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Market Overview

The Biggest Buyer Will Become the Biggest Seller

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Though the overall value of the cryptocurrency market has remained the same, funds within the market are transferring from coin to coin at a rapid rate.

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The craze of new coins coming online is astounding. More than 100 new digital assets have been created since the beginning of the year. Some of them with a clear purpose and a good team, some of them, not so much.

What boggles my brain is the amount of money that some of these new startups are raising. Many of them have already collected more than $100 million from alternative investors. This is more money than Leonardo Dicaprio makes in a year ($72M) and more than the annual expenditure of the Republic of Palau($99.5).

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So, unless these companies really need an Airbus A320 ($96.7M) what do they plan to spend that money on??

But what really concerns me, is that all of this money was raised in cryptocurrencies. So if they ever do decide to spend it offline, they’re going to need to cash out. Of course, as we saw with GDAX last month, they don’t always have the decency to spread their orders out.

Mati Greenspan
eToro, Senior Market Analyst

Please note: All data, graphs & figures are valid as of July 6th. All trading carries risk. Only risk capital you can afford to lose.

Now, let’s amplify this by a billion times!!!

The scary situation outlined above is very similar to what’s happening in the world of “real money.”

However, the scope of the cryptomarket is virtually nothing when compared to fiat, which represents the entire monetary system that all 7 billion of us currently rely on.

It goes like this…

In 2008 there was a financial crisis due to way too many investments in all the wrong places.

In response to the crisis the United States Federal Reserve, in an unprecedented maneuver, stepped into the open market as the largest buyer of financial assets in the history of mankind.

Here, let’s take a look at the S&P 500 index since just before the crisis. The crash and recovery.

As you can see, they’ve breathed enough money into the market for it to rise about 35% higher than the peak in 2007. Talk about overkill.

Now for the scary part…

Over the last few months, the Fed has been shifting their strategy. Instead of telling the markets that they will be raising the interest rates, they’ve been talking seriously about selling off $4.5 Trillion worth of assets that they’ve bought over the past decade.

Now, of course, they plan to do this gradually and they understand the implications but the facts remain the same…

The biggest buyer in the market is about to become the biggest seller.

Certainly, the head of the Fed Janet Yellen has more data than I do but I simply cannot wrap my head around her recent statement that “we will not see another financial crisis in our lifetimes.”

Maybe it’s pride. Maybe faith. Perhaps she’s right. It’s definitely possible that they’ve printed enough money to last for the next 4 or 5 generations. Only time will tell.

What I can tell you with reasonable certainty is that the printing policy, in conjunction with historically low interest rates, has tampered with the way that people view savings and the way that investors view risk.

At this point, it’s pretty clear to everybody that money sitting in the bank is money wasted and the trend of people taking more and more risk in order to seek out higher returns is currently at an unsustainable level.

With that, I’ll leave you for today. Please feel free to approach me directly @MatiGreenspan with any questions, comments, or concerns. Have a lovely day ahead.

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

Past performance is not an indication of future results. All trading carries risk. Only risk capital you’re prepared to lose.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Market Overview

The Competitive Nature of the Human Spirit

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After a hearty meal and plenty of family time, the citizens of the biggest consumer culture on our planet will commence with the age old tradition of Black Friday.

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In this unique American holiday, accidents can happen and frequently do. It’s not uncommon to see videos of people physically fighting over the last discounted big screen TV or getting trampled by a stampede of screaming shoppers when a big chain store opens their doors at the time of a major sale.

Over on Wall Street, they’ll be watching these videos closely, not to gauge consumer sentiment of course, they’ve got plenty of graphs and other tools to do that, but because that’s what Americans do.

@MatiGreenspan
eToro, Senior Market Analyst

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Please note: All data, figures & graphs are valid as of November 24th. All trading carries risk. Only risk capital you’re prepared to lose.

Market Overview

In the last few moments, we had some breaking news out of Germany. It seems that the two main political parties are actually ready to talk.

