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Market Overview

Digital Natural Selection

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Cash to digital money

Hi Everyone,

Just as the recent slide in crypto and tech stocks has put pressure on investors, it is also testing the business models of tech businesses across the board.

When the system is flush with cash it’s much easier for entrepreneurs and investors to test ideas, but when the money starts tightening up, market prices fall, and business models start getting tested.

On Monday evening, the main team responsible for developing Ethereum Classic (a spinoff of Ethereum) announced that they will be closing operations. This follows announcements from the crypto social site Steemit and the adult entertainment site Spankchain that they will be laying off a large portion of their staff.

For the FAANG stocks, the recent tech rout is currently putting pressure on Wall Street’s perennial darlings to start delivering on great expectations.

Fear not though. This new age version of Darwin’s ‘survival of the fittest’ theory is a natural part of economic cycles and development and can actually provide great opportunities for those brave enough to take a contrarian view.

In fact, if we look past the specific examples above and consider the overall data, we can notice that job growth (which is considered a leading indicator of market health) in both the tech sector and the crypto industry are rising at a rapid pace.

This is something we discussed in a bit more detail in yesterday’s webcast for eToro Platinum and Professional clients. Feel free to catch the recording at this link.

@MatiGreenspan

eToro, Senior Market Analyst

Today’s Highlights

  • Closed for Bush
  • Sudden Stock Plunge
  • Crypto Air BNB

Please note: All data, figures & graphs are valid as of December 5th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Today many financial markets will be closed to honor the passing of former US President George Bush Senior. As this was a rather last minute decision, we’ve added the following update to our market hours page. However, be aware that other assets could be affected due to lack of liquidity.

This unforeseen closure also seemed to have an impact on the stock markets yesterday as some investors may have been trying to reduce exposure before the hiatus.

Still, there’s no way to know for sure whether these losses were down to the Bush-related downtime ahead or for different reasons. Other catalysts like the trade war and yield curve inversion were also blamed for the sudden plunge yesterday (purple circle), which saw the major US indices down more than 3% by the end of the session.

Of course, we know that no specific catalyst is required here. Taking a broader view, as we’ve been discussing in these updates, sentiment across the markets is that many of these stocks have seen a record-setting bull run and might now be due for a pullback.

Crypto Air BNB

Despite the selling pressure lately, one particular crypto asset has been bucking the trend. While many coins are down double digits in the last week. Binance Coin (BNB) has actually risen by more than 20%.

This is likely due to two positive updates that come out lately.

On the development, side CEO CZ has recently announced that it will be launching their own public blockchain called Binance Chain.

On the adoption side, a blockchain based hotel booking site with over 450,000 listings is now allowing users to pay directly with BNB coins.

This is a particularly interesting update because of the status of BNB coin in general. In our recent research paper on Binance Coin, we noted that BNB is considered a utility token but that it may contain elements of a digital security. The sudden use case as a means of payment in sites other than Binance means that this unique asset may also be considered a cryptocurrency as well.

Feel free to review the full report at this link, to get a better understanding of what this could mean going forward.

Let’s have an amazing day ahead!!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

eToro is a multi-asset platform which offers both investing in stocks and cryptocurrencies, as well as trading CFD assets.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Best regards,
Mati Greenspan
Senior Market Analyst

Connect with me on….

eToro: @MatiGreenspan Twitter: @MatiGreenspan LinkedInMatiGreenspan | Facebook:MatiGreenspan

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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Market Overview

U.S. Stocks Mostly Higher on FOMC Drift; Bitcoin Price Holds Higher

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U.S. stocks traded mostly higher on Tuesday, as the Federal Reserve’s two-day policy meeting was officially underway in Washington. The cryptocurrency market notched a fresh 12-day high as bitcoin and its altcoin peers maintained their upward traction for most of the session.

Stocks Recover

Wall Street recovered modestly after plunging on Monday to their lowest levels of the year.  The Dow Jones Industrial Average rose 82.66 points, or 0.4%, to close at 23,675.64. The industrial benchmark fell more than 500 points on Monday.

The large-cap S&P 500 Index trimmed all of its gains to finish flat at 2,546.16. Gains were concentrated in six sectors, with consumer discretionary and information technology companies among the biggest gainers. Losses were primarily concentrated in energy and consumer staples.

