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Market Overview

Bitcoin is Back

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There is a world of difference between speculation and implementation but they are connected.

Even though price movements can be incredibly distracting they do serve to drive excitement in the market and attract new people to this exciting field, which does lead directly to more implementation.

For example, according to a recent report, there are now twice as many registered cryptotraders in Brazil than there are stock traders. In Russia, thanks to 185,000 news articles that were written about Bitcoin, more than half of the population now feels confident that they have a good grasp of what cryptocurrencies are.

Blockchain operates on the power of the network. Similar to the way we see the “wisdom of the crowd” in eToro, where each client that comes in whether they are a beginner or expert trader, strengthens the entire system.

Though the bitcoin network has not grown nearly as fast as her price, there has been an incredible rise in the number of full nodes, people who have downloaded the entire blockchain ledger in order to help verify transactions.

I’m proud to report that after 46 days of being flooded, the bitcoin network is showing signs of recovery and the backlog of transactions is finally clearing.

This recent pullback in the price has been a blessing in disguise.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

Government Temp

BoJ Announcement

Getting Technical with Bitcoin

Please note: All data, figures & graphs are valid as of January 23rd. All trading carries risk. Only risk capital you’re prepared to lose.

Traditional Markets

The good news is that the US government managed to come together long enough to get money flowing through its branches. The not so good news is that this most recent deal will only fund the government for another 16 days.

The hope is that in that time frame they’ll be able to work out a more long-term solution but most political analysts are saying that this is very unlikely and we can expect another showdown in two weeks time.

The shutdown has not affected the stock market whatsoever, but it seems the temporary spending bill has. Markets on Wall Street saw a strong relief rally.

Asian markets this morning are have continued the momentum with both the Nikkei 225 and the China 50 up about 1.25%.

The story here is one of economic growth despite political deadlock. Earnings are good, corporations are doing well, so stocks go up. The head of the IMF, Christine Lagarde kicked off the Davos convention with an inspirational speech to address sum all this up saying that “the time fix the roof is when it’s sunny outside.”

Makes sense to me.

Japan Remains Cautious

The Bank of Japan’s event this morning was fairly uneventful. They only made minor changes to their outlook on the economy. Though these changes could be seen as laying the groundwork to exit their ultra-aggressive stimulus program it’s clear that they don’t want to spook the markets by pulling out too abruptly.

My guess is that the BoJ governor Kuroda is looking at this graph…

Kuroda wants this chart to up, but ending stimulous would have the effect of sending it down. If he manages to build in some strong support at 110 Yens to the Dollar (blue line) or even break the dotted yellow line to the upside, they might be able to create some directional momentum that would make things easier to implement the changes they want.

Bitcoin Decongestion

As we alluded in the opening letter above, the recent price action and “sell-off” in cryptocurrencies has been really good for bitcoin.

Even though mass adoption is a dream come true, the network does need time to scale. While things are surging and the number of transactions skyrocket, it’s difficult to do that.

Thanks to the declining prices, the transaction rate has come down nicely. At the peak in December, we were seeing more than 4.7 transactions per second. That number is now down to a more sustainable 3.24.

This has given time for the backlog to clear. Since December 8th, there have been more than 100,000 transactions at any point waiting to be added to the blockchain.

This morning, that number was seen as low 55,000. A much more normal number.

In the meantime, some solutions are starting to be implemented to improve the overall capacity of the network. The two main solutions at the moment are SegWit and Lightening.

SegWit has been in place since August but users have been slow to adopt it. The lightening network, on the other hand, is a lot newer and after months of testing, the first few transactions are just happening now.

For the first time in months, we’re seeing real signs that bitcoin’s odds of remaining the world’s number one digital currency are increasing and with it the awesome possibility of a truly global and borderless monetary system have reemerged.

Bitcoin Price Analysis

Right, but what about the sell-off???

So, we can never really know what’s going to happen in the future. However, we do know that what’s happening at the moment is purely technical.

