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Currency Wars

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It’s been a while since we’ve used the term “currency wars” to describe the foreign exchange market but over the past 48 hours, this issue has once again been thrust into the limelight of global politics.

For those of you who are new or have “just come for the cryptos” this is important, so let’s recap.

On and off for the past few decades, we’ve seen many different attempts from world leaders to influence the currency markets. For the most part, it’s better for a country to have a weaker currency because then more countries will be attracted to buy their products.

If a washing machine made in Japan costs ¥25,000, it will be easier for someone from Germany to buy it when the yen is cheap against the Euro.

It seems Steven Mnuchin’s comments about a weaker Dollar have sparked massive controversy. Especially since the Dollar did plunge in response. Let’s take a look at the charts and some of the responses below.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

Dollar Blowback

Japanese Washing Machines

Unconnected Crypto

Please note: All data, figures & graphs are valid as of January 26th. All trading carries risk. Only risk capital you’re prepared to lose.

Traditional Markets

The weirdest response by far was from Donald Trump who said that he read Mnuchin’s exact statement and the market had simply misinterpreted what he was trying to say.

This is a complete 180 degree turnaround from the US President and his treasury secretary. At the beginning of the year, Trump was trying to weaken the buck while Mnuchin was talking it up. Now they’ve gone and done a complete role reversal and at this point, it’s hard to tell who’s the good cop, or if there even is one.

On point, as usual, was the Governor of the European Central Bank Mario Draghi who said in much more elegant words that the United States was now involved in manipulation of their own currency. It seems the US government is taking quite a hypocritical stance. The Trump administration often labels other countries as currency manipulators.

Here we can see the US Dollar whipsawing at the time of the statements from Draghi (blue) and Trump (purple).

As the Dollar continues to weaken, we can see the commodities gaining. All commodities traded on eToro are up over the last few days on the sliding buck.

One of the most fun pairs to trade now is the USDJPY. As we mentioned a few weeks ago, the pair has been showing a rather stable trading range over the last year from about 108 to about 114.50.

The cool thing about the above chart is that the fundamentals match up nicely. Even though the Bank of Japan might be planning to ease their monetary policy, they really can’t afford for this graph to go too much lower. Because if it does, the Yen could get too strong and they’ll start to have trouble selling washing machines.

Crypto Drop

When I started writing today, the crypto market was showing a bit of a drop across all the top coins. By now it looks like the drop is getting a bit more significant…

It’s important to note that the futures contracts from the CME group will close today. The volumes that have been traded there are still rather small but there does seem to be concern among cryptotraders that Wall Street may be trying to manipulate the price.

In my opinion, it is still too early for Wall Street to try and take any such action using the Bitcoin Futures. So far they have rightfully shown extreme caution in regards to this asset as they still don’t fully understand it. That’s not to say that they won’t try to pull a fast one later on, but I think the first few settlements should go through smoothly.

At this point, cryptotraders have nothing to fear but fear itself. The currency wars happening now on the global stage shouldn’t have any effect on crypto market.

Wishing you an excellent weekend.

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 134 rated postsSenior Market Analyst at Etoro.com.




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2 Comments

2 Comments

  1. amg893

    January 26, 2018 at 9:36 pm

    Thanks Mati – great article. Just got a few questions. Do you know when the all the comtracts for CME expire? Also do you think the crash on the 17th has anything to do with the CBOE contracts? Thanks mate

  2. Mati Greenspan

    January 29, 2018 at 11:20 am

    Hi AMG. The CME contracts expired on Friday the 26th. If there is any correlation it would probably be more psychological than anything else. Wall Street is taking a very cautious approach to the new bitcoin related assets and volumes are still incredibly light. So I wouldn’t expect them to be moving the markets much at this stage.

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Altcoins

Crypto Market Flash-Dips 12%; Bitcoin Price Hits New Yearly Low as ETH, TRX Bleed Out

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The global cryptocurrency segment experienced a market-wide sell-off on Wednesday afternoon, losing $25 billion, or 12% of the overall market cap.

The bulk of the losses struck in a brief one-hour window, between 15:30 and 16:30 UTC. The sudden flash dip came as a surprise to say the least, and followed this morning’s $7.5 billion sell-off which, without the benefit of foresight, seemed significant at the time.

Just When We Thought We Were Out…

Now the altcoin setup looks radically different, with several coins threatening the yearly lows of August-September once again following an entire quarter of recovery.

All of Bitcoin Cash’s recent gains have disappeared, with BCH sinking 30% in the last week alone, and close to 20% in the last day. The same pattern persists among all the recent market growers, as yet another great correction unfolds.

BTC/USD Hits 13-Month Lows

Bitcoin did however strike new yearly lows, or thirteen-month lows to be precise, after BTC/USD fell to $5,765 – a level not witnessed since October 2017. That puts BTC on 9.8% losses over less than twelve hours, after falling from this morning’s $6,395.

Of Bitcoin’s $6 billion volume at time of writing, you have to look eleven places down the charts to find the first cryptocurrency that BTC has been significantly traded against. The top ten most concentrated trades are all against either fiat currency (USD and KRW), or dollar-pegged stablecoins – specifically Tether (USDT).

Ethereum Sinks Along With Mining Profits

As covered earlier on Hacked, Ethereum’s initial fall below the $200 mark resulted in Ether mining no longer being profitable. However, the $189 price quoted in the article continued to fall further, landing on $179.49 and resulting in a 14.4% crash for Ethereum from last night’s high of $209.78.

That’s still slightly above the $170 valuation recorded during the dip of September this year, and saves ETH from notching up a new yearly low along with BTC.

