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Fire at the Fed

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The Federal Reserve in the United States was on fire over the weekend. I’m not speaking metaphorically either. There was literally a fire at the Fed building in Manhatten.

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It seems that a generator on the roof of the building overheated and caught fire. The area quickly turned into a circus of fire trucks and sirens as the city moved in to protect what is arguably the most important of the 12 Federal Reserve branches.

Though clarity is hard to come by, the rumor that the blaze was caused by too much money printing was quickly debunked.

@MatiGreenspan
eToro, Senior Market Analyst

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Please note: All data, figures & graphs are valid as of October 9th. All trading carries risk. Only risk capital you’re prepared to lose.\

Market Overview

Market liquidity could be a bit low today due to national holidays in Japan, Canada, and the United States. All markets are scheduled to be open in eToro. However, if trading is too thin we may need to close specific assets.

Day traders in traditional assets (everything except crypto) please be aware that market conditions can be a bit funky during the US session.

China on the other hand is just coming back from their break and things are not looking great. This morning the Caixin Services PMI came out with its worst reading since January of 2016. The China50 responded with a light sell off of 1.5%.

Parting Blow

One of Germany’s most outspoken Eurocrats gave a rather surprising statement yesterday.

Wolfgang Schauble has been the Federal Minister of Finance since 2009 and has recently resigned in order to do bigger and better things as Angela Merkel’s new Speaker of the Bundestag.

In a rare interview, likely one of his last at the German FinMin, he warned that we may be headed towards another global financial crisis.

Almost an entire decade of excessive money printing has sparked the danger of new bubbles in the markets, explains Schauble. This is something that many economists have been warning about but to hear it from a man who’s dedicated his career to propping up the system is striking.

Not to worry though. As we discovered in Friday’s Market Update, investors on Wall Street and around the world are still bullish and nobody is expecting a major pullback until at least July of next year.

Even the head of the IMF Christine Lagarde has recently stated that “the long-awaited global recovery is taking root” and ” the global economy is enjoying it’s best growth spurt since the start of the decade.”

Let’s Fork this thing

The crypto-markets have put up a very impressive weekend indeed. With Bitcoin breaking above $4600 and Ethereum fighting hard to hold at $300.

One of the main reasons for the rally is likely due to the upcoming hard fork in Bitcoin that’s happening on October 25th. Similar to the Bitcoin Cash hard fork, Bitcoin Gold will give everybody who is holding bitcoin something for nothing.

What that something will be remains to be seen. With the Bitcoin Cash hard fork, which created $10 Billion worth of value out of thin air, still fresh in investors minds many are currently shifting their digital assets to take advantage of the new craze.

Please note: This hard fork has nothing to do with the contentious SegWit2x hard fork planned for November.

Ripple Conference

The superstar of growth has been Ripple.

In one week from today Ripple will hold their first-ever annual conference called SWELL. Speaking at the event will be two of the world’s most famous innovators. Tim Berners-Lee is largely known as the inventor of the Internet and Ben Bernanke the father of Quantitative Easing.


XRP has gone from 20 cents per XRP token last Wednesday to 27 cents this morning (blue circle).

Wishing you an amazing week ahead!

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.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Cryptocurrencies

Trade Recommendation: Stellar

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The price bounces from the support zone formed by the uptrend line, SMA100 and the support level. RSI confirms price reversal. MACD histogram supports upward movement and DMI allows opening long trades. It’s trading opportunity. Buy orders can be placed at 0.00000870 level with stop orders at 0.00000720 level. Profit targets are 0.00001200 and 0.00002000 levels. The daily chart does not give us strong bullish signals, that’s why this buy signal is more risky than it could be. You should invest small part of your deposit in this market or skip this trading opportunity. If you don’t use leverage, trading volume for this trade is up to 10% from your deposit.

Market: STRBTC
Buy: 0.00000870
Stop: 0.00000720
Profit Targets: 0.00001200 and 0.00002000

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The trading signal is based on Poloniex chart.
Disclaimer: The analyst does not have investments in Stellar.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Altcoins

Ethereum’s Pullback from Record Territory Continues as CryptoKittes Effect Wears Thin

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Ethereum resumed its descent Monday, a mere 24 hours after hitting new highs, a sign that the CryptoKitties bump was beginning to wear down.

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ETH/USD Price Levels

Ether’s dollar-denominated trade value plunged 10% on Monday to reach an intraday low near $429. Prices would later recover near $450 for a loss of nearly 6%. ETH/USD has declined 2.7% over the past five days in what has been a period of relative calm for the world’s second-largest cryptocurrency.

That being said, prices briefly traded at record highs over the weekend, touching $518. That narrowly beat the Nov. 29 high of $514.

At present values, the ether market is capitalized at nearly $44 billion, which is only a fraction of bitcoin’s $260 billion value. Ether’s 24-hour transaction volume came in at nearly $1.5 billion, according to CoinMarketCap.

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Volumes were evenly dispersed across the exchanges. Bitfinex’s ETH/USD pair saw the highest volume at 7.4% of the total market, which was equivalent to $108 million. Poloniex processed nearly 7% of ether’s daily turnover via ETH/BTC.

