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Analysis

Despite Month-Long Rally, Cryptocurrencies are Not Brimming With New Buyers

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If Google search trends are a proxy for consumer demand, bitcoin and other cryptocurrencies have yet to recapture the attention of new adopters. In fact, interest in cryptocurrency declined last week to the lowest level since October, a strong sign that the latest buying spree was driven almost entirely by existing market players.

What Google Search Trends Reveal

Cryptocurrencies have generated nearly $200 billion in additional market cap over the last four weeks, but new adopters appear to be absent from the rally. Data from Google reveal that searches for keywords like “bitcoin” and “cryptocurrency” have steadily declined since mid-February, with the downtrend continuing even as digital assets rebounded.

As of  May 5, search word “bitcoin” had a trending score of 12 on a scale of 1-100 where higher readings are associated with higher interest. To get a sense of just how far “bitcoin” has fallen, consider that the keyword had a perfect score of 100 in the week leading up to Christmas.

Interest for bitcoin is depicted in the following chart, which was taken from Google Trends:

The “cryptocurrency” search term has followed a similar downtrend since peaking at 100 in late December. As of Saturday, the term had a score of 17, which was also the lowest since October.

Assessing Demand

Much of the attention paid to cryptocurrency over the last week has centered on growing institutional adoption. Hacked reported May 3 that Goldman Sachs was in the formative stages of launching its own cryptocurrency market through bitcoin futures contracts. The bank will serve Wall Street in a market-making capacity where institutional investors can gain exposure to the digital asset using traditional derivatives products.

While institutional demand has been regarded as the next major step for cryptocurrencies in their path to mainstream adoption, some analysts have underestimated the role of new buyers in propping up the market. Google search trends reveal an undeniable correlation between consumer interest – perhaps even curiosity – and the underlying performance of the cryptocurrency market. In other words, when consumer interest was highest, so was the market.

Of course, the correlation isn’t perfect. The month-long recovery in crypto prices has not been met with a commensurate rise in search traffic. Then again, this is what leads us to believe that the veterans are largely responsible for the rally.

But new adopters are absolutely needed to keep crypto prices trekking higher and their absence can generate lethargic price action for the foreseeable future. That’s the general outlook of Nick Colas, a prominent Wall Street analyst who has been covering cryptocurrencies for quite some time.

In a recent interview with CNBC, Colas cited Google search and cryptocurrency wallet growth in concluding that fewer people are buying bitcoin for the first time. In his view, real world adoption of crypto assets goes far beyond what the institutions are doing. Although bitcoin futures and ETFs matter, what the average Joe is doing matters even more.

“Like any new technology, you need new adopters to come in to make it more valuable.” Colas said in the interview. “Then, we have a solid trek higher. Then, interest will reengage.”

Colas concluded that bitcoin and the overall market could trend sideways until we see the return of newcomers to the market. In his view, this could take up to five years to materialize.

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 649 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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Analysis

Another Volatile Day on Wall Street

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US stock markets had an ugly morning after a bearish overnight session, with the major indices all hitting new correction lows, and with the Russell 2000 confirming the under-the-hood weakness on Wall Street yet again. The afternoon session saw another violent counter-trend rally, led by the Nasdaq that almost erased the 2+% losses accumulated during the first hours of trading.

Dow 30 Futures, 4-Hour Chart Analysis

The most-awaited US earnings releases were a mixed bag today, as although the bottom line of the majority of companies beat estimates, the likes of 3M (MMM) and Caterpillar (CAT) outright crashed due to their disappointing guidance, putting even more pressure on the already shaky stock market.

Caterpillar (CAT), 4-Hour Chart Analysis

Verizon (VZ) and McDonald’s (MCD) performed much better after their earnings beat, but both companies are considered more defensive, and their encouraging results didn’t help the broader market in the gloomy environment. Texas Instruments (TXN) reported after the closing bell and as the semiconductor giant cut his guidance, the stock is down by around 5% lower in after-hours trading.

Treasuries Bounce Hard as Safe-Haven Flows Intensify Again

As for economic news, the German monthly PPI came in much higher than expected, the European Consumer Confidence Index was in line with expectations, while the US Richmond Manufacturing Index came in at 15, well below last month’s reading of 29 and the consensus 25.

