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Market Overview

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…

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

Switzerland Makes It Easier for Blockchain Companies to Open Bank Accounts

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Switzerland is making it easier for blockchain startups to access traditional financial services after several projects decided to leave the country over strict banking laws. The new guidelines are part of a wider initiative to help Switzerland maintain its status as the epicenter of cryptocurrency innovation.

SBA Issues New Guidelines

On Friday, the Swiss Bankers Association (SBA) announced new guidelines for financial institutions looking to do business with blockchain startups. The rules will make it easier for banks to service the blockchain ecosystem and for the companies themselves to set up bank accounts in the country.

“We believe that with these guidelines, we’ll be able to establish a basis for discussion between banks and innovative startups, making the dialogue simpler and facilitating the opening of accounts,” SBA strategic adviser Adrian Schatzmann said in a news conference, as quoted by Reuters.

The new measures provide “more clarity not only to banks, but also to startups,” said Oliver Bussmann, head of the Crypto Valley Association.

Although blockchain companies are not barred from opening up Swiss bank accounts, existing regulations make it difficult for them to quality for corporate banking services. Swiss banks have been hesitant to serve the growing sector over fears of violating know-your-customer (KYC) and anti-money laundering (AML) obligations.

Banks are especially concerned over initial coin offerings (ICOs), the controversial crowdfunding system that allows companies to raise millions of dollars by issuing tokens. Several ICOs have raised funds without conducting AML checks on their investors. Banks that service such firms would be at risk of falling out of line with existing AML guidelines.

Switzerland’s fourth largest bank,  Zuercher Kantonalbank (ZKB), has already closed the accounts of more than 20 blockchain firms. According to Reuters, only a small handful of the country’s 250 banks ever allowed blockchain companies to deposit the cash equivalent of their token raises.

Under the new guidelines, banks will have the opportunity to distinguish between blockchain firms that carry out ICOs and those that do not. For token projects, KYC and AML guidelines are still enforced.

Crypto Valley Switzerland

Switzerland quickly emerged as a leading hub for the blockchain industry after a government-sponsored institution launched Crypto Valley, an ecosystem based in Zurich and Zug that incubates new cryptocurrency startups. Hacked shined the spotlight on Crypto Valley last October after several dozen high-profile firms set up shop in the region.  Crypto Valley is now home to roughly 530 blockchain companies.

Despite offering a more liberal environment for cryptocurrency startups, Switzerland clamped down on the market in February by issuing more stringent ICO guidelines. This seems to have triggered a mass exodus of cryptocurrency startups, which have since made their way to Liechtenstein, Gibraltar and Cayman Islands. The new rules categorized ICOs into three separate buckets: payment, utility and asset.

SBA is hoping to stem the outflow of blockchain projects by giving them more avenues to traditional banking services. However, with several countries liberalizing their blockchain laws, it remains to seen whether Crypto Valley can maintain its leadership pace.

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 610 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

Stocks Pull Back From Highs as Pound Plunges

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After yesterday’s record-breaking session, US stocks once again broadly opened at all-time highs, even as the momentum of the global rally waned. Chinese stocks kick-started the day by extending their relief rally off their 4-year lows and Europe also ticked higher, although the major indices couldn’t hold on to their early gains. Since the US open stocks are drifting lower, but with no major events scheduled for today, a calm afternoon session is likely on Wall Street.

GBP/USD, 4-Hour Chart Analysis

The slight weakness came on the heels of the weaker than expected European flash Manufacturing and Services PMIs, while Theresa May’s Brexit ultimatum also weighed on local equities. The Great British Pound fell sharply on the news too, erasing yesterday’s lofty gains and briefly getting close to the 1.30 level, as the Dollar rallied across the board.

NASDAQ 100 Futures, 4-Hour Chart Analysis

The Nasdaq has been lagging the Dow and the S&P 500 from a short-term perspective and the tech benchmark is once again leading the way lower today. The worse than expected guidance by Micron (MU) from yesterday is weighing on the segment and the market-leading tech giants are also weaker than average.

10-year US Treasury Yield, 4-Hour Chart Analysis

All eyes are still on the bond market, as Treasury yields are near multi-year highs concerning almost all maturities, and with the 10-year yield being very close to signal a trend change in the multi-decade structural downtrend.

While next week’s rate hike by the Fed is near certain, the outlook for the next year will likely be crucial, and given the positive US economic trends and the trade wars’ contained impact, the market’s rate hike expectations are rising across the curve.