Ethereum rebounded from record lows against bitcoin, but remains relatively subdued as the world’s no. 1 crypto continues to dominate the market. ETH/BTC plunged 11% to 0.028040.

CryptoKitties

Much of the excitement surrounding Ethereum lately has centered on CryptoKitties, a simple collectibles-based game that was built on the ether blockchain. The game, which was released Nov. 28, allows users to purchase, trade and even breed digital kittens. Some analysts have likened the game to Tamagotchi, a handheld digital pets game launched in 1996.

Transactions on Cryptocurrencies are processed using ether, which is Ethereum’s native token. Industry estimates show that Cryptokitties transactions account for nearly 20% of all computations on the Ethereum platform. This figure appears to be growing continuously.

Although the game was immediately dismissed by members of the cryptocuurrency community,  Ethereum co-founder Vitalik Buterin and Earn.com CEO Balaji Srinivasan said the game had more virtues than some cared to recognize.

“Why is Cryptokitties actually important?” asked Balaji. “It’s one of the first examples of what people have been talking about for years: frictionless international trading of digital assets (not just cash!) on a blockchain. Basically what Fred Wilson saw.”

Earn.com markets itself as the “first token-based social network.”

At the same time, the CryptoKitties phenomenon presents several challenges for the Ethereum ecosystem related to scalability, future growth and ICO risk.

Ethereum continues to be the platform of choice for the budding ICO industry. The amount of money raised through the controversial crowdfunding model is fast approaching $4 billion for the year. The phenomenon doesn’t appear to be dying off anytime soon as more startups look to raise money to fuel their expansion.

That being said, many token raises and the issuers that back them are attempting to circumnavigate securities regulations by building a utility token. It remains to be seen how the regulatory landscape will evolve to keep up with the evolving nature of the industry. Equally important is how the cryptocurrency community will come together to address regulatory issues.

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 money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Bitcoin

Bitcoin Futures Officially Launch on CBOE

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The long-awaited bitcoin futures contract officially debuted on CBOE Global Markets Sunday, sending BTC/USD sharply higher. Trade volumes were reportedly thin as CBOE’s website crashed immediately after the contract went live.

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XBT Goes Live

CBOE’s futures contract, which trade under the symbol XBT, went live at 6:00 p.m. ET. Within minutes, bitcoin prices surged over $1,000, a sign that institutional money was pouring into the market. The BTC/USD exchange rate reached a session high of $15,811 before giving up gains later in the session. XBT traded at $16,000 soon after the contract went live, giving it a premium over the spot price.

At press time, BTC/USD was trading at $15,248, where it was little changed compared with the previous close.

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Bitcoin’s total market capitalization is $260 billion. Trade volumes over the past 24 hours have exceeded $13.5 billion, according to CoinMarketCap. South Korean trading desks drove much of the daily turnover, with Bithumb accounting for roughly 16.5% of transactions. That’s equivalent to roughly $2.2 billion.

The Bitfinex exchange turned over 12% of total bitcoin transactions, which is equivalent to $1.6 billion, data showed. Coinbase’s GDAX exchange saw 6% of the volumes, or roughly $823 million. GDAX experienced technical difficulty last week as bitcoin prices crossed $19,000.

Although trade volume on the exchanges was robust, liquidity in the futures market was relatively thin.

Highly Speculative Instrument

It has been argued that bitcoin futures represent one of the highest forms of speculation in recent memory, given that they are cash settled and have no delivery requirement. This point was raised by Randy Mitterling in Twitter of all places in response to Nassim Nicholas Taleb, the world renown essayist, scholar and former trader. Mitterling, who serves as a Chief Investment Adviser, said:

“Bitcoin futures are cash settled. No delivery requirement. It’s just a sentiment indicator that could be completely wrong compared to the actual price. Truly the most highest form of speculation ever created.”

Taleb, himself a brilliant writer and probability theorist, had provided a series of insightful tweets about bitcoin in general and the new futures contract in particular. In a Sunday post, Taleb said the following:

“Note that Bitcoin has a limited number of natural sellers. The entire concept is very concave supply (it costs more and more to extract). The number of producers shrinks with time.”

In an earlier tweet, Taleb also said:

“No, there is NO way to properly short the bitcoin “bubble”. Any strategy that doesn’t entail options is nonergodic (subjected to blowup). Just as one couldn’t rule out 5K, then 10K, one can’t rule out 100K.”

The arrival of bitcoin futures probably ups the ante on other forms of institutional investments involving cryptocurrency. Some analysts speculate that bitcoin exchange-traded funds (ETFs) are the next logical step for a market growing more comfortable with the idea of cryptocurrency.

CBOE chief Edward Tilly recently told CoinDesk that the case for a bitcoin-linked ETF is stronger now that futures trading is under way. As such, CBOE may be prepared to submit a new proposal to the Securities and Exchange Commission (SEC) to allow bitcoin ETFs and exchange-traded notes (ETNs) to be traded.

Tyler and Cameron Winklevoss failed to launch their bitcoin ETF earlier this year after the SEC rejected their proposal on grounds that the Bats exchange would be unable to enter necessary surveillance-sharing agreements.

A bitcoin ETF would allow investors to buy and sell the asset class much like a stock transaction. For many, it is seen as a precursor to greater mainstream adoption of the world’s no. 1 digital currency.

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 money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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