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Isn’t it Ironic?

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

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“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

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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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4.6 stars on average, based on 85 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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Market Overview

Market Update: Dow Industrials Surge as Risk of Trade War Fades

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U.S. stocks advanced sharply on Monday, with the Dow adding nearly 300 points amid signs that the United States and China would resolve their ongoing trade dispute.

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Stocks Surge

All of Wall Street’s major indexes booked solid gains at the start of the week. The Dow Jones Industrial Average jumped 298.27 points, or 1.2%, to 25,013.36. That was the index’s first settlement above 25,000 in over two months.

All but two of the index’s 30 members finished higher, with Boeing Company (BA) and General Electric Co (GE) leading the market higher.

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The broader S&P 500 Index gained 0.7% to close at 27,33.01. Ten of 11 primary sectors contributed to the positive result, with industrials and telecommunication services leading the rally.

The technology-heavy Nasdaq Composite Index climbed 0.5% to close at 7,394.04.

A measure of implied volatility known as the CBOE VIX edged slightly lower on Monday, signifying underlying calm on Wall Street. The so-called “fear index” closed at 13.08 on a scale of 1-100 where 20 represents the historic mean.

U..S.-China Trade Negotiations

China has agreed to “substantially” reduce its trade surplus with the United States, according to an official statement released by the White House on Saturday.

“China will significantly increase purchases of U.S. goods and services,” the statement read while adding that specific details would be worked out at a later date.

White House economic adviser Larry Kudlow told reporters that Beijing had agreed to reduce the deficit by “at least” $200 billion – a number that China quickly denied.

The U.S. trade deficit with the Chinese stood at $375 billion in 2017. However, that’s only the tip of the iceberg in terms of the real cost of trade with the world’s second-largest economy. The Trump administration believes China’s theft of U.S. intellectual property costs the economy between $225 billion and $600 billion per year.

Cryptocurrencies Ebb Lower

Digital currency prices drifted lower Monday after posting strong gains overnight, as bitcoin and the major altcoins shed more than $10 billion in collective market cap.

At the time of writing, the total cryptocurrency market was valued at $381 billion, according to CoinMarketCap. The market was worth as much as $393 billion earlier in the day.

Trading volumes continued to hover below $17 billion, which is roughly 20% lower than the end of last week.

Bitcoin declined 1.5% to trade at $8,402. Prices bottomed near $8,365 earlier in the session.

Ethereum fell 3.3% to $697, while Ripple XRP shed nearly 4% to trade at $0.681.

Bitcoin cash fell nearly 5% to $1,236, extending its post-fork slump.

Tron was the only positive performer in the top-ten, with the value of TRX rising 4.2% to $0.081.

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 406 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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Market Overview

Stocks in a Sea of Green, Buoyed by China

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Stocks started the week on a strong footing, with all three major US indices — the Dow, Nasdaq and S&P 500 — all trading in the green. China is largely to thank amid a deal that was reached over the weekend with the United States to suspend a trade war that was threatening to unfold. The Dow advance more than 300 points, with the index revisiting March highs and trading comfortably above the $25,000 threshold, while the Nasdaq and S&P 500 were each up nearly 1%.

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US Treasury Secretary Steven Mnuchin set the stage for gains over the weekend, when he disclosed that the trade war was “on hold” and that the United States would refrain from assigning tariffs to Beijing and vice versa amid productive discussions. The world’s two largest economies were at stake, with the United States and China poised to attach tariffs of $150 billion and $50 billion on China and US imports, respectively.

There was early confusion when a US trade representative seemingly countered the progress, but by Monday morning Secretary Mnuchin suggested that while President Trump could change his mind, a trade war is off the table — at least for now. The somewhat mealy-mouthed response may suggest that the market rally could have more steam left once any and all signs of an impending trade war are put to rest.

Further concerns were resolved in a tweet –

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‘All Is Fair in Love and War’

Putting the kibosh on a brewing trade war sent many sectors higher, from high-tech to agriculture including farm equipment maker Caterpillar, which advanced 4% on the development that President Trump tweeted about above.

American farmers were at risk of taking the brunt of a US/China trade war, given that China had threatened to place tariffs on ag products like soybeans, hogs and pork. In addition to Caterpillar, Deere & Co, which is behind the famous green John Deere tractors, climbed 3% higher.

But the trade reversal took the wind out of the sails of steel stocks, which would have benefitted greatly from the double-digit percentage tariffs that President Trump was prepared to attach on China’s steel imports. US Steel was hit especially hard, shedding nearly 5% early in Monday’s trading session. Nucor Corp, another steel play, fell about 1%. The price of steel the commodity had rallied 5% since President Trump’s previous tariff announcement in March.

