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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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4.6 stars on average, based on 152 rated postsSenior Market Analyst at Etoro.com.




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Return of the Bitcoin Maximalist? Crypto Winter Luring Even More Institutional Capital than Before

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Bitcoin’s price crept higher on Saturday, as the leading digital currency found renewed support near $3,600 following a week of mostly tepid moves. Although the bear market is showing little signs of letting up, Grayscale has declared the return of the ‘bitcoin maximalist’ following a dramatic surge in investments during the fourth quarter. Could this mean that the worst of the downturn has passed?

Return of the Bitcoin Maximalist

Grayscale, the cryptocurrency asset manager most famous for the GBTC Bitcoin Trust, saw an influx of investment capital during the fourth quarter of 2018 – a period known simply as ‘crypto winter’ or ‘crypto nuclear winter,’ depending on who you ask. During the quarter, the Grayscale Bitcoin Trust brought in an average of $2 million per week, the company said in its most recent quarterly report. The number dwarfs the average weekly investment for all other cryptoassets, which stood at just $300,000.

The sheer dominance of bitcoin relative to its altcoin peers led Grayscale to declare the “return of the bitcoin maximalist.” Bitcoin attracted “the most capital within the Grayscale family of products despite further price declines in the digital asset market,” the manager said. “In the fourth quarter, 88% of inflows were into Grayscale Bitcoin Trust, while 12% were into products tied to other digital assets.”

Total investment into Grayscale products reached $359.5 million in all of 2018. The average weekly investment for all products stood at $6.9 million, with the Bitcoin Trust attracting $4.7 million of that total.

Profound Shift Underway?

The shift from retail to institutional investor was also highlighted in the quarterly report. Two-thirds (66%) of the total funds invested during the year came from the institutional investor class. A deeper dive into the investor profiles reveled that 40% of the total amount invested in the fourth quarter came from retirement accounts.

These data points – the rise of the institutional investor and the influx of retirement savers into the digital currency space – reinforce two important trends: (1) the average bear-market investor is patient (i.e., they have a multi-year time horizon); and (2) institutions are building strategic positions in crypto, having used the 2018 downtrend to bolster their positions.

Interestingly enough, it was just last week that Morgan Creek Digital, a leading crypto asset manager, announced that two pension plans became anchor investors in a $40 million venture-capital fund. In other words, retirement planners are beginning to view crypto as a long-term investment vehicle.

Nowhere is this more apparent than in Virginia, which is where the two pension plans are located. Combined, they accounted for $21 million of the $40 million invested into Morgan Creek Digital’s fund. More on this story: Virginia Police Department Reveals Why its Pension Fund is Betting on Bitcoin.

BTC/USD Update

Bitcoin clawed back above $3,600 on most major exchanges Saturday even as trade volumes declined. The bitcoin price rose 1% to $3,603.76 on Bitfinex, where it was in close proximity to the 50-day moving average. A clean break above this level could generate sustained bids for the digital currency as it attempts to carve out a higher trading range. The relative strength index (RSI) shows the price has positive momentum, based on the daily chart.

At current values, bitcoin has a total market capitalization of $63.8 billion. That accounts for 52.6% of the overall market. The combined market cap of all assets was $121.2 billion, according to CoinMarketCap.

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 770 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




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Crypto Update: Another Spike Fails in Crypto-Land

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The major cryptocurrencies continue to follow the pattern which consists of sudden spikes followed by choppy sideways periods. Today, the top coins jumped higher, with the strongest currencies testing their recent swing highs, but the move quickly failed. The market continues to be dominated by low liquidity and the bearish long-term forces, making it difficult to make money trading the long side.

That said, the short-term break-outs, which were formed one week ago, remain intact and our trend model is also on short-term buy signals in the case of the relatively stronger coins. Despite the buy signals, traders should remain cautious with new positions, as the long-term forces continue to work against bulls here.

The leadership of last week’s move continues to be weak and without a new batch of coins hitting new short-term highs, it’s hard to see what could propel the market higher. The top 3 coins haven’t been able to pull their weight either, so odds clearly favor the continuation of the bear market from a broader perspective.