XHB, 4-Hour Chart Analysis

Tomorrow we will have the flash manufacturing and services PMIs from Europe and the US together with US new home sales, and the housing market gauge will be in the center of attention. US homebuilders have been plunging lower in recent weeks, and the XHB ETF is deep in a bear market already, as rising yields and mortgage rates hit the sector hard this year.

Today the segment outperformed thanks to the pullback in yields, and a positive surprise in sales could spark a meaningful short-covering move.

10-year US Yield, 4-Hour Chart Analysis

While the swift rise in yields triggered the seep correction, at least on the surface, today the decline in stocks pushed yields lower thanks to strong the strong safe-haven flows, which also helped the Japanese Yen and gold, especially in early trading.

WTI Crude Futures, 4-Hour Chart Analysis

Commodities had a very volatile day even as copper was relatively calm, with the plunge in crude oil and the pump & dump in gold drawing a lot of attention to the segment. While gold simply followed the risk trade, hitting multi-month high in European trading and pulling back in line with the rally on Wall Street, oil was reacting to the news from Saudi Arabia regarding a pledge to increase supply this year.

The WTI contract fell to a $65 per barrel handle, a new 2-month low, shedding almost 5% in one day, and it’s hard not to spot the connection between Donald Trump’s demands regarding lower crude prices, the disastrous Saudi cover-up of the Khashoggi murder, and today’s announcement that could help in easing the tensions between the US and the Kingdom.

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 381 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

TenX: Look Out The Brits Are Coming

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We have written about TenX in the past with admiration for its business model. We weren’t the only admirers.  Last year TenX raised $80 million, ranking it as the ninth largest ICO of 2017. But now, there is a new threat, UK based Wirex.  These Brits are less well financed but much further along with a real product ready to launch in the US. Could this could put the kibosh on tiny TenX? Let’s take a look.  

You Gotta Love The Concept: Mass Acceptance

Both TenX and Wirex share a similar business model. They make cryptocurrencies spendable anytime, anywhere in the world. Start with their wallet and add a supported cryptocurrency. Then when the need to fill the gas tank or pay for dinner arises, pull out your TenX or Wirex card bearing the VISA or MasterCard logo and complete the transaction.

During the transaction, your crypto is instantly converted to fiat in one seamless step.  The cost of this service to the cardholder is unclear but we presume it will have to compete with exchange fees from entities like Coinbase or Binance.

True, there are certain limitations. So far the Wirex wallet accepts only Bitcoin.  TenX boasts of accepting Bitcoin, Ether and Litecoin. That covers about 90% of crypto assets but still leaves out a long list of altcoins and the bazillion of recently minted stablecoins.

Other marketing highlights at the TenX website include the opportunity to “Spend at over 42 million points of acceptance online and offline, in almost 200 countries – perfect for the world traveller.”  Unfortunately the website also notes, “We’re working hard to bring the TenX Card to you as soon as possible. Join the waitlist in the app to be notified when it’s out.”

Neither approach is perfect.  For crypto purists the only solution is for Bitcoin and other altcoins to be accepted directly as a medium of exchange. Maybe that dream will take place by 2028 or sooner but be careful about holding your breath.

Another flaw is that both systems appear dependent on either the VISA or MasterCard payment rail (and this has been a big problem). Even under ideal circumstances these transactions fail to reach the dream of being both frictionless and free.  However from the standpoint of mass acceptance, the merchant is already absorbing these costs so it should not impede acceptance of either TenX or Wirex.

Wirex Comes To America

Now Bitcoin.com reports that Wirex, which just registered in Canada, has its sights on a US launch. There are two aspects about this that are worth noting.  First, Wirex is using transfer technology from i2c. Not being a technology mavin, it is unclear what this exactly means to things like speed and costs but it can’t hurt Wirex’s invasion of America.

So why should investors in TenX be concerned?  After all, things haven’t exactly been all that shining.  At one point this year, TenX ranked in the 50 most highly valued cryptos.  It pretty much carved out a giant sized niche.

And then back in January a great many of Visa’s cryptocurrency debit cards ceased working as the company ended its relationship with a debit card provider called WaveCrest. Affected cards were those issued by WaveCrest, including products from CryptoPay, Bitwala, TenX, Wirex and others. Since then, the price of TenX has dropped from $5 to about $0.55.

This is where the connection between Wirex and i2c could be the answer to the problem. According to Bitcoin.com “The relationship with i2c will enable Wirex to be the first crypto-friendly payment platform to offer this innovative service in the US.”

