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Market Overview

Redistribution of Crypto Profits

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Looks like we’ve got a pullback coming in on the Crypto market at the moment with many coins down 10% or more off of their all-time highs.

This market is risky and hard to predict in the short term so we can’t really know if this pullback will get much deeper or be reversed within the next few hours.

With that said, many of you who already have significant profits may be wondering just how to redistribute them into a more long term, more sustainable portfolio.

This is exactly what we did in the webinar yesterday. Using my own portfolio as an example and using the help of some of our more experienced clients we demonstrated some of the principles of proper portfolio management using the power of social trading.

Check out the recording of our session here: http://etoro.tw/2kPWXei

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

Trumps Taxes are Close

The South Korea Hack

Bitcoin Cash Grabs the Spotlight

Please note: All data, figures & graphs are valid as of December 20th. All trading carries risk. Only risk capital you’re prepared to lose.

Traditional Markets

Donald Trump’s tax cut plan is now so close that Wall Street traders are literally starting to salivate. Though, we’ve heard from many economists and even the top officials at the US Federal Reserve, the ones who are effectively in charge of the US Dollar, that this plan will not have a trickle-down effect on the economy.

Analysts point out that this plan is likely to increase the wealth of the ultra-rich at the expense of the US Deficit. The ones at the top are most likely to hoard the additional income rather than redistribute it. So what we’re looking at is a plan that will in effect accelerate the gap between the rich and poor in the United States.

Many have called the plan a “fiscal sugar high.”

So we should probably be a bit wary of the recent bull run because we all know what comes after a sugar high. There’s an old trader saying “buy the rumor, sell the news.”

Let’s hope that’s not the case here. In any case, if all goes according to plan the tax bill could be on President Trump’s desk ready to sign within the next 48 hours or less.

Youbit Hacked

Now, we’ve seen before how some hacks can have a huge impact on the crypto markets but most have little effect. It usually depends on who gets hacked, where and how and who is affected by it.

This one is very important primarily because of the location. As we know, South Korea is one of the largest crypto trading countries. So even though Youbit is not their biggest exchange site, the headlines that they’re shutting down for business will be in every paper, every discussion board, and a regular topic of conversation there this morning.

Youbit has already halted all deposits and withdrawals and plans to return clients holdings at the rate of 75 cents on the Dollar. This is certainly the kind of thing that can put a damper on the buying frenzy in a critical location.

Further details of the hack will be watched closely by the entire community. Though it does seem in large part that the damage has been done and the recent rally is on hold for the time being. When and if it will resume remains to be seen.

Bitcoin Network Status

One of the hardest hit by this minor pullback has been bitcoin. We’ve been speaking about the sustainability of the bitcoin blockchain in these daily updates for several weeks now and it seems that the network is indeed nearing it’s max capacity.

At the moment, there are 230,000 unconfirmed transactions in the mempool. The concerning thing is that this number has remained at elevated levels since December 6th.

This graph shows the number of unconfirmed transactions at any given time over the past three months.

The amount of transactions happening per second continues to increase, now at 4.81 TPS.

The good news is that it seems more computing power is joining the bitcoin mining force and the hashpower has also grown in the last three months.

Bitcash’s Gain

As we’ve seen many times over the last few months, Bitcoin’s loss is Bitcoin Cash’s gain. Despite the pullback that we’re seeing from the rest of the crypto market Bitcash is actually surging.

This graph shows the unique relationship between the two rival coins over the last month. Both of them have more than doubled in value over this time frame. But notice how many times when Bitcoin sees even a small pullback, Bitcash has a tendency to fly.

For the savvy investor, we need to check our politics at the door. No matter which one you believe has a better shot at replacing government backed money in the long run as a payment method and/or as a store of value, it may be prudent to have some amount of both in your overall portfolio.

As with any investment, the key is to diversify, diversify, diversify!

Wishing you a spectacular 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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4.7 stars on average, based on 139 rated postsSenior Market Analyst at Etoro.com.




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3 Comments

3 Comments

  1. mvppvm_07

    December 20, 2017 at 5:13 pm

    It’s “diversifly” with this one. Just moved some into the Cash coin. You’re absolutely right about the politics of it. Keep politics in mind, though, if it becomes a profit metric but if one is in this industry for profit, buy and sell metrics, not politics. Fly, fly, fly. Or so I hope.

    • topsytervy

      December 20, 2017 at 7:17 pm

      Where is the webinar usually i can find it but i can’t find last weeks?

      • Mati Greenspan

        December 22, 2017 at 11:37 am

        Hi Topsy. The webinar is usually for eToro platinum members only. I opened this one up to the general public as a one time deal.

