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Market Overview

When It Comes to Peak Volatility, the VIX has Bitcoin Beat

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When it comes to volatility, bitcoin is no match for the volatility index. The CBOE VIX, Wall Street’s preferred barometer of investor anxiety, just saw its ten-day volatility spike beyond any level bitcoin has seen over the past seven-and-a-half years.

Record-Breaking Volatility

The month of February has seen dramatic moves for the CBOE VIX. The index’s ten-day volatility surged to a record 520% through Wednesday, according to Bloomberg, as stocks recorded their fourth consecutive daily advance. That’s not only the highest reading in the VIX’s 28-year history, but also eclipsed bitcoin’s peak of 501% in April 2013.

This phenomenon is captured in the following chart:


Source: Bloomberg.

Volatility spiked through the roof last week as stocks completed one of their worst selloffs since the financial crisis. On Feb. 6, the VIX briefly traded above 50 for the first time since 2015. The day before, it rose more than 115% for its biggest move on record.

The index has leveled off over the past five days amid a broad relief rally on Wall Street. It now trades right around the historic average of around 20.

The VIX measures anticipated volatility in S&P 500 Index options over the next 30 days. More often than not, it trades in the opposite direction of the benchmark S&P 500 Index. Prior to the latest rally, the index spent the better part of two years trading at roughly half the historic average.

Bitcoin Prices Gaining Traction

Bitcoin is no stranger to volatility. The coin set an all-time high near $20,000 in December before plunging below $6,000 – all in under two months.

After weeks of instability, bitcoin prices are finally regaining momentum. On Thursday, the coin climbed above the $10,000 mark for the first time in two weeks. In doing so, it extended its five-day recovery to more than 23%.

At its highest point Thursday, bitcoin traded at $10,209.42. It was last seen trading at $10,135 for a market cap of $171 billion.

Bitcoin’s latest acceleration is significant for at least two reasons. Firstly, prices have overcome a major technical hurdle around the $9,200 mark, signaling the return of bullish momentum. The liftoff also suggested that investors were moving past FUD-induced volatility that has dogged the market for the past five weeks.

Bitcoin’s market share has also risen in recent days, with BTC now representing close to 36% of the total market. As of Thursday, about 35% of total trade volumes were devoted to bitcoin.

In terms of the market’s short-term trajectory, our analyst Mate Czer issued the following statement on Thursday:

“The sector is now back near the $500 billion mark in market capitalization, but investors shouldn’t get complacent here, as corrections will come along the rally, and the dominant downtrend is intact in most cases, with BTC being no exception.”

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 612 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Market Overview

Market Update: U.S. Stocks Rattled by Trade War; Cryptocurrencies Pull Back from Multi-Week High

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U.S. stocks declined sharply on Monday, with the Dow and S&P 500 pulling back from record highs on news that China and the United States had cancelled upcoming trade talks. Meanwhile, cryptocurrencies slipped from recent highs on profit-taking.

Stocks Fall

All of Wall Street’s major indexes posted declines on Monday. The S&P 500 Index slipped 0.4% to 2,919.37, with seven of 11 primary sectors finishing in negative territory. Consumer staples were the biggest decliners percentage-wise; industrials and materials also finished firmly lower.

Shares of energy companies bucked the downtrend, rising more than 1% on average, as international crude prices hit four-year highs.

The much narrower Dow Jones Industrial Average declined 181.32 points, or 0.7%, to 26,562.18. The technology-focused Nasdaq Composite Index reversed losses in afternoon trading, rising 0.1% to 7,993.25.

The CBOE VIX, also known as the fear index, rose 5.2% to 12.29. VIX typically rises when stocks fall and vice versa. Levels below 20 generally point to complacent market conditions.

U.S.-China Trade Talks Cancelled

Equity markets were under pressure as new tariffs on U.S. and Chinese goods came into effect. Both countries have also cancelled upcoming trade talks after the Trump administration announced a 10% levy on $200 billion in Chinese goods. In response, Beijing slapped import duties on 5,000 U.S. products and rescinded its proposal to send a trade delegation to China.

The new round of tariffs on Chinese goods came into effect on Monday. The current rate of 10% is set to rise to 25% by year-end if China doesn’t comply with Washington’s demands.

The Trump administration is doubling down on its threats because China cannot match the U.S. dollar for dollar in a trade war. Beijing’s massive surplus with the U.S. gives Washington more leverage in negotiating the new terms of trade.

Cryptocurrencies Stabilize After Sharp Correction

The cryptocurrency market was valued at roughly $220 billion Monday afternoon, well off its most recent high of $230 billion. The sharp pullback affected all major coins, though altcoins were disproportionately impacted.

XRP and XLM, the market’s top performers last week, were each down double digits through the early morning session. By the afternoon, XRP had pared its losses to 7.5% and was trading at $0.524. Meanwhile, Stellar’s XLM was worth $0.264, having declined 5.7% over 24 hours.

Bitcoin stemmed its intraday loss to less than 1% as markets continued to stabilize. The leading digital currency is currently trading around $6,643 for a 52% share of the overall market.

As Hacked reported earlier, a pullback in the market was expected following the rapid gains in altcoins and tokens over the past five days. Although the gains were largely predicated on positive fundamental news, the bulls have yet to make a convincing break higher. This means the status quo of lower for longer is still very much in effect.

