7%
Hong Kong –Hang Seng 29,005 -0.5%
South Korea-KOSPI 2,515 -0.45%
Australia-ASX 200 5,951 -0.3%
S&P 500 E-Mini Futures 2,571 -0.27%

 

Most major Asian equities markets were trading lower on Wednesday morning, following disappointing data out of China on Tuesday.

In Japan, the Nikkei 225 was down 1.06 percent to 22,142 around midday on Wednesday.

On the Chinese Mainland, the Shanghai Composite Index was down 0.70 percent to about 3,404 before midday. In Hong Kong, the Hang Seng Index dipped 0.50 percent to around 29,005 before midday.

In South Korea, the Kospi skidded 0.45 percent to around 2,515 shortly before midday.

Down under, the ASX 200 lost 0.30 percent to 5,951.

The S&P 500 E-Mini Futures was down 0.27 percent to 2,571 at midday.

Asian markets have been trading lower for the past few days, after earlier rallies that pushed indexes to record highs, raising the question of whether the party is over for Asian stocks.

Also, there is story of about the slowing of the Chinese economy making its impact on stock prices. Data out of Beijing on Tuesday showed that both industrial output and retail sales in the world’s second-largest economy missed market expectations, according to state-run newspaper Global Times.

Currencies

The Japanese yen gained 0.2 percent on the US dollar at midday Wednesday to 113.21 per dollar.

The Chinese yuan firmed 0.04 percent against the US dollar at 6.6323 per dollar.

The Australian dollar lost 0.62 percent on the dollar, changing hands at 1.3181 per dollar at midday.

Commodities

WTI Oil was up 0.24 percent to $55.09 per barrel.

Brent Crude gained 0.16 percent to $61.47 per barrel.

Gold was up 0.16 percent to $1,281 an ounce.

Business News across Asia

In Japan: data showed that the world’s third-largest economy grew faster than expected in the third quarter of the year, expanding 1.4 percent in July-September, according to official data on Wednesday.

Take away: The BOJ has refrained from changing its monetary policy despite missing the inflation target. Stable economic growth could reinforce this stance.

In Taiwan, Foxconn, the major Apple Inc. supplier, saw a 3 percent fall of its shares on Wednesday after the electronics producers reported a nearly 40 percent drop in quarterly earnings.

Take away: Foxconn’s earnings loss could be viewed as the performance of the Apple’s newest devices. A 40 percent drop could mean shipments of the new iPhones are not performing well, and Apple’s share price may suffer in the near future as a result.

Featured image from Pixabay.

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

BTFD!

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Now entering day three since the broad sell-off across the crypto market industry and theories are piling up as to why it’s happening.

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To me, none of the theories point to any dramatic change in the fundamentals of this market. We’ve seen greater pullbacks in bitcoin before. This isn’t the first 50% retracement and it probably won’t be the last.

This is actually a good thing for the industry as it can shake out some of the speculators and consolidate the tremendous gains seen over the last few months. Of course, the best thing would be a sustained reduction in volatility to increase stability.

We’ll discuss below what the possibilities are for price movement in the near term. Though we might go lower from here, for those who believe that this technology will play a much greater role in the future, this pullback can present an excellent opportunity to spot out possible entry points in the market.

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There’s an old strategy that’s been used in the traditional markets called “buy the dip.” This works especially well when the long term trend is up.

The term BTFD can mean either Buy The eFing Dip or Bear the F Down, usually depending on if you’re already in the market or waiting on the sidelines.

Of course, this is crypto so the usual disclaimers apply. Never afford more than you can lose and always diversify your investments. Blockchain is revolutionary but there is always a chance that any individual coin can go to zero.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

Growth from China

The Banks are Fine

Crypto by the charts

Please note: All data, figures & graphs are valid as of January 18th. All trading carries risk. Only risk capital you’re prepared to lose.

Traditional Markets

Investors were calmed yesterday that the US government is heading to yet another temporary solution to keep the government open for business.

This will likely be the fourth temporary patch to extend the deadline but with the fractured politics in the USA right now even just the ability to kick the can down the road for a few weeks is being seen as a reason to celebrate.

