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Market Overview

Pumping and Dumping

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  1. One of the biggest issues of the crypto market as we know it is the lack of regulation.

It’s great to see that some new companies are able to sidestep the traditional finance industry and raise large amounts of seed money in an ICO but of course, many people are taking advantage of this and using this new market to create scams for tokens that may not have any value at all.

The real problem though, is what happens after a worthless token is created. Many times these new tokens become prime targets for pump and dump schemes, which are being perpetrated shamelessly by groups like the “PumpKing Community” on the Telegram app.

I recently had the pleasure of working with Oscar Williams-Grut from Business Insider UK, who put together an excellent article explaining all about it.

@MatiGreenspan
eToro, Senior Market Analyst

 

Please note: All data, figures & graphs are valid as of November 14th. All trading carries risk. Only risk capital you can afford to lose.

Market Overview

It’s quite common these days for a country to borrow more money than they could ever conceivably payback. For example, the US Government now owes more than $20 Trillion to other countries and private investors. That doesn’t usually become a problem as long as they can pay back the service payments on these loans. When you’re a country, you generally have more freedom to borrow.

Think of it like this, the bank allows you to borrow money in order to purchase a home that costs $20 Million. When giving you that loan, they take a minimal downpayment of $250,000 and largely ignore the fact that it will take you more than 300 years to pay off the full amount. In fact, the only thing they look at is your ability to pay off the monthly mortgage bill of $2,500.

The United States is in no immediate danger of defaulting on their monthly payments but it seems that Venezuela just did.

A month ago, they ran into trouble paying off $200 Million of debt-servicing but they were granted a 30 day grace period to pay up, which has just expired. The most likely situation now is that their investors will remain patient, hoping and praying that they’ll get their money back. There is also a chance though that they will band together and demand payment, in which case things could get pretty ugly.

The main thing to watch is the price of crude oil. State owned Venezuelan oil companies are currently contributing about 6% of OPEC’s oil. So if they’re unable to keep the pumps running, there will be a significant drop off in supply from South America.

“The oil supply coming from Venezuela has been declining lately, but if the country goes into default, it will be extremely difficult for them to even meet their reduced quotas.”

Tali Salomon
eToro, Spanish Region Analyst

The price of oil is already pretty high at the moment, so it will be interesting to see how this saga plays out over the next few days.

Sudden Swings

Just as I’m writing to you, I can see a few charts that have been moving pretty quickly. The reason for the move is still not clear to me but the moves themselves are strong enough to comment on.

There are a few breakouts in some currency pairs but none of them really seem to be connected. Here’s a graph from Finviz that has a good overview.

So the Euro is surging with a clean break above 1.1700…

The Yen is falling, with the USDJPY breaking out above 113.70…

The New Zealand Dollar is the worst off from this violent swing but take a look at Gold touching $1270 an ounce before rebounding.

…but the coolest part of all this is that we might finally have a breakout in ETHEREUM. We’ve been tracking this triangle pattern for a while now. In the last few hours, the upper line of the pattern is getting a serious test…

With all the excitement in the crypto markets lately it’s nice to see ETH finally joining the party, fashionably late as usual. The move may also have something to do with some new upgrades that are being planned on the network that will move away from high electricity mining to a better system known as PoS.

What else?

All eyes and ears are on the big central bank meeting in Frankfurt. Guest speakers will include Mario Draghi, Janet Yellen, Mark Carney, and Haruhiko Kuroda. These four people have more influence over global money flows than anybody else in the world right now.

Numbers have been good lately, really good. Economic growth and employment numbers in most of the developed world have been surpassing expectations and thanks to copious amounts of money that the central banks have injected into the system, stock markets are at record highs.

At some point, possibly soon, the central banks will want to start tightening up the money by raising interest rates and reducing the amount of cash injections.

No doubt we’ll hear a lot of grandiose statements and self back patting from the quartet. Try and see past that. The markets want to know about policy going forward. Sure the “economy is doing great” but what do they intend to do about it. Will they put their money where their mouth is and start to get aggressive?