BTC/USD, 4-Hour Chart Analysis

Bitcoin remains stuck below the $3600 level despite today’s spike, and the bearish drift that started last week in the coin continues. BTC’s relative weakness is a negative sign for the whole segment, and although it’s still above the support/resistance zone just north of $3450, the long-term setup continues to point of the $3250 and $300o support levels.

That said, the short-term buy signal is still in place in our trend model, and traders could open small, speculative positions in BTC, with strong resistance zones being ahead near $3850 and between $4000 and $4050.

XRP/USDT, 4-Hour Chart Analysis

Ripple has also been showing relative weakness in recent days, and today it dipped back below the key $0.30 support/resistance level following the failed rally attempt. While the coin once again avoided a move towards the next main level of interest at $0.28, it is still likely to violate that level and test the August low near $0.26.

With that in mind, traders should stay away from XRP, with our trend also being on short- and long-term trend signals, and barring a move above $0.32, the immediate outlook is also negative, with further resistance levels ahead near $0.3550 and $0.3750.

Litecoin Tests $44 Level Again as Ethereum Clings to $120

LTC/USD, 4-Hour Chart Analysis

After settling down near the $41 price level, last week’s star LTC spiked as high as $44 today, but it failed to break-out above the key resistance zone. While the break-out remains intact and the MACD indicator still only points to a correction, the market-wide trends remain negative, and the previously leading coin hasn’t shown signs of relative strength in the last couple of days.

Traders could still hold their positions here even though a swing low is not yet confirmed, but strict rsik management rules should still be applied. A move back below $38 would trigger a downgrade in our trend model, which is still on a short-term buy signal. Above the initial resistance at $44, further levels are ahead near the recent swing high near $46 and at $51, while support below $38 is found near $34.50 and between $30 and $30.50.

ETH/USD, 4-Hour Chart Analysis

Ethereum has been trading in a narrow range today and the recent short-term swing high capped the rally attempt in the second largest coin. While the coin is still holding on to most of its gains from last week, trading well above the $112 level, the lack of bullish follow-through is a negative sign even regarding the short-term outlook.

The hostile long-term setup raises the odds of a failed short-term rally, and although pour trend model remains on a short-term buy signal, traders should only consider small, speculative positions here. The $120 level continues to be at the center of attention, with another strong resistance above that being found near $130, while further support is found in the $95-$100 zone.

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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4.7 stars on average, based on 465 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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The “Accessibility Premium”: How Coinbase’s Overseas Expansion Could Affect Crypto Prices

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The accessibility premium refers to the affect on a cryptocurrency’s price when it is added to Coinbase. The $8 billion valued exchange is now looking to expand beyond its U.S-based institutional trading business to offer institutional services worldwide. Bitcoin, Bitcoin Cash, Ethereum, and Litecoin may end up being the greatest beneficiaries. These cryptocurrencies could gain from increased accessibility; the new “Coinbase Effect”.

In 2018, as the exchange added more cryptocurrencies, some writers wrote about a perceived “Coinbase Effect”, like Ari Paul. They theorize about an “accessibility premium”, in which those crypto-assets that are more accessible rise in price. With Coinbase bringing crypto to worldwide investors, it could bolster demand for those coins that are listed on the San Francisco-based “Goldman Sachs of Crypto”. They would be more accessible. When a new cryptocurrency or token hit the exchange, traders might expect a bump in price. 

On May 3, 2017 Coinbase integrated Litecoin, resulting in a 30% increase in the price. When Coinbase listed Bitcoin Cash on December 19, 2017, trading on global exchanges skyrocketed. Bitcoin cash closed at $4,000. Two days prior, its price had been $2,200. Volume increased from $2.5 billion on December 18 to nearly $12 billion on December 20 for a 380% increase.

Coinbase added Ethereum on July 21, 2016, resulting in a modest 14% rally. Things changed when Brave browser’s token, BAT, launched on Coinbase. It declined in price. Further data is needed to know the truthful dynamics. By the time BAT was listed, the price of crypto had long since started a consolidation, leaving sentiment low.

