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Market Overview

Front Running for Christmas

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HSBC’s former head of global forex cash trading was just found guilty of front-running a $3.5 Billion trade.

There’s actually a recording that was heard in court of Mark Johnson saying “oh f***ing Christmas” when he learned that the trade would go through.

Front-running is a huge issue across the world of finance and it is fraud. The idea is that if you have a client who’s about to make a large trade you get your small trade out just in front of him and take advantage of the price move.

This is one of the issues that blockchain will be able to fix quite easily if/once it reaches mass adoption.

@MatiGreenspan
eToro, Senior Market Analyst

 

Please note: All data, figures & graphs are valid as of October 24th. All trading carries risk. Only risk capital you’re prepared to lose.

Market Overview

Stocks on Wall Street actually went down yesterday. A rare sight these days but it still happens every once in a while. Though they did end up down, they were able to reach new record highs before the declines.

For the Dow Jones, this marks the first losing session in almost two weeks and the fourth losing session so far this month. Even though the declines are small it has many market commentators [half-jokingly] screaming “buy the dip!”

Analysts are still arguing about whether or not the increasingly likely tax reforms are priced into the markets, but they also have their eyes on the individual stocks in this particularly interesting earnings season.

A critical vote will happen in the US House of Representatives that should allow Trump to enact his tax plan without Democratic support.

More than 120 companies are expected to announce their Q3 earnings reports today so things may get a bit volatile.

Slippery Sterling

Yesterday the Deputy Governor at the Bank of England Jon Cunliffe cast some FUD on the upcoming rate hike announcement.

He says that the timing just might not be right for a hike next week. The Pound did see a small dip on this statement but it quickly recovered.

Jon’s comments clearly run contrary to the views of the rest of the markets. After all, Mark Carney is the one to make the final decision on rates and he seemed fairly confident about an impending hike during the BoE’s last meeting on September 14th.

Market expectations have also not changed much since that last meeting and remain solid with an 82% chance of a hike on Thursday the 2nd. So mark your calendar.

Crypto-contrary

The Crypto Market has been seeing a lot of action lately. However, the headline market cap, which is the value of all cryptos in circulation has remained fairly stable over the past week and a half (blue) just below the all time highest levels of September 2nd (black).

The main battle has been between bitcoin and the rest. We’re very often seeing bitcoin in the green with everything else in red and then vice versa. This is in stark contrast to what we saw throughout September when all the cryptocurrencies were sharing a tight correlation.

For those of you who are in it for the long term, don’t worry about this short term drama. A well-diversified portfolio should be all you need.

As always, let me know if you have any questions or if you need anything further.

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 (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 152 rated postsSenior Market Analyst at Etoro.com.




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Market Overview

Dow Crosses 26,000 as Trade Optimism Lifts Stocks

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U.S. stocks advanced Friday, as the major benchmarks rebounded from their worst slide in two weeks on renewed optimism over China trade talks. Bitcoin and other cryptocurrencies rebounded from a midweek slump, strengthening the case for a larger short-term rally.

Dow Returns to Strength

The Dow Jones Industrial Average smashed through 26,000 on Friday and settled close to its intraday high. The blue-chip index closed up 181.18 points, or 0.7%, at 26,031.81. Twenty-three of 30 index members finished higher, led by Pfizer Inc. (PFE) and Intel Corp (INTC).

With the gain, the Dow extended its weekly winning streak to nine weeks, the longest since 1995.

The large-cap S&P 500 Index gained 0.6% to settle at 2,792.67. Nine of 11 primary sectors contributed to the rally, with shares of information technology companies leading the charge. The sector rose 1%. Health care and communication services also outperformed the broad average.

A strong performance for tech stocks sent the Nasdaq Composite Index sharply higher. The tech-laden average rose 0.9% to 7,527.54.

Trade Optimism Lifts Markets

Stocks returned to strength Friday on reports that officials from the U.S. and China held marathon talks aimed at resolving their trade dispute. Trade representatives met in Washington for nine hours on Thursday, where they discussed a range of issues including state subsidies and illicit technology transfers.

President Donald Trump was also said to be meeting China’s top trade negotiator, Vice Premier Liu He, on Friday. No further updates have been provided.

