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Market Overview

Bigger than Wall Street

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It’s amazing how fast the future comes at you.

Just a few years ago we were theorizing about how the crypto market may come to replace the Foreign Exchange market. Earlier this week, business insider has reported that the volumes in the cryptomarket are now comparable to those of the New York Stock Exchange.

As we can see from the data, a typical day at the NYSE produces an average turnover of $41 Billion. Some days are more than $100 Billion and some days less than $25 Billion.

The crypto market has advanced exponentially this year. On January 1st the total turnover was about $120 Million but by now they’re consistently surpassing $30 Billion.

However, as the author points out, there’s still a long way to go to reach the $5 Trillion daily turnover that is seen in the global currency markets. After seeing what’s happened in 2017, it’s already easy to imagine that this may somehow be possible in the year ahead.

@MatiGreenspan
eToro, Senior Market Analyst

Traditional Markets

Wall Street came back from their long weekend with a bit of a hangover. It’s quite common for large hedge funds to close out their positions and realize some of their profits by the end of the year. It looks good on their reports.

The main target was Apple, which fell about 2.5%. After a 53% gain in share price this year, the retracement looks pretty normal and I wouldn’t doubt that many investors will see this as a discount. Though the losses were not staggering, it did manage to bring down the major indices, which ended at a bit of a loss.

Unfortunately, it seems that the Asian markets have detected the sour sentiment from New York. Though the Nikkei is only slightly down, the China50 dropped 2.5% today. Contrarywise, the markets have just opened in Europe and though volumes are likely to be weak during the holiday season, the boards are all green for the Dax and his pals.

Commodities Jump

Gold and Oil seem to be benefiting from the low liquidity holiday season trading. Both have made significant gains the last few days.

Gold actually saw a drop at the beginning of the month and so now is only recovering from that. Oil on the other hand, has seen a shift in trend over the last few months and has now touched $60 a barrel for the first time since mid-2015.

Many analysts are pointing to a pipeline explosion in Libya as the cause for the price surge yesterday. To me, that’s a hard story to swallow really. It’s really difficult to see such an occurrence as having much of an impact on the long term balance between supply and demand of this global market.

More likely, the news of the explosion caused traders to focus their energy on crude oil. That together with low liquidity during the holidays and a weaker US Dollar gives us a more complete picture.

Ripple Explosion

Though Bitcoin regained a lot of its composure yesterday, it’s Ripple that should be making the headlines.

The Ripple network is a bit different from most other blockchains in that Ripple is a private company and their protocol is maintained as such. So it’s not completely open source like the rest but it still is included in the overall asset class we call cryptocurrencies since it does make use of the distributed ledger technology.

Ripple’s aim is to replace the swift system that is currently being used to send money from one bank to another. If you’ve ever sent an international wire transfer, you know that it usually takes between two and five business days and costs about $25. Ripple can do this in seconds for pennies.

Every transaction that is sent through the Ripple network burns a small amount of XRP tokens, as a payment for the transfer. Those tokens then disappear and can never be used again. This means that the overall economics of the coin are super deflationary. Meaning, over time the supply dwindles causing the price to rise.

However, to counteract this Ripple has started with a monumental amount of 100 Billion tokens. Though they’ve recently locked up more than half of this supply in a long term escrow account, there is still a current circulation of almost 39 Billion XRPs.

The price gains have been intense. At the start of the year each token was a fraction of a penny and in December alone it’s come from 23 cents to $1.17 this morning for a total gain of 408%.

I’ve already heard several people tell me that it’s actually cheap at around $1 but we do really need to think about the total supply in the market. Compared to bitcoin’s current supply of about 16 million and Ethereum’s 96 Million.

In the end of the day, the value will be determined by the banks. The more financial institutions use it to set up payment gateways the more they will need XRPs to facilitate the transactions.

However, in the long term, there may actually be a real cap on the amount this toke can grow. The more expensive the tokens are the more the transactions will cost. For now, it’s extremely cheap to send a Ripple transfer but at some point, if XRP gets more expensive it may be seen as less viable.

Sorry for getting the report out a bit late today. Wishing you 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. 

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 138 rated postsSenior Market Analyst at Etoro.com.




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  1. gideon104

    December 27, 2017 at 1:41 pm

    Are you sure about circulating supply there? Coinmarketcap shows 38,739,144,847 XRP. Based on this I think that the total was probably 100 Billion, not Trillion.