The second largest party, the Social Democrats (SPD) previously mentioned that they didn’t want to join Merkel’s government because they preferred to be in the opposition. However, now that Angela has proven unable to form a government without them and the country headed for re-elections the pressure was too much and they finally caved.

This new update may actually cause more uncertainty. Just because the SPD is entering talks doesn’t mean that they’re necessarily going to enter into a grand kumbaya coalition. Their demands of Mrs. Merkel will likely be very high as the longest ruling leader in Europe is now on the ropes.

The Dax 30 has just opened without much reaction to the news so far. Let’s see how the day progresses.

By Popular Demand

Already several colleagues and clients have asked me to speak about the ongoing situation in South Africa. Today, it’s crunch time for the geopolitically unstable nation.

For those of you who are not from this particular region, here’s just a small sample of what they’re going through.

There are plenty of videos just like this on YouTube showing dear President Zuma’s inability to speak, do simple maths, or even count. In March, Zuma took a harsh decision to fire an extremely competent finance minister, ostensibly due to his meddling in the President’s own financial affairs.

Within the next 24 hours, two major ratings agencies are expected to make their final decision regarding the status of country’s debt. Economists are forecasting that a downgrade from S&P is more than likely but if Moody’s delivers a downgrade it would be a much bigger surprise.

Watch the USDZAR pair closely. Note that the chart is inverted so a move up represents a weakening in the Rand.

Ethereal Run

As the crypto-market continues it’s advance, we shall continue to split hairs over which is going the fastest. This is simply due to the competitive nature of the human spirit. “Who cares that all the cars are driving really fast, I want to know which one will be the fastest.”

The fastest car today is Ethereum with a gain of 5.77% over the past 24 hours. The level of Ethereum transactions is rising steadily and it now processes more transactions per day than any other cryptocurrency. In fact, according to trustnodes.com, 52.3% of all cryptocurrency transactions happen on the Ethereum Blockchain, compared with 33% on Bitcoin itself and only 1.8% on Bitcoin Cash.

Ethereum has also been the most steady crypto for the past few months only joining in on most of the major rallies a bit late for fear of a pullback. Here’s the chart since January showing a total return of 4000%.

After passing the second hump that peaked on September 1st, we’re now in breakout territory. Next level of resistance is at the all time high of $428.17, which is now not far off.

Also watch bitcoin over the weekend. It’s really close to it’s all time highs now as well.

Have an exceptional weekend!

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.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Market Overview

Asian Market Update – Friday: Ethereum on the move; Asian markets were mixed in muted trade

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Ethereum

The Big Question: What’s going in the Chinese stock market?

Main cryptocurrencies say minor losses in early trading on Friday, but quickly regained ground and turned losses into gains.

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Ethereum had a big day yesterday, surging by more than 10 percent at the most before selling off again. Ethereum ended the day up about 6 percent to $406, breaking through the resistance level at $400. As of Friday morning, ethereum has gained nearly $60 since Monday.

Ethereum has also broken out of the long-term triangle pattern we have seen on the daily chart, indicating that there may be further upside in ethereum.

Meanwhile, bitcoin added 0.83 percent to $8,098 before midday in Asia on Friday. The cryptocurrency took a dive earlier in the morning, falling from $8,185 to near the $8,000 level before surging back. Overall, it has been a steady week for bitcoin, remaining above the $8,000 line since Monday.

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Litecoin’s price gained 1.39 percent to $74.32 around midday, erasing part of a $3 loss seen early in the morning. Litecoin broke through the $70 line on Wednesday and has remained above that level since.

In the news, Uport, an ID platform on ehtereum blockchain, has opened digital ID registration on its platform for citizens of Zug, Switzerland, which would allow access to e-services such as online voting. The move marks a significant step in the adoption of blockchain technology in government services.

