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Market Overview

Isn’t it Ironic?

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So here’s a nice quote from the Chicago Federal Reserve Senior Economist , Mr. Francois Velde…

“It is hard to imagine a world where the main currency is based on an extremely complex code understood by only a few and controlled by even fewer, without accountability, arbitration, or recourse.”

Of course, he was talking about bitcoin when he said it but many people in the Internet community heard a concise description of the current monetary system, which is held in place by the Federal Reserve and other central banks, the very same institution that Mr. Velde currently serves.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

Trump: Putting out Fires

What caused the Crypto Sell-off?

What could drive the next surge?

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

Backdrop

For the first time in two years, leaders of North and South Korea got together and had a meaningful discussion. The main result was that the DPRK will likely be sending a team of Olympians to the Winter Games in Pyeongchang next month.

No doubt the President of the United States will be taking at least some of the credit for this groundbreaking change in relationship status, as he has with the soaring stock market, and the roaring economy.

Somehow, I’m pretty Ok with that though. After the fires he’s been putting out lately with the new book “Fire & Fury” and Special Investigator Robert Mueller hot on his heels, the man deserves a win.

Ironic as it may seem, the new tax incentives have in fact improved the outlook for businesses in the USA, even if they are derived from borrowed money. And it is possible that comparing button sizes with Kim Jong Un was exactly what was needed to get the job done.

Crypto Sell Off

A massive sell-off gripped the crypto markets yesterday afternoon. What caused it?

An unannounced data adjustment by coinmarketcap.com. CMC is probably the biggest website in the world of crypto. I myself have included their information in these daily updates many times and according to the Wall Street Journal, the website is ranked in the same ballpark as Alibaba.

It seems the decision was taken to exclude data coming from the South Korean exchanges. As we’ve noted several times, the pricing on cryptocurrencies like Bitcoin and Ripple is frequently up to 25% higher in South Korea than it is in the rest of the world. So it seems the CMC felt that their data was being offset by this outlier.

The result of this sudden change appeared to many traders to be a sudden drop in the price without any real reason for it, which in turn prompted an onslaught of panic selling.

The biggest and most noticeable drop was Ripple, which was already extremely inflated over the past few weeks and was due for a major correction. But the selling soon spread to the entire crypto-market. Only Ethereum stood out as a safe haven and managed to stay positive throughout the day.

The good news is that because people figured out pretty quickly that the sell-off was due to a fluke, the prices rebounded pretty quickly. The not so great news is that these sudden movements do seem to be sparking further volatility in the market as well as other side effects.

For example, I noticed an anomaly on Cryptocompare.com. From this graph, it appears as if the US Dollar controlled 100% Bitcoin volumes for a few minutes. This is of course highly improbable and is more likely due to imperfections in the data. They did tweet about some delays on their site at around that time and tried to reach out to them for comment but I guess they’re probably pretty busy at the moment.

Ethereum As a Safe Haven

Over the last year and throughout the current crypto-boom Ether has stood out as the most solid blockchain network not just in price and “market cap” but in the number of transactions, transaction speed, the broad variety of use cases, and many other metrics.

But the biggest use case that has just been announced is not receiving nearly as much media coverage as it should.

It seems that the government of Brazil is about to use the Ethereum public blockchain to streamline their political process. Of course, we haven’t heard any official announcement from the government as of yet but sources say that this is not only likely but necessary to restore confidence in the Brazilian Electoral Process.

We will of course keep our ears to the ground. Obviously, a nationwide government backed ERC20 token in the world’s fifth most populated country could have a big impact on the network and on the infrastructure of global technology as we know it.

Many thanks to Alanis Morissette for the title of today’s update. Even though it’s been a while, feels quite natural to insert her jagged little pill inside my own.

As always, please feel free to reach me directly through eToro or any other social network anytime with any questions, comments, feedback, and resources.

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.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

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 122 rated postsSenior Market Analyst at Etoro.com.




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2 Comments

2 Comments

  1. johnnyquid

    January 9, 2018 at 6:09 pm

    I really appreciate your candid posts and always look forward to what you write. Cheers to the new year Matti.

    • Mati Greenspan

      January 10, 2018 at 12:42 pm

      Thanks a lot Johnny!!

      Very glad to hear you’re enjoying my drivel. 🙂

      Let me know if you need anything further from my end.

