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Market Overview

Predicting Crypto Market Movements

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One of the most difficult aspects of trading cryptocurrencies is the reactionary nature of the market. Most of the news events that influence prices are the type of things that are difficult to foresee.

In traditional finance, we know in advance when there will be an economic data releasee. Things like inflation figures, GDP data, interest rate decisions are all scheduled in advance and we can even look at an economic calendar to understand the timing and expectations of the event.

Though we may still be a while away from a comprehensive crypto calendar, we are seeing that as we go there is more awareness of future events. For example, on Wednesday we had a Congressional Hearing about cryptocurrencies that traders were able to tune in to.

On Monday and Tuesday, the first of five G20 meetings will be held in Argentina and will be a primary focus of traditional finance players. It has recently been confirmed that representatives from Japan will use this meeting to address cryptocurrencies, specifically to provide ideas on how to limit the use of cryptos for laundering money.

Japan is currently the world’s leader when it comes to cryptocurrency usage and regulations after completely legalizing Bitcoin on March 31st of last year. So their opinions in this matter carry a lot of weight with other world leaders.

More intense crypto talks are expected at the November G20 meeting, and with the price of Bitcoin and other cryptos more than 50% off their all-time highs crypto-skeptics are getting louder, so seeing one of their main concerns being addressed on the largest global financial stage is a very reassuring thought.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Ritual Suicide
  • Therein Lies the Rub
  • Bitcoin Lightening

Please note: All data, figures & graphs are valid as of March 16th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

It’s not often that we lead this section of the update with Japan but it is the world’s third-largest economy and they’re going through a bit of a rough patch which could potentially lead to some market movements that are worth highlighting.

Prime Minister Shinzo Abe is having a bad month right now. A suicide note left by a government official revealed that he was forced to rewrite several official documents to cover up the Prime Minister’s connection with a particular sale of land.

Though political analysts are saying that the Prime Minister himself is safe from the scandal, the Finance Minister Taro Aso is clearly in the thick of it and will be sitting out the above mentioned G20 meetings.

Why this matters to the markets

Abe and Aso, along with the Bank of Japan have been acting since 2012 to proactively devalue the Japanese Yen. A weak Yen policy is considered a cornerstone of ‘Abenomics’.

The idea is to keep the currency weak in order to promote exports. The weaker the Yen, the more foreigners will be able to afford products that are made in Japan. And with Japan exporting more than they import, this policy makes a lot of sense.

In this chart, we can see the Yen’s massive depreciation since Abe was elected in September 2012.

(Remember, this is the USDJPY pair so an upward movement on the graph indicates a weaker Yen.)

So far the Yen has been getting stronger, acting as a barometer of Abe’s dwindling popularity. Any progression in this saga can and likely will have a direct impact on these markets.

Therein Lies the Rub

The current UK investigation into the poisoning of a former Russian spy has brought the Russian Ruble into full focus.

In an unrelated matter, yesterday Donald Trump ended up slapping sanctions on Russia for their alleged meddling in the 2016 elections.

All this adds up to volatility in the USDRUB.

(As before, the chart going up means the Ruble getting weaker.)

Lightning Fast

A huge congratulations to the Bitcoin network for completing a major upgrade!!

Bitcoin scaling is particularly difficult. Due to the decentralized nature of the network, it’s hard to get all the programmers and participants to agree on a path forward but all agreed that bitcoin needs to be more efficient so this was a long time coming.

The new lightening network that was deployed to the bitcoin main-net yesterday allows trusted parties to set up their own private networks to facilitate off-blockchain transactions. These sidechains allow the participants to trade freely among themselves and only upload a periodic summary of the transactions to the main blockchain.

What this means is, fewer transactions will require the approval and confirmation of the energy-intensive miners. Transactions that happen on lightening are also much quicker and are only a fraction of the cost of regular transactions.

As we mentioned in January and many times since, this dip in price should be seen as a good thing for the progression of cryptocurrencies as it allows much-needed breathing space to advance and scale up the technology.

Happening today

One of our top FX traders, @Goodgoing, will be in our London office this morning for a live Q&A on Twitch at 11:00 AM GMT. All things FX and technical analysis will be on the agenda. You can tune in and interact here.

Have an amazing weekend!

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

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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4.7 stars on average, based on 115 rated postsSenior Market Analyst at Etoro.com.




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4 Comments

4 Comments

  1. embersburnbrightly

    March 16, 2018 at 3:24 pm

    I always enjoy your articles, Mati. The first couple of paragraphs of this one are SO very true. I also enjoy the clever wordplay you use, especially in the outline section where you preview what will be discussed further down below in each article (i.e., “Therein Lies the Rub,” regarding the ruble and its USDRUB pairing). I just wanted to take a moment to acknowledge how much I appreciate the extra thought you put into your articles to keep them both informative and entertaining!

