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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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4.6 stars on average, based on 144 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

U.S. Stock Futures Fall on Brexit, China Growth Woes; Lifeless Crypto Market Drift Sideways

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U.S. stock futures declined on Monday, as concerns over Brexit and the health of China’s economy weighed on investors’ sentiment. Crypto markets were largely uneventful following a sudden correction early Sunday.

Stock Futures Falter

Futures tied to the Dow Jones, Nasdaq and S&P 500 Index finished lower in holiday trading. The Dow Jones mini futures contract fell 72.00 points to 24,615.00. The March contract for Nasdaq futures declined 31.25 points to 6,761.50. S&P 500 mini futures closed down 8.25 points at 2,663.25.

U.S. markets were closed on Monday for Martin Luther King Jr. Day. The New York Stock Exchange and Nasdaq will resume regular trading hours on Tuesday.

European equity markets were also down on Monday. The Euro Stoxx 50 Pr declined 0.3% to 3,125.07. Bourses in Frankfurt, Paris and Madrid declined by at least 0.2%. London’s FTSE 100 Index broke even in the final moments of Monday’s session.

China, Brexit in the Spotlight

Concerns about the global economy resurfaced Monday after China reported the slowest pace of annual growth in nearly three decades. Gross domestic product (GDP), the value of all goods and services produced in the economy, grew 6.6% annually, the slowest since 1990. In the fourth quarter, China’s annual growth rate slipped to 6.4%.

The International Monetary Fund (IMF) has once again revised down its estimate for global growth, warning that the synchronized global recovery was losing steam. The Washington-based lending institution now expects global GDP to grow 3.5% in 2019 and 3.6% in 2020. That’s down from the October estimate of 3.7% for both years.

Another form of instability comes from the United Kingdom, which is still grappling with how to proceed on the issue of Brexit. Prime Minister Theresa May on Monday unveiled a new Brexit plan after her initial bill was shot down by British Parliament last week. A vote on the so-called Brexit Plan B is scheduled for Jan. 29.

Crypto Markets Drift Aimlessly

The cryptocurrency market saw little movement on Monday, as a lack of conviction from the bulls and the bears kept price action subdued. Tron was the notably exception among the major cryptocurrencies, gaining 5.1% to $0.0250.

Bitcoin’s price was little changed over the 24-hour cycle and was last seen trading at $3,583.44. The largest cryptocurrency by market cap dropped 4% on Sunday after gaining nearly 3% during the previous session.

Altcoins and tokens traded in a similar fashion at the start of the week. XRP edged up 0.3% to $0.3196. Ethereum fell 1% to $117.79. Bitcoin cash, EOS and Stellar XLM were little changed during the session.

The combined crypto market cap held below $120 billion on Monday.

In terms of news, Ethereum’s developer communication has announced that the highly-anticipated Constantinople hard fork will take place Feb. 27. The rollout, which was originally scheduled last week, was delayed after developers identified a major security flaw in one of the Ethereum Improvement Proposals (EIP).

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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4.7 stars on average, based on 743 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Analysis

3 Things You Need to Know About the Market Today

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1, Chinese GDP Growth Slows to Multi-Decade Low

Shanghai Composite, 4-Hour Chart Analysis

When even the strongly PR-optimized Chinese economic releases are showing severe weakness, it’s not at all surprising that the local stock market is in a deep bear market, and even the explosive oversold rally on Wall Street combined with the trade optimism of last week is not enough to meaningfully change the technical setup.

While economic growth slowed to an almost 30-year low on a yearly basis, retail sales and industrial production beat the consensus estimates by a hair, but that wasn’t enough to cause a material rally in equities, with the global sentiment leaning slightly bearish. This week’s most important question will be how risk assets will hold on to their recent gains, with a special attention on China and Europe, which continue to lag behind the US from a technical perspective.

The Shanghai Composite is more than 30% below its bull market highs, while the main European benchmarks are also around 20% below their respective highs, and that’s following one of the strongest short squeezes in history on Wall Street, mind you. The next few days could be crucial for markets, and we now advise caution even for short-term bulls.

