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Market Overview

More Powerful than an Emperor

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The elections in the Czech Republic have gone largely as expected but things are far from over. Andrej Babis is also known locally as the ‘Czech Trump’ not only because of his personal wealth but also because of his Czech First anti-establishment populist views.

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Unlike in the USA however, winning an election in a Parliamentary system doesn’t necessarily guarantee control. Babis’s ANO (Yes) party has won 29% of the vote so they will need to partner up with one or more of the other eight parties in order to form a majority coalition. The task will not be simple, especially since Babis has already stated that he will not work with some of the parties and vice versa.

These type of negotiations can sometimes go on for quite a while. For example, the Netherlands is only just getting their government in place this week after a deadlock elections more than seven months ago. Over in Germany, Chancellor Angela Merkel isn’t expected to settle on a Government until some time next year.

In Japan, on the other hand, Shinzo Abe has won a two-thirds majority so will have no need for wheeling and dealing. He now holds more power than the emperor himself and is free to continue on his stated mission to aggressively devalue the Yen.

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@MatiGreenspan
eToro, Senior Market Analyst

 

Please note: All data, figures & graphs are valid as of October 23rd. All trading carries risk. Only risk capital you can afford to lose.

Market Overview

After the bloody referendum in the Spanish region of Catalonia, things have not died down. In fact, tensions have continued to heat up. Prime Minister Mariano Rajoy has now stated that he will soon strip the Catalonian Government of their power and hold a new election to replace the separatist local government of Carles Puigdemont.

The ball is now in the Catalan’s court. Puigdemont has several options. He can himself call for a snap election in Catalonia or he can simply accept the one that Rajoy has forced on him. A third option would be to make a more aggressive push for independence claiming that Spain has just again violated their rights.

No matter what he decides to do it is unlikely to bring calm as the doors for negotiation are now shut. The EURUSD is sinking this morning and now holding tight to temporary support (yellow) at 1.1750, if it passes there it could likely meet key resistance (red) at 1.1650.

More Powerful ECB

Of course, all the political updates we’ve mentioned above are minuscule when compared to the power of the European Central Bank.

The ECB’s monthly injections of €60 Billion per month have been propping up the stock markets and keeping the Euro down for the past three years. This Thursday, the ECB is largely expected to give some sort of guidance on the future of their massive stimulus package.

We know that they have been talking internally about reducing the injections to €30 Billion as of January and to keep the program going at least until September. In normal market conditions, it’s easy for them to leak these type of internal discussions to see their effect on the markets. But with all of the political uncertainty, their usual tactics may be less effective.

Here we can see the German Dax Index hesitating near it’s all time highest levels. Is the hesitation due to governmental negotiations or the rumors of less stimulus going forward?

Bitcoin ATH

Celebrations could be seen across the eToro network over the weekend as Bitcoin reached another all time record high of more than $6,000 per coin. The overall market cap (price per coin times number of coins in circulation) has for the first time surpassed $100 Billion before pulling back.

This very significant milestone clearly cements the role of bitcoin in the future of our global economy. As more people learn about the technology and how to use it, the more useful and valuable it will become.

For those that say “blockchain without bitcoin” just take a look at this chart showing bitcoin’s dominance over all the other cryptocurrencies in circulation…

The bitcoin network is all about consensus and at this time, the consensus is all about bitcoin.

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.

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 88 rated postsSenior Market Analyst at Etoro.com.




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Market Overview

Finding a Golden Opportunity

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Hi Everyone,

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Yet another attack struck the cryptocurrency market recently, this one claiming around $18 million from the Bitcoin Gold network.

The innovation of blockchain is that transactions are secured by utilizing the power of the network. The second major fork of Bitcoin, known as Bitcoin Gold or (BTG), is not on the eToro platform at the moment, precisely because the network is simply not big enough at this time.

Both BTG and Bitcoin Cash (BCH) were created to give Bitcoin a larger block size, an idea that the Bitcoin Core community rejected. With all the thousands of cryptocurrencies out there, the question arises, how many bitcoin forks do we actually need?

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In this video from earlier this week, you can see the backers of Bitcoin Gold arguing with a well-known backer of BCH Craig Wright. The video ends with the BTG spokesperson saying to Craig “goodbye Fake-Toshi” a disapproving nickname that he received for previously claiming to be the real Satoshi Nakamoto.

Even though BTG seemed to come away with the upper hand in the video, it’s losing against BCH on the ground.

In the graph below, we can see the total mining power (hashrate) of all three Bitcoin tokens mentioned above (BTC, BCH, and BTG). As you can see, BTG is simply a flat line at the bottom, indicating that there are very few miners actually supporting the network.

The distinct lack of miners left the network vulnerable to attack and the hackers were easily able to add enough hashrate to write the blocks however they like.