Also, Dan Bilzerian, a social media celebrity and professional poker player, apparently made a ton of money after purchasing a “shitload” of bitcoin at $2,300 in May. Quote of the day:

“It’s like sweating like I made a bet on the Super Bowl or something,” – Dan Bilzerian talking about watching bitcoin prices going up.

But Bilzerian might still be in a position to gain much more, if Max Keiser, a reporter on Russia’s RT news, said bitcoin will reach $100,000 and that bitcoin cash is just a knockoff of bitcoin.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan- Nikkei 225 22,446 -0.34%
China-Shanghai Composite Index 3,346 -0.18%
Hong Kong –Hang Seng 29,877 0.57%
South Korea-KOSPI 2,537 0.02%
Australia-ASX 200 5,967 -0.31%
S&P 500 E-Mini Futures 2,596 -0.04%

 

Most major Asian equity markets were in a mixed mode on Friday morning, with small losses seen in Japan, the Chinese mainland and Australia, and minor gains in Hong Kong.

In Japan, the Nikkei 225 was down 0.34 percent to 22,446 at midday on Friday.

On the Chinese mainland, the Shanghai Composite Index was off 0.18 percent to about 3,346 before midday. In Hong Kong, the Hang Seng Index climbed 0.57 percent to around 29,877 before midday.

The Shanghai Composite saw the largest single day loss this year on Thursday, after closing 2.29 percent lower. The drop is still relatively small compared to some seen last year, but nonetheless indicates that mainland investors are getting increasingly worried about growth Chinese growth.

Stocks in Shenzhen in South China also saw big losses on Thursday. Analysts attribute the drop to a combination of things, including the tightening of regulation on the country’s burgeoning online lenders.

In South Korea, the Kospi added 0.2 percent to around 2,537 shortly before midday.

Down under, the ASX 200 was down 0.31 percent to 5,967.

The S&P 500 E-Mini Futures was down 0.04 percent to 2,596 at midday.

In other news, nuclear tensions on the Korea Peninsula are back in focus after North Korea said that the US decision to list the country on a state sponsor of terrorism was a “declaration of war.”

Currencies

The Japanese yen depreciated 0.12 percent the US dollar at midday Friday to 111.33 per dollar.

The Chinese yuan lost 0.13 percent against the US dollar at 6.5868 per dollar.

The Australian dollar lost 0.04 percent on the dollar, changing hands at 1.3116 per dollar at midday.

Commodities

WTI Oil was down 0.17 percent to $58.42 per barrel.

Brent Crude lost 0.09 percent to $63.33 per barrel.

Gold was up 0.12 percent to $1,292 an ounce.

Business News across Asia

In China, experts are urging the government to prepare for any measures from the US to target Chinese trade. Chinese authorities fear that the Trump administration could pressure China on trade by citing reasons such as insufficient protection of intellectual property rights and a non-free market.

Take away: China-US relations have been overall positive since Trump took office and further improved after meetings of the two leaders, but things remain fragile. 

In Australia, the government has published the first foreign policy white paper in a decade. The most important theme: Australia is looking to the US to take a bigger role in the Asia Pacific to counter China’s rise.

Take away: Though there is nothing new in the paper about its foreign policy, it still angers some in China. China-Australian relations are still extremely important for the Australian mining and farming industry.

Featured image from Pixabay.

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Market Overview

Why We’re Not Drowning in Cash?

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Investors have a lot to be thankful for this year. Both the traditional markets and alternative markets are outpacing all expectations and those of us lucky enough to be involved should take a moment to reflect.

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Many markets will be closed this evening as Wall Street takes a much needed night off. Check out the Market Hours Page for the specific assets that you’re trading on.

For you cryptotraders, I’ll save you a click. There will be no downtime. Crypto is traded 24/7!

@MatiGreenspan
eToro, Senior Market Analyst

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Please note: All data, figures & graphs are valid as of November 23rd. All trading carries risk. Only risk capital you can afford to lose.