2, Stocks Retreat after Friday Ramp with Wall Street Closed

German DAX 30 Index, 4-Hour Chart Analysis

Looking at Europe, the major indices failed to extend their gains from Friday, while US stock futures are also modestly lower after the European close. With the US markets being closed in observance of the Martin Luther King Jr. Day, trading volumes and activity has been predictably low, and things will likely get heated tomorrow, as the earnings season will also continue.

Johnson & Johnson (JNJ) and IBM (IBM0 will report earnings tomorrow, and all eyes will be on their overseas numbers and guidance amid the global economic slowdown. We had some negative reports regarding the US-Chinese trade talks, concerning the sensitive issue of Intellectual Property, and we still think that even though an agreement is likely in the coming months, implementation and enforcement will be borderline impossible.

3, Oil Tests December High

WTI Crude Oil, 4-Hour Chart Analysis

While risk assets, in general, had a slightly bearish half-session crude oil kept on pushing higher following Friday’s move to new correction highs, with the WTI contract entering the resistance zone that capped the December consolidation. The crucial commodity, which has been slightly lagging US stocks from a technical perspective is still squeezing late shorts, but we expect a short-term top very soon, possibly after a stop hunting rally above the $55 per barrel level.

What’s sure, is that we wouldn’t be buyers at these levels, even in light of the OPEC production cut, since over-supply remains a major issue, and the increase in US output continues. That said, the short-term uptrend is intact and the topping process could take a while, but we will keep a close eye on the day-to-day price action following the 25% rally off the December lows.

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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 445 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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Market Overview

European Stocks Decline as China’s Economic Growth Hits 28-Year Low

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European stocks traded lower on Monday amid news that China’s economic expansion reached its slowest pace in nearly three decades, casting a dark shadow over the health of the global economy.

Europe Sees Red

All of Europe’s major stock indexes traded lower in the afternoon session. The pan-European Stoxx 600 fell 0.3%, reflecting weakness across the continent.

Germany’s benchmark DAX Index fell 0.6%. In Paris, the CAC 40 Index languished 0.2%. Spain’s IBEX 35 Index also dropped 0.2%. The FTSE 100 Index in London pared losses to trade flat.

The weak European session followed strong gains in Asia, where traders remained optimistic about China’s new stimulus plan. Last week, the Chinese government pledged to lower taxes and increased federal expenditures in 2019 as a way to shore up economic growth. Meanwhile, the People’s Bank of China (PBOC) said it will make monetary policy easier to gauge moving forward.

Drama surrounding Brexit also weighed on European stocks as British Prime Minister Theresa May prepared to unveil a new plan to withdraw from the EU. May’s Brexit bill was shot down in British parliament last week. A parliamentary bloc tried to oust her from power by forcing a no-confidence vote that the prime minister subsequently survived.

British lawmakers will vote on May’s Plan B on Jan. 29. According to early reports, the new plan is unlikely to be much different than the previous bill tabled to parliament.

China’s Economic Headwinds

The Chinese economy is coming off its slowest year of growth since 1990, a warning sign for investors banking on continued global expansion. The world’s second-largest economy grew 6.6% in 2018, in line with expectations but a substantial drop compared with previous years.

China’s economic grew 6.4% annually in the fourth quarter, which is an extension of a downtrend that began to emerge roughly five years ago.

Retail sales grew 8.2% annually in December, slightly higher than the November rate. During the same month, industrial production picked up to 5.7% annually, up from 5.4% in November. Annual fixed asset investment was unchanged at 5.9%.

Beijing is prepared to make big concessions in its ongoing trade negotiations with the United States. As CCN reported Friday, China has offered to completely eliminate its trade surplus with Washington by purchasing an additional $1 trillion in American-made goods. The additional purchases will be made over a six-year period.

Last year, China’s trade surplus with Washington amounted to $323 billion.

Talks between the two superpowers are expected to continue over the next six weeks as negotiators look to get a deal done during the 90-day truce period. President Donald Trump and Chinese Xi Jinping agreed to de-escalate trade hostilities during a face-to-face meeting in Argentina in early 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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4.7 stars on average, based on 743 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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