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Asian Market Update – Wednesday: Cryptocurrencies tumble on more attacks on the industry

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Bitcoin under attack

The Big Question: For how long can bitcoin withstand all the attacks?

Prices of cryptocurrencies tumbled during the Asian trading session on Wednesday, as more attacks were directed at the virtual currency industry from prominent figures such as JPMorgan CEO Jamie Dimon and from NORTH KOREA.

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The bitcoin price dropped more than 3 percent overnight to about $4,034 before midday in Asia. That’s close to one of the lowest levels of around $4,020 in recent weeks seen on Sunday after news of China planning to ban commercial trading made a wave across the virtual currency world.

The ethereum price fell 2.85 percent to $285.53 around midday. The digital currency has been on a downtrend since late yesterday, falling from around $316.

JPMorgan Chase CEO Jamie Dimon said Tuesday that bitcoin is a “fraud.” He told CNBC that “[bitcoin] is just not a real thing, eventually it will be closed.” But Dimon said he is not suggesting investors to go short bitcoin.

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North Korea is reportedly building a bitcoin stash for rainy days (UN sanctions) but it’s not trying to get bitcoin in the way everyone else is – buying. Reports said that the North has launched several cyber attacks on South Korean cryptocurrency exchanges, starting in May this year.

While North Korea’s attack highlights concerns over security, Dimon’s remarks represent the doubt of some mainstream traders and governments about virtual currencies.

On Monday, several media outlets reported, citing unnamed sources, that Chinese officials have already drafted an instruction to shut down coin exchanges and ban commercial trading. China has already placed a ban on initial coin offerings or ICOs.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan-Nikkei Stock Average 225 19,869.82 0.47%
China-Shanghai Composite Index 3,374.89 -0.09%
Hong Kong –Hang Seng 27,850.02 -0.44%
Australia-ASX 200 5,759.00 0.22%
South Korea-KOSPI 2,369.08 0.15%

Most major Asian stock indexes were mixed on Wednesday, as indexes in Japan, South Korea and Australia climbed, following gains on Wall Street. Indexes in Greater China posted a slight decline.

In Japan, the Nikkei 225 added 0.47 percent to 19,869.82 around midday.

In South Korea, the KOSPI gained a slight 0.15 percent to 2,369.08.

Down under, the benchmark ASX 200 tacked on 0.22 percent to 5,759.00.

The gains in Asian indexes followed the record highs seen in the S&P 500 and Dow Jones Industrial on talks of tax reform and eased concerns over hurricane Irma in the US and geopolitical tensions on the Korea Peninsula.

In Greater China, the Shanghai Composite Index was down 0.09 percent and Hong Kong’s Hang Seng lost 0.44 percent.

Currencies

The Japanese yen gained a slight 0.06 percent against the US dollar at midday in the Asian trading session on Wednesday. The USD/JPY rate was at 110.08.

The Chinese yuan gained 0.1 percent to 6.5290 per US dollar. The yuan lost against the greenback in the previous day to as low as 6,5430 after the central bank changes two regulations on foreign exchange, seeming to indicate to let the yuan move more freely.

The Australian dollar gained 0.02 percent against the US dollar. The Australian dollar was trading at 1.2462 per dollar.

Commodities

WTI Oil was down 0.29 percent to $48.20 per barrel.

Brent Crude lost 0.18 percent to $54.11 per barrel.

Gold was also down 0.05 percent to $1,331 an ounce.

Business News across Asia

In China, opinions are mixed about the new iPhones, with some saying they were not impressed by the upgrades to iPhone 8 or even the iPhone X, and indicated that they would choose domestic brands such as Huawei. Others are already lining up to get their hands on the first batch of iPhones. Some iPhone scalpers in China say price for iPhone X could be pushed up to 20,000 yuan or about $3,063, compared to the official price of $999.

Take away: Apple has been having a tough time in China, amid increasing competition from local brands such as Huawei, Xiaomi and others. The new iPhones are Apple’s bet to get back on the top of the world’s largest smartphone market, but things are not looking all positive.