While a trade deal between the two countries remains highly unlikely, Trump has expressed willingness to extend the negotiating window beyond the March 1 deadline. He told reporters Friday that the deadline isn’t a “magical date” but a good barometer to measure progress from both sides.

Bitcoin Up 10%

Bitcoin’s price climbed back above $4,000 Friday, as momentum swung in favor of the bulls following a minor midweek slump. The leading digital currency by market cap reached a session high of $4,074 on Bitfinex and was last spotted in $4,050 range.

Via CoinMarketCap, bitcoin’s aggregate value was a hair below $4,000 at press time, enough for a gain of 1.3%. Over the past seven days, BTC gained 10.3%.

The top-20 coins traded higher on Friday and booked solid gains for the week. EOS was the top performer, gaining 3.87% for the week. Ethereum gained 22% and bitcoin cash was 18.5% higher.

Read our Week in Review: Crypto Spring? Bitcoin on Track to Snap Six-Month Losing Streak Following Spectacular Week.

The overall cryptocurrency market capitalization improved to $135.3 billion, having gained $15 billion over the past seven days. Trade volumes are down sharply from their early-week highs but are still well above the yearly average.

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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4.7 stars on average, based on 773 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




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Market Overview

MindChain Conference: ‘Blockchain Isn’t Our Saviour’; Romania’s Growth Says Different

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Blockchain was picked apart at the MindChain conference this week, where one prominent commentator said blockchain won’t make the world a better place, and that it won’t be our saviour.

Blockchain Won’t Make the World a Better Place

One of Forbes’ ‘30 Influential Europeans Under 30’, Cornel Amariei took aim at blockchain, which he said was a buzzword, and that there weren’t too many places it could be applied:

“I hate buzzwords because they give a false impression about what is happening. Blockchain is a buzzword – I’m not a big fan, and I’m not against it either – but it’s nothing more than an encryption and decentralization technology – there aren’t that many areas where it can really be applied well.”

The 22 year old inventor and author suggested blockchain’s reach will be more limited than most in the crypto space would like to believe. He said:

Blockchain will solve a lot of issues, but it won’t really make the world a better place. It’s not our saviour.

Romania: Blockchain and Crypto Tech Hub

Held by Business Review, the conference comes from Romania – the latest addition to the European Union having joined in 2007. Romania’s economy has grown at twice or even three times the rate of its larger EU neighbours in recent years. Its approach to tech innovation is a big reason why.

Sixteen blockchain and cryptocurrency startups have launched in Romania in the past year, while Google, Facebook, Amazon and Microsoft all have offices scattered around its major cities.

Those startups include a blockchain-based energy supplier, an augmented reality (AR) project, and many more, including the recently covered Ark (ARK).

Romania’s new role as a tech hotspot can largely be attributed to its encouraging tax policies – the country’s corporations are taxed at 16%, hence the arrival of Google, Amazon, et al. Meanwhile, low income earners only have 10% of their earnings taxed.

If that sounds good get this: if you work in the IT industry your income doesn’t get taxed at all. Same goes for R&D workers and those involved in technological development. (Side note: construction workers are also exempt from income tax).

Breakdown of Romania’s tax exemption policies – designed to encourage growth and worker participation.

New Transylvanian Silicon Valley

It’s thanks to policies like these that Romania recorded 5.7% growth year-on-year leading into 2017 – the fastest rate of growth in the European Union. Romania’s tech growth has been such that it has drawn comparisons with Berlin; while Techcrunch once referred to the nation as the ‘Silicon Valley of Transylvania’.

Blockchain is currently benefiting from this new wave of Romanian innovation and optimism. Sixteen crypto startups from a population of just 19 million – all within the past year or so – must be one of the strongest ratios in existence right now.

It’s true that blockchain didn’t have much of a hand in Romania’s glowing recent past, but it may yet have a big role to play in its future.

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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4.5 stars on average, based on 147 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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Market Overview

How to Escape Inflation

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Hi Everyone,

After years of economic crisis and hyperinflation, it seems that Zimbabwe may finally be taking their first steps toward stabilization.

For more than a decade the African nation has been relying on a multi-currency system that relies heavily on the US Dollar. However, in a country of 16 million people, there aren’t always enough dollar bills to go around. Talk about a liquidity issue.

