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The Butterfly Economy

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The Butterfly Economy

Introduction

This article was posted on Friday, 11:07, UTC.

Like a caterpillar emerging from its egg, the Internet came to the general public just before the turn of the century. Until then it was only used by the US government and academic computer nerds.

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This new technology gave birth to a new economy. A new age of globalization and cooperation. Eventually though, the caterpillar ate too much. Loans that should have stayed local were repackaged and sold, the caterpillar had become fat and complacent and a great shock came in 2008.

We were, in fact, sessile inside a cocoon of deflation and stagnation.

The central governance bodies and banks have been pumping liquidity into the financial system in order to try and spur growth. Inside a cocoon fluidity is essential.

Over the past year, the world has shown signs that it is ready to emerge. Dramatic democratic decisions in the US and the UK were the first signs. Strong leadership and unity in the European Union, and drastically reduced dependence on fossil fuels.

The next stage of human evolution is only now emerging from our chrysalis. As we spread our wings for the first time the colors and characteristics come into full view. Our technology is now completely mobile and our money is moving to the blockchain.

Mati Greenspan
eToro, Senior Market Analyst

Please note: All data, figures, and graphs are valid as of May 26th. All trading carries risk. Only risk capital you can afford to lose.

Market Overview

The Trump administration is putting out fires left and right. As the President scolds Nato for not paying their fair share, Donald’s own son in law Jared Kushner is now under investigation for the Russian ties. Meanwhile, Secretary of State Rex Tillerson is traveling the UK to assuage fears of a leaky US intelligence agency.

The UK of course has their own stuff to deal with. Today the election campaign will resume. In the wake of the brutal terrorist attack in Manchester, the priority level that voters are placing on national security has been bumped to the top, by many people the issue is now even more important than Brexit.

What seemed like an easy win for Theresa May and the hard Brexit is now going to be a tooth and nail battle with less than two weeks to go. The polls over the last few weeks clearly show that even before the attack happened the gap is rapidly thinning…

Later today, the US will announce their GDP figures for the first quarter of 2017. A fair uptick is expected due to the Trump effect.

Oil is Important

As was widely expected, OPEC indeed announced massive production cuts through March 2018. The markets took to the old adage and sold the news…

However, the stock market remained resilient. In fact, the slight losses from the energy sector were generously offset by the rest of the market.

All in all, volatility on the stocks remains quite low and the VIX volatility index is once again close to record lows below 10 points.

It seems as if all of the high-frequency traders have already moved to another market…

Cryptocurrencies

Last night, we saw the biggest pullback in the history of this new market. Bitcoin pulled back more than $500 in a few short hours.

The overall market cap for all digital coins dropped by $15 Billion!

However, most of this loss has already been recovered and we can see a huge number of traders in eToro currently buying the dips.

Just to put some perspective…

We’re almost exactly where we were 24 hours ago in the overall digital currency market cap…

and the price of Bitcoin is exactly where it was 30 hours ago.

This is a staunch reminder that though this market has plenty of potential, it remains the most volatile and risky market since the dawn of time.

Wishing you an awesome day and a spectacular weekend!

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.



Feedback or Requests?

Mati Greenspan

Mati Greenspan

https://www.etoro.com/

Senior Market Analyst at Etoro.com.

Comments
  • user

    AUTHOR Gabriel

    Posted on 9:04 pm May 26, 2017.

    Thank you for putting things into perspective!

  • View Comments (1) ...
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