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Analysis

Pre-Market: Turkey Back in the Crosshairs Amid Sanction Threats

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The “red-bar-green-bar-madness” continues in global stock markets, as after yesterday’s rally, today the major markets are all in the red once again. Emerging market woes are still feeding the bearish narrative, with the Turkish Lira being back in the center of attention. The currency which enjoyed a three-day relief rally slid lower following threats regarding further retaliatory US sanctions, should turkey keep Pastor Brunson in custody.

USD/TRY, 4-Hour Chart Analysis

The diplomatic troubles only add to the problems of the country, while also helping the rhetoric of the Turkish leadership that focuses on a western “attack” on the nation. With the vague budget plans in mind, the endgame for the Lira still seems ugly, even as at the current levels, strong Turkish companies can offer great bargains for a long-term investment portfolio.

DAX Index, 4-Hour Chart Analysis

The divergence between the US and the rest of the world seems to be getting wider by the day, as the Shanghai Composite closed on a fresh bear market low, while most of Asia is also stuck in short-term downtrends, while Europe is looking wounded too from a technical perspective. The main US indices, on the other hand, are still near their all-time highs, and today’s selloff is also just a small blip in the ongoing uptrend.

S&P 500, 4-Hour Chart Analysis

On a slightly negative note, the Nasdaq has been underperforming the broader market ever since Tencent’s earnings miss on Wednesday, and today, it’s also the worst performing benchmark on Wall Street in the wake of Nvidia’s (NVDA) lackluster guidance that came out yesterday after the closing bell.

Today’ session could still go either way in the US, as the overnight losses are moderate, and yesterday’s trade war optimism could still fuel a recovery in the worlds strongest stock market, even amid the deepening emerging market crisis.

Forex Markets Stable As Dollar Consolidates

Dollar Index (DXY), 4-Hour Chart Analysis

The Dollar is consolidating just below its recent 13-month highs, with the EUR/USD pair rebounding to 1.14, and the broader Dollar index settling down near 96.5. The reserve currency is still clearly in a rising trend, and as the short-term overbought momentum readings are almost cleared, the rally could soon continue, especially if risk-off sentiment remains dominant outside of the US.

Copper Futures, 4-Hour Chart Analysis

Commodities are virtually unchanged before the US open, with gold still hovering just above its 17-month low near the $1185 level, crude oil being stuck near $65 per barrel regarding the WTI contract, while copper trying to hold its ground after the recent key breakdown.

Dr. Copper is still signaling troubles ahead for China and the global economy, as although the commodity outperformed today, it’s clearly below the break-down level near $2.7, and the downtrend will likely continue in the coming weeks.

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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4.6 stars on average, based on 321 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Market Overview

Say No to Currency Contagion

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Hi Everyone,

Once again the deteriorating relationship between the United States and Turkey is leading the news. The Lira is sliding again and it does seem to be bringing some of the other emerging market currencies with it.

As we’ve been saying throughout the week, it’s very possible that the declines in the crypto market earlier this week are due to a stronger US Dollar more than anything else.

As I’ve said before, in order to understand what’s happening in crypto, we must look at what’s happening in the rest of the economy as well. In this case, the US Dollar strength isn’t coming from Turkey, that’s just the catalyst.

The Greenback has been gaining ground since early April on the promise of higher interest rates in a strong economy. So far today, it doesn’t seem that the Lira’s slide is affecting the other major currencies though, nor has it touched crypto for the time being.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Currency Contagion
  • Looking at Metals
  • ETC Backwards

Please note: All data, figures & graphs are valid as of August 17th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Now that we’ve established the underlying theme and why the Dollar’s been surging, it seems that the situation has largely been contained. At the beginning of the week, the strong Dollar was taking out everything in its path. Today, the declines seem to be limited to the emerging markets.

In fact, of the major currencies, the USD is the worst performer today.

So even though the Dollar is rising against the Lira, Peso, and Rand…

… it doesn’t seem to be spilling over into other markets today.

Looking at Metals

Now that we’ve seen one of the biggest declines in the metals markets in recent history, it’s time to examine the long-term charts again.

Frankly, the weakness in metals still doesn’t make much sense to me. As we saw the Dollar strength earlier in the week, it did decline further but the declines seem disproportionate to the gains of the Buck.

Actually, what we’re seeing since 2011 is a precious metals market that’s been trending down.

The question is, has that dynamic come to a head?

