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China has Trump by the Bonds

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It’s earnings season on Wall Street and everyone is focused on the big banks.

Wells Fargo, Blackrock, and JP Morgan Chase will all report their fourth-quarter earnings today and the results will not be good.

Trading volumes have been incredibly low in the last half of 2017, both due to reduced fears about the economy and because many high-frequency traders have already moved to the crypto market.

It doesn’t matter though. At this point, the banks could plausibly report the worst losses in the history of capitalism and still see their stock go up.

Investors and analysts will be listening closely, and physically salivating, to the banker’s projections. Tax cuts are coming and investors want to know how much money the banks think they can make from it.

Tell us a sweet fairy tale of wonder and enchantment so we can sleep better at night and forget all about these historically high stock valuations.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

German Breakthrough (Euro)

China has Trump by the Bonds

Ripple’s Deal with MoneyGram

Please note: All data, figures & graphs are valid as of January 12th. All trading carries risk. Only risk capital you’re prepared to lose.

It’s a Breakthrough

Angela Merkel just reached a groundbreaking deal with her rivals the SPD party to form a grand coalition in the German Government. Everybody is excited and the Euro is flying. BUT… we’re not out of the woods just yet.

The SPD party will still need to vote on this and many of her members might prefer to see new elections rather than join Merkel’s government. So we’ll see how this plays out.

Enough of that though. Let’s take a look at the Euro-dollar, which is now trading at it’s highest level since 2014…

The DAX on the other hand seems less than excited. It’s been near it’s highest ever levels since November so this little tidbit was not enough to push it through the roof.

Bonds in Geopolitics

As we’ve been discussing earlier this week, the bond markets have been seeing some mild selling action. In a normal market, this wouldn’t be worrying but because the word ‘sell’ has become so rare on Wall Street lately it is making headlines.

What made bigger headlines though was that China was considering to stop buying bonds from the United States. These reports were later refuted by Chinse authorities and have since been tossed in the category labeled ‘fake news’.

It is interesting though. Bonds are how countries lend money to one another so the bond market can be seen through the lens of foreign debt. China is one of the US’s largest creditors at the moment. So if they stop buying, or worse, start to offload some of their bonds the US could be in a heap of trouble.

What’s suspicious here is the timing. Donald Trump has big plans and they won’t be cheap. After decreasing corporate taxes his income has now been stunted. So increased expenses and reduced income means that you need to borrow.

Trump is also ramping up his rhetoric against China. It was an essential part of his political victory in the elections and he’s itching to call them out on several issues already. So this bit of ‘fake news’ does actually come as a reminder or even a warning. Mess with the dragon and you will get burnt.

What’s Ripple’s Deal?

Ripple rejoiced yesterday as those who hodled through the Korean FUD were rewarded with a breakthrough in global payments relations.

Even though it’s only a pilot, just the fact that a major payment system like MoneyGram will be testing Ripple’s network is incredibly big news and even gives investors a taste for more news to come.

The great thing for hodlers is that the pilot will reportedly be using Ripple’s XRP tokens. This has been a soft spot for Ripple skeptics who say that Ripple’s success does not necessarily mean success for XRP since they could potentially form payment networks without these specific tokens.

The price shot up more than 20% within the first hour of the news.

The news comes at an excellent time as far as technical analysis is concerned and could potentially provide a floor for the price movement.

Here, take a look at the rally, and pullback. The level of $1.5 per token was a significant breakout level on the way up and now seems like a valid support level for the massive pullback.

Of course, cryptocurrencies are incredibly risk so it always pays to diversify and use proper money management as I’m sure many of our new clients have learned recently.

Let me know if you have any questions, comments or feedback. Have an amazing weekend 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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4.6 stars on average, based on 152 rated postsSenior Market Analyst at Etoro.com.




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3 Comments

3 Comments

  1. ronaldo18

    January 13, 2018 at 7:28 am

    clear analyses, thx.

  2. snow4me

    January 15, 2018 at 2:50 am

    Adoption is kill in the crypto market because it leads to credibility. I wondered why it took so long for Money Gram to do this… how much $$$ flows to Mexico alone in a weeks time?

