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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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Bitcoin

Bitcoin Returns to Health After Flash Crash

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The value of bitcoin stabilized Thursday after a flash crash wiped nearly 9% from its value, a sign that investors are getting over the initial fear of regulatory encroachment on their tokens.

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Bitcoin’s Epic Drop

Beginning at around 12:45 UTC, the BTC/USD began an epic decline that continued for 90 minutes until prices bottomed in the low $5,100 region. At its worst, bitcoin was down nearly 9% on the day.

Prices would soon recover, and do so in a big way. BTC/USD regained more than $300 over the next two hours before continuing higher for the rest of the day. At press time, bitcoin is up 1.3% at $5,646, having traded within a $180 range early Thursday.

At present values, bitcoin is capitalized at $94 billion, according to CoinMarketCap. The token peaked above $97 billion last week as it set multiple record highs.

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Bitcoin continues to trade in overbought territory, according to the Relative Strength Index (RSI). As the following chart illustrates, the BTC/USD has been technically overbought on several occasions over the past six months.

As CCN reports, bitcoin wasn’t the only digital currency to experience a sharp drop. Ripple plunged by 12% and Ethereum shed 8%. For bitcoin and ether, the losses would later prove to be a healthy correction after last week’s run-up. The ETH/USD is currently trading around $314.

Ripple is still down roughly 9%, where it is trading near three-week lows.

Bitcoin, ether and Ripple are the world’s top-three digital currencies by market cap. Combined, they’re worth more than $131 billion.

Regulatory Fears Emerge

The plunge came just a day after the U.S. Commodity Futures Trading Commission said it has jurisdiction to regulate bitcoin derivatives. In a report titled A CFTC Primer on Virtual Currencies, analysts at the Commission reaffirmed that bitcoin and others like it are commodities.

The report said:

The CFTC’s jurisdiction is implicated when a virtual currency is used in a derivatives contract, or if there is fraud or manipulation involving a virtual currency traded in interstate commerce.

A commodity is defined in various ways by the CFTC. It can be a physical commodity or natural resource, a currency or interest rate and “services, rights, and interests… in which contracts for future delivery are presently or in the future dealt in.”

Three bitcoin exchanges were listed as examples of permitted cryptocurrency activity. They included TeraExchange, LLC, North American Derivatives Inc. (NADEX) and LedgerX, LLC.

The report also said there was no inconsistency between how it defines cryptocurrency and how the Securities and Exchange Commission (SEC) dealt with The DAO. SEC regulators deemed The DAO tokens to be “securities” under federal law.

There is no inconsistency between the SEC’s analysis and the CFTC’s determination that virtual currencies are commodities and that virtual tokens may be commodities or derivatives contracts depending on the particular facts and circumstances. (CFTC)

As cryptocurrency trading expands in scope, investors can expect a slew of products designed to track the market. The Chicago Board Options Exchange (CBOE) plans to launch its own bitcoin derivatives product next year.

Meanwhile, Grayscale currently operates the Bitcoin Investment Trust, a traditional investment vehicle with shares solely invested in BTC.

Featured image courtesy of Shutterstock. 

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Analysis

Technical Analysis: Bitcoin Dumps and Pumps amid Broad Volatile Correction

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The crypto segment has been in turmoil today, as the most valuable coins turned significantly lower, leading to a mini-panic, but they rallied strongly off their slows as buyers stepped in the second half of the session.

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Bitcoin fell as low as $5100, for a 15% correction top-to-bottom, but it is now trading near the prior short-term support at $5400. As the long-term picture remains overbought, investors shouldn’t open new positions here, but traders could play a likely move towards the $6000 level, although we still advise small sizes, as correction risks remain elevated.

BTC/USD, 4-Hour Chart Analysis

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The other majors were also declining in early trading, led by Ripple, with only NEO and IOTA, holding up well during the sell-off.  Both of the latter coins faded away as the rest of the market recovered, but Ripple continued to suffer. For now, the long-term bullish picture is unchanged for the segment, but BTC’s overbought correction could still cause volatility in the coming period. Let’s see the short-term charts after the busy session.

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Cryptocurrencies

Trade Recommendation: DigiByte

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Based on the daily chart we have a buy opportunity. Possible upward movement is confirmed  by RSI reversal in the oversold zone and MACD histogram. We can use lower time frame for getting a better entry level. If we look at the 4H chart, we can see a bullish divergence at the support level. It gives us a trend reversal signal. MACD supports upward movement. We can place pending orders for buy at 0.00000220 level with stop orders at 0.00000150 level. Profit targets are 0.00000300 and 0.00000450 levels. Also the part of long positions can be left for long run. If you don’t use leverage, recommended trading volume for this trade is up to 5% from your deposit.

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Market: DGBBTC
Buy: 0.00000220
Stop: 0.00000150
Profit Targets: 0.00000300 and 0.00000450

The trading signal is based on Poloniex chart.

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