    Fairly confident this is an error, but I could be wrong?

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Market Overview

U.S. Stocks Rise on China’s Evolving Industrial Blueprint; Cryptos See Modest Progress following Heavy Selling

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U.S. stocks rebounded sharply on Wednesday as investors shifted from apprehension to optimism on China trade negotiations. Cryptocurrencies stemmed early-week volatility but failed to muster much of a rally as trade volumes dropped.

Relief Rally

Wall Street’s major indexes recovered sharply midweek, shifting the balance back in favor of the bulls for the time being. The large-cap S&P 500 Index climbed 0.5% to 2,651.07, with sectors ranging from information technology to consumer discretionary posting large gains. Five of 11 primary sectors reported gains in excess of 1%. Real estate and utilities were the only laggards on the day.

The Dow Jones Industrial Average jumped 157.03 points, or 0.6%, to 24,527.27. The blue-chip index was up 450 points earlier in the session.

Meanwhile, the technology-focused Nasdaq Composite Index closed up 1% at 7,098.31.

China in the Spotlight

Investors got the go-ahead to bid up stocks amid reports that China was seeking to replace industrial policy that favored domestic companies across a range of vital industries. The new plan will reportedly open the door to foreign companies looking to set up shop in the world’s second-largest economy. As Hacked reported on Tuesday, the policy in question is called the Made in China 2025 plan.

The Wall Street Journal reported Wednesday that the blueprint was already being re-drawn in an effort to appease the Trump administration amid ongoing trade negotiations. Earlier this week, China agreed to reduce tariffs on U.S. automobiles to 15% from 40%.

Efforts to renegotiate free trade agreements comes in the wake of a face-to-face meeting between presidents Trump and Xi earlier this month. Both leaders held productive talks on the sidelines of the G20 summit in Buenos Aires, Argentina. This included a three-month truce not to escalate the trade war.

Cryptos Get Some Relief

Cryptocurrencies saw modest upside on Wednesday, as the majors recovered slightly from their most recent beating that nearly drove values to new yearly lows.

Bitcoin, XRP and Ethereum all recorded gains in excess of 2%, helping engineer a broad-based recovery in the market. Bitcoin was back above $3,500, while XRP returned above the vital 30-cent mark. Looking further down the market rankings, EOS jumped 8% to overtake bitcoin cash for sixth spot on the list. The digital currency was last seen trading just above $2.00.

Most coins ranked in the top-20 traded higher on Wednesday. The combined market cap rose to $111 billion as a result. However, trade volumes fell by nearly $800 million to $12.2 billion, with BitMEX seeing a drop off in activity compared with the heavy selling pressure observed earlier in the week. BitMEX has emerged as a popular venue for shorting bitcoin, which has wreaked all sorts of havoc on the leading digital currency and the market as a whole.

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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4.6 stars on average, based on 696 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Analysis

Forex Update: Dollar Drops, Risk-On Currencies Rally on Trade Optimism

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Forex Market Snapshot

Asset Current Value Daily Change
EUR/USD 1.1366 0.43%
GBP/USD 1.2634 1.19%
USD/JPY 113.25 -0.10%
AUD/USD 0.7223 0.26%
GOLD 1,249 0.09%
WTI Crude Oil 52.16 0.37%
BTC/USD 3,444 2.74%

The forex market saw another very active session, with the key topics of the recent weeks still making headlines and causing wild swings in the major currency pairs. The Brexit saga took another turn today, as Prime Minister Theresa May faced a no-confidence vote in her party following the delay of the vote on the draft plan in the British Parliament.

The result of the vote is not yet known, but analysts expect the PM to win the vote after she stated that she won’t run for another term in light of the Brexit-related chaos. The Pound has been rallying so far today together with most of the risk-on currencies, with yesterday’s decision to grant bail to the recently arrested CFO of Huawei boosting investor confidence across the globe. President Trump also hinted on progress on the ongoing talks, and that led to a sizable drop in the USD and in US Treasuries, as safe-haven flows reversed.

Technical Analysis

USD/CNH, 4-Hour Chart Analysis

The Dollar/Yuan pair, which has been crucial for all markets in recent months, broke its short-term uptrend on the news, and it fell to its lowest level in almost a week. The Chinese currency is still weaker compared to its post-trade-truce levels, but it’s also clearly above its October lows, despite the continued weakness in the Chinese economy thanks to the trade-related optimism.

