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Goldilocks and the Three Investors

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You may have heard a similar story before but I assure you this is something completely different.

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There once was a young millennial named Goldilocks. One day she looked at her bank account and realized that the money sitting there was not earning her any interest and that due to inflation she was actually losing money every year.

So she naively wandered into the world of investments. A world that is full of hungry wolves who would just as soon eat Goldy than help her.

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Finally, after a ton of research, she spotted a broker that she felt she could trust. But the broker had so many assets to trade that Goldy’s head started spinning as soon as she walked in the door.

First, she tried the cryptocurrencies. But this market was too young and way too volatile.

Next, she tried the stock markets. But the markets were way too high and Goldy had no way of getting into this market without grossly overpaying for the shares she wanted to buy.

Finally, she tried the bond markets. But the Fed had already bought all of the good bonds and there was nothing left at a reasonable price for poor Goldilocks.

I forget how the story ends but I hope it’ something along the lines of all the investors coming back to their senses, valuations slowly returning to normal, and Goldilocks living happily ever in peace and harmony with the financial markets.

Mati Greenspan
eToro, Senior Market Analyst

 

Please note: All data, figures, and graphs below are valid as of July 10th. All trading carries risk. Only risk capital you can afford to lose.

Market Overview

Pheww. The G20 meetings are over without any drastic headlines. In fact, the leaders of the world seem to be surprisingly on the same page. They were even able to put out a unified statement.

The G20 reaffirmed their commitment to the Paris Climate Accords, even while noting the US’s planned departure from the deal. The statement contained no mention of North Korea. So it seems that issue is safely under the rug for now.

The Trump-Putin meeting produced some interesting headlines as well. Most notable, that Trump asked Putin if Russia interfered in the US elections. Putin said no. Some are now considering this issue as a closed case as well. Of course, we’ll wait until special investigator Robert Mueller gives the final word.

The Jobs Report last Friday was also quite eventful. The US economy managed to add an astonishing 222,000 jobs. The job market is certainly running hot at this point, some might say it’s running too hot.

The only issue is that despite the diminishing labor force wages don’t seem to be rising. Over the past year, average hourly wages grew by just 0.2%.

The market did much of nothing. First it went too high, then too low and ended up finding something that was just right… where it started.

The stocks on the other hand, were very happy about this report and we can see the Dow Jones rose sharply on the news.

Of course. it doesn’t take much to please the stock markets these days.

Gold reversal

According to an article on Bloomberg this morning, over the past month investors have gone from extremely bullish to extremely bearish.

The reason seems to be the expectations of rising rates in the United States. However, this doesn’t make much sense. The expectation of rising rates has been happening for months. It’s not some new piece of information that now needs to be priced in.

The following chart was posted by a guy named Mark Baillie and shows the price of gold over the last hundred years compared to the supply of US Dollars in the market.

So, it does appear that we’re seeing some sort of long-term divergence in the market over the past 4 years.

Less than $100B

The Crypto market is currently seeing the most pressure it’s seen since 2013, and arguably the most pressure ever as we see yet another completely red day for this industry.

Of the top 30 most valuable cryptos only 3 are currently in the green. This as the total market cap of all cryptocurrencies has dropped significantly below $100 Billion.

Still, if we look at the last three months it’s quite clear that we’re still up exponentially since April.

As with gold, one of the best strategies I’ve seen for the crypto markets is to think long term. Don’t be surprised or startled by short-term movements.

Buy low sell high, and always have sufficient diversity in your account.

Have an amazing week ahead!

This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation. 

Past performance is not an indication of future results. All trading carries risk. Only risk capital you’re 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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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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Cryptocurrencies

How Bithumb Listing is Boosting Zcash Cryptocurrency on the Coin Market

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Zcash, previously referred to as ‘ZeroCoin’ or ‘Zerocash’, recently got listed on Bithumb as the ninth coin. The move has attracted attention to this private digital currency that came into existence in October, 2016.

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Prior to its listing on Bithumb, Zcash traded on a virtual asset exchange called Poloniex in the United States. Zcash value and technology were subjected to a thorough review before gaining entry to the South Korea market via Bithumb, the biggest exchange for digital currencies in the country.

Competing Closely

Though Zcash displayed signs of slow growth early this year, it recovered strongly in June with its price hitting the $435 mark, up from $26. There is no doubt that this digital coin is now competing closely with other bigger digital currencies in the cryptocurrency space. It is currently trading between $217 and $304.

Denitza Tyufekchieva, CEO at Propy says, “Such dramatic price changes of cryptocurrencies can be explained with speculation, especially after such announcement. However, what brings such increase in the long-term is usually the product advancement. In the case of Zcash, The Zcash team has made great strides on performance since their initial release. In the pending Sapling network upgrade, users will see significant performance improvements. This could mean a potential increase in the demand.”

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The stabilizing price of Zcash indicates its competitiveness. It  also shows that the coin does not differ too much with other high ranking cryptocurrencies like Ripple, Dash and Ethereum. Currently, there are 2.31 million Zcash coins in circulation.

Secure and Private

Drawing inspiration from the Bitcoin, Zcash boosts privacy through its cryptographic tool, zkSNARKS, an element that is not provided for in Bitcoin.

This outstanding security and technology underlying Zcash coin captivated the coin market. It has led to a surge in the coin’s market capitalization which is now at $648.5 million, up from $1.3 million at the time of listing on Bithumb.

On the coin market, Zcash improved in ranking now at  the 15th position, from position 30 in December 2016. The coin has been experiencing steady growth with its every day exchange volumes between $26 million and $43 million.

However, Angel Versetti of Ambrosus notes that, “Fluctuations like this make one jealous of cryptocurrency exchange owners, because no matter which way it goes as long as there is volatility and massive trading riding the wave, the house always wins.”

Traders find the coin’s untraceability compelling with its encryption serving to conceal user identity, protect privacy and conceal transaction amounts. Zchash’s protective anonymity has seen its value attract recognition in US’s Silicon Valley as well as globally in countries such as China, Argentina, Venezuela, Brazil and South Africa.

However, it is important to note that with Zcash, users are not be able to conduct audits on the blockchain. According to Kamil Przeorski, CEO and founder of Experty.io, this poses a risk for Zcash holders particularly if a bug hits the codebase.

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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