Futures and Option Expiries Lead to Choppy Trading

Today is an important day for futures and options traders, as the quarterly contracts are expiring across asset classes, and that has a huge effect on stock and commodity markets as well, with high volumes and volatile trading especially around the key strike prices. Strong trends are rare on these sessions and day-traders should be cautious of sudden volatile spikes in even the most traded assets.

Copper, 4-Hour Chart Analysis

Commodities already experienced volatile swings throughout the day, with especially gold being tossed around the $1200 level that has been in the center of attention in the past weeks. Shorts in copper have been squeezed heavily before the end of the week, with the crucial metal surging above key support with the rally in Chinese stocks, while WTI crude oil retreated from a more than two-month high above the $71 per barrel level as the Dollar rallied.

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 351 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

Rapid Delays Bring a Blessing

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Hi Everyone,

For what seems like the first time in forever, crypto prices are on the rise again.

There was some excitement on social media yesterday as the SEC took the expected step to delay the decision on a bitcoin backed ETF.

The decision to delay is actually coming 10 days ahead of schedule, which moves the entire timeframe forward a bit. The next deadline is December 29th, right between Christmas and New Year, which means if they delay again before then, we could be looking at a final decision date of mid-February rather than the second week of March, as was previously expected.

Cryptotrading on Wall Street now seems one giant step closer.

In other news, Brazil’s largest broker has finally buckled to the pressure and will now be offering crypto-assets. This comes as around 3 million Brazilians are holding Bitcoin, compared to just 600,000 who invest in stocks.

Cryptocurrencies are rapidly proving their place as the preferred asset class of the millennial generation.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Enter Weaker Dollar
  • Dash on Weed
  • XRP Flys with the Crows

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

Traditional Markets

The emerging market currency rout that began with the Turkish Lira in early August seems to have lost moment. The US Dollar now seems to have lost momentum.

The trend comes as yields on the US treasury bonds continue to grind higher. Here we can see the US 10-year yield over the last month. Remember, higher yields were largely considered to be the catalyst for the market dip in early February.

However, the above dynamic doesn’t seem to be hampering the stocks at all. Both the Dow Jones and the SPX500 have marked fresh all-time highs yesterday and Asian markets are following their lead this morning.

The Dollar weakness is also allowing some much-needed breathing room for the precious metals, which have been battered badly over the last few weeks.

Here we can see the Platinum and Silver over the last six months suffering from Dollar strength and the comeback over the last few days.

Digital Cash for Marijuana

In light of the recent movements in cannabis-related stocks and the launch of the new eToro @CannabisCare CopyPortfolio, we’ve been talking a lot about the budding marijuana industry and the possible investment opportunities.

Here we can see a map of all the states in the USA and their legalization status. As we can see, the map is now quite green but there’s still a lot more room for growth if other states join the trend and decide to legalize it.

The issue is the Cannabis has yet to be legalized at the federal level in the US making it difficult for vendors and entrepreneurs to open a bank account. Therefore, despite its new legal status in many places the industry is still heavily reliant on cash.

Enter Dash…

Obviously, cash has its pitfalls and no self-respecting businessman really wants to be walking around with bundles of bills. This is why the Dash foundation in partnership with the Alt Thirty Six payment processor aim to make Dash Cryptocurrency the go-to medium of exchange for the cannabis industry.

We know that Dash has been making strong headway in places like Venezuela. To me, it just seems like this reigning crypto industry leader has their hands in several markets with plenty room for growth.

XRP & Everything After

The recent crypto rally can very much be seen in the context of the weakening Dollar trend highlighted above. As we’ve been saying, the reverse correlation between the USD and the crypto market has been striking over the last few months, so it’s no surprise to the latest rally in crypto assets coming on the back of a weaker Greenback.

In this chart, we can see the US Dollar index in purple and Bitcoin in blue.

The surge in XRP however, cannot be explained by this phenomenon though. A surge of nearly 80% in less than four days needs to have a deeper explanation.

Given the nature of these rapid movements, my gut tells me these fluctuations are more than just speculation. Nevertheless, the main chatter surrounding this move is all about the launch of the xRapid software next month, which aims to use XRP for international settlements. As well as Ripple’s Swell Conference on October 1st and 2nd, which will host Bill Clinton as the keynote speaker and bring in the Counting Crows for entertainment.

Wishing you an amazing weekend 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

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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