Fast forward Q1 2019, and Coinbase is expanding overseas. It is laying down infrastructure for the long-term as it looks towards Asian markets, amid moves to attract international institutional money to cryptocurrency trading. (Coinbase’s product GDAX offers US-based institutional trading) New traders might find Coinbase’s familiarity welcoming. Higher volumes would be to expected for the cryptocurrencies offered by the Silicon Valley giant. 

So, the popular exchange is undergoing an extensive expansion. Coinbase customers residing outside of the U.S. can now trade without a domestic bank account. This could be a boon to the prices of cryptos offered by Coinbase, led by Bitcoin.

There has been discussion about the correlation between simplicity and demand. Opinions on the effect ease of use has on demand are not entirely aligned. As Donald Norman says in his book “Living with Complexity”:

… the so-called demand for simplicity is a myth whose time has passed, if it ever existed.

Make it simple and people won’t buy. Given a choice, they will take the item that does more.

Features win over simplicity, even when people realize that features mean more complexity. You do too, I’ll bet. Haven’t you ever compared two products side by side, feature by feature, and preferred the one that did more? …

Would you pay more money for a washing machine with fewer controls? In the abstract, maybe. At the store, probably not.

Ultimately, Norman argues for managed complexity. But, the demand for simplicity – or at least clarity – seems logical in a chaotic, complex world. In a blog on their website called “The Customer Demand for Pervasive Simplicity”, Cisco writes of this perception, and how it tailors its products towards this end.

A bastion of crypto-simplicity, Coinbase has long courted institutional investors in the U.S., but now its targets are clearly set on a global institutional book. The stage is set for crypto’s first truly global exchange, though Coinbase will need to first successfully assimilate into new countries, with their unique business practices languages, laws, and regulations. Currently, differing regulations in different countries keep crypto’s exchange ecosystem quite regional.

Coinbase holds 5 percent of all bitcoin, 8 percent of all ethereum, and 25 percent of all litecoin in circulation in cold storage. Its success overseas would likely underpin their prices if the “accessibility premium” holds true.

Marcus Hughes, recently appointed as lead counsel for Coinbase in the United Kingdom, has been tasked with overseeing cross-border expansion: “Coinbase takes the long view on bitcoin and wider cryptocurrency prices,” Hughes said, “We need to move beyond the speculation phase of bitcoin and cryptocurrency to the utility phase.”

He added: “The utility phase will mean bitcoin and crypto becomes more widely accepted and understood.”

This solidifies bullish sentiment from the exchange which will be strengthened should it be successful in its bid to attract ‘big money’, not just from a core user base in the U.S. but also from thriving crypto markets in countries such as Japan.

Coinbase reports that, “In the past twelve months, hundreds of crypto-first hedge funds have launched around the world, and many hundreds more traditional institutions have begun [actively trading digital assets]. High-volume clients across Asia will now have access to Coinbase’s flagship trading platforms for institutions. As part of this rollout, we now support inbound and outbound international (SWIFT) wire transfers, allowing Coinbase clients in Asia to fund their accounts from non-US bank holdings.”

Coinbase predicts a bright future for digital currency in Asia, it says, and looks to enter into a market that could help it to cement a role as one of the global leaders in crypto trading. But there remains a big question mark over cryptocurrencies, prominently over how regulation is going to play a role.

Marcus Hughes opines that this year will see a “massive change” for global bitcoin regulation. He says that Europe will gradually lead the way out of a “crypto winter” into regulated digital currency markets with more potential for long-term stability. But, in the short term, irrational trading might paint an entirely different picture. 

As we see Coinbase invest in the long-term it bolsters confidence in a currently inhospitable climate for bitcoin. Should prices continue to fluctuate market sentiment may dip, but it is the notion of institutional money that may serve to give cryptocurrency markets much-needed price stability. 

Image: David McBee, Pexels

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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5 stars on average, based on 2 rated postsJustin O'Connell is the founder of financial technology focused CryptographicAsset.com. Justin organized the launch of the largest Bitcoin ATM hardware and software provider in the world at the historical Hotel del Coronado in southern California. His works appear in the U.S.'s third largest weekly, the San Diego Reader, VICE and elsewhere.




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