A strong performance in technology-related industries pushed the Nasdaq Composite Index firmly higher. The index climbed 0.5% to settle at 6,783.91. On Monday, the Nasdaq joined the S&P 500 and Dow in negative territory for the year.

FOMC Drift

The relatively strong performance in stocks ahead of Wednesday’s Federal Reserve policy verdict has a well established historical precedent. Since 1994, gains in the 24 hours before the FOMC meetings represent 80% of excess returns in the market, according to CNBC. The average S&P 500 gain during that stretch is 0.5%.

Policymakers are widely expected to raise interest rates at the conclusion of the FOMC meeting on Wednesday. The accompanying rate statement and quarterly economic projections could shed light on the central bank’s future path at a time when President Trump is pressuring officials to end the tightening cycle.

Based on Fed Fund futures prices, the chance of a liftoff tomorrow is 71.5%. That’s down slightly from Monday and is well below levels seen last month.

Cryptocurrencies Show Stability

The cryptocurrency market traded mostly higher on Tuesday, as bitcoin and the major altcoins avoided a reversal following a strong start to the week.

The market cap for all cryptocurrencies peaked at $115.6 billion, the highest since Dec. 6. At press time, the market came in just shy of $114.1 billion.

Among top-ten cryptocurrencies, bitcoin cash (BCH) was the best performer, gaining 8.6% to $99.36. EOS climbed 4.2% to trade at $2.50. XRP rose 1% to trade at $0.3308. Bitcoin’s price was little changed at $3,552.12.

Stable market prices were accompanied by a sharp rise in trading volumes. Crypto exchanges processed nearly 50% more volume on Tuesday, according to CoinMarketCap. Total market turnover rose above $17 billion, based on latest available data.

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 704 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

Forex Update: Dollar Drifts Lower With All Eyes on the Fed

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Forex Market Snapshot

Asset Current Value Daily Change
EUR/USD 1.1368 0.19%
GBP/USD 1.2648 0.20%
USD/JPY 112.55 -0.23%
AUD/USD 0.7201 0.34%
GOLD 1,250 0.14%
WTI Crude Oil 48.53 -1.32%
BTC/USD 3,565 1.96%

With just one day left until the week’s main event, the Fed’s rate decision, it’s no surprise that forex markets are having a very choppy session, with the Dollar and the main safe-haven assets being in focus. The USD has been under pressure in the last couple of days amid the louder and louder critiques regarding the Fed’s rate hikes, and although economic numbers continue to be positive in the US, and the consensus still points an increase tomorrow, leaving the rates unchanged wouldn’t be as shocking as one week ago.

Economic numbers were mixed today, with the German IFO index missing the consensus estimate, but with the US housing market showing stability for the second month in a road. Building permits and Housing Starts both bounced back more than expected amid the pullback in Treasury yields in November, pointing to a still relatively healthy economy in the US.

While the Dollar only managed a small pop higher following the releases, as Treasury yields plunged to new multi-month lows again, the underlying bullish trend seems safe for the reserve currency.

Technical Analysis

GBP/USD, 4-Hour Chart Analysis

The Great British Pound is having another active session, and although it briefly surpassed the crucial 1.27 level against the Dollar, it fell sharply later on, leaving last week’s key technical breakdown intact.  While choppy trading is expected across the forex segment up until tomorrow’s key Fed announcements, the Pound could remain active, with the Brexit chaos and Theresa May’s shaky position still causing headaches for traders.

EUR/JPY, 4-Hour Chart Analysis

While risk assets rebounded today after yesterday’s volatile and bearish session, the main safe-haven assets, such as the Japanese Yen and gold continue to perform well, especially compared to the risk-on currencies. The EUR/JPY pair which has been trading in a broad bearish consolidation pattern since October is testing the key support zone between 127.50 and 127.75, threatening with a key breakdown in the coming weeks. While the short-term momentum indicators are slightly oversold, the pair is clearly bearish both short- and long-term and traders should be looking for entry points on the short side.

USD/CNH, 4-Hour Chart Analysis

Some analysts call the Dollar/Yen pair “most important currency pair of 2019”, and the pair continues to trade in the close vicinity of its October low, despite the recent trade-related optimism. A clear dovish surprise tomorrow could send the Yuan soaring, even in light of the recent weak Chinese economic data, but for the coming months, new highs are very likely (meaning new lows for the Yuan), and a drop to 6.85 would be an optimal entry point for traders.

