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Bitcoin Party on Wall Street

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Looks like a lot more people may be reading these updates than I thought. Two days ago we spoke about crypto-kitties and then it got so popular it slowed down the Ethereum Network. Yesterday we showed a chart with the total market cap of all stocks in the world, which is nearing $100 Trillion. I subsequently saw that same chart on three separate financial blogs throughout the day.

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All kidding aside. I’m flattered by every single reader and really appreciate the outstanding feedback, excellent questions, and especially the helpful information that you all send to me on a regular basis.

With great thanks,
@MatiGreenspan
eToro, Senior Market Analyst

 

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

Market Overview

Things are heating up in Washington DC and it’s having a direct impact on Wall Street in New York. The tax bill now seems to have a chance of passing by the end of the year. So far the House and the Senate have passed slightly different versions of the bill and they now need to get together to draft a final version that works for everybody.

Yesterday it was announced that special investigator Robert Mueller has slapped a subpoena on Deutsche Bank in order to further investigate Trump’s finances and alleged collusion with Russia to attack the US elections.

Stocks declined in the United States, Asia has followed suit with losses of more than 1.5% in China and Japan. The European markets have just opened now and things are not looking good at all.

Two warnings were issued on the stock markets in the last 24 hours from top-tier financial firms.

The first is from Goldman Sachs who is looking at the run in the stock market and saying that it could soon come to an end.

The second, though I couldn’t find the source of the quote was published in the name of Citi by a well known but sometimes questionable alternative finance site.

Indeed, looking at the VIX volatility index over the long term we can easily confirm. With the exception of a brief spike in August of 2015, the “fear index” has remained subdued for the better part of this decade. The only other period like that that we can see here is the run up to 2007.

This distinct lack of fear should probably set off a few alarm bells in and of itself. Now, that it seems the Trump Tax Rally may be losing steam, we should probably tread cautiously going forward.

The old trader’s saying “buy the rumor, sell the news” may well end up applying to tax reform legislation.

Trade Idea

This one came up in a weekly meeting that we’re holding with all of the best analysts in eToro from around the world. It’s a more low risk opportunity and a bit of a safe play.

Take a look at this chart, showing Natural Gas against the ETF that tracks Natgas UNG.

As you can see, these two markets are very highly correlated as they are on the same underlying asset. However, in the past few months, we can see them drifting apart. Since July the UNG has lost 15% where Natgas has only dropped 3%.

This type of divergence creates a nice opportunity. By buying one and selling the other you will be in a comfortable hedge. This also should impact your risk score nicely as hedges tend to do.

Bitcoin Off the Charts

Last night Bitcoin pushed through the $12,000 barrier for the first time and didn’t look back. At the time of this writing, BTC is testing the next round number of $12,500…

The value of the entire bitcoin blockchain has also busted through a notable landmark with the market cap breezing past $200 Billion. Still only a small fraction of the stock markets, which as we mentioned above is almost $100 Trillion.

The entire cryptomarket has grown in value by 86% over the last 30 days.

The movement is coming from traders excitement that Wall Street will soon be joining the party. With CBOE bitcoin futures coming on Sunday and CME bitcoin futures on the 18th of December all of Wall Street will be able to trade bitcoin by Christmas. In turn, all investors around the world should have easy access to bitcoin-based assets as soon as March.

Those of us who have come to the party are now reaping the benefits. Let’s have an awesome 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.

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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Analysis

Long-Term Cryptocurrency Analysis: All Majors Stretched as Ripple Finally Breaks-Out

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Although the previous leaders of the rally started to correct or at least consolidate in the wake of the overbought long-term setups, another batch of coins turned exponential, with Litecoin, Ripple, and Ethereum all registering lofty gains this week. Bitcoin, Monero, and Dash have been holding up well, and even drifted to new marginal highs during the period, while Ethereum Classic had a more volatile week, before moving to new highs today.

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XRP left the broad trading range that has dominated its market since May, and surged to new all-time highs while almost quadrupling in the process. As the coin was the only major on a long-term buy signal according to our trend model, and the move triggered a sell signal on Thursday, now all of our tracked coins are on sell signals.

Ripple could be in for further short-term gains but long-term investors should reduce their positions after this week’s spike. Support levels are found Major at the prior high near $0.4250 and in the $0.30-$0.32 range.

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XRP/USDT, Daily Chart Analysis

IOTA, which has been leading the market higher before is down by more than 30% off its all-time high, but given the exponential move before, an even deeper correction is likely in the coming weeks, and investors should wait until a more favorable setup to add to their positions. Strong support is only found at $3 and $1.5, but potential Fibonacci support is at $2.35.

IOT/USD, Daily Chart Analysis

Let’s see how the long-term charts of the other majors look this weekend.

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Analysis

Technical Analysis: Bitcoin Up Again as Altcoins Mixed in Volatile Trading

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Bitcoin is at a new all-time high today, although the momentum of today’s move is far below from what we saw recently, and the coin only managed to reach a marginal record high yet again. BTC is now worth $300 billion, and it is still trading right at the short-term trendline, inside a rising wedge pattern that shows a clear momentum divergence.

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With the short-term trend still being intact further gains are still possible, but as all the majors are overbought from a long-term perspective, we still advise investors to wait for a better buying opportunity before adding to their holdings. Primary support is still found near $13,000, with further levels at $11,300, $10,000, $9000, and stronger levels at $8200 and $7700.

BTC/USD, 4-Hour Chart Analysis

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 XRP entered a volatile short-term correction after its two-day surge after giving a short-term sell signal yesterday, and the coin spiked back towards $0.60 before settling down just below yesterday’s highs. The long-term setup also turned overbought thanks to the almost 300% rally, and now investors should reduce their holdings, even as further gains are still possible. Major support is still found at the prior high near $0.4250 and in the $0.30-$0.32 range.

XRP/USDT, 4-Hour Chart Analysis

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Analysis

Cryptocurrency Analysis: Ripple Continues Rampage as Litecoin and Ethereum Enter Correction

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Ripple remained in the center of attention in the segment after breaking out to a new all-time high yesterday, and the coin almost doubled in value, climbing above the $0.80 level. The currency concluded a 6-month long consolidation pattern with the move after being the only major on a long-term buy signal in our trend model.

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XRP gave a short-term sell signal today, while turning neutral regarding the long-term setup. Investors now shouldn’t add to their positions, although further gains are still possible, and reducing holdings somewhat is a good idea here. Major support is still found at the prior high near $0.4250 and in the $0.30-$0.32 range.

XRP/USDT, 4-Hour Chart Analysis

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While Bitcoin stagnated, and Bitcoin Cash jumped, Ethereum, Litecoin, Dash, and IOTA has been drifting slightly lower, although the recent gains are still mostly intact, and the basic setup in the segment is unchanged.

Litecoin fell below the $300 level after yesterday’s consolidation, and the coin faced strong selling pressure in the latter half of the session. The currency remains extremely stretched regarding the long-term momentum indicators, and although the short-term uptrend is still intact, a deeper correction is likely in the coming weeks, with key support levels found at $125 and $100, and weaker levels at $260 and $170.

LTC/USD, 4-Hour Chart Analysis

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