  3. snow4me

    January 15, 2018 at 3:14 am

    MGI is moneygrams ticker. Gonna stick my big toe in that water tomorrow morning.

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Altcoins

Bitcoin Cash Price Analysis: Bullish Pennant Pattern Confirmed

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  • Bitcoin Cash price remains very much elevated, as the bulls continue to run north.
  • BCH/USD price action has formed a bullish pennant pattern formation, subject to a breakout higher.

BCH/USD: Recent Price Behavior

The Bitcoin Cash price has been a notable out-performer over the past few sessions, with the BCH/USD pair rallying as much as 23% since 17th February. In doing so, it reached its highest levels in over six weeks. The aggressive move north came after a prolonged period of range-bound trading via the daily chart view.

Between 8th – 17th February, BCH/USD was moving within an extremely narrowing range-block formation. This represented a lack of commitment from both camps after being confined within a range low of $117 to a high around $125. On 18th February, the bulls managed to force a breach and daily closure above the confines of the mentioned range.

Coinbase Adds Bitcoin Cash Support to Wallet App

Coinbase, a U.S.-based cryptocurrency exchange and wallet service provider, announced it has added support of BCH to its Coinbase Wallet.

“The new Wallet update with Bitcoin Cash support will roll out to all users on iOS and Android over the next few weeks,” the company said in an official blog post.

The app will facilitate support for both CashAddr and legacy addresses. Private keys will be encrypted on the mobile device by the Coinbase mobile wallet. Last week Coinbase announced the following: “users can now back up an encrypted version of your Coinbase Wallet’s private keys to your personal cloud storage accounts, using either Google Drive or iCloud This new feature provides a safeguard for users, helping them avoid losing their funds if they lose their device or misplace their private keys.”

Technical Review – BCH/USD

BCH/USD 4-hour chart.

At the time of writing, the BCH/USD price is still holding at elevated levels, with gains in the session amounting to 2.5%. Over the last two sessions, between 19-20th February, the price action has somewhat moved within a range. The detailed price behavior has seen a bullish pennant pattern formation, which is subject to a further potential move north.

Near-term resistance is eyed at $145.50, where the upper acting trend line of the pennant is tracking. Should the bulls manage to break this down, then expect a fresh wave of selling pressure to kick in. To the upside, eyes will then be on supply observed up within the $160-$165 price range.

In terms of near-term support, the lower acting trend line of the pennant which is tracking at $140 is the next major target; a breach could then expose critical daily support at $137. Lastly, if neither safety nets protect the price from falling, then there runs the risk of a full reversal of the recent gains.

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 125 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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Analysis

Crypto Update: Coins Test Swing Highs Litecoin Runs Into Resistance

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The major cryptocurrencies continue to trade with a bullish bias after establishing a new short-term uptrend this week. The top coins are all holding on to the bulk of their recent gains, even as most of them entered consolidation patterns on the heels of the strong rally in the segment. With still only Ripple lagging the broader market notably, the immediate outlook remains positive, despite the still bearish long-term picture.

LTC/USD, 4-Hour Chart Analysis

Today, the initially leading Litecoin shined again, pushing past the $50 level and hitting the long-term resistance zone near $51. As LTC is overbought due to its recent lofty gains, the coin is now only on a neutral short-term signal in our trend model, since the bearish long-term setup continues to warrant caution for bulls here.

That said, the rising short-term trend is intact, and should the coin clear the overbought momentum readings, traders could enter small, speculative positions using strict risk management rules. Support levels are now found near $47, $44, and $38, while the next major resistance zone is ahead near the $56 price level.

BTC/USD, 4-Hour Chart Analysis

Bitcoin entered a consolidation pattern today, as we expected, after touching the longer-term zone resistance zone between $4000 and $4050. The momentum indicators hint on further consolidation, and in light of hostile long-term setup, traders should wait for the overbought readings to be cleared before entering new short-term positions.

Below the initial level $3850 support, further levels are found near $3600 and just above $3450, while the next resistance zone above $4050 is ahead near $4450. The short-term uptrend is intact in BTC, and our trend model remains on a short-term buy signal.