The fun thing about the way down is that eventually, you run into a lower barrier at the production cost. Meaning, if the price to mine a metal is higher than the price to sell it, miners will stop mining, which generally tends to drive up the price.

A quick look at the mining costs of all three of the above does seem to indicate that those prices are quite close or even already passed.

A Crypto of its own

It’s good to see the rebound taking hold in the crypto markets despite the emerging currencies continuing to sell-off today. This is a positive indication that crypto is less sensitive to the moves of the Dollar but under extreme circumstances still is susceptible.

One thing that seems to be sticking out like a sore thumb is Ethereum Classic. In this graph, we can see that ETC (white line) has been acting out since mid-June and simply hasn’t been following the rest of the market.

This type of go-it-alone price action is typical when prices are moving up, but we almost never see it when prices are declining.

One of the reasons might be due to the listing of ETC on Coinbase. A new door to this crypto could mean new money flowing in. This could be worth keeping an eye on in the next few days. I’m eager to see how long it will take to fall back in line with the other cryptos or if it increases in market share following the listing.

Wishing you a fantastic weekend!

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.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Best regards,
Mati Greenspan
Senior Market Analyst

Connect with me on….

eToro: @MatiGreenspan | Twitter: @MatiGreenspan | LinkedIn: MatiGreenspan | Facebook:MatiGreenspan

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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Market Overview

Market Update: U.S. Stocks Surge Ahead of China Trade Talks; Bitcoin Eyes Bullish Reversal

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U.S. stocks surged on Thursday after a senior White House official confirmed that trade talks with China will resume later this month, sparking optimism that the world’s two largest superpowers can resolve a lingering tariff dispute.

Stocks Rebound

All of Wall Street’s major indexes put up firm gains on Thursday, with the Dow Jones Industrial Average surging 396.32 points, or 1.6%, to 25,558.73. Shares of Walmart Stores Inc. (WMT) surged more than 9% after reporting its best sales growth in a decade. Boeing Company (BA) and Caterpillar Inc. (CAT) each rose 4.4% and 3.2%, respectively.

The broader S&P 500 Index rose 0.8% to 2,840.69, with all 11 primary sectors reporting gains. The consumer staples category was among the best performers, rising 1.5%. Financials stocks added 1.3% as a whole.

The technology-driven Nasdaq Composite Index finished well off session highs, rising 0.5% to 7,806.52.

A measure of implied volatility known as the CBOE VIX declined on Thursday, partially offsetting the previous day’s sharp climb. The so-called “fear index” fell 9.5% to 13.25 on a scale of 1-100 where 20 represents the historic mean.

U.S.-China Trade Talks Back On

White House economic adviser Larry Kudlow confirmed Thursday that China will send an envoy to Washington later this month to re-start trade negotiations between the two countries. Although the talks are expected to be low-level, they mark important progress in a relationship that has quickly deteriorated.

“The Chinese government, in its totality, must not underestimate President Trump’s toughness and willingness to continue this battle to eliminate tariffs and nontariff barriers and quotas, to stop the theft of intellectual property and to stop the forced transfer of technology,” Kudlow told CNBC’s Squawk Box on Thursday.

U.S. tariffs targeting $50 billion worth of Chinese goods have been implemented so far. President Trump has warned Beijing that the next round of levies will be much larger.

Bitcoin Eyes Breakout

The cryptocurrency market stabilized on Thursday, with bitcoin eyeing a bullish reversal amid reports of a new bitcoin exchange-traded note (ETN) being offered in U.S. brokerage accounts.

According to Bloomberg, the Bitcoin Tracker One ETN will be available to U.S. traders under the ticker symbol CXBTF. The ETN has been publicly traded on Nasdaq Stockholm since 2015. Technically, the ETN will be quoted as a foreign debt in U.S. over-the-counter markets.

Bitcoin’s price reached a high of 6,476.70 on Bitfinex. The leading digital currency would consolidate at $6,380 for a gain of 1.1%. As Hacked reported earlier, BTC has crossed the 50-day moving average and appears poised for further gains amid a sharp rise in momentum.

The broader cryptocurrency market was valued at $206.2 billion Thursday afternoon, with most major assets reporting 24-hour losses. Ethereum Classic was a notable exception; the cryptocurrency spiked 18% after Coinbase Consumer confirmed full support for ETC listings.

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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4.6 stars on average, based on 551 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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