Will Japan ease off their money printing? Will Europe start signalling that they’re ready to give up on negative interest rates? Let’s see if they come up with a central theme about where things are going, then we can really see the markets start to move.

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.

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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Market Overview

Ethereum Co-Founder Puts to Rest Speculation of Crypto Armageddon

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Blockchain pioneer Joseph Lubin, who is at the helm of blockchain startup ConsenSys, isn’t swayed by this year’s downturn in the crypto market. In fact, Lubin has been a voice of calm in the crypto space all year, emphasizing the development side of the equation while cryptocurrencies have been in the doldrums, not the least of which has been the currency of the project he co-founded, Ethereum (ETH). He told CNBC:

“Digital currencies are not on the edge of a collapse. We’ve seen lots of boom and busts in our ecosystem over the last nearly 10 years and our ecosystem has never been stronger.”

Lubins’ barometer for success in the crypto industry is the number of projects and people that have been drawn into this space, including entrepreneurs and developers. “It’s orders of magnitude bigger than it was and the foundational infrastructure is getting built out,” he noted.

That foundational infrastructure is exactly what is going to deliver the kind of scalability that networks like Bitcoin and Ethereum need to go from what an Andreessen Horowitz General Partner recently described as “dial-up” days to mainstream adoption. Meanwhile, Lubin recently pointed out that the amount of activity on the Ethereum blockchain today outpaces where it was a year ago when the market was approaching its peak.

Industry Regulation

While U.S. regulators have been dragging their feet to develop  a framework for cryptocurrencies like bitcoin, they’ve been more keen to embrace the blockchain and according to Lubin “regulators are getting a very good understanding of the value of the technology.” When pressed, Lubin said he expects “lots of self-regulatory activity” in the crypto space” but he is quick to distinguish ether more as a crypto commodity or as a crypto fuel for the Ethereum network than a cryptocurrency, though it has some features of the latter.

Incidentally, while the broader cryptocurrency market is currently trading flat, one of the best-performing cryptocurrencies of late is Basic Attention Token (BAT), which is an Ethereum-based coin that is up approximately 50% in the last week amid speculation it will be Coinbase’s next listing.

And then there’s regulated crypto exchange Bakkt, whose parent company is the Intercontinental Exchange (ICE). Bakkt announced today that it will launch its bitcoin futures contract on Dec. 12, which is slightly behind the original plan for a November launch. In a nod to foundational infrastructure, it’s been about a year since the CME and CBOE launched the industry’s first bitcoin futures products.

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 69 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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Market Update: U.S. Stocks Dragged Lower by Financials, Energy Companies; China Rebounds

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U.S. stocks finished mostly lower on Monday, as brisk selloffs of financials and energy shares offset modest gains in the technology and communication sectors. A large relief rally in China failed to ignite a similar revival in Europe and North America as concerns over global growth dampened investors’ appetite.

U.S. Stocks Sputter

The S&P 500 Index opened in positive territory before wobbling during the morning session and eventually turning lower in in afternoon trade. The broad index settled down 0.4% at 2,755.88, with a majority of sectors finishing in the red. Energy and financials were the biggest decliners, each falling more than 1% as a sector.

Modest gains in tech pushed the Nasdaq Composite Index to higher ground. The benchmark rose 0.3% to close at 7,468.63.

Dow industrials declined 126.86 points, or 0.5%, to 25,317.48. DowDupont Inc. (DD), American Express Co (AMX) and Goldman Sachs Group Inc (GS) were among the biggest decliners.

European markets also headed for losses on Monday, with all major continental bourses finishing in the red. The Euro Stoxx 50 Pr index closed down 0.7%,

China’s Biggest Rally in Three Years

Chinese markets exploded higher on Monday, with the mainland indexes posting their biggest single-day advance in almost three years following reassuring comments from government officials last week.

The benchmark Shanghai Composite Index surged 4.1% while the CSI 300 Index closed 4.3% higher, its largest advance since November 2015. Hong Kong’s Heng Seng Index rose 2.3%.