  2. Mati Greenspan

    March 16, 2018 at 3:42 pm

    Wow! Thanks a lot embers. Much appreciated.

  3. Carst

    March 16, 2018 at 9:30 pm

    Hi Mati, same here, always enjoy your views and birds-eye perspective.

    I am confused in the sense what is discussed in the March G20. As you said, more intense discussions about crypto are on the agenda for november. As i read the agenda (first meeting of finance ministers and central bank governors of 2018):

    “The technology behind crypto assets has the potential to promote financial inclusion. At the same time, however, it is important to analyse its implications to financial stability, tax evasion, and financing illegal activities. The issue is an important item on the meeting agenda; delegates will consider a common response that would mitigate the risks without discouraging innovation”..

    This tells me that there is more to be expected (a common response), but maybe its just the start of a (intense) long process ending in november.

    Just wanted to share.

  4. Mati Greenspan

    March 17, 2018 at 6:59 pm

    Thanks a lot carst.

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Market Overview

Market Update: U.S. Stocks Edge Lower in Tepid Trading; Earnings Up 21% So Far

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U.S. stocks finished mixed-to-lower Friday as trade uncertainty outweighed robust corporate earnings from Microsoft, one of the tech industry’s most closely-watched blue-chips.

Stocks Struggle for Direction

All of Wall Street’s major indexes hovered around break-even in afternoon trade, with the S&P 500 Index and Nasdaq eventually settling lower.

The large-cap S&P 500 edged down 0.1% to 2,801.83. Eight of 11 primary sectors led by utilities and consumer shares finished in the red.

The tech-focused Nasdaq Composite Index closed down 0.1% at 7,820.20.

Dow industrials were virtually unchanged by the close, settling at 25,058.12.

Wall Street’s VIX fear index, which trades on a scale of 1-100, was virtually unchanged at 12.86.

Earnings on Track for Large Gains

Shares of Microsoft Corp (MSFT) rose to all-time highs after the company reported stronger than expected corporate results late Thursday. The tech juggernaut posted per-share earnings of $1.14 on revenue of $30.1 billion during its fiscal fourth-quarter. Analysts on Wall Street called for earnings of $1.08 per share on sales of $29.2 billion.

Guidance was a big factor in the company’s strong performance Friday. Microsoft said it expected first-quarter revenue of between $27.35 billion and $28.05 billion. Analysts had expected a revenue guidance of $27.4 billion.

General Electric Co (GE), a former Dow blue-chip, also reported earnings and revenue that were higher than expected. However, the company’s share price declined sharply Friday.

S&P 500 companies have reported an annual earnings growth rate of 20.8% for the second quarter, according to FactSet. Eighty-three percent of S&P 500 companies have yet to report.

Trump Breaks Precedent

On Thursday, U.S. President Donald Trump scolded the Federal Reserve for raising interest rates, a move that put him at odds with a long line of presidents who have refused to get involved in central bank policy.

According to Trump, the Fed’s plan to raise interest rates could hurt disrupt the economy at a time when the recovery engine was gaining momentum.

A White House statement later clarified that the president is not trying to influence Fed policy:

“Of course the President respects the independence of the Fed. As he said he considers the Federal Reserve Board Chair Jerome Powell a very good man and that he is not interfering with Fed policy decisions ” the statement said. “The President’s views on interest rates are well known and his comments today are a reiteration of those long held positions, and public comments.”

The U.S. central bank has raised interest rates twice this year and is planning on hiking twice more in 2018.

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 504 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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Market Overview

Bankers & Politicians

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Hi Everyone,

Today is the day. Out of all the meetups, conferences, and hearings that we’ve seen regarding the future of money over the last year, imho none are as critical as the decision expected from India’s supreme court today.

Like several other places in the world, the Indian government is now working hard to form their policy regarding bitcoin and cryptocurrencies but the banking sector has made it clear that they will do everything in their power to halt this.

When Prime Minister Modi made the move to remove 86% of the paper money in India on November 8th, 2016 he inadvertently handed a big win to the banking system and it seems they’re willing to do everything in their power to maintain the status quo.

The crypto ban imposed by the Reserve Bank of India earlier this month is a clear example of this effort. Let’s hope that the judicial system sees through this today and strikes down this policy, doing what is right for the wider public now and for future generations.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Central Bank Independence
  • Stock Markets are Mixed
  • Divergence in Crypto

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

Traditional Markets

It was funny, but yesterday I was teaching a group of new eToro representatives about central banks and happened to use an example of what’s happening in the news.

The point I was making is that central banks are officially disconnected from politics but that politics do end up influencing their actions and vice versa.

