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Market Overview

Bears & Bubbles

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The global multi-asset sell-off continues. Stocks, commodities, bonds, and even crypto continue to fall as investors are quite suddenly shying away from everything risky.

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The famous groundhog Punxsutawney Phil indeed predicted six more weeks of winter last Friday, but market participants seem a bit more concerned about a different animal that may now be emerging from deep hibernation, the bear.

This far more fearsome animal tends to sleep a bit longer than his much smaller peers. However, there’s no telling when he might just wake up early from the hunger.

@MatiGreenspan
eToro, Senior Market Analyst

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Today’s Highlights

Volatility is Through the Roof

The Fed’s New Direction

Bitcoin Bank Ban = Fresh FUD

Please note: Please note: All data, figures & graphs are valid as of February 5th. All trading carries risk. Only risk capital you can afford to lose.

Stocks Are High

So says outgoing Fed Chair Janet Yellen with a surprise statement just before leaving office.

These comments are in line with recent sentiment from former Fed Chair Alan Greenspan…

Despite having the same last name, this is probably the first time I feel that Greenspan and I are on the same page. 😛

Economists continue to debate just how high is high and whether or not we’re in a bubble but investors are definitely fearful at this point. The Dow Jones dropped nearly 700 points on Friday after a stronger than expected jobs report. Not a great sign.

Still, the benchmark index has been performing so well lately that it could conceivably drop as low as 23,500 points without even breaching its long-term upward trend line.

We can also see a massive spike in volatility. The VIX “fear” index is now up to it’s highest levels in more than a year. To put it in proportion though, the levels we’re seeing now are rather comfortable when put into historical context.

The negative sentiment has continued into the start of this week in Asia with the Nikkei 225 down a killer 2.75%, and European indexes have opened up in deep red territory.

Central Bank Likely Reactions

Today Jerome Powell will be sworn in as the country’s 16th head of the Federal Reserve. Many expect that given the anticipation of larger inflation numbers ahead, Powell will be compelled to be a bit more aggressive on raising interest rates going forward.

Typically, expectations that interest rates in the United States will rise are accompanied by a stronger US Dollar, as are stock market declines. However, over the last week, Dollar has remained rather weak.

Here we can see the Dollar’s main rival, the Euro at rather elevated levels, much to the chagrin of the ECB (European Central Bank)…

Today, the President of the ECB Mario Draghi will speak on an unrelated matter but just might drop some words to try and cool the Euro down.

Bitcoin Sentiment

This morning, some breaking news gripped the crypto-community. It seems that the bankers are moving in on Bitcoin. Taking the lead is Lloyd’s bank who will block about 9 million customers from purchasing digital assets with their credit cards.

Looking at the current situation, the fear that global regulators will try to squash cryptocurrencies has been overplayed. In fact, regulators have little to lose from blockchain innovation. Rather, the bigger fear should come from established financial institutions. The ones who have the most to lose from economic disruption.

In line with that, the results of a recent survey from Goldman of 1,300 economists and institutional clients have come out rather bearish….

It should be noted however, that a large portion of people who filled out this survey indicated “no view” or have little understanding.

On the other hand, a survey that I ran on my twitter feed, though having much fewer participants, came out much more bullish, with 76% of traders expecting to see Bitcoin higher than $10,000 in the next three months.

So clearly, different types of people voting in these two surveys.

Getting technical, we can now see bitcoin testing it’s long term trendline, which will very likely be a make it or break it moment for the world’s favorite cryptocurrency.

Wishing you and yours an amazing week 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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Analysis

Pre-Market: Oil Plunges Below $70 as Markets Mixed Before Long Weekend

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Financial markets are relatively calm today, despite the hectic week that was highlighted by the Turkish currency crisis, wild swings in bonds, and a step back in US-North Korean relations. Stock markets turned lower globally, with US equities outperforming the rest of the world, essentially drifting sideways all week long, thanks to the slight correction in the Dollar’s rally, and the dip in Treasury yields that was triggered by the dovish Fed meeting minutes.

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S&P 500 Futures, 4-Hour Chart Analysis

Today, the durable goods report came out before the opening bell and although the headline number was a tad worse than expected the more important core figure beat the consensus estimate, helping the slightly dampening economic outlook, even as yields continue to fall, especially with regards to long-dated Treasuries.

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EUR/USD, 4-Hour Chart Analysis

Although emerging market currencies are way less volatile today than recently, despite the rebound in the Dollar, equities shed their early gains and are now slightly in the red. The all-important EUR/USD pair hitting yet another 6-month low near 1.1650, and the test of the key long-term 1.1450-1.15 zone looks more and more likely in the coming weeks, even as the pair is a bit oversold.

