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Let’s Be Optimistic Here

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Today we witness history.

Just about every government and bank on the planet has toyed with the idea of making their own cryptocurrency. Today, of all people and places, Nicolas Maduro will make this a reality in Venezuela.

This new experiment is actually a milestone in blockchain technology and could very well provide an excellent case study for economists for generations to come.

Big thanks to the author of this excellent article for his praise of my analysis…

Wait a second… am I the only one? Maybe I’m being naive…

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Indeed, everybody, I speak with and everything I read about this seems to indicate that this project is doomed to fail. However, the more I think about it, the more I can’t help but be tempted by the possibility that a plagued nation may finally be on the cusp of salvation and a stable economy.

To me, this just doesn’t seem to be a Kodak moment or just another ICO scam. Of course, if it is it won’t take long before it’s completely exposed.

By putting the entire economy on a decentralized blockchain, Nicolas Maduro is actually opening up the books. Every person on the planet will have the option to scrutinize every transaction with indisputable evidence.

Maduro is plagued by a lack of trust from his people. He’s made many efforts to change his image but they have often been met with skepticism. This effort is really a Hail Mary for him and if it doesn’t work there will be consequences.

As with many other ICOs I’ve seen, information on the website isn’t exactly clear or organized. Of course, as with any other ICO the risk element is through the roof and there is a high probability that this will not work. However, that doesn’t always stop alternative investors from participating.

Personally, I will likely put a small amount of Ether on this project. Not because I think the price will go to the moon (this is highly unlikely given that this will be a commodity-backed currency) but because I would like to be part of this fascinating experiment.

Ultimately the success of this project will depend on the people of Venezuela. If they choose to adopt the new currency then it will actually have a fighting chance of survival.

@MatiGreenspan
eToro, Senior Market Analyst

(Reminder: Today’s Webinar will be at 15:00 GMT. If you haven’t registered yet, please do so now: eToro.tw/Webinar)

Today’s Highlights

  • Back in Business
  • $250 Billion Bonds Coming
  • Crypto Momentum Building

Please note: All data, figures & graphs are valid as of February 20th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

China is still on holiday until Thursday, so it will be Europe leading this session. The ECB’s minutes from their last meeting will be released at 12:30 GMT, which should kick things off nicely several hours before Wall Street returns from their long weekend.

During the stocks downtime, we did see a bit of movement in the currency markets. Especially on the US Dollar, which recovered a bit from the extreme lows of last week.

Lots of Bonds

For those of you who have been paying attention to the markets over the last 3 weeks, you’ve probably noticed that the bond market has been holding an increased significance in the global investment narrative.

So it should be noted that about $250 Billion worth of new bond notes will be put auctioned off by the US government over the next three days.

It will be very interesting to see how much appetite the market has for these treasures at this time. Who knows, perhaps oversupply really does spark demand.

Here we can see the US 20 Year Bond, which has fallen sharply since December.

Now for Crypto

We’re well off the lows now. Bitcoin is rallying and finally, we’re seeing some very welcome divergence in the crypto-market.

Since the lows two weeks ago (February 6th), we can see a massive difference in the performance of some of the top cryptocurrencies with Ethereum gaining 51% while Litecoin has rocketed 109%.

This is an excellent sign and one we’ve been waiting for.

However, the main downward trendline (purple) on Bitcoin has not yet been broken. If we do see that broken soon, there’s a fair chance the next leg could take us above $15,000.

As always, please feel free to send me any questions, comments, feedback, or resources. I’m always happy to receive them. 🙂

Have an amazing day.

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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9 Comments

9 Comments

  1. elcloche

    February 20, 2018 at 2:11 pm

    Hi Mati,

    I’m going to star saying that I’m Venezuelan.

    The people in power are thugs, criminals, scam artists, they have kidnaped every institution in the country and has been declared a dictatorship by many countrys.

    Since 1999 when Chavez took over, they have only looted the country for personal gains.

    They are pulling this out just to keep robbing people because USA block them from getting new or negotiate their debt .

    They are not there to “try to make things better for the people”, people in Venezuela are starving and they do not care.

    You wrote “However, the more I think about it, the more I can’t help but be tempted by the possibility that a plagued nation may finally be on the cusp of salvation and a stable economy.”, but I’m sorry to disappoint you by telling you that they are going to take all your money (and anyone’s who invest in it) and will waste it all up, and then make another emission and keep it up until they bleed everybody’s trust and money (just as they did with their national bonds, that they just missed their payments by the way).