It should be noted that even though BTC enjoys the most hashrate by far, BCH actually has marginally lower fees. This is why people keep saying that Bitcoin is moving to be more of a store of value.

So if payments is the question, we need to look at the top three contenders. In this case that would be Bitcoin Cash, Litecoin, and Dash. As you can see, in the last few months, the competition has been getting tight, with all three coins charging less than 20 cents per transaction.

Ultimately, the natural way of the market is to push out the weakest contenders. For now, the payments market is dominated by Visa & MasterCard, who at the moment are charging vendors about 2.5% to 3% per transaction.

As the average credit card transaction is about $80, the average fee comes out to approximately $2.20, which is more than 5 times higher than Bitcoin itself.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Trump Pulls Out
  • Happy GDPR Day
  • Vitalik is Tweeting again!

Please note: All data, figures & graphs are valid as of May 25th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

A big part of my job and the job of other financial bloggers is to try and gauge the impact of any given news event on actual market prices. When doing this, it’s important to always remember that correlation does not equal causation.

A perfect example would be this news that came out yesterday…

The purple circle on this chart shows the exact time that the news broke on Bloomberg.

As is clear from the chart, the market has been falling for several days, and though there was a spike down shortly after the announcement, it would be difficult to prove that the news caused the movement.

On the other hand, there was an event yesterday that I believe did have a direct and measurable impact on the markets. Here we can see Donald Trump’s letter to Kim Jong Un announcing that he was calling off their June 12th Singapore meeting.

For your convenience, I’ve pinpointed the exact time that the letter went viral on social media on this chart of gold.

Even though the price spiked before the announcement it does seem that this little event was able to give it the strength to push the market above the $1,300 psychological barrier.

The news also seems to have had an impact on the global stock indices as depicted here.

Final Fantasy

With all the news and simultaneous stories coming out right now, it’s difficult to pinpoint exactly which ones translate into investment opportunities.

For example, the Brexit saga in the UK right now doesn’t seem to have changed much for the Pound. Yes, the British Pound sold off against the US Dollar, but the USD is getting stronger across the board. If we look at the Pound’s strength against the Euro, we can see that little has changed in the last few months.

We are getting ever closer to the March 2019 Brexit though, so we hope things are sorted out pretty soon. In any case, we should get more clarity soon when the Brexit Bill is back in front of the UK Parliament.

New Spending Government

Over to Italy, where earlier this week we saw that the new Prime Minister has been confirmed by the President. So Italy should soon have a government. Even though it’s clear that the new parliament will try to increase spending in a country that has more than its fair share of debt, it seems that what’s happening in Italy is staying in Italy, at least as far as the global markets are concerned.

Roll-Back

Yesterday the Trump administration did a huge roll-back of the Dodd-Frank regulations, which were put in place by Obama to prevent another crisis similar to 2008.

The immediate impact will probably be that medium-sized banks will be free to take on more risk. Wheather this will end up increasing systemic risk of the entire system is currently being debated, but even if it does, that’s not something that would usually cause an immediate impact on the markets, that’s “future America’s” problem.

Happy GDPR Day!!

I’d like to wish you a very happy GDPR day!! Please enjoy the abundance of emails informing you that the privacy policy of just about every company that holds your personal data has been updated. Good luck reading through it all.

This is something that might impact the market over the next few weeks because it’s been reported that many companies are still not fully compliant. The market impact will largely depend on how EU officials choose to deal with these type of infractions.

TRY Time

The Turkish Lira has been almost as volatile as many of the major cryptocurrencies over the last month. So if you like high risk, feel free to day-trade it. Just please be cautious and use proper money management.

Increased Chatter (Vitalik is Tweeting)

For traditional markets, more chatter means a conference happening in Stockholm, which will include a panel with both Fed Chair Jerome Powel and the Governor of the Bank of England Mark Carney. This is about as good as it gets for central bank watchers and is not to be missed.

In crypto, it’s relevant to note the Ethereum community is having a lot more open dialogue lately on Twitter. As a decentralized platform, they’ve always been rather transparent about their conversations.

Vitalik likes to remain silent though for fear of having too much influence over the direction of the network. Over the last few months, he’s been especially hands-off and limiting himself to only retweets, presumably to emphasize a point made in the original tweet.

In the last few days however, it seems that he’s been engaging a lot more directly, especially with people contributing to the development of the Ethereum network. The community has been waiting for the famous Casper upgrade that will take Ether to a new level. Lately’ we’ve heard that the code for this upgrade has already been written and is currently in final review. Let’s hope for a smooth release.

Long Weekend

Really sorry for the long winded email. I hope that the information here will help you make better decisions in your portfolio, especially going into the long weekend.

