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Market Overview

Finding a Golden Opportunity

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Hi Everyone,

Yet another attack struck the cryptocurrency market recently, this one claiming around $18 million from the Bitcoin Gold network.

The innovation of blockchain is that transactions are secured by utilizing the power of the network. The second major fork of Bitcoin, known as Bitcoin Gold or (BTG), is not on the eToro platform at the moment, precisely because the network is simply not big enough at this time.

Both BTG and Bitcoin Cash (BCH) were created to give Bitcoin a larger block size, an idea that the Bitcoin Core community rejected. With all the thousands of cryptocurrencies out there, the question arises, how many bitcoin forks do we actually need?

In this video from earlier this week, you can see the backers of Bitcoin Gold arguing with a well-known backer of BCH Craig Wright. The video ends with the BTG spokesperson saying to Craig “goodbye Fake-Toshi” a disapproving nickname that he received for previously claiming to be the real Satoshi Nakamoto.

Even though BTG seemed to come away with the upper hand in the video, it’s losing against BCH on the ground.

In the graph below, we can see the total mining power (hashrate) of all three Bitcoin tokens mentioned above (BTC, BCH, and BTG). As you can see, BTG is simply a flat line at the bottom, indicating that there are very few miners actually supporting the network.

The distinct lack of miners left the network vulnerable to attack and the hackers were easily able to add enough hashrate to write the blocks however they like.

It should be noted that even though BTC enjoys the most hashrate by far, BCH actually has marginally lower fees. This is why people keep saying that Bitcoin is moving to be more of a store of value.

So if payments is the question, we need to look at the top three contenders. In this case that would be Bitcoin Cash, Litecoin, and Dash. As you can see, in the last few months, the competition has been getting tight, with all three coins charging less than 20 cents per transaction.

Ultimately, the natural way of the market is to push out the weakest contenders. For now, the payments market is dominated by Visa & MasterCard, who at the moment are charging vendors about 2.5% to 3% per transaction.

As the average credit card transaction is about $80, the average fee comes out to approximately $2.20, which is more than 5 times higher than Bitcoin itself.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Trump Pulls Out
  • Happy GDPR Day
  • Vitalik is Tweeting again!

Please note: All data, figures & graphs are valid as of May 25th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

A big part of my job and the job of other financial bloggers is to try and gauge the impact of any given news event on actual market prices. When doing this, it’s important to always remember that correlation does not equal causation.

A perfect example would be this news that came out yesterday…

The purple circle on this chart shows the exact time that the news broke on Bloomberg.

As is clear from the chart, the market has been falling for several days, and though there was a spike down shortly after the announcement, it would be difficult to prove that the news caused the movement.

On the other hand, there was an event yesterday that I believe did have a direct and measurable impact on the markets. Here we can see Donald Trump’s letter to Kim Jong Un announcing that he was calling off their June 12th Singapore meeting.

For your convenience, I’ve pinpointed the exact time that the letter went viral on social media on this chart of gold.

Even though the price spiked before the announcement it does seem that this little event was able to give it the strength to push the market above the $1,300 psychological barrier.

The news also seems to have had an impact on the global stock indices as depicted here.

Final Fantasy

With all the news and simultaneous stories coming out right now, it’s difficult to pinpoint exactly which ones translate into investment opportunities.

For example, the Brexit saga in the UK right now doesn’t seem to have changed much for the Pound. Yes, the British Pound sold off against the US Dollar, but the USD is getting stronger across the board. If we look at the Pound’s strength against the Euro, we can see that little has changed in the last few months.

We are getting ever closer to the March 2019 Brexit though, so we hope things are sorted out pretty soon. In any case, we should get more clarity soon when the Brexit Bill is back in front of the UK Parliament.

New Spending Government

Over to Italy, where earlier this week we saw that the new Prime Minister has been confirmed by the President. So Italy should soon have a government. Even though it’s clear that the new parliament will try to increase spending in a country that has more than its fair share of debt, it seems that what’s happening in Italy is staying in Italy, at least as far as the global markets are concerned.

Roll-Back

Yesterday the Trump administration did a huge roll-back of the Dodd-Frank regulations, which were put in place by Obama to prevent another crisis similar to 2008.

The immediate impact will probably be that medium-sized banks will be free to take on more risk. Wheather this will end up increasing systemic risk of the entire system is currently being debated, but even if it does, that’s not something that would usually cause an immediate impact on the markets, that’s “future America’s” problem.

Happy GDPR Day!!

I’d like to wish you a very happy GDPR day!! Please enjoy the abundance of emails informing you that the privacy policy of just about every company that holds your personal data has been updated. Good luck reading through it all.

This is something that might impact the market over the next few weeks because it’s been reported that many companies are still not fully compliant. The market impact will largely depend on how EU officials choose to deal with these type of infractions.

TRY Time

The Turkish Lira has been almost as volatile as many of the major cryptocurrencies over the last month. So if you like high risk, feel free to day-trade it. Just please be cautious and use proper money management.

Increased Chatter (Vitalik is Tweeting)

For traditional markets, more chatter means a conference happening in Stockholm, which will include a panel with both Fed Chair Jerome Powel and the Governor of the Bank of England Mark Carney. This is about as good as it gets for central bank watchers and is not to be missed.

In crypto, it’s relevant to note the Ethereum community is having a lot more open dialogue lately on Twitter. As a decentralized platform, they’ve always been rather transparent about their conversations.

Vitalik likes to remain silent though for fear of having too much influence over the direction of the network. Over the last few months, he’s been especially hands-off and limiting himself to only retweets, presumably to emphasize a point made in the original tweet.

In the last few days however, it seems that he’s been engaging a lot more directly, especially with people contributing to the development of the Ethereum network. The community has been waiting for the famous Casper upgrade that will take Ether to a new level. Lately’ we’ve heard that the code for this upgrade has already been written and is currently in final review. Let’s hope for a smooth release.

Long Weekend

Really sorry for the long winded email. I hope that the information here will help you make better decisions in your portfolio, especially going into the long weekend.

For those of you in the UK and USA, I want to wish you a happy holiday in advance and to everyone a wonderful weekend!

For anyone who got through the entire post. Feel free to tag me, you probably deserve some sort of prize. 🙂

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.

Best regards,
Mati Greenspan
Senior Market Analyst

 

eToro: @MatiGreenspan | Twitter: @MatiGreenspan | LinkedIn: 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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4.7 stars on average, based on 129 rated postsSenior Market Analyst at Etoro.com.




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2 Comments

2 Comments

  1. DAPPerD

    May 25, 2018 at 4:37 pm

    Sure, the post is a little long but it’s a good perspective on a lot of news items that are colliding right now. I enjoyed it.

  2. Mati Greenspan

    May 25, 2018 at 5:22 pm

    Thanks Bro & Well done!! You’ve earned an honorable mention that will be etched forever on my Twitter timeline.

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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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