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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.

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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.

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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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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

I Have a Dream Today: HK, Oil & Gold Up, ETC and Ethereum

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Today we celebrate the birthday of a true American hero. One who fought for freedom for all in a country that promised the world and delivered nothing.

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“In a sense, we have come to our nation’s capital to cash a check.”

King said in his famous speech, referring directly to the promise of freedom on which the United States was founded but “it is obvious today that America has defaulted on this promissory note…”

Indeed, the United States seems to enjoy writing checks that it cannot cash. Still, Martin Luther King Jr. was quite optimistic. He believed that his people need only demand payment on that check for its promises of freedom to be redeemed.

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By now many of Dr. King’s initial demands have been met but the fight has evolved. Victims of inequality are not necessarily defined by the color of their skin, nor do they reside solely within the borders of the United States.

We must press on in his symbolic shadow and demand freedom for everyone throughout this entire planet that we all call home.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Record Run in HK
  • Oil & Gold up on Weaker USD
  • Crypto Atmosphere

Please note: All data, figures & graphs are valid as of January 15th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

The Asian markets have put on a fantastic show so far today. The China A50 index has now surpassed it’s highs from April of 2015 and is now the highest it’s been since 2008.

The gains in China were propelled further by what’s happening in Hong Kong. The founder and CEO of Alibaba, Jack Ma announced that he is considering listing Alibaba shares on the Hang Seng.

Alibaba’s shares in the US currently hold a record for most stocks sales in an IPO and the company’s daily turnover is about 30% of the entire Hong Kong Stock Exchange.

Furthermore, there are rumors that a subsidiary of the Chinese Insurance giant Ping An will be looking to raise $60 Billion from the Hong Kong market in April.

Money comes to money, and as we’ve seen so many times in the crypto market. More activity on an exchange means that everything listed on that exchange can see a boost.

Sinking Buck

The second strongest trend of 2017 was the declining US Dollar. The Dollar Index went from a high of about 103.50 in January to a low of 91.4 in December.

2018 hasn’t been great for the buck either and it’s gotten off to a rather rotten start.

Along with the weakening Dollar comes a strength in commodities. Gold and Oil are priced in USD so they have a very strong reverse corolation.

As we can see here, since Thursday morning the USD has declined 1.8% and Gold has climbed by the same amount.

Though Oil has been a lot more volatile than gold or the buck, it’s strength lately has been astounding. This strong breakout above $60 was certainly unexpected by many…

Don’t get me wrong, oil rising against a weaker Dollar is understandable, but oil rising against more production in the United States is baffeling.

Friday’s Baker Hughes report shows that 280 new rigs came online in the United States over the last year.

Very likely we could see those rigs really get going now that they can get $60+ a barrel for their output.

Crypto Market

It’s easy to make money when everything is rising but when thing get choppy like they are now it can start to get a bit frustrating, especially for beginning traders.

Over the last few weeks, we’ve seen a general pumping pattern where one specific crypto will dominate the market for a few days before flatlining or even pulling back.

Over the weekend, this momentum has been on Ethereum Classic, which went from $31 to $46 in about 60 hours but now may have lost the propulsion.

Ether Classic (ETC) is the hardest crypto for me to explain simply because I don’t see it as useful. It’s not a great store of value and is not meant to be a medium of exchange. So I’m scratching my head trying to figure out why crypto traders latched onto this one.

Of course, if we zoom out a bit we can see the incredible gains of ETC’s younger sister ETH. A platform that has hundreds of projects being built on top of it and currently processes more transactions than any other blockchain.

The present rise in ETC might just indicate that alternative investors are looking for a bit more risk at the moment, and if that’s the case we may see some of the altcoins or even the exotic cryptos gaining a bit. In the chart above we can spot a nice rising trendline (yellow) but if that fails to hold we should have a nice support level just below $900 a token.

Remember: Several of the traditional markets will be closed tonight for the holiday in the USA. Crypto trades 24/7. 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

Asian Market Update – Monday: Asian stocks hits all-time high; cryptocurrencies decline

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punching

Slow morning for cryptocurrencies

The top cryptocurrencies, including bitcoin, ethereum, bitcoin cash, and ripple, all traded slightly lower on the first day of the week, with no significant news coming out to guide the markets.