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Market Overview

U.S. Stocks Mostly Higher on FOMC Drift; Bitcoin Price Holds Higher

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U.S. stocks traded mostly higher on Tuesday, as the Federal Reserve’s two-day policy meeting was officially underway in Washington. The cryptocurrency market notched a fresh 12-day high as bitcoin and its altcoin peers maintained their upward traction for most of the session.

Stocks Recover

Wall Street recovered modestly after plunging on Monday to their lowest levels of the year.  The Dow Jones Industrial Average rose 82.66 points, or 0.4%, to close at 23,675.64. The industrial benchmark fell more than 500 points on Monday.

The large-cap S&P 500 Index trimmed all of its gains to finish flat at 2,546.16. Gains were concentrated in six sectors, with consumer discretionary and information technology companies among the biggest gainers. Losses were primarily concentrated in energy and consumer staples.

A strong performance in technology-related industries pushed the Nasdaq Composite Index firmly higher. The index climbed 0.5% to settle at 6,783.91. On Monday, the Nasdaq joined the S&P 500 and Dow in negative territory for the year.

FOMC Drift

The relatively strong performance in stocks ahead of Wednesday’s Federal Reserve policy verdict has a well established historical precedent. Since 1994, gains in the 24 hours before the FOMC meetings represent 80% of excess returns in the market, according to CNBC. The average S&P 500 gain during that stretch is 0.5%.

Policymakers are widely expected to raise interest rates at the conclusion of the FOMC meeting on Wednesday. The accompanying rate statement and quarterly economic projections could shed light on the central bank’s future path at a time when President Trump is pressuring officials to end the tightening cycle.

Based on Fed Fund futures prices, the chance of a liftoff tomorrow is 71.5%. That’s down slightly from Monday and is well below levels seen last month.

Cryptocurrencies Show Stability

The cryptocurrency market traded mostly higher on Tuesday, as bitcoin and the major altcoins avoided a reversal following a strong start to the week.

The market cap for all cryptocurrencies peaked at $115.6 billion, the highest since Dec. 6. At press time, the market came in just shy of $114.1 billion.

Among top-ten cryptocurrencies, bitcoin cash (BCH) was the best performer, gaining 8.6% to $99.36. EOS climbed 4.2% to trade at $2.50. XRP rose 1% to trade at $0.3308. Bitcoin’s price was little changed at $3,552.12.

Stable market prices were accompanied by a sharp rise in trading volumes. Crypto exchanges processed nearly 50% more volume on Tuesday, according to CoinMarketCap. Total market turnover rose above $17 billion, based on latest available data.

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 704 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

Forex Update: Dollar Drifts Lower With All Eyes on the Fed

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Forex Market Snapshot

Asset Current Value Daily Change
EUR/USD 1.1368 0.19%
GBP/USD 1.2648 0.20%
USD/JPY 112.55 -0.23%
AUD/USD 0.7201 0.34%
GOLD 1,250 0.14%
WTI Crude Oil 48.53 -1.32%
BTC/USD 3,565 1.96%

With just one day left until the week’s main event, the Fed’s rate decision, it’s no surprise that forex markets are having a very choppy session, with the Dollar and the main safe-haven assets being in focus. The USD has been under pressure in the last couple of days amid the louder and louder critiques regarding the Fed’s rate hikes, and although economic numbers continue to be positive in the US, and the consensus still points an increase tomorrow, leaving the rates unchanged wouldn’t be as shocking as one week ago.

Economic numbers were mixed today, with the German IFO index missing the consensus estimate, but with the US housing market showing stability for the second month in a road. Building permits and Housing Starts both bounced back more than expected amid the pullback in Treasury yields in November, pointing to a still relatively healthy economy in the US.

While the Dollar only managed a small pop higher following the releases, as Treasury yields plunged to new multi-month lows again, the underlying bullish trend seems safe for the reserve currency.

Technical Analysis

GBP/USD, 4-Hour Chart Analysis

The Great British Pound is having another active session, and although it briefly surpassed the crucial 1.27 level against the Dollar, it fell sharply later on, leaving last week’s key technical breakdown intact.  While choppy trading is expected across the forex segment up until tomorrow’s key Fed announcements, the Pound could remain active, with the Brexit chaos and Theresa May’s shaky position still causing headaches for traders.