In India, Visiting Japanese Prime Minister Shinzo Abe and Indian PM Narendra Modi are reportedly quietly ramping up a plan to build up their own regional connectivity, competing with China’s Belt and Road Initiative. India and Japan have shown reservation about Chinese President Xi Jinping’s vision to connect the Eurasia region and Africa.

Take Away: Though there was no concrete plan reported between India and Japan, the pair seems to be on to something that could change both geopolitical and economic dynamics in Asia.

Featured image from Max Pixel.

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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4.2 stars on average, based on 20 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 mainly follows the stock and forex markets, and is always looking for the next great alternative investment opportunity.




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Market Overview

Play that Funky Market

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There’s only one way to explain what’s happening in the markets right now.

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It’s FUNK!

@MatiGreenspan
eToro, Senior Market Analyst

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Today’s Highlights

  • More Market Funk
  • No way but Right?
  • More Crypto Vol

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 Funk

Everything was going fine on Wall Street, they came back from lunch in a buying mood, but somehow things started to turn sour. By about an hour before the close things started to get downright ugly and by now we’re more than 500 points off the peak of that yellow circle and we’re now 3.82% from the all-time high.

Once again, the movement began in the bond markets, with the yields on the 10 Year spiking to a new high of 2.94% by the end of the day.

And of course, volatility can be seen with the VXX shooting up into the close.

Italian Splinters

It’s been five days since Italy stopped publishing opinion polls ahead of the national elections on March 4th in order to stop them having an influence on polling day itself.

That said, as we learned in Brexit and the Trump elections, polls can’t always predict what’s going to happen and in Italy, even less so. And this one is set to be even more interesting than usual.

Nevertheless, some analysts have come to the conclusion that the only party with an actual shot of winning an outright majority is Forza Italia, led by Silvio (I can’t believe I’m even writing this) Berlusconi.

This is still anyone’s game though, and even though there are 945 seats across two Houses of Parliament, alliances are so fractured that candidates are now battling for every single voter.

For the markets it’s still not clear what the effects might be, but as Europe’s 4th largest economy, and with the EU’s 1st largest economy still in a political deadlock, I’m looking squarely at the Euro.

In this chart, we can see the effect that a decisive election had on the EURUSD on April 23rd (yellow circle). Notice the large gap up that seemingly took the market from flat to flying in a single weekend when it became clear that Marine Le Pen had no chance of victory.

Crypto Volatility Continues

When Wal-mart’s stock dropped 10% on Tuesday it was a really big deal but when Bitcoin dropped an equal percentage on Wednesday, somehow it just doesn’t seem all that significant.

On that thought, here’s a meme I made yesterday. 🙂

That’s just the level of volatility that we’ve come to expect from this market. So please be aware that when I say cryptos are volatile, what I mean is they’re extremely volatile.

One thing that I keep noticing in the crypto-market is that when things are going up, we can expect to see different levels of returns in different coins and general divergence. However, when things are going down the correlation gets stronger and everything falls together.
You should be able to see that in this chart pretty clearly…

As always, let me know if you have any questions or if you need anything further.

Have a groovy day!!

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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Analysis

Daily Analysis: The Usual Post-Fed Pump and Dump…

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Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2700 -0.51%
DAX 12,470 -0.14%
WTI Crude Oil 61.28 -0.83%
GOLD 1325.00 -0.43%
Bitcoin 10480 -8.71%
EUR/USD 1.2336 0.61%

The script that we laid out for the FOMC meeting minutes has worked almost perfectly, with the major US indices completing a roundtrip that triggered most of the “weak” stop-losses, before a powerful move lower into the close.

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The predictable late-session intraday volatility aside, markets were quiet and choppy for most of the day, and the Dow, the Nasdaq, and the S&P 500, all closed just slightly lower, while covering 2% during the session, with the tech-index’s relative strength evaporating in late trading.

S&P 500 Futures, 4-Hour Chart Analysis

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Forex Markets and Commodities

What drove the decline in equities was the renewed rise in US Treasury Yields, and to answer the most important question of the day; yes, in fact, the yield-Dollar correlation of the past few months broke down, and today the Greenback rallied together with bond yields.

