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Promises Surprising Promises

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US President Donald J Trump certainly has his fair share of critics. Even I myself am sometimes one of them. There is one thing though that he has not misled us about and that is economic growth.

The new President has promised us a steady growth rate of 3% and the numbers out on Friday have demonstrated that despite hell and high water, floods and fires, and a multitude of other obstacles, the economy has fulfilled that promise on his behalf.

The significance of this report along with the jaw dropping revenue announcements from the US’s biggest tech firms has sent the stock markets to the moon.

@MatiGreenspan
eToro, Senior Market Analyst

Please note that there will be no daily market update tomorrow. Myself and about 250 other eToro employees will be taking a short field trip for some much needed R&R. We will resume on Wednesday, November 1st.

 

Please note: All data, figures & graphs are valid as of October 30th. All trading carries risk. Only risk capital you’re prepared to lose.

Market Overview

The world’s largest financial institution may soon be changing ownership.

Even though central banks are supposedly separate from the government and unconnected to politics, the very nature of their business binds them to each other.

One example is the way in which Fed Bosses are chosen. When Janet Yellen’s term ends as the Governor of the US Federal Reserve, there will not be any national election to find a replacement. Rather, the President of the United States will be the one to nominate her successor. The nominated candidate will need to be vetted by Congress before being sworn in, but at that point his or her appointment is almost certain.

Trump’s administration has been mulling the decision over for several months now and according to reports are very likely to announce shortly that Jerome Powell will take over.

Powell has been on the Fed’s Governing Board since 2012 and is expected to be the best person to continue Yellen’s work on “normalizing” monetary policy and more importantly he is expected to be the best person for the roaring stock markets.

As earnings season slows down to a trickle, market participants are more likely to be focusing again on the Fed and their international counterparts and look to them for direction.

Japan

If the Fed in the US is expected to continue their path to normal monetary policy, their friends in Japan are doing just the opposite.

After PM Shinzo Abe’s sweeping victory in the national elections the Bank of Japan now has a full mandate to continue on their path to printing money and forcibly devaluing the Japanese Yen.

Until now they’ve been focused on creating money in order to buy Japanese ETFs but they may be running out of assets to buy.

As of February, the BoJ owned about two thirds of the ETFs in Japan…

According to some sources, in the past few months, their holdings have grown to 75% of the entire market.

Of course, this is unsustainable. You can’t have a free and fair market in which the central bank is holding most of the assets.

Also, the Bank of Japan is still experimenting with negative interest rates. Currently, anyone holding funds at the BoJ needs to pay 0.1% a year in negative interest. Even though many other central banks around the world are trying to raise these rates, Japan is not expected to do so for quite some time.

The market is currently giving the possibility of a BoJ rate hike in one year from tomorrow at just 33%.

The good news is that this white line is rising and that at least the markets are starting to belive that it eventually will happen.

Tomorrow morning, BoJ Governor Haruhiko Kuroda will give the interest rate decision, followed by a press conference.

In my view, this meeting has a very large chance of delivering a surprise to the markets. They do need to switch their strategy quite soon before they’ve bought up all the assets in the country and now that Abe has the power to do as he pleases, the timing is right to double down or back off their plan to send the Yen to the floor.

Japanese Traders

In Japan, day trading is a way of life. Candlestick charts were invented there as was the Ichimoku Cloud and several other technical analysis indicators.

Lately, they’ve moved on to a new asset that’s a bit more volatile than the Yen. Now they’re trading Bitcoins.

The Bank of Japan, possibly in an effort to weaken the Yen, has legalized Bitcoin completely in April and since then many major stores, websites, and supermarkets have started accepting payments in the digital currency.

In September, the country’s BTC monthly volume reached a record of 6.5 Million coins, which is roughly 70% of the entire market.

Over the weekend, the price of Bitcoin reached a new all-time high of $6,281 per coin so the number one chart today that most traders will be looking at is this one.

It will be interesting to see if the BoJ does indeed end up with a surprise tomorrow how fast traders will switch their screens to the USDJPY.

Of course, the nature of a surprise is that nobody is expecting it. So most likely they’ll simply continue on their path to buying out the market, cutting their nose off to spite their own currency. But it always pays to be prepared.

Wishing you an amazing week 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.

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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Analysis

Crypto Update: Altcoins Reverse Gains as Bitcoin’s Surge Fizzles Out

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The cryptocurrency market had one of the wildest days in months following yesterday’s epic short-squeeze in Bitcoin that triggered a strong segment-wide rally. While Bitcoin managed to break through several key resistance levels, the major altcoins failed to join the break-out, even as temporarily, some of them managed to move above primary resistance.

Ethereum topped $500 briefly, while Ripple cleared the $0.51 level, as BTC neared the $7650 resistance, but altcoins failed to trigger short-term buy signals, as they promptly reversed gains. As correlations remained very high despite the rally, and a bullish leadership is still missing, the market as a whole still shows bearish characteristics, even as the buy signal is intact in Bitcoin, for now.

Yesterday we also pointed out the relative weakness of altcoins and traders should still remain cautious with new positions, as, despite the recent moves, the technical setup is still unchanged in the segment.

BTC/USD, 4-Hour Chart Analysis

Although Bitcoin reached the next major resistance level at $7650, the weak altcoins now dragged the largest coin back below the $7350 support, and the odds of failed break-out are growing in BTC as well. While the buy signal is intact, the coin needs to stay above $7000 to avoid a bearish reversal, with further support below that found at $6750 and $6500.