In his testimony on Wednesday, Fed Chair Jerome Powell did his best not to take sides on the current trade dispute between the USA and China. However, when pressed, he did admit that the proposed sanctions of $200 billion on Chinese imports would have a negative impact on the economy.

This is similar to when Mark Carney, the Governor of the Bank of England, stated before the Brexit referendum that if the vote passes it would hurt the Pound. The statement doesn’t take sides, it simply states the view of someone who is in a good position to understand the economic impact.

So, it was a bit surprising that a few hours after our lesson, Donald Trump had a few remarks of his own about what he thinks the Fed should or shouldn’t be doing.

Though President Trump insists that he’s not trying to influence the Fed’s decision, the very fact that he stated his opinion will likely have an impact on policy, it certainly had an impact on the markets.

Here we can see the US Dollar falling at the time of the interview.

The price of gold also reacted to the administration’s new policy.

Well… maybe not a new policy. Trump did blast Yellen while on the campaign trail for raising interest rates but this is the first time that any US President has so publicly disputed central bank policy, at least not since Bush Senior & Greenspan.

Meanwhile, Trump is still under pressure for his performance with Putin in Helsinki and we’re watching that play out in the press and in Congress.

Stock markets remain mixed while all this sinks in.

Mixed Crypto Rally

There’s been a lot of excitement in the crypto markets over the last few days and everybody wants to know where this is going.

Here’s an article that’s rather bullish…

…and here is one that’s quite bearish…

My thoughts…

It’s still too early to say for certain. The chart of bitcoin is sending rather mixed signals. On the one hand, the downward trendline (yellow) that that has loomed over Bitcoin for the better part of this year has now been broken.

On the other hand, the current rally has stopped significantly short of breaking the strong line of resistance (dotted blue) that kept the price notably depressed in early June. A break above that could very well lead us to $10,000 (green line) but only a clean break above that would indicate a shift in the medium term trend.

One point that is giving a positive sign is the level of divergence between different digital assets. Here we can see a graph containing all the cryptos currently traded at eToro over the last few days.

We’ve noticed in the past that when the trend is down the cryptos tend to stick more closely together, whereas when things are moving up we tend to see more mixed results. The price action over the last 48 hours would certainly indicate the latter.

As always, tag me at the links below if you need anything at all. Wishing you a very pleasant weekend.

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

Connect with me on….

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

Pre-Market: China Tries to Support Markets as Global Stocks Slide

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Yesterday’s risk-off shift continued today in early trading with nervous and choppy trading in Asia and Europe, as global financial markets are still haunted by trade war fears and emerging market weakness. The major US indices rolled over after another period of apparent relative strength, with the Nasdaq being the most robust market once again, while most of the key European benchmarks continue to lag behind.

S&P 500 Futures, 4-Hour Chart Analysis

Chinese assets are still in focus before the weekend, as the Yuan’s recent steep devaluation sparked fears of a credit meltdown in the country. With the largest credit bubble in human history casting its shadow on China, some analysts think that with Trump’s trade war, the bug finally found its windshield and the bubble already started to burst.

USD/Yuan, 4-Hour Chart Analysis

All eyes are on the USD/Yuan pair as Chinese authorities are reportedly intervening in the market of the currency, and most likely local equities as well, trying to prevent a serious run on the most important assets.

With the Chinese stock market already in a bear market, and the Yuan trading at fresh 12-month lows against the Dollar, it might be a bit late to stop the slide, but the intervention could cause spectacular short squeezes.

Italy also made headlines today during the European session, as Italian government bonds got slammed lower, as the future of the new finance minister is uncertain, with another round of political turmoil possibly ahead for Europe’s most vulnerable country.

Unicredit (UCG), 4-Hour Chart Analysis

Looking at the charts of Italian banks, it’s clear that the spring turmoil had a lasting effect on the financial system, as Unicredit is on the verge of hitting a new low, and the other large players also remain under pressure, in part explaining the general weakness in European equities.

Europe Still Far Behind amid Mixed Economic Numbers

USD/CAD, 4-Hour Chart Analysis

The economic calendar is almost empty today with regards to the key markets, as the Canadian Retail Sales and CPI reports are the most important releases. The Canadian Dollar rebounded when the USD entered a correction June, but now the currency edging lower again, as the weakness in commodities and the Greenback’s rally are taking their toll. New highs are likely in the USD/CAD pair in the coming weeks, although strong resistance is just ahead at 1.33.

Commodities are little changed today after yesterday’s volatile session, as the bounce in China helped to stabilize the segment. Notably copper is back above the key $2.70 level, while WTI crude oil is trading at $68 per barrel again, and gold is hovering around $1225.

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 297 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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