Tron (TRX) Threatens Yearly Lows

The value of TRX fell 16% from $0.022358 to $0.018757 for Wednesday, pushing the coin closer to the lows of August when TRX hit the eery number of $0.016666 before rebounding.

This time the price rebounded to the $0.019 level, which is a hopeful sign for the altcoin, although TRX losses now stand at 22.5% for the last seven days.

All of the coin growth surrounding BitTorrent, record transaction volumes, coin listings and everything else that came out of Tron HQ in recent months has now effectively been wiped out.

Few coins were spared the bloodletting, and even the stablecoins were shaken by the sudden sell-off as Tether dipped to the $0.97 range once again. Despite the numbers quoted above, the worst of the losses came from the lesser altcoins, with recent gainer Basic Attention Token (BAT) now down more than 40% for the week.

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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4.4 stars on average, based on 88 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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Altcoins

Update: Crypto Selloff Deepens as Bitcoin Hits New Yearly Low

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The cryptocurrency market underwent a massive selloff Wednesday, as bitcoin breached new lows for the year and major altcoins booked double-digit losses across the board. Bitcoin cash experienced the largest percentage drop, effectively erasing gains made in the run-up to Thursday’s hard fork event.

Market Update

Cryptocurrencies have given up a combined $25 billion in value over the last 24 hours, as markets approached new lows for the year. The selloff intensified through the late morning session, driving the crypto market cap to a low of $187 billion. At the time of writing, cryptoassets were worth $188.4 billion collectively, according to CoinMarketCap.

Trade volumes surged 33% to $17.6 billion as investors rushed to liquidate their positions amid the selloff. All major exchanges reported a sharp rise in daily turnover, with volumes on Huobi, Bitfinex and LBank surging 100% or more in the last day.

Bitcoin’s price collapsed more than 10% on Coinbase to reach a session low of $5,530. At the time of writing, BTC/USD was worth $5,675.

Bitcoin cash, the fourth largest cryptocurrency by market cap, relinquished a whopping 18.1% to reach $433. In doing so, it completely reversed all the gains made in the last two weeks.

Ethereum fell 12.1% to $184, XRP lost 11.9% to $0.4576 and Stellar XLM declined 12% to reach $0.2303. With the exception of USDT, a dollar-backed stablecoin, all cryptoassets in the top-20 lost 7% or more on Wednesday.

The following snapshot, courtesy of CoinMarketCap, highlights the extent of the selloff.

Bitcoin Dominance Grows

While bitcoin certainly wasn’t spared from the latest rout, its share of the overall market climbed back above 54% on Wednesday, a sign that remaining capital was consolidating in the largest asset store. Bitcoin’s dominance rate has since fallen back to around 53.1%.

Extended periods of volatility for altcoins and tokens have provided bitcoin with a linchpin of support since the bear market began earlier this year. This has been most recently demonstrated by narrower price ranges and sharp declines in volatility for the leading digital currency. As Hacked recently reported, bitcoin’s volatility index fell this week to its lowest level in over two years.

Although there was no immediate catalyst for the rapid decline in market prices, anxiety over the future of bitcoin cash likely factored into the equation. The protocol’s primary implementation, dubbed bitcoin cash ABC, has won support from major industry players ahead of Thursday’s hard fork. However, recent data show that the network’s hash rate has tipped in favor of bitcoin SV, a competing protocol being pushed by Craig Steven Wright, Calvin Ayre and some very large mining pools. This information may have contributed to a sharp spike in SV futures prices on Wednesday.

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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Cryptocurrencies

Bitcoin SV Price Briefly Surpasses Bitcoin ABC Ahead of Hard Fork

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With the bitcoin cash hard fork fast approaching, the rival SV and ABC futures prices are fluctuating wildly as both protocols vie for hash rate. The market took a dramatic turn earlier in the week after Craig Steven Wright, the main backer of bitcoin cash SV, revealed that more than 50% of the network’s hash power backs his protocol.

Heavy Volatility

The bitcoin SV futures price briefly surpassed the competing ABC protocol on Wednesday, reaching a high of $243.79, according to CoinMarketCap.

Around the same time, bitcoin cash ABC futures dropped to a low of $239.99.

The convergence occurred at roughly the same time – 05:14 GMT. At the time of writing, bitcoin SV futures were up nearly 72% at $230. The value of bitcoin cash ABC was down 36% at $251.

Bitcoin cash (BCH) led a broad downtrend in cryptocurrency prices on Wednesday, falling 8% to $486. Trade volumes in BCH surpassed $1 billion in the last 24 hours.

Hard Fork Nears

The anticipated hard fork of bitcoin cash on Thursday is as much ideological as it is technical. Bitcoin cash ABC, the leading implementation backed by Roger Ver and Bitmain founder Jihan Wu, is said to be a full node implementation of the existing BCH protocol. As such, it will introduce significant upgrades, such as atomic swaps. Backers of bitcoin SV, on the other hand, believe their implementation is a better representation of Satoshi Nakomoto’s original vision. This means raising the block size from 32 MB to 128 MB.

While the consensus among industry is that bitcoin ABC will prevail in the so-called mining war, bitcoin SV appears to be backed by more than half of the current hash rate, according to data provider Coin Dance. Recent data show that CoinGeek, Mempool, BMG and SVP – mining pools that support SV – hold a firm majority on the network’s hash rate. This figure was as high as 77% earlier this week.

Holders of BCH can expect heavy volatility over the next 24 hours. Exchanges such as Binance and Coinbase, which have come out in support of bitcoin ABC, have announced anticipated downtime in the hours leading up to the hard fork. Several other exchanges have also announced support for the upcoming fork, including OKEx, Huobi, Upbit, Poloniex and BitForex.

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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