The Dow Jones ended the day with another all time high closing above 26,000 points for the first time ever.

This morning, we had some great growth numbers out of China with the economy in the world’s most populated country growing by 6.9% in 2017. This figure was slightly better than analysts were forecasting and the China50 index is the highest it’s been since 2008.

Stocks were further encouraged by earnings figures from the big banks. Analysts were expecting some dismal results this quarter but it seems the figures were not quite as bad as expected. Famous Wall Street commentator Jim Cramer has expressed his confidence in this sector.

Though the financial stocks were the only red sector in the Dow Jones, things certainly could have been much worse.

Now for Crypto…

We did indeed see some moderate increase in volumes from Japan and South Korea. Also, the premiums paid by these two countries have come down slightly.

At the time of this writing, Japanese exchanges are selling bitcoin for just 15% above the Western markets and South Korea is down to a premium of 18%. Though the prices are still elevated this is a great sign that the market is indeed evening out.

On December the premium in Japan was as high as 25% and the premium in South Korea was 31%.

Let’s Get Technical

With a lack of any strong fundamental news to drive this market, the best thing to do in a situation like this is to dig into the charts for clues.

Here we can see a chart of bitcoin over the last few months. Take a look at the blue rising trend line. Usually, the tendency would be for the market to come back to it’s support on the decline and as we can see that level is now acting as a magnet.

Slightly beneath that we can see the 200 day average price in yellow. So between these two levels, and now that the $10,000 psychological barrier has been broken, the key support is around $8000 per coin.

For those of you looking for more volatilty to do some day trading, take a look at Bitcoin Cash. According to Coincheckup.com BCH is the most volatile of the top cryptos.

Here we can see a very wide range between $1000 and $4000. If it passes either of these levels things will certainly change, but assuming stability returns to this market we could see it coming back to the average price that it was trading before the crash, right at the dead center of the range.

As always, please continue sending me your excellent feedbacks and questions. You are my main source of information. 😉

Let’s have an awesome 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.

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

The Cryptocurrency Crash Hasn’t Spilled Over Into Stocks, Yet

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Carnage in the cryptocurrency market has yet to bleed over into stocks, something analysts at Wells Fargo says is definitely in the cards.

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Danger Lurks for Wall Street

With equities riding record highs, few investors are paying attention to the possibility of cryptocurrencies raining down on their parade. According to Christopher Harvey of Wells Fargo Securities, this scenario isn’t being given as much consideration as it deserves.

In a recent interview with CNBC, Harvey said: “We see a lot of froth in that market. If and when it comes out, it will spill over to equities.”

“I don’t think people are really ready for that,” he added.

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The cryptocurrency market tanked another 23% on Wednesday, hitting nearly one-month lows before rebounding sharply in the latter half of the day. At their lowest, bitcoin, Ethereum and dozens of other major coins shed hundreds of billions of dollars in market cap. Bitcoin alone had declined some 50% from its record high last month.

In Harvey’s view, a more sustained drop would be needed for cryptos to materially impact the stock market. Until now, crypto traders have bought every major dip stretching all the way back to the start of 2017.

Crypto carnage has already hit bitcoin proxy stocks, a broad cross-section of equities with direct and indirect exposure to the blockchain market. The tech-focused proxy shares rebounded on Wednesday in chorus with the rest of Wall Street.

Goldman Sachs has also warned about cryptocurrency speculation, arguing that a sustained rally in bitcoin may cloud an otherwise rosy outlook for the U.S. economy. In a report issued in late December, Goldman analysts said credit imbalances and crypto speculation were among their biggest concerns going into 2018.

Stocks Continue to Surge

Interestingly, Harvey has given the S&P 500 Index a year-end price target of 2,863, according to CNBC. On Wednesday, the large-cap index closed at 2,802.56, for an astonishing year-to-date return of 4.8%. Either the Wells Fargo analyst has severely underestimated the bull market or is expecting a few major pullbacks en route to the year-end target.

Wall Street’s major indexes rose between 0.9% and 1.3% on Wednesday amid better than expected corporate earnings. As of Friday, roughly 5% of S&P 500 companies had reported a blended earnings growth rate of 10.2% for Q4, according to financial researcher FactSet.