So most Zimbabweans receive their monthly paycheck by electronic transfer to their bank account, which they then need to figure out how to spend in the grocery store.

In 2016 the government issued a new currency called a bond note, the exchange rate of which has been controlled by the government. In a recent update, the Reserve Bank of Zimbabwe has ditched capital controls and is now allowing bond notes to trade according to the free market.

In a country that has full mobile penetration, it’s really a wonder to me how cryptocurrencies are not playing a larger role.

Hint hint, wink wink, to Dash, Bitcoin Cash, and Litecoin.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • US-China trade deadline: 7 days | Days to Brexit: 35
  • Crypto Changing Landscape
  • Ethereum’s Rate of Inflation

Please note: All data, figures & graphs are valid as of February 22nd. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Stocks pulled back a bit yesterday but this morning investors are looking to reverse the losses. We’ve been counting down on geopolitical timers for so long that many market participants are already dreaming of a day when those counters get to zero and all is resolved.

The tricky one remains Brexit. At this point, analysts have identified three possible yet unlikely outcomes.

1. No deal Brexit
2. Theresa May’s deal, or some variation
3. A time extension

Each of the above seems to be extremely unlikely yet we know that one of them has to happen. Should option one materialize, it’s very likely that the British Pound will fall, and in the event of option two, the Pound should rise.

The Pound has been falling pretty steadily since May. Here we can see the GBPJPY kissing her 200-day moving average (blue line).

Also, the New York session today should be really interesting as we’ll hear from a slew of central bankers including Mario Draghi and no less than four Fed members as well as receiving a monetary policy report from the Fed.

Remember, these are the guys who drive the markets. So it pays to pay attention.

SEC Watchers

Just as traders in traditional markets watch the Fed, cryptotraders seem to be forming a habit of watching the SEC.

Today, we got some pretty astonishing news that an ICO called Gladius Network LLC received a pass from the SEC despite them selling $12.7 million worth of unregistered securities tokens. This is quite a different outcome than the SEC took with Paragon and Airfox just three months ago, who each needed to pay a fine of a quarter million dollars.

While the SEC is the most important regulatory body in the United States when it comes to securities, other regulators may be influencing policy as well. Our US Managing Director Guy Hirsch wrote me this morning…

How about the Crypto Rally?

Well, excitement is still high but seems to be fading. Volumes did peak out at $35 billion during the full moon on Tuesday, February 19th. Today we’re down to $23 billion traded across global crypto exchanges.

Some have pointed to the volumes on Wall Street’s bitcoin futures, provided by the CME group, which reached a new record high of 18,338 contracts during Tuesday’s madness. That comes out to a total volume of approximately $357 million, or approximately 1% of the amount traded on exchanges.

Also, the major price surge actually happened on Monday, when the CME was closed for President’s day. So, it’s clear that Wall Street is the passenger here and not driving.

So, to find out whether this rally is about to continue or claw back we need to look at the root. As we’ve been discussing, this entire rally seems to have been caused by a shortage in the supply of new Ethereum.

Historically, the Ethereum network produces about 20,000 to 30,000 new ETH per day. However, since the beginning of the year the amounts have been tapering off and as of last week, the new supply was more like 13,000 per day.

The Constantinople upgrade which is currently scheduled for block height 7,280,000 (approximately February 27th), is supposed to stabilize supply to about 5,700 blocks per day and reduce the block reward from 3 ETH to 2 ETH per block. So, by these metrics, we can deduce that new production after the fork will be about 11,400. Far less than the current rate mentioned above.

Now, another part of Constantinople is that it’s supposed to reduce the amount of gas needed per transaction. However, it’s not apparent how the new gas fee structure will affect demand.

So even though we know supply will be reduced drastically, we don’t know if this will affect bottom line inflation because we don’t know exactly what demand will look like under the new system.

Clearly, forward guidance on monetary policy is not the largest concern for Ethereum’s community leaders.

As far as the rest of the crypto market, this recent rally certainly has the big fish nibbling. We’ve been in the accumulation zone for a while now and this latest push off the floor might just be enough to bring the market out of a slump, but there are several technical levels that need to be broken before that happens.

Wishing you an awesome weekend!

Best regards,

Mati Greenspan
Senior Market Analyst

Connect with me on….

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

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 152 rated postsSenior Market Analyst at Etoro.com.




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