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 612 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Analysis

Stocks Pull Back as China Exits Trade Talks

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Global stock markets have spent the better part of the day in the red, although the losses are muted, and markets are slightly choppy before Wednesday’s Fed meeting. China pulled out of the scheduled trade talks with the US following last week’s tariff-escalation and that put pressure on risk assets globally. Chinese and Japanese markets were closed today, and that also attributed to the lower than usual liquidity and trading activity.

Dow 30 Index Futures, 4-Hour Chart Analysis

European Central bank President Mario Draghi warned of a “vigorous” pick-up in inflation, which triggered a selloff in the dollar and bonds across the globe, while putting more pressure on risk assets too. The dollar almost regained all of its losses since Draghi’s speech and with the looming fed decision in mind, further choppy and nervous trading is expected in the Greenback, especially following the recent surge in Treasury yields.

Russell 2000, 4-Hour Chart Analysis

The Dow and the S&P 500 both continued to retreat off last week’s record highs, as Friday’s trend resumed, and despite the bounce in the market leading tech giants, the Nasdaq is also lower. On a negative note, small-caps are trading at a 1-month low, as measured by the Russell 2000, which could mean that the US market might be ready to roll over into a correction.

The main European indices are holding on to most of last week’s gains in the meantime, but only the energy segment is clearly positive today, with the help of the strong rally in the price of crude oil.

Dollar and Euro in Focus Before the FED

EUR/USD, 4-Hour Chart Analysis

The EUR/USD pair will see fireworks for sure this week, and although the pair reached the 1.18 level today, it’s still in a zone with strong resistance and bulls still can’t conclude a successful breakout, with the 1.1675 level still being close form a technical perspective. For now, the short-term uptrend is intact, but a quick move below 1.1750 could mark a reversal.

Emerging market currencies are mixed, with the Turkish Lira trading notably higher thanks to the possible release of Pastor Brunson, who has been a major catalyst for the diplomatic troubles between the US and Turkey. The release of the Pastor could stabilize the currency, but another major global risk-off shift could hurt the vulnerable country again, as yields continue to rise globally.

WTI Crude Oil Futures, 4-Hour Chart Analysis

As Saudi Arabia basically ignored Trump’s call for lower oil prices, the recent strength in the commodity culminated in a break-out to new 10 week highs in the WTI contract, which topped the $72 per barrel level for the first time since early July. Natural gas hit $3, and it is on the verge of breaking out to a new 7-month high too, as the whole energy segment is rallying.

Elsewhere in the commodity segment, the Dollar’s choppy price action led to a mixed picture, with copper pulling back slightly from last week’s highs, while gold is still fighting to stay above the $1200 per ounce level as it has been the case for several weeks now.

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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4.6 stars on average, based on 352 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

Switzerland Makes It Easier for Blockchain Companies to Open Bank Accounts

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Switzerland is making it easier for blockchain startups to access traditional financial services after several projects decided to leave the country over strict banking laws. The new guidelines are part of a wider initiative to help Switzerland maintain its status as the epicenter of cryptocurrency innovation.

SBA Issues New Guidelines

On Friday, the Swiss Bankers Association (SBA) announced new guidelines for financial institutions looking to do business with blockchain startups. The rules will make it easier for banks to service the blockchain ecosystem and for the companies themselves to set up bank accounts in the country.

“We believe that with these guidelines, we’ll be able to establish a basis for discussion between banks and innovative startups, making the dialogue simpler and facilitating the opening of accounts,” SBA strategic adviser Adrian Schatzmann said in a news conference, as quoted by Reuters.

The new measures provide “more clarity not only to banks, but also to startups,” said Oliver Bussmann, head of the Crypto Valley Association.

Although blockchain companies are not barred from opening up Swiss bank accounts, existing regulations make it difficult for them to quality for corporate banking services. Swiss banks have been hesitant to serve the growing sector over fears of violating know-your-customer (KYC) and anti-money laundering (AML) obligations.

Banks are especially concerned over initial coin offerings (ICOs), the controversial crowdfunding system that allows companies to raise millions of dollars by issuing tokens. Several ICOs have raised funds without conducting AML checks on their investors. Banks that service such firms would be at risk of falling out of line with existing AML guidelines.

Switzerland’s fourth largest bank,  Zuercher Kantonalbank (ZKB), has already closed the accounts of more than 20 blockchain firms. According to Reuters, only a small handful of the country’s 250 banks ever allowed blockchain companies to deposit the cash equivalent of their token raises.

Under the new guidelines, banks will have the opportunity to distinguish between blockchain firms that carry out ICOs and those that do not. For token projects, KYC and AML guidelines are still enforced.

Crypto Valley Switzerland

Switzerland quickly emerged as a leading hub for the blockchain industry after a government-sponsored institution launched Crypto Valley, an ecosystem based in Zurich and Zug that incubates new cryptocurrency startups. Hacked shined the spotlight on Crypto Valley last October after several dozen high-profile firms set up shop in the region.  Crypto Valley is now home to roughly 530 blockchain companies.

Despite offering a more liberal environment for cryptocurrency startups, Switzerland clamped down on the market in February by issuing more stringent ICO guidelines. This seems to have triggered a mass exodus of cryptocurrency startups, which have since made their way to Liechtenstein, Gibraltar and Cayman Islands. The new rules categorized ICOs into three separate buckets: payment, utility and asset.

SBA is hoping to stem the outflow of blockchain projects by giving them more avenues to traditional banking services. However, with several countries liberalizing their blockchain laws, it remains to seen whether Crypto Valley can maintain its leadership pace.

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 612 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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