EUR/JPY, 4-Hour Chart Analysis

While risk assets rebounded today after yesterday’s volatile and bearish session, the main safe-haven assets, such as the Japanese Yen and gold continue to perform well, especially compared to the risk-on currencies. The EUR/JPY pair which has been trading in a broad bearish consolidation pattern since October is testing the key support zone between 127.50 and 127.75, threatening with a key breakdown in the coming weeks. While the short-term momentum indicators are slightly oversold, the pair is clearly bearish both short- and long-term and traders should be looking for entry points on the short side.

USD/CNH, 4-Hour Chart Analysis

Some analysts call the Dollar/Yen pair “most important currency pair of 2019”, and the pair continues to trade in the close vicinity of its October low, despite the recent trade-related optimism. A clear dovish surprise tomorrow could send the Yuan soaring, even in light of the recent weak Chinese economic data, but for the coming months, new highs are very likely (meaning new lows for the Yuan), and a drop to 6.85 would be an optimal entry point for traders.

WTI Crude Oil, 4-Hour Chart Analysis

Oil continues to be in a steep broader downtrend, and despite the deeply oversold long-term momentum readings, the crucial commodity only managed to consolidate in a sideways trading range after dipping below the key $50 per barrel price level in the WTI contract.

Yesterday, the price of the contract fell below its prior low, and today the commodity plunged by more than 5%, violating the $47.50 per barrel level for the first time since mid-2017. Barring a quick recovery, the breakdown could extend to the $44 per barrel level but a strong support zone is already found between $46.50 and $47.

Key Economic Events Tomorrow

ChartBook

Forex

EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

AUD/JPY, 4-Hour Chart Analysis

GBP/JPY, 4-Hour Chart Analysis

USD/CHF, 4-Hour Chart Analysis

Commodities

Gold Futures, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

 

Featured image from 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 421 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

The Ghost of Crypto Anarchy

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Hi Everyone,

Today we bid farewell to the Godfather of the Cypherpunk movement, which gave birth to bitcoin.

If you’ve never heard of Tim May (may he rest in peace), I refer you to his words of 1992. This short passage was so ahead of its time that it may as well have been written last Tuesday.

Quick read: The Crypto Anarchist Manifesto

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Sell Off Continued
  • Breakouts Forming
  • Bounce off the Floor

Please note: All data, figures & graphs are valid as of December 18th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

The global sell-off in the stock markets continues. For a brief moment after the bell rang at the New York Stock Exchange, it did seem like there would be some sort of bounce, but by the end of the session, the major indices were back at the lows.

The S&P500 index fell within a single point of its lowest rate this year (yellow line).

The negative sentiment has carried through into Asia, but it seems the Europeans are a bit more optimistic today, especially in Germany where the DAX is in green.

The feeling is that we could be getting some much-needed relief from the US Federal Reserve as they head into their two-day meeting today. So things might calm down as we approach the announcement tomorrow evening.

Breakout Time

Looking at some of the other assets out there, volatility has increased over the past few sessions. Here we can see the VIX Volatility Index making a move to the upside over the last few days along with the selloff in the stocks.

With that, it pays to take a look at the US Dollar, which continues to push the highs with some upward facing consolidation. This will be critical going into the Fed meeting, where they are largely expected to raise rates.

However, since the rate hike is expected to be dovish, we could just as easily see a downward breakout. Watch this space.

Gold is also looking for a breakout of the psychological barrier at $1,250 an ounce.

Ever avantgarde, crude oil has already broken below $50 yesterday, a staunch indication that the oversupply issues aren’t quite behind us.

Just for good measure we’ll add in the USDJPY as well here. Especially if the dovish rate hike does indeed do the Dollar in, and Asian traders look for safety in the Yen, we could see 112.22 give way.

Crypto Bounce Acquired

Yesterday, on the 10th anniversary of Bitcoin’s all-time high, we did manage to see a strong push off the floor. Though it’s not clear what exactly caused the bounce, it does appear to be a short squeeze that took out a few of the high-risk traders. I did put up a few charts on Twitter as it was happening.

Ever since the break below $5,000 we’ve been talking about light support at $3,500 and heavy support at $3,000, so this bounce off the $3,000 level couldn’t be more picture perfect.

The biggest winner emerging from this move was EOS, which rose a total of 29% within a few short hours. Yet still nowhere near its all-time high of $23.33.

Though it is possible that we do continue downward from here, this type of movement is very encouraging for technical analysts and may just end up creating a bottom for this battered market possibly even giving way to a bullish trend in 2019. Who knows… maybe we’ll get a Santa Claus Rally after all.

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

eToro is a multi-asset platform which offers both investing in stocks and cryptocurrencies, as well as trading CFD assets.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

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 LinkedInMatiGreenspan |Facebook:MatiGreens

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 139 rated postsSenior Market Analyst at Etoro.com.




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