Market Overview

The people in charge of the money flows, released their thoughts on the economy and stock markets yesterday. As we know, the US Federal Reserve Bank has had more influence on the economy than any single institution or person over the past decade. The FOMC minutes from their meeting on November 1st did contain a few surprises.

It seems that the Fed Head Janet Yellen has completely changed the language she’s using about inflation. The word she was using before was “transitory”, meaning that the Fed feels this low inflation period will pass shortly. A word that she used more recently is “guess,” stating that we ‘think’ that inflation will rise. Now it seems they’re just not certain so they’re going to ignore it.

Let’s back up…

The Federal Reserve, along with the other central banks of the world have been pumping the global economy with cash injections known as Quantitative Easing (QE). Currently, the total amount of QE from the top five countries is about $19.5 Trillion. Not a small amount of change.

but it doesn’t stop there…

In our economy, only a small portion of money is created by the central banks. In fact, every Dollar that is held at the Fed is then lent out to other banks within the country who in turn lend each and every dollar to many different clients. This is called fractional banking and what it means is that a bank only needs to own a fraction of the money that it lends out.

Like any other asset, prices of currencies are usually determined by supply and demand. However, with the amount of QE that’s been poured into the system it’s a real mystery that we haven’t seen hyperinflation on a massive scale.

Why are we not drowning in cash???

This question is now being pondered by virtually all economists in the world at the moment and nobody seems to have any good answers.

One of the biggest effects that we can see are global stock prices that tend to benefit from all this cash floating around the system.

The question of hyperinflation or lack thereof is a hot topic in the financial world and no doubt will be discussed by some over turkey and cranberry sauce this evening. For some of the more normal people, the much bigger topic of discussion will be about cryptocurrencies and how we can replace all of the above with a much better system.

Crypto Market Tops $250 Billion

There have already been several articles published about how to speak about Bitcoin at your Thanksgiving dinner. Some of them are pretty good too. But I’m sure most of my readers are already somewhat familiar with this world and what we’re trying to accomplish with it so I’ll just dive right into the price movements for you.

It’s now been two weeks since the Segwit2x hard fork was called off (orange circle) and the action has been intense. It seems that every day one crypto or another is seeing monstrous gains. Here I’ve put together all the cryptos that are traded at eToro in one chart.

Bitcoin itself is up 10% in two weeks, which is amazing if you think about it but somehow just doesn’t seem impressive at all given some of the other advances.

The best performer by far has been Bitcoin Cash (Green). I actually had to cut off the top of the spike on the chart above just so we could see the moves more clearly. Some believe that Bitcash’s bigger blocks and new ‘difficulty adjusting mining formula’ make it an excellent alternative to Bitcoin. However, the crypto markets are all about consensus. And lately, especially since B2X coin never happened, this new bitcoin is gaining traction.

As of this writing, Bitcash is up 36% in the last 24 hours and 148% in the last two weeks. Beware the volatility though!!

The second best performer has been Dash, which we discussed in yesterday’s update and though Ripple saw a big spike (purple circle) on the announcement that they will be partnering with American Express, they’re two-week performance is now mostly inline with the rest of them.

Trying to guess which crypto is going to perform the best is a lot like playing roulette. The odds that you’re going to guess the exact right one are pretty slim. However, this is not a zero-sum game. So spreading your bets out and diversifying into many different contenders is probably the best strategy.

New Milestone

The total value of all digital assets in the world has now passed $250 Billion, up 25% in the past two weeks and 1471% since the beginning of the year.

My best guess is that many cryptotraders looking at their portfolio right now might see the ‘lagging’ performance of bitcoin and try to reallocate some of their BTC into higher risk tokens to try and chase those bigger returns. However, this doesn’t necessarily mean that bitcoin will go down.

Bitcoin is a gateway cryptocurrency. Most newcomers in the market and there are a lot of newcomers, first get into bitcoin before trying out some of the others and it still represents the biggest holding of most crypto-investors.

Let’s have an amazing day ahead!

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.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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