There has been no major breaking news that would point to a systematic breakdown of digital currencies or a global crackdown on regulation. Therefore, we must conclude that this price action is due to the tremendous rise in price and we’re just seeing a normal pullback.

As I’m writing the level of $10,000 is being heavily tested but it wouldn’t surprise me to see a gentle break below this round figure.

As I’ve mentioned before and was well documented, the next main level of support for bitcoin is at or around $8,000 per coin.

This graph shows three different types of support that can be found in this approximate area…

The weakest sign is the rising trend line in blue. These lines are drawn very differently by different analysts. However, the general theme remains the same and most retracements will lead back to some such support level.

Next is the breakout level (dotted purple line) of $8,300 that was first crossed to the upside with strong momentum on November 25th. One could argue that this is not the only breakout level on the chart ($11,750 for example), but it is the one that seems most relevant to me.

The third is the 200-day moving average (yellow line). This is the least subjective of the three and in traditional markets is considered a very compelling indicator. At the moment, it’s reading $7,421. However, if we see continued consolidation or even orderly price declines over the next few days, it should rise nicely to be inline with the other two indications.

Many thanks as always for reading the reports and sending me your questions, comments, and feedback. I’m going out to meet some clients now in Zurich, then hop a train over to Davos for the afternoon.

Have 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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Analysis

Pre-Market Analysis And Chartbook: Markets Flat Ahead of Key Economic Data

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Wednesday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,729 0.02%
DAX 30 11,467 -0.05%
WTI Crude Oil 56.16 1.59%
GOLD 1,202 -0.03%
Bitcoin 6,211 -0.80%
EUR/USD 1.1287 -0.01%

As traders awaited the key US economic releases of the week, the Consumer Price Index (CPI) and the Retail Sales report, financial markets were relatively quiet and flat before the Wall Street open, but things got volatile since then, despite the muted CPI reading. The progress in the Brexit negotiations and the liquidation event in crude oil were making headlines today, although the advance in the Pound stalled, as equity markets and in general risk assets are still under clear selling pressure following the turmoil in October. The second half of the week will likely see strong moves across asset classes, and given the negative technicals, odds favor a risk-off shift globally.

EUR/USD, 4-Hour Chart Analysis

The Dollar is consolidation after its move to new 16-months highs on Monday, and for now, the currency failed to confirm the break-out, at least as measured by the Dollar index. The EUR/USD is showing a slightly different picture compared to the broader measure, and the common currency is still in a steep downtrend, even as it is back near the key 1.13 level, retracing a large chunk of Monday’s move.

A durable recovery above 1.13 could signal a failed break-down and another consolidation phase in the pair, with the long-term momentum indicators still being oversold, but the broad downtrend is clearly intact, and long positions should only be considered as short-term trades.

Nasdaq 100 Futures, 4-Hour Chart Analysis

In equities, we continue to see bearish technicals from a broader perspective, and although the post-Fed selloff halted, for now, the re-test of the October lows still seems likely in the coming weeks. The Nasdaq is still relatively weak compared to the other major US benchmarks, and the tech benchmark is the closest to its lows, even after yesterday’s bounce.

The overnight session saw a slight bullish bias in stocks, with the indices holding on to above their weekly lows, but we still view the short-term rally attempts as selling opportunities given the hostile technicals across the globe.

Crude Oil in Turmoil as Copper Holds Support, For Now

WTI Crude Oil, 4-Hour Chart Analysis

The bounce that we have been expecting in crude oil didn’t materialize despite the deeply oversold momentum readings, as the dip below the $58-$60 zone triggered a liquidation event in the commodity. The worst day for oil in 3 years saw the WTI contract falling below $55 per barrel, its lowest level in a year. Today, oil is attempting a recovery, and we continue to expect a rally up to the $63-$65 zone in the coming weeks.

