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New Diversification

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One of the keys to sustainability in any investment is diversification. Even if you’re dealing with extremely risky assets, just having an even mix of them is enough to bring your level of risk down drastically.

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This is why index funds and ETFs work so well. They invest in lots of different assets within a specific sector so as long as that part of the economy keeps growing at a normal pace, you’ll see decent returns.

After the recent “Tech tantrum” that saw the Nasdaq fall 238 points in a single day, investors want to take this opportunity to find out how to strengthen their respective portfolios.

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Mostly, what they’re finding is that the big tech names have been dominating investment portfolios. Such that a single investor may have lots of different investments that all hold the same four stocks as their main holding.

For clients in eToro who have many different types of investments in copytrading and copyfunds, Every once in a while, it pays to check for unnecessary correlations in your portfolio. You can do this quite simply by using the portfolio pie chart, which is available at this link: etoro.com/portfolio/chart/

Take a look at your allocation and risk. Let me know what you find.

Mati Greenspan
eToro, Senior Market Analyst

 

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

Market Overview

Wall Street is celebrating the return of the tech stocks after their recent fall and are now booking in new record highs for the Dow Jones and the S&P 500.

This as volatility remains near all time record lows.

Watch out for China?

The MSCI has a lot of ETFs in it, most of them are quite stable and steady. One, that is specifically for emerging markets will face a big decision today.

You can find the index at: etoro.com/markets/eem

The decision is simple, whether or not to add stocks from mainland China inside this index. Chinese stocks have been performing well lately, so adding them into the diversification pool could be seen as a good thing.

However, Chinese stocks have a way of reporting back to the Chinese government, who tends to exert a certain amount of pressure on the companies themselves. They also are exposed to currency risk related to the Renminbi.

“I think that this would not be a good decision for the MSCI to make. Adding these Chinese stocks may be good in the short term but it will make the entire index more risky for long term investors.”

Macy Ma
eToro, China Analyst

Bitcoin Scale-ability

The big debate about bitcoin may be coming to a head. A solution that was agreed on in New York called, you guessed it, the New York Agreement has recently reached a milestone of 70% of miners who agree to implement it. Once 80% consensus is reached, the protocol will begin locked and loaded and begin to take effect.

The idea is similar to the segwit solution that was implemented on Litecoin recently and hopefully will be strong enough to process 8000 to 10,000 transactions per block in the chain.

The great news is, that if this happens, the hard fork will likely have no impact on regular bitcoin users. The main bitcoin that we know today will continue to exist as normal, and any miners who did not signal for segwit2x will be forked off the network.

The price of Bitcoin is reacting nicely to this news and is up up up today. If we see a break above $2,700, we could certainly see a fresh wave of interest from all sorts of new and old investors.

This is going to be interesting to watch. Wishing you an amazing day ahead!!

This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation.

Past performance is not an indication of future results. All trading carries risk. Only risk capital you’re 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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Altcoins

Why IOTA Belongs On Your Focus List

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For the serious student of cryptocurrencies, IOTA is a name most likely you know well. However since only about 8% of Americans own any crypto, and then 80% of those folks own bitcoin, it’s time to get to know your neighbors.  

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Ok, let’s start with a trick question.  Over the next 10-20 years, which technovation will have the greatest impact on society: cryptocurrencies, the Internet of Things (IoT) or Artificial Intelligence (AI)?  

The answer is: they will each be so big and so important that it really doesn’t matter.  As an investor you can go with anyone of these themes. But then, you might want to focus attention on IOTA. It could be like getting a techno triple play.  

This is not to suggest dumping your bitcoin, Ethereum, Ripple or other major names. In an uncertain world, the big guys still carry a better risk profile.  But in today’s market, altcoins represent the most depressed values. Out of this group, IOTA offers investors participation in crypto, IoT and AI.

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I do not own IOTA so objectivity isn’t being compromised.  Here are a few things about IOTA that stand out.

Ideal For High Volume Small Transactions

For all their benefits, single layer blockchains present a scaling nightmare to bitcoin and even so called second generation names like Ethereum.  Solutions like the Lightning Network and Raiden, when fully deployed sometime later this year, will help. But the ability to process 50,000 transactions a second is still a way off.

IOTA is specifically targeted for high volume transactions at near zero costs.  This makes a competitive stand against the ultra fast but high cost giants like Visa, MasterCard, etc. The secret is that IOTA doesn’t depend on a blockchain.  

Instead, developers have created something they call Tangle. IOTA is a blockchain free cryptocurrency.  Tangle is designed to remove the necessity of predetermined block times. Instead of many nodes confirming a transaction, the sender of the IOTA transaction must confirm two other transactions on the Tangle.

In other words, the entire time and energy intensive crypto mining process in sidetracked replacing it with a user verification process. To put it more simply, every user becomes a miner in the network.

This reduces cost to the point where IOTA transactions are near zero.  Compare this to a Visa or MasterCard debit card merchant service charge of 1.5% or a credit card fee of 2.9%-4%+ and there is no contest.

Is Tangle more secure than blockchain?  An honest answer is Tangle has not been tested enough to get enough data.  But if you accept that small transactions are less of a so called “attractive nuisance” than the size Bitcoin is best handling, then the effective security risk becomes tolerable.

IoT And AI: Real And Imagined

Small and even micro-transactions will be the measure of IOTA for the immediate future and there is nothing wrong with that.  After all we are talking about a multi trillion dollar global market. But this isn’t what crypto visionaries see as the end game.

Advocates of IOTA paint a glowing picture for the crypto in IoT and AI based on the near zero transaction cost and huge supply of the currency.  If things turn out this way, it means that IOTA is appealing to an entirely different segment than bitcoin, ether, Ripple or many altcoins.

