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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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Analysis

Technical Analysis: Cryptocurrencies Start Week on a Quiet Note as NEO Shines

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The broad Bitcoin-led correction continued to dominate trading in the crypto-segment throughout the weekend, as the most valuable coin drifted sideways above the key technical level at $13,000, with dwindling trading volumes.

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BTC remains in a declining short-term pattern, although the digital currency still holds well above the mini-crash lows from December, spending almost a month now in the daily range of the year-end plunge. We still expect the largest coin to complete the current cycle with a move below the crash lows and the $10,000 level after the stellar rally of the previous months. Key support is still found near $13,000, with further levels at $11,300, $10,000, $9000, and stronger levels at $8200 and $7700

BTC/USD, 4-Hour Chart Analysis

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Altcoins also settled down across the boards with only a few coins registering strong activity. Ethereum and NEO have been among the coins making headlines, as the second largest coin continued to grind, higher still trading near its recent all-time high today. The price of the ETH token is moving in a short-term uptrend, in the face of the stretched momentum indicators, but we expect a meaningful correction soon, and long-term investors should wait for a more favorable technical setup before entering new positions, with key support levels at $1000, $850, $740, $625, and near $575.

ETH/USD, 4-Hour Chart Analysis

Ripple remained under heavy selling pressure in the meanwhile, as the oversold bounce of the weekend faded away and the coin got close last week’s lows again. As the short-term downtrend is intact, traders should stay away from entering new positions, while investors should wait for short-term sell-offs towards the main support levels at $1.50, $1.25, and $0.85 to add to their holdings.

XRP/USDT, 4-Hour Chart Analysis

(more…)

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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6 votes, average: 5.00 out of 56 votes, average: 5.00 out of 56 votes, average: 5.00 out of 56 votes, average: 5.00 out of 56 votes, average: 5.00 out of 5 (6 votes, average: 5.00 out of 5)
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Analysis

Technical Analysis: Coins Rebound as Key Support Level Holds Bitcoin

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The $13,000 level in the price of Bitcoin continued to be the center attention of traders today, as the most valuable coin successfully tested the crucial support zone overnight, despite another brief dip below it. The other majors followed the subsequent bounce higher, with Ethereum pushing past $1250 once again, while Ripple reclaiming the $2 level.

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Despite the bounce, the short-term trend in Bitcoin is clearly bearish and the correction is still likely to continue, although the extreme long-term overbought readings are now cleared. We still expect a move towards the previous correction low near $11,300, with a likely dip below $10,000 before the end of the current cycle, with further important support levels are found at $9000, $8200, and $7700.

BTC/USD, 4-Hour Chart Analysis

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Ripple recovered slightly after nearing the $1.50 level and reaching short-term oversold readings, and the coin tested the primary resistance level at $2.1 yesterday in late trading. The currency remains in a strong short-term downtrend despite the bounce and the continuation of the correction is likely, although long-term investors could already accumulate new positions near the main support levels at  $1.50, $1.25, and $0.85.

XRP/USDT, 4-Hour Chart Analysis

Ethereum bounced of the dominant short-term trendline, but the coin remains overbought on all time-frames and we expect a trendline break in the coming days. That said, traders could hold smaller positions here with tight stops as a push towards the prior all-time high is still possible. Key support levels are found at $1000, $850, $740, $625, and near $575.

ETH/USD, 4-Hour Chart Analysis

(more…)

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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Cryptocurrencies

China has Trump by the Bonds

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It’s earnings season on Wall Street and everyone is focused on the big banks.

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Wells Fargo, Blackrock, and JP Morgan Chase will all report their fourth-quarter earnings today and the results will not be good.

Trading volumes have been incredibly low in the last half of 2017, both due to reduced fears about the economy and because many high-frequency traders have already moved to the crypto market.

It doesn’t matter though. At this point, the banks could plausibly report the worst losses in the history of capitalism and still see their stock go up.

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Investors and analysts will be listening closely, and physically salivating, to the banker’s projections. Tax cuts are coming and investors want to know how much money the banks think they can make from it.

Tell us a sweet fairy tale of wonder and enchantment so we can sleep better at night and forget all about these historically high stock valuations.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

German Breakthrough (Euro)

China has Trump by the Bonds

Ripple’s Deal with MoneyGram

Please note: All data, figures & graphs are valid as of January 12th. All trading carries risk. Only risk capital you’re prepared to lose.

It’s a Breakthrough

Angela Merkel just reached a groundbreaking deal with her rivals the SPD party to form a grand coalition in the German Government. Everybody is excited and the Euro is flying. BUT… we’re not out of the woods just yet.

The SPD party will still need to vote on this and many of her members might prefer to see new elections rather than join Merkel’s government. So we’ll see how this plays out.

Enough of that though. Let’s take a look at the Euro-dollar, which is now trading at it’s highest level since 2014…

The DAX on the other hand seems less than excited. It’s been near it’s highest ever levels since November so this little tidbit was not enough to push it through the roof.

Bonds in Geopolitics

As we’ve been discussing earlier this week, the bond markets have been seeing some mild selling action. In a normal market, this wouldn’t be worrying but because the word ‘sell’ has become so rare on Wall Street lately it is making headlines.

What made bigger headlines though was that China was considering to stop buying bonds from the United States. These reports were later refuted by Chinse authorities and have since been tossed in the category labeled ‘fake news’.

It is interesting though. Bonds are how countries lend money to one another so the bond market can be seen through the lens of foreign debt. China is one of the US’s largest creditors at the moment. So if they stop buying, or worse, start to offload some of their bonds the US could be in a heap of trouble.

What’s suspicious here is the timing. Donald Trump has big plans and they won’t be cheap. After decreasing corporate taxes his income has now been stunted. So increased expenses and reduced income means that you need to borrow.

Trump is also ramping up his rhetoric against China. It was an essential part of his political victory in the elections and he’s itching to call them out on several issues already. So this bit of ‘fake news’ does actually come as a reminder or even a warning. Mess with the dragon and you will get burnt.

What’s Ripple’s Deal?

Ripple rejoiced yesterday as those who hodled through the Korean FUD were rewarded with a breakthrough in global payments relations.

Even though it’s only a pilot, just the fact that a major payment system like MoneyGram will be testing Ripple’s network is incredibly big news and even gives investors a taste for more news to come.

The great thing for hodlers is that the pilot will reportedly be using Ripple’s XRP tokens. This has been a soft spot for Ripple skeptics who say that Ripple’s success does not necessarily mean success for XRP since they could potentially form payment networks without these specific tokens.

The price shot up more than 20% within the first hour of the news.

The news comes at an excellent time as far as technical analysis is concerned and could potentially provide a floor for the price movement.

Here, take a look at the rally, and pullback. The level of $1.5 per token was a significant breakout level on the way up and now seems like a valid support level for the massive pullback.

Of course, cryptocurrencies are incredibly risk so it always pays to diversify and use proper money management as I’m sure many of our new clients have learned recently.

Let me know if you have any questions, comments or feedback. Have 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.

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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7 votes, average: 4.29 out of 57 votes, average: 4.29 out of 57 votes, average: 4.29 out of 57 votes, average: 4.29 out of 57 votes, average: 4.29 out of 5 (7 votes, average: 4.29 out of 5)
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