Over-hyped and Underpriced

The man known as Dr. Doom has once again ruffled some feathers within the crypto-community with some harsh words about bitcoin and blockchain.

Doctor Nouriel Roubini is largely credited with predicting the US Housing Bubble that kicked off the global financial crisis of 2008 and has also expressed very fond opinions of social trading. However, it has recently become clear he is not a fan of cryptocurrencies.

In a report titled The Blockchain Pipe Dream, he points out all of the inefficiencies of the current technology and calls it “the most over-hyped technology of all time.”

Of course, I find the explanation of cryptos provided by John Oliver in this hilarious video more helpful, which though extremely cautionary highlights the advantages as well as the risks.

Notably missing from both reports was details on some of the more exciting projects that are already using blockchain. For example, the Wal Mart blockchain that can track produce across a supply line, or shipping giants like Maersk using blockchain to track their containers. Or Sweden beginning to use a blockchain to manage land ownership. The list goes on things do take off investors still have the opportunity to get in early.

We do need to give the Doctor some credit though and tread cautiously. No matter how excited we get about a specific project investors should remember that in this early stage most of the projects are still experimental, with similar characteristics to start-ups in their early days.

Bitcoin and Ethereum and several other big cryptos have already proven themselves to be useful and present a case that potential investors can consider. However, investors should remember the disclaimers and look to diversify their portfolio across many different assets.

eToro, Senior Market Analyst

Today’s Highlights

  • Pickey Pickers
  • Inflation Data
  • Cryptos face Regs

Please note: All data, figures & graphs are valid as of March 13th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Stock traders are becoming ever pickier lately as yesterday’s action clearly demonstrates. The Dow Jones is now suffering from Trump’s proposed metal tariffs, which could weigh down on industrial companies. However, tech stocks, which don’t rely on any sort of imports are flying.

Here we can see the Dow Jones Industrial Average (in white) against the tech-heavy Nasdaq Index (in green) over the last two weeks.

Yesterday ended with record highs for Apple, Microsoft, Square, and Nvidia, but unfortunately, none for Facebook.

Also on the minds of American investors, today will be the special elections in Pennsylvania’s 18th district. The race there is very close and it is seen as a bellwether that could end up having a heavy influence on the national stage come the mid-term elections in November.

However, whoever wins today will only serve until the end end of the year. As both sides have thrown millions of dollars of campaign money into this election, this may be the most over-hyped election the US has seen in a long while.

Inflation Data Today

No matter how big these small elections are, the main focus for traders today will be the CPI inflation data coming out at 12:30 GMT.

Please note: that the USA has shifted their clocks back an hour over the weekend. So for those of us trading from Europe remember that Wall Street’s opening and closing bells are one hour earlier than usual. Europe isn’t set to shift the clock until March 25th and Australia goes at the end of the month.

Last month’s inflation data came out way above analyst’s expectations at 0.5%. Today’s numbers are forecast for a more moderate 0.2% gain.

Any surprise to the upside has the potential to spark a panic in the stock markets because it would raise expectations of Fed tightening.

Crypto Regs in Focus

The prices of all the major coins seem to have stabilized after last week’s sell-off. On the charts, we can see the famous wedge pattern getting ever narrower on many different cryptos.

Here’s Ethereum for example, whose range is now as little as $100 (from $650 to $750).

For now, we watch for updates from the various regulatory bodies around the globe. Even though decentralization is one of the defining points of cryptocurrencies, updates from local regulators, especially in key areas, do have the potential to impact the prices quite significantly.

South Korea for example, seems to have done a complete flip from strongly considering to eliminate ICOs in the country just a few weeks ago, it now seems they are preparing to regulate the market.

Japan on the other hand is getting a bit harsher on cryptos. Even though Bitcoin has been legalized a year ago there, the hack on Coincheck has served as a wake-up call for the community and for regulators.

The Japanese FSA is now cracking down on money laundering and may even be preparing to lead the fight for crypto AML rules at the upcoming G-20 summit.

In the United States, on the other hand, things are still in the exploratory phase. Tomorrow, the House Financial Services Committee will host several insiders from the crypto community to hear their view on the ICO market and how it should be regulated.

What else?

There’s plenty more in the news that can impact the markets today. Specifically, watch out for the strained tensions between the UK and Russia. May dropped more than a few jaws yesterday by claiming that Russia was most likely behind the recent assassination of a former Russian Spy.

She’s given Putin until midnight to comment on the accusation. Something he may or may not do, given that he has his own elections coming up this Sunday.

Also in England, Phillip Hammond will be delivering the Spring Budget at 11:30 in London.

And in the US, it looks like Russia is off the hook for allegedly meddling in the US elections. Special Agent Robert Muller has decided that there’s insufficient evidence that Trump has colluded with Putin to swing the 2016 results. Muller will now focus on other areas of his investigation.

Let’s have an awesome day 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

eToro: @MatiGreenspan | Twitter: @MatiGreenspan | LinkedIn: MatiGreenspan | Facebook:MatiGreenspan