For those of you in the UK and USA, I want to wish you a happy holiday in advance and to everyone a wonderful weekend!

For anyone who got through the entire post. Feel free to tag me, you probably deserve some sort of prize. 🙂

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

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 88 rated postsSenior Market Analyst at Etoro.com.




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Market Overview

Market Update: Geopolitical Tensions Trigger Rush to Safe Havens as Gold Spikes to 10-Day High

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Investors were on high alert Thursday after President Trump called off a planned summit with North Korea next month, The subsequent haven rush sent gold prices to ten-day highs and the yen to its best levels in almost two weeks.

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Gold Spikes

Gold prices jumped more than 1% as demand for riskier assets faded in the wake of geopolitical unrest between the United States and North Korea. August bullion prices gained 1.2% to trade near $1,310 a troy ounce on the Comex division of the New York Mercantile Exchange.

Silver prices surged 28 cents, or 1.7%, to $16.69 a troy ounce.

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Thursday gains helped gold recoup from a massive slide earlier in the month as traders began pricing a fourth interest rate hike by the Federal Reserve this year. The U.S. dollar surged to five month highs, reducing gold’s investment appeal in the eyes of international traders.

Bullion has spent the better part of 2018 valued above $1,300, though the bulls have been unable to make a definitive break above $1,350.

Yen Strengthens Across the Board

Asia’s favorite haven currency rose across the board on Thursday, as carnage in emerging markets added to geopolitical uncertainty.

The yen rose more than half a percent against the dollar, sending USD/JPY to a session low of 109.00. The pair traded as high as 111.37 earlier in the week.

The yen has benefited from a sharp selloff in emerging market currencies, with the Turkish lira and Argentinian peso among the hardest hit. These countries are heavily influenced by the U.S. dollar because the bulk of their foreign funding is denominated in the greenback.

Despite its recent pullback, the dollar is up 3.3% over the past month.

Crypto Woes Continue

The cryptocurrency market touched fresh six-week lows Thursday, as the combination of regulatory risks and South Korean exchange uncertainty weighed on prices.

Crypto assets have lost a combined $50 billion in value since Sunday, with the total market cap bottoming near $320 billion earlier in the day. At the time of writing, the total market was worth $338 billion, according to data provided by CoinMarketCap.

All major altcoins were up compared with 24 hours ago, with EOS leading the rally. The digital currency was up more than 10% by late afternoon EST to trade at $1219.

Ripple XRP rose more than 4% to $0.635. Bitcoin cash rebounded more than 3% to $1,058.

Bitcoin traded relatively flat after hitting fresh lows. It was last valued at $7,585.

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 413 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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Stocks Suffer Hit as Trump Cancels Summit, Turkey Hikes Rate

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After yesterday’s late-day bounce, stocks got close to their two-week lows yet again today in early trading, as risk assets got sold across the board after Donald Trump canceled the much-awaited summit with North Korea’s Kim Dong Un. Safe haven assets spiked higher on the news, with gold getting back above $1300, and the Japanese Yen also gaining significant ground on its peers.

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NASDAQ 100 Futures, 4-Hour Chart Analysis

US equities are still not in a terrible short-term position, as the key support levels are holding up, and the trading range is intact, but most European indices gave back all of this month’ s gains, and the cracks on the synchronized global growth narrative are clear.

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Emerging markets are still under pressure, even as the Turkish central bank finally did what we have been expecting, raising its benchmark rate by 3% after an emergency meeting yesterday, but for now, it seems that the this might have been too little too late.

USD/TRY (Turkish Lira), 4-Hour Chart Analysis

The Lira recovered more than 8% off its intraday lows, but today the currency has been plunging again, and it is still dangerously close to its all-time low, and a run on the Lira is still not out of the question. Mr. Erdogan told the Turkish citizens not to exchange their Lira to foreign currency, but the President might need more than “verbal capital controls” to stop the collapse.

Dovish Fed Minutes Cause Slight Dollar Pullback

Dollar Index, Daily Chart Analysis

The US Dollar is lower compared to the Euro, the Pound, and the Yen today, even as the Greenback gained ground against the Canadian Dollar. While the Yen’s advance is due to the risk-off sentiment, the Dollar’s broad pullback started after the release of the FOMC meeting minutes yesterday, as the central bank expressed that it would allow inflation to overshoot the 2% target temporarily.

US 2-Year Yield, Daily Chart Analysis

This caused a drop in Treasury yields across the yield curve, as investors removed their rate hike bets. The 2-year yield briefly hit a level not seen since mid-April, while the 10-year yield got back to the key 3% level. The European Central Bank also released its minutes today, and the bank also cited downside economic risk, capping the dip in the Dollar and helping the pullback in yields.

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 256 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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