A Few Metrics on Wirex

If any published data can be believed, it would appear the Wirex already is a small force in crypto to fiat payments.  According to its website, Wirex has over 900,000 customers in 130 countries having participated in over $1 billion in transactions.  That maybe be peanuts compared to the total value of all transactions but it ain’t exactly chump change either.

So while loyal fans of TenX patiently wait for their plastic and investors sit on their $0.55 crypto investment, Wirex appears ready to steal the thunder.

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 115 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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Analysis

FedEx Goes Looking for New Lows

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By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets

At a recent Federal Reserve meeting, the market was made clear that interest rates were going to rise, which means that the burden on business in the form of interest on borrowed funds will increase. The ‘cheap’ money has run out, and now overvalued companies will be heading to their real quotes. If you look at the market, the corrections are already beginning, and there is a decline in each sector. Under these conditions, stocks will be forming ranges, although in most cases they are already here. If the price is at the lower boundary, then we should expect an even greater decline, as new support levels will be formed lower.

The ‘weak link’ under these conditions will be the companies that have shown a significant decrease in profits in the current quarter relative to the previous quarter and to similar periods of the previous year.

Tips for trading here should be sought in technical analysis, since the fundamental one will not show negative trends in Q3, as reports will be provided for the previous period, and they will be compared with similar periods of last year, which in most cases will show a positive trend.

In this situation, it is possible to consider trading for lowering overpriced companies, but the trader needs to be aware of the risk they will be taken taking, as due to the gaps at the opening, losses can be fatal.

FedEx, a leading mailing operator, is among such companies that are set to decline in the near future. Quarterly reports show an increase in profits compared to the same period last year. With this in mind, it would seem, there is no reason for concern, as the fall in profits in Q3 this year was also observed last year.

FedEx

Meanwhile, the short float is as low as 2.01%. The debt to capital ratio is less than 1, which also indicates the company is good to invest into.

On Oct 18, FedEx announced the acquisition of Manton Air-Sea Pty Ltd, a leading logistics service provider based in Australia. This will allow FedEx to increase its presence in the Australian market. The transaction is scheduled to be completed by the end of this year.

Analyzing other financial indicators, the negative details can only be found in the discrepancy between the Q3 earnings per share predicted values, since the EPS expectations were at $3.80, and in fact it turned out to be just $3.46, which resulted in the company ending its trading session with a 1.7% decline.

Without going into details, the company’s profit is growing, dividends are paid, and there is no reason to worry, especially when the index is being bought heavily during such falls. Let’s get back to the reports however, and we’ll see the profit in Q3 decreased by 42% compared to the previous quarter, although last year it was only by 16%.

In July, Amazon announced its new project, Delivery Service Partners (DSP), as mentioned earlier in one of our analytic reports. This led to the largest international postal operator’s decline. The project by Amazon enables starting your own shipping business under Amazon brand. This project is already working and the goods, despite the problems that arise, are being shipped. This means that FedEx and UPS are guaranteed to lose some of their income. In the long term, the development of DSP will create an even more serious competition against postal operators.

Amazon’s policy led to FedEx shares losing around 16%, after which the price tried to recover, but nothing came out of it, and now it’s trading around the year’s lows. Another negative fact is that the price went below the 200-day SMA, which last occurred in 2015. Last time, after the SMA breakout, the price fell by 36% from its highs. The last fall was accompanied with the largest trading volume over the last 2 years, which increases the likelihood of further price fall.

The nearest support is around $200. Further decline may be news-driven and come later, as it often happens. A short-term price increase to the resistance at $240 USD is possible, but after that, a rebound and a more serious price fall to $200 may follow. With larger volumes or a consolidation range, a reversal may occur.

To sum up

According to the Federal Reserve’s latest meeting minutes, rate hikes are going to happen both this year and next. This will increase the cost of borrowed funds, which will lead to consolidation of the stock market and a possible sharp decline when approaching the highs. Some investors will close their positions on highs, trying to lock in as much profit as possible, after which they can move to less risky instruments such as bonds, whose yields will only increase with rate hikes.

Yet another crisis coming is often a surprise for investors, because usually everything starts with a small correction, which then rapidly develops into a market collapse and leads to a massive fall in stock prices. For this reason, investing in companies at current prices is not a good idea.

In this situation, it is best to look for small and unknown companies to buy, or to focus on those that are just starting their IPO’s.

Disclaimer

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboMarkets shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

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 15 rated postsHaving majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.




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