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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.

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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

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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

BTFD!

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Now entering day three since the broad sell-off across the crypto market industry and theories are piling up as to why it’s happening.

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To me, none of the theories point to any dramatic change in the fundamentals of this market. We’ve seen greater pullbacks in bitcoin before. This isn’t the first 50% retracement and it probably won’t be the last.

This is actually a good thing for the industry as it can shake out some of the speculators and consolidate the tremendous gains seen over the last few months. Of course, the best thing would be a sustained reduction in volatility to increase stability.

We’ll discuss below what the possibilities are for price movement in the near term. Though we might go lower from here, for those who believe that this technology will play a much greater role in the future, this pullback can present an excellent opportunity to spot out possible entry points in the market.

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There’s an old strategy that’s been used in the traditional markets called “buy the dip.” This works especially well when the long term trend is up.

The term BTFD can mean either Buy The eFing Dip or Bear the F Down, usually depending on if you’re already in the market or waiting on the sidelines.

Of course, this is crypto so the usual disclaimers apply. Never afford more than you can lose and always diversify your investments. Blockchain is revolutionary but there is always a chance that any individual coin can go to zero.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

Growth from China

The Banks are Fine

Crypto by the charts

Please note: All data, figures & graphs are valid as of January 18th. All trading carries risk. Only risk capital you’re prepared to lose.

Traditional Markets

Investors were calmed yesterday that the US government is heading to yet another temporary solution to keep the government open for business.

This will likely be the fourth temporary patch to extend the deadline but with the fractured politics in the USA right now even just the ability to kick the can down the road for a few weeks is being seen as a reason to celebrate.

The Dow Jones ended the day with another all time high closing above 26,000 points for the first time ever.

This morning, we had some great growth numbers out of China with the economy in the world’s most populated country growing by 6.9% in 2017. This figure was slightly better than analysts were forecasting and the China50 index is the highest it’s been since 2008.

Stocks were further encouraged by earnings figures from the big banks. Analysts were expecting some dismal results this quarter but it seems the figures were not quite as bad as expected. Famous Wall Street commentator Jim Cramer has expressed his confidence in this sector.

Though the financial stocks were the only red sector in the Dow Jones, things certainly could have been much worse.

Now for Crypto…

We did indeed see some moderate increase in volumes from Japan and South Korea. Also, the premiums paid by these two countries have come down slightly.

At the time of this writing, Japanese exchanges are selling bitcoin for just 15% above the Western markets and South Korea is down to a premium of 18%. Though the prices are still elevated this is a great sign that the market is indeed evening out.

On December the premium in Japan was as high as 25% and the premium in South Korea was 31%.

Let’s Get Technical

With a lack of any strong fundamental news to drive this market, the best thing to do in a situation like this is to dig into the charts for clues.

Here we can see a chart of bitcoin over the last few months. Take a look at the blue rising trend line. Usually, the tendency would be for the market to come back to it’s support on the decline and as we can see that level is now acting as a magnet.

Slightly beneath that we can see the 200 day average price in yellow. So between these two levels, and now that the $10,000 psychological barrier has been broken, the key support is around $8000 per coin.

For those of you looking for more volatilty to do some day trading, take a look at Bitcoin Cash. According to Coincheckup.com BCH is the most volatile of the top cryptos.

Here we can see a very wide range between $1000 and $4000. If it passes either of these levels things will certainly change, but assuming stability returns to this market we could see it coming back to the average price that it was trading before the crash, right at the dead center of the range.

As always, please continue sending me your excellent feedbacks and questions. You are my main source of information. 😉

Let’s 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.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

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

The Cryptocurrency Crash Hasn’t Spilled Over Into Stocks, Yet

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Carnage in the cryptocurrency market has yet to bleed over into stocks, something analysts at Wells Fargo says is definitely in the cards.

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Danger Lurks for Wall Street

With equities riding record highs, few investors are paying attention to the possibility of cryptocurrencies raining down on their parade. According to Christopher Harvey of Wells Fargo Securities, this scenario isn’t being given as much consideration as it deserves.

In a recent interview with CNBC, Harvey said: “We see a lot of froth in that market. If and when it comes out, it will spill over to equities.”

“I don’t think people are really ready for that,” he added.

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The cryptocurrency market tanked another 23% on Wednesday, hitting nearly one-month lows before rebounding sharply in the latter half of the day. At their lowest, bitcoin, Ethereum and dozens of other major coins shed hundreds of billions of dollars in market cap. Bitcoin alone had declined some 50% from its record high last month.

In Harvey’s view, a more sustained drop would be needed for cryptos to materially impact the stock market. Until now, crypto traders have bought every major dip stretching all the way back to the start of 2017.

Crypto carnage has already hit bitcoin proxy stocks, a broad cross-section of equities with direct and indirect exposure to the blockchain market. The tech-focused proxy shares rebounded on Wednesday in chorus with the rest of Wall Street.

