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Fire & Fury

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Hi Everyone,

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Global stock markets are in a bit of a tizzy this morning. The recent escalations between the USA and DPRK seem to be a bit more than your average sticks and stones name calling between international leaders.

Though the stocks have been largely able to ignore this issue as remote for the past few years it does seem that a bit of reality is interrupting the day to day euphoric stock buying cycle. By no means are we in a bear market. The stocks are doing exceptionally well in so far in August.

However, there are some telltale signs of fear creeping into the global financial picture. Let’s take a look…

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Please note that by popular demand, political opinions will be kept out of today’s update. The pissing match between Donald Trump and Kim Jong Un is not the issue being discussed.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

Missiles at Guam

Volatility Up

Gold up

Crude Oil Today

RBNZ Tonight

U.S. Inflation on Friday

Awesome Ethereum

Please note: All data, figures & graphs are valid as of August 9th. All trading carries risk. Only risk capital you can afford to lose.

First, let’s start with the obvious.

Volatility Is Up

The VIX, volatility index spiked yesterday to it’s highest level this month and closed above 11 points. Not a historical high or anything, just a break from the lower volatitliy theme that’s been prevalent lately.

Stocks Are Not

The Dow Jones has been on a serious winning streak lately. The past 10 sessions have all ended in green taking us ever deeper into record high territory. Just the fact that it ended the day with a negative number yesterday is notable even if that number was just 0.15%.

The declines in Asia today are a lot less tame. With North Korea being closer to home, the Nikkei 225 in Japan is down 1.29% today and the China 50 is down 0.56% so far today, not bad for a country that doesn’t allow short selling.

Gold is up today as well. So far gaining more than half a percent today. A clear indication that at least somebody is getting nervous. But the main place that we can see the fear playing out is in the…

Currency Markets

Here, take a look…

Usually, the Australian Dollar has a strong correlation with the commodity markets since most of their exports are commodities. So seeing it this far down on a day when the commodities are up is more than a bit odd.

The Japanese Yen gaining more than a half a percent since the beginning of the day tells us that Asian investors are indeed nervous.

The kicker of course is the Swiss Franc. An upward movement of nearly 1% tells us that something is definitely wrong.

For those of you looking for extreme volatility, take a look at the AUDCHF, which is looking at its biggest single day movement since Trump’s election (white circle).

Crypto Doesn’t Care

…or maybe it does.

The total market cap of all cryptocurrencies is at a record high of $123 Billion this morning.

As we can see, the South Korean exchange bithumb is responsible for more than 17% of today’s volume, more than both of the next two exchanges combined.

The real winner today is Ethereum, which is up above $300 again making for a 10% gain in the last 24 hours and 50% since the start of the month.

Wishing you 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.

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.

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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  1. Inverstor Clouseau

    August 9, 2017 at 12:28 pm

    That etherium entry call was on point

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Altcoins

Fears of Regulatory Crackdown Flush $190 Billion Out of Crypto Market

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Bitcoin, Ethereum and every other major cryptocurrency collapsed on Tuesday, as fears of regulatory clampdown in South Korea triggered a mass exodus from the digital asset class. The collapse comes as mainstream media reports continue to push the idea of an imminent ban on cryptocurrency exchanges even as lawmakers cautioned no decision had been reached.

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Cryptocurrency Market in Free Fall

The cryptocurrency market declined rog $190 billion on Tuesday, marking one of the biggest single-day drops on record. At its lowest, the market was valued at $510 billion,  which was than $200 billion below its peak earlier this month.

The top 20 coins were each down in excess of 17%, according to data provider CoinMarketCap. Nearly $49 billion worth of cryptocurrency exchanged hands over the past 24 hours.

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Bitcoin plunged below $12,000, reaching its lowest level since early December. Ethereum, its biggest rival, fell back toward $1,000, while Ripple bottomed out at $1.23 after peaking above $3 just a few weeks ago.

South Korea Jolts Market

It was mainly regulatory issues that jolted cryptocurrencies on Tuesday, with South Korea mulling new legislation to stamp out excessive risk from the market.