Energy Markets in Turmoil as OPEC Signals Production Increase Again

WTI Crude Oil, 4-Hour Chart Analysis

It seems that the crude oil market is in for a strategic switch yet again, as the OPEC, together with Russia made it clear today that the price of the Black Gold finally reached a desirable level. The cartel will be targeting a higher level of output later on this year in order to keep the US shale players under pressure by capping the advance in the key commodity’s market.

The WTI contract reached a 4-year high at $72 per barrel recently and the Brent contract which is more exposed to Middle East woes rose as high as $80 per barrel after trading below the $30 level just two years ago. The last phase of the advance extended above the level where a large portion of the shale plays turn profitable, and as global growth worries also surfaced, the commodity entered a selloff this week.

Gold Futures, 4-Hour Chart Analysis

Safe haven assets continue to be bid despite the relatively calm environment, and gold hit a two-week high today despite the bounce in the Greenback as buyers are back after the wash-out plunge below $1300. With the long-term setup and fundamentals still being favorable for the precious metal, the short-term downtrend line is in danger here.

As US markets will be closed on Monday, which usually favors an active session, volatility might remain high throughout the day.

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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4.6 stars on average, based on 256 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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Market Overview

Finding a Golden Opportunity

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Hi Everyone,

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Yet another attack struck the cryptocurrency market recently, this one claiming around $18 million from the Bitcoin Gold network.

The innovation of blockchain is that transactions are secured by utilizing the power of the network. The second major fork of Bitcoin, known as Bitcoin Gold or (BTG), is not on the eToro platform at the moment, precisely because the network is simply not big enough at this time.

Both BTG and Bitcoin Cash (BCH) were created to give Bitcoin a larger block size, an idea that the Bitcoin Core community rejected. With all the thousands of cryptocurrencies out there, the question arises, how many bitcoin forks do we actually need?

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In this video from earlier this week, you can see the backers of Bitcoin Gold arguing with a well-known backer of BCH Craig Wright. The video ends with the BTG spokesperson saying to Craig “goodbye Fake-Toshi” a disapproving nickname that he received for previously claiming to be the real Satoshi Nakamoto.

Even though BTG seemed to come away with the upper hand in the video, it’s losing against BCH on the ground.

In the graph below, we can see the total mining power (hashrate) of all three Bitcoin tokens mentioned above (BTC, BCH, and BTG). As you can see, BTG is simply a flat line at the bottom, indicating that there are very few miners actually supporting the network.

The distinct lack of miners left the network vulnerable to attack and the hackers were easily able to add enough hashrate to write the blocks however they like.

It should be noted that even though BTC enjoys the most hashrate by far, BCH actually has marginally lower fees. This is why people keep saying that Bitcoin is moving to be more of a store of value.

So if payments is the question, we need to look at the top three contenders. In this case that would be Bitcoin Cash, Litecoin, and Dash. As you can see, in the last few months, the competition has been getting tight, with all three coins charging less than 20 cents per transaction.

Ultimately, the natural way of the market is to push out the weakest contenders. For now, the payments market is dominated by Visa & MasterCard, who at the moment are charging vendors about 2.5% to 3% per transaction.

As the average credit card transaction is about $80, the average fee comes out to approximately $2.20, which is more than 5 times higher than Bitcoin itself.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Trump Pulls Out
  • Happy GDPR Day
  • Vitalik is Tweeting again!

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

Traditional Markets

A big part of my job and the job of other financial bloggers is to try and gauge the impact of any given news event on actual market prices. When doing this, it’s important to always remember that correlation does not equal causation.

A perfect example would be this news that came out yesterday…

The purple circle on this chart shows the exact time that the news broke on Bloomberg.

As is clear from the chart, the market has been falling for several days, and though there was a spike down shortly after the announcement, it would be difficult to prove that the news caused the movement.

On the other hand, there was an event yesterday that I believe did have a direct and measurable impact on the markets. Here we can see Donald Trump’s letter to Kim Jong Un announcing that he was calling off their June 12th Singapore meeting.

For your convenience, I’ve pinpointed the exact time that the letter went viral on social media on this chart of gold.

Even though the price spiked before the announcement it does seem that this little event was able to give it the strength to push the market above the $1,300 psychological barrier.

The news also seems to have had an impact on the global stock indices as depicted here.

Final Fantasy

With all the news and simultaneous stories coming out right now, it’s difficult to pinpoint exactly which ones translate into investment opportunities.

For example, the Brexit saga in the UK right now doesn’t seem to have changed much for the Pound. Yes, the British Pound sold off against the US Dollar, but the USD is getting stronger across the board. If we look at the Pound’s strength against the Euro, we can see that little has changed in the last few months.

We are getting ever closer to the March 2019 Brexit though, so we hope things are sorted out pretty soon. In any case, we should get more clarity soon when the Brexit Bill is back in front of the UK Parliament.