Ethereum Tries to Form Swing Low while Ripple Fights Trendline

ETH/USD, 4-Hour Chart Analysis

Ethereum entered a shallow correction after hitting the resistance zone near $145, but the price action and the volume patterns continue to support the bullish short-term case. The $160 price level remains a viable target for bulls but the momentum indicators continue to show overbought readings. The short-term uptrend is intact and our trend model is still on a short-term buy signal as well. Support levels are found near $130 and $112 while above $160 resistance is ahead near $180.

EOS/USD, 4-Hour Chart Analysis

Only a few of the major altcoins managed to follow Litecoin to a new swing high today, but EOS slightly extended its rally, despite being severely overbought from a short-term perspective. While the new high is a positive sign for the coming period, EOS remains only neutral in our trend model, and traders should wait for the oversold readings to be cleared before entering new positions.

XRP/USDT, 4-Hour Chart Analysis

While the leadership of the rally is still healthy, Ripple continues to lag the leaders, still fighting with the declining trendline that stopped the recent rally attempt in the coin. XRP is holding up above the $0.32 level, but it’s stuck below the recent swing high, and traders should still focus on the relatively stronger coins despite the short-term buy signal in our trend model.

From a long-term perspective, technicals remain negative, and a move towards the $0.28 and $0.26 levels remains likely. Further support zones are found near $0.32 and $0.30, while short-term targets are still ahead near $0.3550, and $$0.3750.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

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 468 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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Altcoins

Litecoin, EOS, Binance Coin, Maker: Altcoins Leading the Charge

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Crypto valuations experienced a slight pullback Wednesday, though a small contingency of altcoins continued to see impressive gains, a sign that the latest uptrend still had room to mobilize.

Crypto Market Update

Most of the top 20 cryptocurrencies reported losses overnight, raising the specter of a ‘bull trap’ following the latest recovery attempt. The downside risk has since moderated, with a small handful of altcoins reporting gains.

EOS (EOS) gained 4.4% to $3.80, extending an early-week rally that pushed prices to nearly three-month highs. The Enterprise Operating System is up more than 30% since Sunday.

The Litecoin (LTC) price crossed $51.00 for the first time since mid-November, gaining 4.8% in the process. The cryptocurrency has gained a whopping 80% over the past two weeks, which helped to engineer a market-wide rally. Read more: Litecoin Sparks Huge Crypto Rally as Bitcoin Smashes Through $3,700.

Litecoin is benefitting from adoption progress after SpendApp announced it will begin supporting the cryptocurrency at more than 40 million locations. Combined with the anticipated ‘halving’ event in August, Litecoin continues to attract strong bids.

Meanwhile, the meteoric rise of Binance Coin (BNB) continued on Wednesday. The price surged 11% to $10.94, the highest since last August. Binance Coin is benefiting from positive publicity tied to its underlying exchange, including the launch of a new token sale platform.

Maker (MKR), which is comprised of a stablecoin, collateral loans and a decentralized governance framework, rounded out the big gainers on Wednesday. MKR jumped 10.4% to $652.10, placing it in 16th in terms of market cap.

Want an introduction to MKR? Read: What’s Driving Maker (MKR)? High-Priced Coin Outshines Peers.

The combined cryptocurrency market cap is currently valued at $134.8 billion, up from an earlier low of $132.3 billion.

Does the Rally Have Legs?

While appearing sudden, the crypto rally that began on Sunday was actually weeks and perhaps even months in the making. As Hacked predicted before the rally, the sharp rise in coin circulation and overall trading volume, combined with the relative decline in volatility, pointed to higher prices in the near term.

On Tuesday, bitcoin’s 24-hour trading volume topped $10 billion for the first time in ten months. Market-wide volumes spiked above $36 billion, levels not seen since last May. And that’s just what digital exchanges are reporting.

Anyone still doubting whether institutional traders are accessing crypto should pay close attention to private bilateral contracts. This private market has scaled up to between $125 million and $500 million per month in the last half year, according to Bloomberg. Recent activity shows that traders have zeroed in on the $4,200 price target, and some are betting large sums that bitcoin can top this level by the spring.

Bitcoin is currently trading just above $4,000 on Bitfinex. While its share of the overall market has declined over the past 48 hours, it is by far the biggest bellwether for cryptocurrencies. Where bitcoin goes, the market follows.

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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4.7 stars on average, based on 773 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




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