Ethereum’s Reversal Warns of a Fake-Out

ETH/USD, 4-Hour Chart Analysis

While ETH was close to triggering a buy signal, we warned traders that without follow-through the short-term trading range and the declining trend would remain unchanged. The relative weakness of Ethereum persisted today as well, and the coin failed to stay above $500, and now it’s back on a short-term sell signal, and it gave back all off yesterday’s late-day surge.  Primary support is still found at $450, with other levels at $420, $400, $380, and $360 while resistance is ahead at $500 and between $555 and $575.

LTC/USD, 4-Hour Chart Analysis

The bearish leaders, like LTC, Monero, NEO, and Dash couldn’t get durably back above the key breakdown levels, and the major altcoins all followed a similar path to ETH thanks to the elevated correlations. As no buy signals popped up, a trend change wasn’t completed even in the relatively stronger coins. The failed break-outs could point to another move towards the June lows, and traders should still remain cautious with new positions here.

XRP/USDT, 4-Hour Chart Analysis

Ripple couldn’t durably move above key $0.51 level despite yesterday’s move, and the coin is now back below the primary $0.49 support following the bearish reversal. The relatively weak coin is still well above the June low, but another test is now likely, and the long-term setups remain dangerous. Further resistance is ahead at $0.54 and at $0.575, while primary support is now found at $0.45.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

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 295 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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Analysis

Technical Analysis: BTC/Tether

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Tradingview is a web application that allows full charting abilities for free. Different online brokerages have different charting abilities and tools.  Using tradingview.com, I was able to utilize Fibonacci zones with the following levels: 23.6%, 38.2%, 50.0%, 61.8%, and 100.00%. I did not set support or resistance levels because they are irrelevant to this analysis. Using indicators such as volume, moving-average convergence divergence (MACD), and Relative Strength Indicators, we are able to predict the movement in the price of Bitcoin relative to Tether. One Tether (USDT) is equal to one U.S dollar, give or take 3 cents.

This 3 day analysis uses price movements plunging into the 61.8% Fibonacci zone to trigger a buy signal. From there, we verify the buy signal with the MACD indicator below the chart. Notice how the MACD looks like a sell signal, but in fact goes back negative. Moving from a negative spread to a positive spread, triggers the buy signal as the price bounces off of the 61.8% Fibonacci level.

Following the next two days, I conducted another analysis using the same strategy. This time I inserted a support where three touches occur in the price.  Bitcoin’s price took a dive on volume pointing to a massive selloff. We were able to capitalize on this by waiting until the price crossed the Fibonacci barrier into the 61.8% zone. From there, the MACD spread checked out at -8.68. A buy signal was created and we waited until the price neared the top of the 50.0% zone.

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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1 stars on average, based on 1 rated postsMichael Genna works in Business Development at Benzinga, a financial media and technology company located in downtown Detroit. He attends Wayne State University, majoring in finance with a minor in economics.




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Bitcoin

Billionaire Hedge Fund Managers Spar on Bitcoin’s Potential

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The bitcoin price is now gunning for $7,500, and after yesterday’s performance, it’s no time to be underestimating the leading cryptocurrency by market cap. It’s been too long since bitcoin’s 10% advance would seem modest in comparison to some of its altcoin peers, but that’s precisely the case today, with coins like Stellar, Cardano and Zcash all advancing between 15%-33%. Bitcoin bulls are coming out of the woodwork, including the likes of billionaire hedge fund manager Marc Lasry, who appeared on CNBC.

Lasry, who is a co-founder of the $9.6 billion investment firm Avenue Capital Group, is calling for bitcoin $40,000. The catalysts will be bitcoin making its way into the mainstream and becoming less cumbersome to trade, the timing for which can be more difficult to predict. Lasry has been a bitcoin bull since at least last year when he reportedly kicked himself for not getting in on the cryptocurrency when it was still trading in the low hundreds of dollars. He told CNBC:

“As it gets more into the mainstream, and as more markets end up allowing it to trade where it’s freely tradable, to me that’s more of the bet.”

While hedge funds are among the institutional investors that are expected to begin pouring capital into the crypto space, Lasry has bitcoin in his personal portfolio, not the firm’s, despite the fact that Avenue Capital is no stranger to risk, as evidenced by distressed debt as its investment strategy. But with companies like Coinbase providing a custody solution, there are going to fewer and fewer reasons for hedge fund traders not to join. Especially given the bullish technical signs that are ahead.

Well, maybe not Lasry’s billionaire peer Ken Griffin, who is at the helm of hedge fund Citadel. He told CNBC he doesn’t believe in bitcoin, and neither do any of his portfolio managers. Griffin finds bitcoin to be a “head scratcher” and even advised the up-and-coming generations to find something more productive to do rather than wasting their money on cryptocurrencies.

Don’t expect Citadel to open a position in bitcoin any time soon, as Griffin told CNBC: “I have a hard time finding myself wanting to be in a position of being a liquidity provider for a product I don’t believe in.”

Moving Average

Meanwhile, with the cryptocurrency market finally out of the doldrums, you might be wondering where it goes from here. Fundstrat Co-Founder Thomas Lee pointed out on CNBC that the bitcoin price currently trading 30% below its 200-day moving average. From a historical perspective in 2011 and 2014, that’s a “positive signal.”

Source: CNBC

Both times that bitcoin was trading 30% below its 200-day moving average, it found a bottom within a month. And looking ahead for the coming six months, “you’re going to do pretty well owning bitcoin here,” Lee said. So basically, he’s advising investors to hold their bitcoin.

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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4.6 stars on average, based on 24 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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