By huge supply we are talking about each traded IOTA quoted in MIOTA or a million units. Total supply is defined as one Petalota. That equals 10 IOTA to the 15th power. If you prefer real numbers, the total supply is 2,779,530,283,277,761. Try saying that number quickly. Certainly the founders of IOTA had such a global vision when they decided to create such a massive supply.

Supply/Demand and Pricing

The one thing about the IOTA story is how can this massive supply benefit investors. It seems counter intuitive.  But I must be too dim witted to appreciate this because back in December before prices tumbled, the public valued IOTA at nearly $15 billion. Since then, like all cryptos, IOTA dropped more than 80% to around $2.6 billion. So did the end of the so called crypto bubble sour investors.  Not at all. Since the April 10th low, the price has jumped 70% to $4.7 billion or about $1.68 per MIOTA.

As we said at the start, long time IOTA watchers will find nothing surprising.  But for the majority, you will want to keep an eye on IOTA; it is not just another altcoin. And it’s price is still less than one-third of last December.  

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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4.3 stars on average, based on 59 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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Altcoins

Bitcoin Cash Surges as Cryptocurrency Bear Market Winds Down

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The value of bitcoin cash rose sharply on Wednesday, as momentum returned to the altcoin following a two-month downtrend.

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BCH/USD Price Levels

Bitcoin cash jumped nearly 16% on Wednesday, outpacing bitcoin and the rest of the major altcoins. In doing so, prices came to within a few dollars of $900.

At the time of writing, BCH/USD was trading at $883.53 for a total market cap of $14.9 billion, according to CoinMarketCap. That puts BCH comfortably in fourth spot on the cryptocurrency leader board when measured by market cap.

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By comparison, the cryptocurrency market as a whole added 5.2% on Wednesday to $342 billion. The total market has now gained more than 37% over the past week, a strong sign that the bear market had ended.

BCH generated trade volumes of $611 million on Wednesday, which is roughly 3.3% of the total market. Digital currency exchange OKEx generated 14% of the daily volume, followed by Huobi (10%) and HitBTC (9%).

Investors tracking the coin’s bullish reversal are keeping close watch of the psychological $1,000 level. The cryptocurrency has generated strong support in the low $800s, with immediate resistance located between $890 and $900.

Bitcoin Cash: Undervalued?

While there was no immediate catalyst for BCH’s oversized gains, some analysts believe that a larger breakout is looming as volatility and trading volumes continue to grow. Bitcoin cash also has the perception of being undervalued, even in light of the recent price recovery. Traders looking to buy the dip still have plenty of opportunity with prices still down a full 78% from the December record.

Bitcoin cash has had prolonged periods of hot-and-cold since it was conceived last August. Prices generally trailed the broader cryptocurrency market until November when the backers of Segwit2x failed to activate their hard fork. The fork was cancelled after its backers were unable to form consensus on the upgrade. The market’s response saw BCH diverge sharply with the original bitcoin, with the former reporting huge gains and the latter equally large percentage losses.

BCH recorded multiple record highs in December after Coinbase announced it was offering trading of the cryptocurrency alongside bitcoin, Ethereum and Litecoin. However, the launch was shrouded in controversy amid reports of insider trading at Coinbase. As of last month, the company was battling a class action lawsuit over those claims.

 

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 332 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

Crypto Update: Monero Price Jumps above $225 as Coins Hold Their Ground

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The cryptocurrency segment is having a mixed but encouraging session so far, as the sudden selloffs of the last couple of days were all bought and the short-term correction lows held up.  Although most of the major cryptocurrencies are trading below their breakout highs as of now, there are standout performers, like Monero, Stellar, and Bitcoin Cash, and the early leaders of the rally are also showing stability.

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These signs of bullish rotation are positive, and as the short-term momentum indicators are back to neutral territory with regards to most of the majors, the segment could be ready for another leg higher in the coming days. That said, as the broad declining trend channels are still intact in both Ethereum and Bitcoin, a trend change is not yet confirmed and short-term trades should still apply strict risk management.

BTC/USD, 4-Hour Chart Analysis

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Bitcoin held up above the key support zone near $7650, despite the spikes lower, and the low volume consolidation continues to be the dominant pattern. The $8400 resistance is now perfectly aligned with the declining trendline that capped rally attempts all year, and a crucial test of that zone is likely this week.

Long-term investors could still add to their holdings, while our trend model also turned bullish again today. The $9000-$9200 zone is the next target above $8400, while further support found at $7300.

ETH/USD, 4-Hour Chart Analysis

Ethereum is trading in a similar short-term pattern, with the declining trendline also ahead as strong resistance for the second largest coin. Although ETH lost some of its relative strength against BTC, its stability in a very positive sign for the whole market, and the coin could resume the recovery in the coming days. Resistance is ahead at $535, with further zones between $555 and $575 and near $625, while support is found at $500 and $450.

Monero Surges as Litecoin also Shows Strength

XMR/USDT, 4-Hour Chart Analysis

The long-term leaders of the segment, XMR and LTC are finally pulling their weight again, as Monero left the short-term consolidation zone with a bang today, while Litecoin is also close to hitting new rally highs, despite yesterday’s dip. XMR still faces strong resistance at $240 and $300, but today’s move confirmed a new short-term uptrend.

Ripple, Stellar, ETC, Dash, and Bitcoin Cash are also benefiting from the bullish rotation, but EOS, NEO, and IOTA are also looking bullish after leading the market higher last week. Al in all, price action in the segment is I line with the continuation of the broad rally, even as a new uptrend is still not yet established and correlations between the coins remain above healthy bull market levels.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

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 224 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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