Government officials ranging from the Vice Premier to the heads of the People’s Bank of China talked up the domestic economy last week, reassuring investors that the ongoing trade war with the United States would not have a material effect on the nation. President Trump has implemented tariffs on more than $250 billion worth of Chinese imports, making whole on a campaign promise to hold Beijing to account for its unfair trade practices. According to the International Monetary Fund, the trade spat will result in both economies growing 0.2 percentage point slower next year. This will also lead to a downshift in global growth.

Last week, China reported annual GDP growth of 6.5% during the third quarter, the slowest since 2009. On Friday, the U.S. Department of Labor is expected to release preliminary Q3 GDP figures.

Lackluster Session for Cryptocurrencies

Risk-off sentiment in global equity markets in hasn’t translated into higher demand for bitcoin and other digital assets. On Monday, cryptocurrency prices traded slightly to the downside, erasing minor gains made during the previous session. At the time of writing, the total market capitalization of all coins was just over $209 billion, according to CoinMarketCap.

The bitcoin price swung back below $6,500, though losses were generally well contained. Ethereum, XRP and bitcoin cash all traded slightly lower on a 24-hour basis.

Digital currencies are experiencing a downshift in volatility as well as in trade volumes, with investors unwilling to commit to either direction. Recent history has taught us that prolonged periods of lateral moves are usually followed by sharp declines in subsequent sessions.

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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4.6 stars on average, based on 649 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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Market Overview

Cautiously Flying

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Hi Everyone,

It’s only Monday and already it seems to be one of the most exciting weeks of the year for the financial markets. Asian stocks are flying this morning (the reason for this below) despite some clear signs that investors are still cautious.

One of these signs is the price of gold, which has spiked during the sell-off two weeks ago (purple circle) but is now showing signs that it may be ready to stretch higher (yellow rising support line).

The fact that gold is trading near its highs is not necessarily any indication in and of itself. The upcoming Diwali Festival in India is traditionally a time when gold prices tend to rise.

As we’ll see below, investors are still happy to pour money into this market but they are doing so very carefully right now.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Chinese Support
  • Mark’s Market
  • Even more stable crypto

Please note: All data, figures & graphs are valid as of October 22nd. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

As we mentioned above, Chinese stocks are flying. The China 50 index is up an astonishing 5.3% as of this writing. This is largely due to strong support from President Xi Xinping…

We’ve seen these type of stunts before from President Trump but this behaviour does seem to be new for the Chinese leader.

The timing is impeccable here too. As we’ve been watching, the Chinese stock markets have been on the ropes after retreating more than 30% since the year’s highs. However, the Xi’s gambit may have fallen short of the mark.

As we can see below, the red line being defended on the China50 is just above 10,500 points. Whereas, to break out of the current range to the upside we’d need to see levels above 12,000.

Cautious Like an Oak Tree

For legendary investor Howard Marks, the markets are not so binary. The co-founder of Oaktree Capital does see the current markets as expensive but adds that this doesn’t mean we’re about to see a crash. The economy is doing well and therefore it pays to be in the market, but defensively.

We all know that markets are cyclical. They go through bull times and bear. However, not every rise is a bubble and not every decline is a crash. In fact, most market moves are a lot more moderate.

Marks’ theories are always fascinating even if they sometimes differ from my own, especially when it comes to bitcoin. I’ve been enjoying his email alerts for a while now, but this interview on Bloomberg opened my eyes in a new way.

Crypto Markets

Crypto markets remain steady and are showing even more signs of stability. Tether seems to have regained most of its composure and is now trading within 2 cents of the $1 mark, right where it should be.

In the meantime, volumes on other stable coins have stepped up to further stabilize the market. In this graph from theblockcrypto.com we can see USDT’s dominance of the stablecoin market dropping sharply since the incident on October 15th.

As we see more stable coins join the market, the safer the market will become. According to CCN there are more than 50 active stablecoins at the moment with more coming out all the time. At the moment, it seems that the one eating into Tether’s market share is Paxos, which is both regulated and rising quickly in volumes.

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.

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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4.6 stars on average, based on 133 rated postsSenior Market Analyst at Etoro.com.




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