New Spending Government

Over to Italy, where earlier this week we saw that the new Prime Minister has been confirmed by the President. So Italy should soon have a government. Even though it’s clear that the new parliament will try to increase spending in a country that has more than its fair share of debt, it seems that what’s happening in Italy is staying in Italy, at least as far as the global markets are concerned.

Roll-Back

Yesterday the Trump administration did a huge roll-back of the Dodd-Frank regulations, which were put in place by Obama to prevent another crisis similar to 2008.

The immediate impact will probably be that medium-sized banks will be free to take on more risk. Wheather this will end up increasing systemic risk of the entire system is currently being debated, but even if it does, that’s not something that would usually cause an immediate impact on the markets, that’s “future America’s” problem.

Happy GDPR Day!!

I’d like to wish you a very happy GDPR day!! Please enjoy the abundance of emails informing you that the privacy policy of just about every company that holds your personal data has been updated. Good luck reading through it all.

This is something that might impact the market over the next few weeks because it’s been reported that many companies are still not fully compliant. The market impact will largely depend on how EU officials choose to deal with these type of infractions.

TRY Time

The Turkish Lira has been almost as volatile as many of the major cryptocurrencies over the last month. So if you like high risk, feel free to day-trade it. Just please be cautious and use proper money management.

Increased Chatter (Vitalik is Tweeting)

For traditional markets, more chatter means a conference happening in Stockholm, which will include a panel with both Fed Chair Jerome Powel and the Governor of the Bank of England Mark Carney. This is about as good as it gets for central bank watchers and is not to be missed.

In crypto, it’s relevant to note the Ethereum community is having a lot more open dialogue lately on Twitter. As a decentralized platform, they’ve always been rather transparent about their conversations.

Vitalik likes to remain silent though for fear of having too much influence over the direction of the network. Over the last few months, he’s been especially hands-off and limiting himself to only retweets, presumably to emphasize a point made in the original tweet.

In the last few days however, it seems that he’s been engaging a lot more directly, especially with people contributing to the development of the Ethereum network. The community has been waiting for the famous Casper upgrade that will take Ether to a new level. Lately’ we’ve heard that the code for this upgrade has already been written and is currently in final review. Let’s hope for a smooth release.

Long Weekend

Really sorry for the long winded email. I hope that the information here will help you make better decisions in your portfolio, especially going into the long weekend.

For those of you in the UK and USA, I want to wish you a happy holiday in advance and to everyone a wonderful weekend!

For anyone who got through the entire post. Feel free to tag me, you probably deserve some sort of prize. 🙂

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

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

Market Update: Geopolitical Tensions Trigger Rush to Safe Havens as Gold Spikes to 10-Day High

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Investors were on high alert Thursday after President Trump called off a planned summit with North Korea next month, The subsequent haven rush sent gold prices to ten-day highs and the yen to its best levels in almost two weeks.

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Gold Spikes

Gold prices jumped more than 1% as demand for riskier assets faded in the wake of geopolitical unrest between the United States and North Korea. August bullion prices gained 1.2% to trade near $1,310 a troy ounce on the Comex division of the New York Mercantile Exchange.

Silver prices surged 28 cents, or 1.7%, to $16.69 a troy ounce.

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Thursday gains helped gold recoup from a massive slide earlier in the month as traders began pricing a fourth interest rate hike by the Federal Reserve this year. The U.S. dollar surged to five month highs, reducing gold’s investment appeal in the eyes of international traders.

Bullion has spent the better part of 2018 valued above $1,300, though the bulls have been unable to make a definitive break above $1,350.

Yen Strengthens Across the Board

Asia’s favorite haven currency rose across the board on Thursday, as carnage in emerging markets added to geopolitical uncertainty.

The yen rose more than half a percent against the dollar, sending USD/JPY to a session low of 109.00. The pair traded as high as 111.37 earlier in the week.

The yen has benefited from a sharp selloff in emerging market currencies, with the Turkish lira and Argentinian peso among the hardest hit. These countries are heavily influenced by the U.S. dollar because the bulk of their foreign funding is denominated in the greenback.

Despite its recent pullback, the dollar is up 3.3% over the past month.

Crypto Woes Continue

The cryptocurrency market touched fresh six-week lows Thursday, as the combination of regulatory risks and South Korean exchange uncertainty weighed on prices.

Crypto assets have lost a combined $50 billion in value since Sunday, with the total market cap bottoming near $320 billion earlier in the day. At the time of writing, the total market was worth $338 billion, according to data provided by CoinMarketCap.

All major altcoins were up compared with 24 hours ago, with EOS leading the rally. The digital currency was up more than 10% by late afternoon EST to trade at $1219.

Ripple XRP rose more than 4% to $0.635. Bitcoin cash rebounded more than 3% to $1,058.

Bitcoin traded relatively flat after hitting fresh lows. It was last valued at $7,585.

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 414 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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