South Korea’s finance minister Kim Dong-yeon reportedly told local radio that an all-out ban on cryptocurrency trading was a “live option, but that government officials still need to “seriously review it.” Seoul’s biggest issue with cryptocurrency trading is the level of speculation in the market and the role of anonymous accounts in spurring volatility. New regulations have already banned anonymous trading on domestic exchanges and barred foreigners from participating in the market.

Last week, some of South Korea’s busiest crypto exchanges were raided by police and tax agents over alleged tax evasion. The raids were confirmed by an employee at Coinone, who spoke to Reuters anonymously.

Seoul’s financial authorities had previously indicated they were investigating six banks that offer cryptocurrency accounts. In addition to speculative risks, authorities are also concerned about the link between cryptocurrency trading and organized crime.

South Korea is a major center for cryptocurrency and is home to some of the largest exchanges. Local traders have been the main catalysts behind some of the crypto market’s biggest gainers, including Ripple.

Some analysts believe that further regulatory crackdown will be ineffective given the borderless nature of cryptocurrencies. When China banned cryptocurrencies, traders there migrated their accounts offshore to Hong Kong or Korea. This suggests that a regulatory crackdown can only succeed with broad international cooperation, which does not exist at the time.

Chinese regulators know that their measures have done very little to limit virtual capital flight from the country. That’s why they are moving to block domestic access to offshore exchanges, according to a recent Bloomberg report.

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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Analysis

Long-Term Cryptocurrency Analysis: Broad Correction Enters Next Phase

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The overbought BTC-led correction that has been the dominating technical process in the cryptocurrency segment in the last month or so continued in earnest today, amid the intensifying regulatory steps concerning the sector. The three-week-long consolidation that followed the initial mini-crash concluded with a sharp sell-off overnight rearranging the long-term charts, while likely kicking off another volatile period.

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While most of the crash lows held up today in early trading in the majors, especially in the case of the late leaders like Ethereum and NEO, some of the relatively weaker coins are already trading below the December minimums. We expect most of the majors to follow Dash and LTC, the weakest of the largest coins, lower and trade below the previous lows, as sentiment will likely swing to a bearish extreme.

The $11,300 level has been in the center of attention throughout the session today and the most valuable coin experienced heavy trading around the level as expected. As the daily MACD is still in neutral territory, the coin could be in for another leg lower, but after the 40% correction and the rather lengthy consolidation, investors could be looking for entry points during the move near the key support levels at $10,000, $9000, and the stronger levels at $8200 and $7700.

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BTC/USD, Daily Chart Analysis

As Ethereum is in a different part of its cycle the long-term momentum readings are still overbought, and that could mean a more protracted correction for the second largest coin. That said, following a multi-month consolidation like the one in Ethereum before, we still expect the token to outperform BTC from a long-term technical standpoint. ETH is now below the short-term trendline, and it’s likely to dip below $1000, and the prior top at $850. Further key levels are found at $740, $625, $575, and near $500.

ETH/USD, Daily Chart Analysis

Let’s see the outlook for the other major altcoins after today’s bloodbath.

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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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Analysis

Crypto Update: Chinese Crackdown Triggers Next Leg of Correction

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The cryptocurrency segment is crashing again, with double-digit losses across the board, and with several coins shedding around 30% in one day amid the widespread and heavy selling. The sell-off was triggered by reports on a new set of measures by the Chinese authorities limiting crypto trading, which added to the still looming South Korea related regulation worries. Bitcoin tested the mini-crash lows at $11,300 today in early trading, dipping slightly below that level before a strong bounce started.

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The most valuable coin is now between two crucial support/resistance lines, with the other ahead at $13,000, and as the downtrend is entering its more mature phase the $10,000 and $9,200 levels could come in play, with a possible dip to the support zone near $7,650.

BTC/USD, Daily Chart Analysis

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Interestingly, the coin is still hovering within the daily range of the crash of December 22nd, and that points to a very active and volatile period ahead near the low at $11,300, as automatic orders will likely get triggered on both sides of the market.

The short-term setup is bearish, and although it’s possible that the primary support level will hold, odds still favor another leg lower, following the exponential run-up at the end of last year that pushed sentiment into bullish extremes.

BTC/USD, 4-Hour Chart Analysis

Altcoins

(more…)

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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