    I’m not saying it might not be good to buy some coins and sell them for some gain later as some people did with the bonds (maybe the Russian and Chinese government buys it too), but beware that at the end somebody will get ripped off, when the coin tumbles and the Venezuelan Government refuses to pay with the reserves (there is no enforceability whatsoever compared to the bonds).

    Maybe Russia and China will be the new owners of the Venezuelan’s Oil, who knows?.

    • Mati Greenspan

      February 20, 2018 at 2:18 pm

      Thanks a lot for the unique insight elcloche. It’s highly appreciated.

      Yes, you’re probably right. It is very likely to be a scam, but if it is, it will be exposed very quickly. Over many years in the markets, I’ve learned that in many cases it pays to be an optimist.

      • elcloche

        February 20, 2018 at 2:46 pm

        As investor/trader yes, you could be optimistic.

        As for me and my country, I just see more debt and robbery on the long run. We are just doomed while this f*ers have the power.

        • Mati Greenspan

          February 20, 2018 at 2:48 pm

          In fact, as an investor I don’t feel there is potential here. Though the downside risk is astronomical there is very little potential for upside. If the project works well, the price of the coin should be stable, so no moon potential for the Petro.

          My optimism is purely to see the robbery exposed by an open-book system.

  2. westgarthwines

    February 20, 2018 at 5:35 pm

    My Venezuelan friend confirmed elcloche’s comments.

    He also added that he simply doesn’t trust their technical, financial or management capabilities. This is the same group of individuals that has basically destroyed the oil production and associated with the colombian drug trafficking FARC to stay afloat. The US is also toying with the idea of cutting their oil via sanctions due to their dictatorial practices.

    Venezuelan oil production: https://www.bloomberg.com/gadfly/articles/2018-01-18/venezuela-s-oil-production-collapse-bad-news-worse-news

  3. jhmblvd

    February 20, 2018 at 6:02 pm

    I think it’s a great idea. It could have impact we don’t expect. It should certainly raise awareness about how blockchain can provide a transparent system. I know little about the situation in the country except that it’s bad and people are hurting. Governments have power, power must be checked and when it’s not checked people suffer. I don’t see much investment potential here, but who knows. I may buy in a bit just to be part of the story and in support of blockchain.

  4. douglash

    February 20, 2018 at 9:23 pm

    Petro is just an effort by the Maduro regime to hold out a bit longer and wring more money from their people and country. They are thoroughly corrupt. They laugh at their “investors”. Anyone buying the Petro is helping prop up this cruel dictatorship.

    Ask yourself, if you support petro, where would you draw the line? SyriaCoin? NorthKoreaCoin? These totalitarian regimes that murder their own people will soon launch crypto projects to fund themselves and evade economic sanctions.

    Crypto is supposed to be the people’s money. What a cruel reversal to let it prop up murderers and despots. Please revise your article, since few will read the comments. Your optimism is misplaced here. Any investment gains from petro will be blood money.

    • Mati Greenspan

      February 20, 2018 at 9:30 pm

      Thanks Douglash. My point here is that if this is a blockchain project it carries the possibility of making the economy transparent. That is all.

      I hope it was clear that this is not a great investment idea.

      • douglash

        February 21, 2018 at 9:39 am

        But you still seem to miss the point. Who cares if it is potentially profitable or not, this is quite clearly blood money. Any money contributed to petro helps keep this murderous, illegitimate regime in power and allows it to bypass sanctions and continue to starve its own people.

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Market Overview

Market Update: Stocks Retreat as Trade Risks Linger; Oil Markets Turn to OPEC

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U.S. stocks drifted lower Monday, as lingering trade concerns between China and the United States curbed investor appetite for riskier assets.

Stocks Decline

Wall Street’s benchmark indexes headed lower in early-week trading, with the Dow Jones Industrial Average recording its fourth straight decline. Dow industrials settled down 102.94 points, or 0.4%, at 24,987.54.

The broader S&P 500 Index declined 0.2% to close at 2,773.86. Seven of 11 primary sectors contributed to the declines, led by a nearly 2% retreat for telecommunication services. Shares of healthcare companies and consumer staples fell more than 1% on average.