The agreement between the U.S. and China remains tentative. As US Commerce Secretary Wilbur Ross put it, it was a “40,000 feet” deal whose details are still being ironed out. Larry Kudlow, President Trump’s economic advisor, also did what he could to dampen the mood, telling CNBC that the tariffs remain a tool in the arsenal of trade talks. Clearly, traders chose to focus on Mnuchin’s optimism.

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 6 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. Full disclosure, she's invested in bitcoin.




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Market Overview

Efficiency in Risk

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Crypto critics and skeptics often like to point out the high use of energy that is consumed by the Bitcoin network. Most proponents, including myself, regularly refute these claims as simply being the cost of doing business.

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The video I’m about to show you isn’t new but it’s something that I saw for the first time today and it blew my mind.

Andreas Antonopoulos is arguably one of Bitcoin’s most recognized names. In this clip, Andreas responds to the question of energy consumption in a rather unique way.

Please watch the video here now. (5:50)

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Not only does he make a comparison between the energy consumption of traditional means of payment but he also explains that the energy arbitrage that is being committed by the Bitcoin network is arguably the most efficient use of surplus energy that might otherwise go to waste.

No doubt, if more and more cryptocurrencies tried to adopt the Proof of Work, mining protocol it could be wasteful, but Andreas believes that at least one is, in fact, necessary in order to maintain the exceptional security of all cryptocurrencies.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Trade War On Hold
  • Efficiency in Oil
  • Ready for Risk

Please note: All data, figures & graphs are valid as of May 21st. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

The US Secretary of the Treasury Steven Mnuchin has announced over the weekend that the trade war between the United States and China is officially on hold.

Speaking on Fox News Sunday, Mnuchin outlined the framework under which the de-escalation is taking place as well as explaining what happened with ZTE and why. Arguably, not a very forthcoming explanation, but that’s probably as good as we’re going to get.

Markets, on the other hand, do not seem to be on hold. Nor are they showing any real signs of relaxation following Mnuchin’s announcement. The most notable move, of course, is the US Dollar, which is flying this morning.

The purple circle here is the weekend gap…

Crude Oil’s Reaction

Strangely enough, crude oil is burning ever higher on the announcement. I can’t personally come up with any fundamental reasons why the Secretary’s announcement should have a positive effect on the price of oil, and that’s after reading several articles that try to make that very claim.

 

If anything, the stronger USD should serve to send the sticky stuff lower. Looking at the price, it becomes a bit more clear. The high of $72 per barrel was actually triggered last Thursday (yellow circle). The gap from the weekend (purple circle) was so weak that we could consider the Trade War news to have had a neutral effect.

Keep in mind that today is Whit Monday in the EU and Victoria Day in Canada, so volumes could be light throughout the day.

Cryptos in Green

The weekend has gone well in crypto-land with all of the 10 tokens listed on eToro rising.

Looking at the landscape, we can easily see that cryptotraders are piling on the risk again. This is apparent by the fact that the most experimental of the bunch, EOS and NEO are outperforming the rest by a wide margin. Whereas two of the most established coins, Litecoin and Dash, have underperformed.

This type of irrational behavior is unfortunately rather typical of financial markets. Both EOS and NEO are far from operating at full capacity and investors see this as an opportunity to get in before “the revolution” takes place. When in fact, it would make more sense to be looking at networks that have already stood the test of time and are in fact growing in their adoption and use.

No matter. the risk/reward slider doesn’t lie. Those who take on greater risks might end up being rewarded for them but if the respective projects don’t end up materializing, prices could come crashing as well. Whereas, the more established networks are less susceptible to those type of wild gyrations.

Risk Efficiency

Interestingly enough, it seems that a similar dynamic is playing out in the traditional markets as well. Here we can see three different ETFs that cover different parts of the market.

White = Russel 2000 – Smallcap Stocks
Blue = S&P Midcap Stocks
Green = S&P Largecap Stocks

Notice how investors are seeking out the extra risk as they speculate that the smaller companies will grow faster than the larger ones.

Wise investors will no doubt keep a diversified portfolio. One that holds a very small amount of ultra-high-risk assets, and includes plenty of different types of markets from crypto to stocks to ETFs and everything else.

Let’s have 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.

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

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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4.6 stars on average, based on 85 rated postsSenior Market Analyst at Etoro.com.




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