Copper Futures, 4-Hour Chart Analysis

Elsewhere in the commodity segment, we are seeing further signs of weakness, despite the pullback in the Dollar. Gold is having a flat quiet day, so far, hovering near the $1200 price level, while despite the renewed trade-deal optimism, copper failed to bounce higher substantially amid the slight risk-on shift. The industrial metal is trading just above its recent swing low, and a move below that would be a sign that the lengthy consolidation phase is ending and the broader downtrend is about to resume.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

Gold Futures, 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 394 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

Slick Move

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Hi Everyone,

The company known as Ripple Labs seems to have a decent shot at replacing Swift as the way that banks move money around globally. The way banks currently send money from one place to another is archaic and certainly needs to be changed.

One of the biggest hurdles for mass adoption of Ripple’s XRP system however, are the current battles playing out in the US court system.

Ripple currently has several lawsuits against it with the plaintiffs claiming that the XRP token is actually a security. If so, the company will likely need to pay dearly for not registering with the SEC before raising money from the public.

In a “slick move” the company has now consolidated all of these cases into one hoping for a positive decision from the federal court.

We continue to keep an eye on this case with great interest and in the meantime, traders are working hard to defend the 50 cent per coin price. Though many of the popular cryptos have given back their gains from the early November rally, XRP is standing its ground quite well so far.

In a surreal coincidence, if we apply the famous Fibonacci Retracement Tool to XRP’s price rise, we see that the 50% mark comes out to exactly $0.50 per coin. Let’s hope it holds.

It’s important to note that even if we’re very generous and say that Ripple does have a 50/50 chance to replace the banking system (a recent report written by Ripple execs only gave it a 25% chance), it’s still a huge risk to take in the event that it doesn’t work out. That’s why it always pays to diversify your portfolio.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Apple Falls
  • Oil Slick
  • Crypto Volumes Spike in South America

Please note: All data, figures & graphs are valid as of November 14th. All trading carries risk. Only risk capital you’re willing to lose.

Traditional Markets

Stock indices are down today as it seems investors prefer to take risk off the table. There was an attempt at a rally on Wall Street yesterday after positive comments from Larry Kudlow on China trade, but it did fade by the end of the day.

The tech sector is being watched particularly closely and Apple stock is a concern for investors wondering if iPhone sales may have peaked. Apple has now fallen 17.5% from it’s all-time high and is now trading below its 200 DMA (blue line).

As much as it pains me, what goes up must come down. Wonder what Sir Isaac Newton would say about this.

If people are scared of tech, they’re terrified of oil. Crude extended its losses yesterday but we are seeing a bit of a bounce this morning. As we discussed in Monday’s market update (titled: Line in the Sand), a move below $60 (yellow dotted line) could be devastating and indeed it was.

This morning we’ve seen a bounce off $55 (thin red line).

A move below $55 is certainly possible but the tendency of a market that’s moved this much so quickly is usually to take a break.

Nobody is taking the oil slide more seriously than Nicolas Maduro, the President of Venezuela. In fact, Venezuela is now making a push to end the era of the petrodollar entirely.

This comes at an interesting time when Iran’s Crypto-Rial is set to go live within the next few days and even the IMF seems to be advocating for state-backed digital currencies around the globe.

BCH Hard Fork Tomorrow

Near as I can tell, the drama happening in BCH isn’t a great concern. Let’s face it, if prices weren’t as flat as they’ve been in recent months, we probably wouldn’t even be talking about this.

Preliminary results of a poll that I put out on Twitter this morning is showing people’s sentiment about this pretty clearly.

So, nobody really seems to care. For those of you who are watching though, I’d recommend keeping your eyes on the following two websites.

Number one is Coindash’s cash.coin.dance. They’ve got a nice cointdown timer and show the hashwar pretty well.

The other is called forkmonitor.info that was set up by BitMex for this purpose. Though I don’t really understand what they’re trying to show in the Bitcoin Cash tab, I’m hoping they’ll have more info as the situation progresses.

Volume Spikes in South America

Prices seem to be declining slightly this morning but overall things are pretty stable. With the exception of Tether, which traded as low as $0.96 on some exchanges last night.