Although gloom and doom scenarios haven’t fazed stock traders, there are early signs that the bull market may be overstretched. Aside from the huge valuation risks currently facing Wall Street, volatility has crept noticeably higher in recent weeks. The CBOE VIX Volatility Index has risen in eight of the last nine sessions to trade at its highest level since November. Under normal circumstances, the VIX trades in the opposite direction of the S&P 500 Index.

Share values are also being supported by high-growth prospects under President Donald Trump, who scored a major legislative victory last month by passing a new tax bill. Even the Federal Reserve, long at odds with the president, has lifted its growth outlook thanks to the historic bill.

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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Cryptocurrencies

Crypto Pullback – Where’s the Support?

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Looks like we have some panic selling on the top cryptos this morning.

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Ripple has slipped below support of $1.5 per XRP and bitcoin has just fallen through $12,000.

The reason for the sell-off is not quite clear but we can see reduced volumes from Japan and South Korea who are usually the ones doing the heavy buying in this market.

In today’s market webinar we’re going to talk about where might be a good place to buy this dip and how to position your portfolio during this kind of pullback.

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The webinar will be at 15:00 GMT and is open to everyone.

https://register.gotowebinar.com/rt/1157869693061562371

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Good Returns
  • Swiss Depreciation
  • Crypto Pullback – How low can you go?

Please note: All data, figures & graphs are valid as of January 16th. All trading carries risk. Only risk capital you can afford to lose.

Traditional markets

Today investors on Wall Street will be coming back from their long weekend in a particularly good mood. The stocks have been flying in Asia so far this year and the Europeans have done a good job recouping the losses from December.

Wall Street herself has been having a record year so far so as long as these trends continue…

Even the bond market, which gave us a bit of a fright last week seems to be cooling down. The US 20 year treasuries have found support at 122.5 and are now holding near their yearly average price.

Swiss Event Today

Thomas Jordan rarely moves the markets but when he does, he does big. Today he will be speaking at the University of Zurich and delivering a speech about how money is created. A subject I’m sure we all would like to know more about.

No doubt he’ll be talking about how the central banks of the world have increased the amount of money in the system over the last decade and how the local banks have leveraged this money.

What he probably should be talking about is how to reduce the money supply from a system that is flooded with capital.

We’ll be watching his speech today with great interest, which will take place at 18:00 Swiss time. Just after our webinar. 😉

For reference, here’s a chart of the Euro against the Swiss Franc. Just about every large movement on this chart, and there are quite a few notable ones, have been created by Mr. Jordan. So it pays to pay attention to what he says.

The Crypto Pullback

The pullback seems to be coming from a lack of volumes in Asia. Cryptotraders in Japan and South Korea tend to dominate this market but so far this year have been notably silent.

Reports from Bloomberg of a further crackdown in China are not helping things but the real story here is Japan.

Japan was the first country in the world to fully legalize bitcoin as a currency last March and investments in BTC have reportedly raised the countries GDP significantly. The digital currency frenzy is also making a blockbuster entrance into Japanese Pop Culture with the new girl band…

So to see Japanese Bitcoin volumes of just 11% of the market at 18:00 Tokyo time is kind of odd.

My best guess is that Japanese and Korean traders are simply tired of paying the premium and are waiting for the market to even out. The price per bitcoin in these two countries is usually more than 25% above the prices in the West. So they might just be taking a step back, waiting for the FUD to blow over and get a better entry price.

The issue is that the markets have gone up so quickly that they didn’t have enough time to build in proper support. Here we can see that bitcoin does have some temporary support at the moment but if it does fall through it we could easily find ourselves below $10,000 pretty quickly and that’s a scary thought for some.

Whatever is causing this pullback it is making a lot of people nervous, which is why we should always remember that even though crypto has been the best performing asset class in history over the last year it’s still incredibly risky. No doubt many will see this dip as an excellent opportunity to get in but anybody who bought at the top is not doing well at the moment.

Hope to see you in the webinar. Let’s have an awesome 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.

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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