WTI Crude Oil, 4-Hour Chart Analysis

Oil continues to be in a steep broader downtrend, and despite the deeply oversold long-term momentum readings, the crucial commodity only managed to consolidate in a sideways trading range after dipping below the key $50 per barrel price level in the WTI contract.

Yesterday, the price of the contract fell below its prior low, and today the commodity plunged by more than 5%, violating the $47.50 per barrel level for the first time since mid-2017. Barring a quick recovery, the breakdown could extend to the $44 per barrel level but a strong support zone is already found between $46.50 and $47.

Key Economic Events Tomorrow

ChartBook

Forex

EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

AUD/JPY, 4-Hour Chart Analysis

GBP/JPY, 4-Hour Chart Analysis

USD/CHF, 4-Hour Chart Analysis

Commodities

Gold Futures, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

 

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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Market Overview

The Ghost of Crypto Anarchy

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Hi Everyone,

Today we bid farewell to the Godfather of the Cypherpunk movement, which gave birth to bitcoin.

If you’ve never heard of Tim May (may he rest in peace), I refer you to his words of 1992. This short passage was so ahead of its time that it may as well have been written last Tuesday.

Quick read: The Crypto Anarchist Manifesto

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Sell Off Continued
  • Breakouts Forming
  • Bounce off the Floor

Please note: All data, figures & graphs are valid as of December 18th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

The global sell-off in the stock markets continues. For a brief moment after the bell rang at the New York Stock Exchange, it did seem like there would be some sort of bounce, but by the end of the session, the major indices were back at the lows.

The S&P500 index fell within a single point of its lowest rate this year (yellow line).

The negative sentiment has carried through into Asia, but it seems the Europeans are a bit more optimistic today, especially in Germany where the DAX is in green.

The feeling is that we could be getting some much-needed relief from the US Federal Reserve as they head into their two-day meeting today. So things might calm down as we approach the announcement tomorrow evening.

Breakout Time

Looking at some of the other assets out there, volatility has increased over the past few sessions. Here we can see the VIX Volatility Index making a move to the upside over the last few days along with the selloff in the stocks.

With that, it pays to take a look at the US Dollar, which continues to push the highs with some upward facing consolidation. This will be critical going into the Fed meeting, where they are largely expected to raise rates.

However, since the rate hike is expected to be dovish, we could just as easily see a downward breakout. Watch this space.

Gold is also looking for a breakout of the psychological barrier at $1,250 an ounce.

Ever avantgarde, crude oil has already broken below $50 yesterday, a staunch indication that the oversupply issues aren’t quite behind us.

Just for good measure we’ll add in the USDJPY as well here. Especially if the dovish rate hike does indeed do the Dollar in, and Asian traders look for safety in the Yen, we could see 112.22 give way.

Crypto Bounce Acquired

Yesterday, on the 10th anniversary of Bitcoin’s all-time high, we did manage to see a strong push off the floor. Though it’s not clear what exactly caused the bounce, it does appear to be a short squeeze that took out a few of the high-risk traders. I did put up a few charts on Twitter as it was happening.

Ever since the break below $5,000 we’ve been talking about light support at $3,500 and heavy support at $3,000, so this bounce off the $3,000 level couldn’t be more picture perfect.

The biggest winner emerging from this move was EOS, which rose a total of 29% within a few short hours. Yet still nowhere near its all-time high of $23.33.

Though it is possible that we do continue downward from here, this type of movement is very encouraging for technical analysts and may just end up creating a bottom for this battered market possibly even giving way to a bullish trend in 2019. Who knows… maybe we’ll get a Santa Claus Rally after all.

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

eToro is a multi-asset platform which offers both investing in stocks and cryptocurrencies, as well as trading CFD assets.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Best regards,
Mati Greenspan
Senior Market Analyst

Connect with me on….

eToro: @MatiGreenspan Twitter: @MatiGreenspan LinkedInMatiGreenspan |Facebook:MatiGreens

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 139 rated postsSenior Market Analyst at Etoro.com.




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Hacked.com and its team members have pledged to reject any form of advertisement or sponsorships from 3rd parties. We will always be neutral and we strive towards a fully unbiased view on all topics. Whenever an author has a conflicting interest, that should be clearly stated in the post itself with a disclaimer. If you suspect that one of our team members are biased, please notify me immediately at jonas.borchgrevink(at)hacked.com.

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