10-Year Treasury Yield, 4-Hour Chart Analysis

While that is how it should work according to common sense and economic theory, the recent inverse correlation helped a lot of trends in reaching extremes, and those extremes now might reverse.

The outperformance of US markets, the Euro strength, and the weakness in European equities were among those trends, and it’s interesting to see that the bullish technical setup in the EUR/USD is crumbling and the US indices are in the deepest correction since the Brexit.

EUR/USD, 4-Hour Chart Analysis

While there is no assurance that these changes are permanent, for now, we remain short-term bearish on US equities, and continue to look for upside in the battered Dollar.

At the end of the day, the Dollar finished higher against all of the major fiat currencies, although the Yen showed notable relative strength amid the stock rampage near the closing bell. Interestingly the USD vs. risk-on pairs trend continues to lead the other asset classes, as we have noted several times, and that could be something to monitor in the coming days and weeks.

Commodities had a mixed but ultimately bearish session, with oil and gold suffering both suffering losses amid the risk-off shift, although crude already traded lower before the FOMC release, while gold traded in close correlation with the Euro throughout the day.

Cryptocurrencies

The segment had a decisively bearish session, with only a few coins showing considerable relative strength amid the sell-off. Bitcoin, Litecoin, Dash, and Monero are still the leaders of this cycle, while Ethereum is the most notable laggard, pulling most altcoins lower as well.

ETH/USD, 4-Hour Chart Analysis

On a positive note, the majors held up relatively well amid the stock turmoil, but the next few days will be crucial, as important support levels could be tested. That said, most of the coins are well clear of the crash lows, and there is more than enough support below that, combined with the still present bullish signs should keep investors confident that a new uptrend is underway and new rally highs are ahead.

Featured image from 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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Analysis

Pre-Market: All Eyes on the FED and the Dollar (Again)

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FED-Days usually bring very special sessions with a choppy illiquid environment before the “big announcement”, an almost usual stop hunting spike in both directions right after the release, and a rather random, but strong trend in the close that usually defines trading for the next days.

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For this reason, a lot of traders like to take the day off until the FED-decision, and only trade after the event. Why are we talking about this today? Because although there is no interest rate decision this month, the meeting minutes of last month will be published this evening, and what moves the market in this period is rate expectations, not actual decisions.

And by the market, we mean basically all traditional asset classes, and through the rising trend in yields and the consequences of that, rate expectations arguably affect the cryptocurrency segment as well. So what do we expect from the FED? Nothing. We will leave that to the rest of the players, and trade upon the reaction of the market; after all that is what counts. At the end of the day, central banks will try to prop up the market, we can take that for granted.

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S&P 500, 4-Hour Chart Analysis

The overnight session in stock futures was in line with the above-mentioned expectations for a quasi-Fed day, with no clear trend in Asia or Europe, and very choppy price action across the board. Yesterday’s late-session decline is still weighing on investors sentiment, but there are clearly positive signs as well, even as we remain bearish for the coming weeks.

The key levels to watch are still the same, the 2735 and 2700 levels in the S&P 500 (25350 and 24800 in the Dow), and the Nasdaq could remain crucial to keep the hopes of bulls up, should it retain its relative strength.

Dollar-Yield Correlation Switch?

EUR/USD, 4-Hour Chart Analysis

Currency traders might have noticed a subtle shift between US Treasury Yields and the Dollar since the Volatility-Armageddon (actually a bit later than that). In the “old regime” the rise in yields was through the changes in rate-expectations was actually hurting the value of the Dollar, while lately, that negative correlation disappeared and even reversed briefly.

Why is that so important? Because the previous correlation helped the rally in US equities as yields rose, while the new regime could mean that European and Asian stocks will finally gather relative strength, should yields continue to rise. Tonight we might get closer to the solution of this puzzle, as the reaction to the FED-minutes will show how correlations are shaping up now.

Currencies and commodities are also little changed today, although the Dollar continued to edge higher overnight, while enduring a small sell-off as we approached the US open, despite the largely negative European PMI indices.

So watch the Dollar, the Nasdaq, and most of all Treasury Yields today in late trading, and expect choppy conditions until the very end of the US session.

Featured image from 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 107 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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