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Meanwhile, the technology-driven Nasdaq Composite Index consolidated at 7,747.02, where it was little changed compared with the previous close.

The CBOE Volatility Index, also known as the VIX, rose on Monday following back-to-back declines. The gauge of investor fear edged up 2.8% to 12.32.

OPEC in the Spotlight

The Organization of the Petroleum Exporting Countries (OPEC) will hold its biannual meeting in Vienna, Austria this week, where members are expected to boost production following the yearlong rally in crude prices.

The Saudi-led cartel is reportedly considering an output boost of between 300,000 and 600,000 barrels per day in an effort to maintain market share. However, Iran, Iraq and Venezuela are expected to veto any decision to raise production levels.

“If the Kingdom of Saudi Arabia and Russia want to increase production, this requires unanimity. If the two want to act alone, that’s a breach of the cooperation agreement,” Iran’s OPEC representative told Bloomberg over the weekend.

The Saudis and Russians last month declared their intent to boost output levels at a meeting of energy ministers in Saint Petersburg.

OPEC’s upcoming meeting is scheduled June 22.

Cryptocurrencies Recover Mildly in Afternoon Trade

After flat-lining for most of Monday, cryptocurrency prices edged higher in the afternoon with bitcoin and the ten major altcoins putting up gains.

The cryptocurrency market added roughly $13 billion in value in just over an hour as trading activity picked up across the major exchanges. At the time of writing, the total market for virtual currencies was valued at around $288 billion.

Trading volumes are back up to $12 billion after plummeting to $9.5 billion on Sunday. That marked the lowest turnover in more than two months.

Bitcoin clawed back above the $6,700 handle after falling to the low $6,300 range earlier in the day. Ethereum, the world’s second-largest cryptocurrency by market cap, was back around $520.

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 455 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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Analysis

Europe Drags Stocks Lower while Trade War Fears Return

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The risk-off shift of Friday continued today throughout the major financial markets, with the German political standoff on migration weighing on investors sentiment as well, besides the emerging market troubles, and the trade skirmish between the US and China. All of the major US indices opened the week lower, with Europe clearly underperforming and Asian equities also being under pressure.

As Chinese announced retaliatory tariffs are after last week’s US steps the week could bring upon another round of measures by the Trump administration and with that, the escalation of the trade tensions is very much a possibility again.

S&P 500 Futures, 4-Hour Chart Analysis

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Despite today’s losses, the leading indices, especially the Nasdaq and the small-cap Russell 2000, are still just a tad below their all-time highs, while the relatively weak benchmarks are 5-10% below their yearly highs. The balanced S&P 500 is also shy of its all-time, but the short-term uptrend remains intact, and incredibly enough, the benchmark still didn’t leave the range of the early-February crash which unfolded in just 3 days.

Euros Stoxx 50, 4-Hour Chart Analysis

The divergence between the leaders and the rest of the global market, continues to point to the fragility of the rally, and as emerging market currencies are sill clearly in trouble, we don’t expect a broad march to new highs in the coming weeks and we remain defensive towards global risk assets.

Commodities Smacked Lower amid Risk-Off Shift

DXY (Dollar Index), 4-Hour Chart Analysis

Currencies settled down after their crazy central bank loaded week, with the Dollar pulling back slightly off its highs against the Euro and the Yen, while holding its ground compared to the other majors. The Dollar index broke out of the consolidation pattern as we expected and it is now challenging the multi-month highs set in May.

USD/CAD, 4-Hour Chart Analysis

The Dollar is now trading at a 12-month high against the Canadian Dollar, as the pair left behind the 1.30 level as we expected, while the Aussie is also close to hitting levels not seen since last summer, as Friday’s drop in commodities put pressure on the already weak AUD.

WTI Crude Oil, 4-Hour Chart Analysis

Commodity traders are licking their wounds after Friday’s rout, although crude oil staged an impressive rebound off the two-month low hit in early trading below $64 per barrel with regards to the WTI contract.

That said, the short-term trend is clearly negative, and     new lows are likely in the coming days, although the much-awaited OPEC meeting later on this week could cause wild swings in the key commodity, with speculation already being rampant about the possible output change by the cartel.

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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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4.6 stars on average, based on 276 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

Let’s Break the Internet

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Hi Everyone,

Cardano is by far the most philosophical of all the blockchains in the crypto-space. Its protocol has been described as more of a batch of computer science principles, than a product with a roadmap.

