No Such Thing as Poor Publicity

Hi Everyone,

Certainly, it would be better for the use case of cryptocurrencies if they remained more stable, or to see a slow but steady increase in prices. But let’s be straight, would bitcoin be as popular as it is today if not for the wild volatility?

The outrageous bull run of 2017 has been largely responsible for bringing an unprecedented number of new users into the network but it seems that excitement can be generated on the way down as well.

Google searches for the term bitcoin are up sharply since the volatility came back and are now at their highest level since April.

Of course, they’re still nowhere near the levels that we saw in late 2017, but they are well above anything seen before May of 2017.

Searches for “buy bitcoin” are seeing a slight uptick as well but this is not investment advice.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Approaching the Neutral Zone
  • Lock Step BTC/DJ30
  • El Erian Crypto Buff

Please note: All data, figures & graphs are valid as of November 29th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Fed Chair Jerome Powell managed to bolster the stock markets yesterday with some unexpectedly supportive statements. One of the biggest fears in the markets lately has been the notion that the US Federal Reserve might tighten monetary policy too hard and too fast, so yesterday’s speech showed their willingness to remain supportive of the market.

Even before Powell took the stage (purple circle), stocks were having a great day but as you can see the opening statements, which were widely interpreted to mean that the Fed would go easy on hiking interest rates, put things right over the top.

The positive sentiment has spilled over into the Asian market but the enthusiasm has not. No doubt Chinese investors are still quite nervous about the upcoming G20 meetings this weekend and what it might mean for international trade.

Things aren’t looking too great for Chinese stocks on a technical level either. The China 50 index is now displaying a pattern on the chart that is all too familiar to bitcoin traders, the descending triangle.

BTC/DJ30

Speaking of bitcoin, and more specifically its relationship to the stock markets, it’s impossible to ignore that it’s been moving in lockstep with the equities lately. In this next graph, we can see bitcoin in orange and the Dow Jones in purple over the last week and a half.

Data that we previously highlighted actually showed how on a day to day basis there is very little or no correlation between stocks and crypto. But as we can see in the graph above, there are certainly profound moments when their two paths are connected somehow.

New Crypto Buff

While comments from SEC chairman Jay Clayton at the Consensus Invest conference are still being parsed, there was another thought leader who emerged from Coindesk’s conference as being strongly supportive of the crypto asset class.

I’ve actually been following Mohamed El-Erian on social media for many years now and always find his views on the markets and the economy very refreshing. and so was delighted to see him forecasting that “they will become more and more widespread.”

Much like myself, Mohamed sees cryptoassets as a new part of the broader economy and not a replacement of it.

This new champion, in conjunction with the massive news we covered yesterday about the Nasdaq moving forward with their bitcoin futures product has created a new line of support for the crypto market. A support which we’ve now seen a strong push from.

In fact, the entire crypto market has seen a massive surge over the last 24 hours. Have we finally found the bottom?

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

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

eToro is a multi-asset platform which offers both investing in stocks and cryptocurrencies, as well as trading CFD assets.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

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

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