All eyes are on BTC to see if it holds onto its current support level of $6,000 but more important than these short-term price movements is a growing trend that we’ve been tracking of rising volumes, especially in several key areas.

One of those areas that I’ve noticed in South America. This site showing volumes by country isn’t a pure indicator since it only tracks trades made on the peer-to-peer site localbitcoins.com. However, if we look at the various countries on the list you’ll notice that all the Latin American countries listed are showing increasing volumes lately.

Now, I’d rather not repost all the charts here but I do urge you to visit coin.dance/volume/localbitcoins to see for yourself.

Volumes are on the rise in Mexico, Dominican Republic and Argentina and are near their all-time highest levels in Colombia, Chile, Peru, and Venezuela.

As the economic cycle continues and the United States continues to raise their interest rates, they put pressure on the emerging market economies, but as we can see, people are getting smarter, the global economy is getting freer, and we now have the tools to protect ourselves from poor monetary policy.

Let’s have a wonderful 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 | LinkedIn: MatiGreenspan | Facebook: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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4.6 stars on average, based on 134 rated postsSenior Market Analyst at Etoro.com.




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Market Overview

Market Update: U.S. Stocks Rattled by the Oil Bears

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U.S. stocks traded mostly lower on Tuesday, weighed down by slumping energy shares as crude prices extended their collapse to a record 12th session. Cryptocurrencies were mostly lower as markets shifted focus to the upcoming bitcoin cash hard fork scheduled in less than two days.

Stocks Settle Mostly Higher

The large-cap S&P 500 Index fell 0.2% to 2,722.18, reversing earlier gains. Five of 11 primary sectors finished lower, with energy shares plunging more than 2% as a collective.

Shares of information technology companies also rebounded from an early-week selloff, helping the Nasdaq Composite Index recover some lost ground. However, the tech-heavy gauge gave up most of its gains in afternoon trading, closing flat at 7,200.88

The Dow Jones Industrial Average fell 100.69 points, or 0.4%, to close at 25,286.49.

A rollover in the technology sector triggered a massive selloff on Wall Street Monday. This included a 600-point drop in the Dow and a nearly 3% plunge for the Nasdaq.

Oil Rout Intensifies

The oil-price collapse entered its 12th day on Tuesday, as U.S. futures prices plunged below $58 a barrel for the first time this year.

U.S. West Texas Intermediate (WTI) for December settlement touched a session low of $54.91 a barrel on the New York Mercantile Exchange, its lowest in over a year. The U.S. oil benchmark plummeted more than 8% on the day. Brent crude, the international futures benchmark, faced a similar setback, falling 7.2% to $65.19 a barrel on London’s ICE futures exchange.

The record loss demonstrates just how quickly market narratives can shift. A little over a month ago, analysts were talking about $100 a barrel oil as a distinct possibility sometime next year. Now, crude prices are struggling to avoid a protracted bear market.

Cryptoassets Slightly Lower

Most cryptocurrencies in the top-20 traded slightly lower on Tuesday, with losses ranging between half a percent and 3.5% over 24 hours. However, the combined market value of all coins in circulation was little changed at $211 billion, reflecting underlying stability in the bitcoin price.

Bitcoin, which accounts for 52.4% of the entire market capitalization, pared losses to settle just below $6,400, according to CoinMarketCap. As Hacked reported earlier, BTC traded at a large premium on Bitfinex following a renewed slump in Tether’s USDT stablecoin.

Bitcoin cash reversed a large slump to trade slightly higher ahead of a planned network-wide upgrade on Thursday. The schism, which is expected to produce two competing coins, appears to stem from a war between Craig Steven Wright and Roger Ver, the most prominent backer of bitcoin cash. Although Ver’s Bitcoin ABC has won support from major industry players, data on bitcoin cash mining pools suggest Bitcoin SV will control the lion’s share of the network’s mining power.

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 664 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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