Like Ethereum, NEO, and EOS, Cardano is a platform for creating decentralized applications. It has some really smart people backing its development too, which is one of the reasons this brand new product was able to find it’s way into the top 10 cryptos by market cap.

As such, eToro has now opened up real-time trading on Cardano’s ADA token. After reaching a high of $0.96 at the peak in January, the tokens are now trading just under $0.17.

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To add ADA to your investment profile, please click here: https://www.etoro.com/markets/ada

Remember, cryptocurrencies are very risky so please trade responsibly and diversify yourself with other markets as well.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Trade War Continues
  • Sudden Dollar Surge
  • The BS Report on Cryptocurrencies

Please note: All data, figures & graphs are valid as of June 18th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Want to wish a very happy Dragon Boat Festival to all our clients and colleagues in China.

On Friday, the USA and China added to market tensions with additional tit-for-tat trade tariffs. President Trump struck first by announcing $50 billion worth of new tariff’s on imports from China.

The response from China was swift, immediately matching the US measure-for-measure. The response came within just a couple of hours as the Chinese finance ministry barely allowed the news of the initial tariff’s to penetrate before announcing their retaliation.

Thus, the Chinese counter-measures dominated the news cycle, which will no doubt be viewed as a successful show of strength. In fact, the original Email that came to my inbox from the Financial Times with the headline…

…actually now leads to an article about the retaliatory tariffs.

The Chinese playbook has become quite clear in this case. Perhaps too clear.

An escalation of $50 billion on either side isn’t much, but the speed and scale of the Chinese response may have just tipped Beijing’s hand.

In any case, the measures didn’t seem to have had much effect on the stock markets. In this short-term graph of the Dow Jones, we can see that stocks were already on their way down before the 3.5 hour spat (purple circle).

If we zoom out to the long-term graph, we can see how insignificant the latest progression has actually been. Same purple circle.

As far as markets are concerned, the entire trade war saga is rather like the turbulence on an airplane. It might scare off a few of the newbies but for any seasoned flyer, it’s just time to sip a drink and go back to sleep.

They will, of course, wake up rather suddenly, only if captain Trump decides to do any drastic evasive maneuvers.

What Happened to Gold?

Though the stock markets were rather unaffected by the new trade war progressions, the news may have had some effect on the commodities.

Here we can see gold and crude oil reacting to the updates and plunging rather noticeably from the initial announcement and until well after China’s retaliation.

Oil is also reacting to updates from OPEC and Russia who are supposed to meet this Friday. The expected results of that meeting seemed to be rather clear at the end of last week but this morning there’s a bit of contention as several OPEC members are now opposing the idea of increasing production.

Gold on the other hand, is really confusing. Increased geopolitical uncertainty usually makes gold go up, so it’s kind of strange to see the opposite reaction from Friday’s news.

So if anyone can help me understand why it went down, I’d sure appreciate it.

The Crypto BS Report

Last week we spoke about the incredible update from the SEC where they finally clarified that Ethereum is in fact not considered a security. Though some in the community pointed out that there’s still a lot of uncertainty in the space, with the exception of Bitcoin maximalists, most people seem very happy about the recent update.

This morning there’s a fresh report out, this time from the Bank of International Settlements (BIS). This institution has never been very crypto-friendly and thought the report does highlight some of the positive qualities of cryptocurrencies, the key takeaways seem rather negative.

It pays to point out in this case that the BIS is a key player in the fiat ecosystem and as we saw with Jamie Dimon, Warren Buffet, and Bill Gates would have the most to lose should Bitcoin gain more prominence.

Their concerns over the consumption of electricity used by Bitcoin have been long ago debunked, while the claim that blockchain technology could overload and “bring the internet to a halt” feels sensationalist.

The analysis used to support this hypothesis assumes exponential growth in usage and zero infrastructure growth. It would be like saying in the 90’s that if all data were transferred over the internet, it would not be able to handle the traffic.

Of course, we know that by the time Kim Kardashian published her famous pics on PaperMag, there was more than enough bandwidth to handle all the likes and shares.

Not only is the infrastructure of blockchain technology now being built at a rapid pace, but the groundwork for the next level of innovation is already well underway as…

Let’s have an awesome day!

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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