That said, the long-term trend is clearly positive in the pair, and negative in the Yuan, and the credit-related troubles, which will likely weigh on the currency for years, will likely outweigh the topic of trade next year. We still expect the likely trade deal to cause a strong bounce in Chinese assets, but it’s unlikely to change the broader trends especially given the broad bearish shift in global risk assets.

EUR/GBP, 4-Hour Chart Analysis

The EUR/GBP pair is testing the recent break-out level amid the continued Brexit uncertainty, with the 0.90 level being in focus throughout the day. The short-term uptrend remains clearly intact in the pair, and bulls remain in control of the market from a long-term perspective as well.

Strong support is found near 0.8920 and a move towards the 2017 highs near 0.93 is possible in the coming months, even as both currencies remain among the weaker majors, and European growth is clearly weakening.

AUD/USD, 4-Hour Chart Analysis

The AUD/USD pair is currently trading in a bearish wedge pattern amid the mixed price action in commodities, and the Aussie has been acting weak today, suggesting a likely move below the 0.7200 level in the coming days.

The currency is neutral on both time-frames currently, but a move below 0.7165 would mean that the long-term downtrend will resume following the two-month-long correction, that broke the long-standing declining trendline.

Gold Futures, 4-Hour Chart Analysis

Gold has been showing relative strength today compared to the other main safe-haven assets, which pulled back thanks to the positive developments in the US-Chinese diplomatic spat, and the precious metal successfully tested the recent break-out level.

Gold is very close to confirming a broader trend change, although it needs to stay above $1235, and a move above $1260 would suggest a test of the next major resistance zone near $1300, with strong support, found at $1215 and $1080.

Key Economic Events Tomorrow

 

ChartBook

Forex

EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/JPY, 4-Hour Chart Analysis

AUD/JPY, 4-Hour Chart Analysis

GBP/JPY, 4-Hour Chart Analysis

USD/CHF, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

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 414 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

Breaking the Silence

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Hi Everyone,

You know the thing I love most about Ethereum upgrades?… They’re silent.

The last Ethereum major upgrade, known as Byzantium, went live in October of 2017 and barely any end users even noticed. Even though Byzantium was implemented using a hard fork, no new Ethereum coins were created. For a better understanding, see this article about how forks work.

The next Ethereum hard fork is now scheduled for mid-January. Constantinople is mostly a maintenance and optimization upgrade that will pave the way for most of the big league scaling solutions and more.

The field of decentralized networks and computing is still very new and presents various challenges. So these type of upgrades, though sometimes take longer than expected, are an excellent example of how dev communities get it right and pave the way for a better future.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • EU Japan Trade Deal
  • Yellen’s Warning
  • 1 Year B-day: Bitcoin Futures

Please note: All data, figures & graphs are valid as of December 12. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Today we’ll start off with some positive news for global trade. The European Union and Japan have finalized a deal that’s been 5 years in the making.

It’s nice to think that even at the present time when many politicians are advocating for more isolation, some countries can continue making deals.

The President of the European Commission was on record as saying,

“We’re saying…we believe in open, fair and rules-based trade,”

Stocks are enjoying a rally this morning. After holding steady during the US session yesterday, Asian and European markets are well off the lows.

Yellen Breaking the Silence

Life comes at you fast sometimes.

The former Chair of the US Federal Reserve said a bit more than a year ago that

It seems her rhetoric has changed completely since then and it now seems that she’s expecting something bad to happen soon.

In this interview, she pointed out the $9.1 trillion corporate debt and gave a stern warning that it could cause a lot of bankruptcies, especially for companies with less than sparkling credit.

Catch it on YouTube at this link: https://youtu.be/gcYTU1sQniI

Interesting times.

Happy Birthday Bitcoin Futures

The bitcoin futures market on Wall Street turns one today.

Many will argue and many often do about what effect this has had on Market prices. Though it’s often downplayed, even by the CBOE themselves, volumes in these CBOE and CME contracts often reach up to about 8% of the volumes reported by major global exchange sites.

For better or for worse, they’re part of this market now and it’s only going to grow when the new Nasdaq futures come online in Q1.

Happy birthday!!

Let’s have a spectacular day ahead!!

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

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

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

eToro is a multi-asset platform which offers both investing in stocks and cryptocurrencies, as well as trading CFD assets.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

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

Connect with me on….

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

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 138 rated postsSenior Market Analyst at Etoro.com.




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