Goldman Sachs has also warned about cryptocurrency speculation, arguing that a sustained rally in bitcoin may cloud an otherwise rosy outlook for the U.S. economy. In a report issued in late December, Goldman analysts said credit imbalances and crypto speculation were among their biggest concerns going into 2018.

Stocks Continue to Surge

Interestingly, Harvey has given the S&P 500 Index a year-end price target of 2,863, according to CNBC. On Wednesday, the large-cap index closed at 2,802.56, for an astonishing year-to-date return of 4.8%. Either the Wells Fargo analyst has severely underestimated the bull market or is expecting a few major pullbacks en route to the year-end target.

Wall Street’s major indexes rose between 0.9% and 1.3% on Wednesday amid better than expected corporate earnings. As of Friday, roughly 5% of S&P 500 companies had reported a blended earnings growth rate of 10.2% for Q4, according to financial researcher FactSet.

Although gloom and doom scenarios haven’t fazed stock traders, there are early signs that the bull market may be overstretched. Aside from the huge valuation risks currently facing Wall Street, volatility has crept noticeably higher in recent weeks. The CBOE VIX Volatility Index has risen in eight of the last nine sessions to trade at its highest level since November. Under normal circumstances, the VIX trades in the opposite direction of the S&P 500 Index.

Share values are also being supported by high-growth prospects under President Donald Trump, who scored a major legislative victory last month by passing a new tax bill. Even the Federal Reserve, long at odds with the president, has lifted its growth outlook thanks to the historic bill.

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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Cryptocurrencies

Crypto Pullback – Where’s the Support?

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Looks like we have some panic selling on the top cryptos this morning.

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Ripple has slipped below support of $1.5 per XRP and bitcoin has just fallen through $12,000.

The reason for the sell-off is not quite clear but we can see reduced volumes from Japan and South Korea who are usually the ones doing the heavy buying in this market.

In today’s market webinar we’re going to talk about where might be a good place to buy this dip and how to position your portfolio during this kind of pullback.

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The webinar will be at 15:00 GMT and is open to everyone.

https://register.gotowebinar.com/rt/1157869693061562371

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Good Returns
  • Swiss Depreciation
  • Crypto Pullback – How low can you go?

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

Traditional markets

Today investors on Wall Street will be coming back from their long weekend in a particularly good mood. The stocks have been flying in Asia so far this year and the Europeans have done a good job recouping the losses from December.

Wall Street herself has been having a record year so far so as long as these trends continue…

Even the bond market, which gave us a bit of a fright last week seems to be cooling down. The US 20 year treasuries have found support at 122.5 and are now holding near their yearly average price.

Swiss Event Today

Thomas Jordan rarely moves the markets but when he does, he does big. Today he will be speaking at the University of Zurich and delivering a speech about how money is created. A subject I’m sure we all would like to know more about.

No doubt he’ll be talking about how the central banks of the world have increased the amount of money in the system over the last decade and how the local banks have leveraged this money.

What he probably should be talking about is how to reduce the money supply from a system that is flooded with capital.

We’ll be watching his speech today with great interest, which will take place at 18:00 Swiss time. Just after our webinar. 😉

For reference, here’s a chart of the Euro against the Swiss Franc. Just about every large movement on this chart, and there are quite a few notable ones, have been created by Mr. Jordan. So it pays to pay attention to what he says.

The Crypto Pullback

The pullback seems to be coming from a lack of volumes in Asia. Cryptotraders in Japan and South Korea tend to dominate this market but so far this year have been notably silent.

Reports from Bloomberg of a further crackdown in China are not helping things but the real story here is Japan.

Japan was the first country in the world to fully legalize bitcoin as a currency last March and investments in BTC have reportedly raised the countries GDP significantly. The digital currency frenzy is also making a blockbuster entrance into Japanese Pop Culture with the new girl band…

So to see Japanese Bitcoin volumes of just 11% of the market at 18:00 Tokyo time is kind of odd.

My best guess is that Japanese and Korean traders are simply tired of paying the premium and are waiting for the market to even out. The price per bitcoin in these two countries is usually more than 25% above the prices in the West. So they might just be taking a step back, waiting for the FUD to blow over and get a better entry price.

The issue is that the markets have gone up so quickly that they didn’t have enough time to build in proper support. Here we can see that bitcoin does have some temporary support at the moment but if it does fall through it we could easily find ourselves below $10,000 pretty quickly and that’s a scary thought for some.

Whatever is causing this pullback it is making a lot of people nervous, which is why we should always remember that even though crypto has been the best performing asset class in history over the last year it’s still incredibly risky. No doubt many will see this dip as an excellent opportunity to get in but anybody who bought at the top is not doing well at the moment.

Hope to see you in the webinar. Let’s 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. Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

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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