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Bitcoin was nearly flat at midday in Asian trading; remaining below the $14,000 line that it has been hovering around in recent days.

On the positive side for bitcoin, US-based Kraken Exchange is back up after a system upgrade that was supposed to take only two hours instead lasted for two days.

Ethereum was also down as of midday in Asian trading on Monday, though much of the losses from yesterday were quickly recovered. In terms of technicals, the strong surge in ethereum that started on New Year’s Eve is still intact, as the price continues to form higher lows and higher highs, which is the typical wave-pattern we are looking for in good trends.

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As of midday in Asia, the price of ethereum is still below the $1,400 level. A break above the previous high of $1,420 would indicate a signal a new immediate surge in price.

Ripple XRP, the number three cryptocurrency in terms of market cap, continued to consolidate Monday morning, remaining below the $2 line for the second day. Since reaching its all-time high on January 4, ripple has now corrected by more than 40 percent to its current level.

Main Market Movers – Midday Asian Trading Session

Indexes Value at Midday Daily Change
Japan- Nikkei 225 23,715 0.26%
China-Shanghai Composite Index 3,419 -0.28%
Hong Kong – Hang Seng 31,582 0.54%
South Korea-KOSPI 2,505 0.33%
Australia-ASX 200 6,077 0.12%
S&P 500 E-Mini Futures 2,794 0.17%

Asian stocks reached for new all-time highs on Monday, as the US dollar continued to weaken, boosting both commodity prices and US export-driven industries. The MSCI index tracking shares in the Asia-Pacific region (excluding Japan) finally reached a new all-time high on Monday, as it caught up with its previous high from 2007.

The US stock market has also continued to make fresh gains with the S&P E-mini future rising once again. The uptrend in the S&P 500 has accelerated in a strong way since the beginning of the New Year, proving many bears wrong.

Currencies

The Japanese yen gained 0.14 percent against the US dollar as Tokyo trading ended on Thursday, changing hands at 110.88 per dollar.

The Chinese yuan gained 0.39 percent against the US dollar, trading at 6.438 per dollar.

The Australian dollar added 0.4 percent on the US dollar, changing hands at 1.2585 per US dollar as the Australian trading day was ending.

Commodities

WTI Oil consolidated slightly Monday morning despite the weakening dollar, trading down by 0.08 percent to $64.32.

Brent Crude Oil was flat for the day, trading at $69.80

Gold continued to rise as the dollar declined, adding 0.26 percent to $1,342.

Featured image from Pixabay.

Disclaimer: The author owns bitcoin, ethereum and litecoin. He holds investment positions in the coins, but does not engage in short-term trading.

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

India Sees Big Opportunity as China Clamps Down on Bitcoin Mining

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The crypto economy is a constant revolving door; when one digital door closes, another one opens. This largely explains India’s newfound embrace of bitcoin mining now that China has taken new regulatory measures to stamp out the highly profitable practice.

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China’s Mass Exodus

Last week, the Chinese government outlined new measures that would restrict bitcon mining operations. The new proposal was initiated by growing concerns over how crypto mining was impacting power consumption in a country that is still a long ways away from its development goals. According to various reports, the blockchain industry is looking to local regulators to guide miners out of the business.

The People’s Bank of China (PBOC) has been tasked with monitoring and restricting the power use of crypto mining operations, which are usually located near hydroelectric power plants.

China made a sweeping overhaul of its cryptocurrency policies last September when it banned bitcoin exchanges as well as initial coin offerings (ICOs). Despite an initial shock, the market has gone on to set multiple record highs over the last four months.

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Bitcoin miners were drawn to China for the same reasons as traditional manufacturers: low cost of energy, cheap labor and local chip production. Until the clampdown, more than three-quarters of mining operations had been installed in China. And despite rising power costs, operations are still profitable thanks to the huge rise in cryptocurrency prices over the past year.

As bitcoin miners exit the market, many will be looking to greener pastures with more favorable policies. Bitmain, which operates China’s two largest mining projects, has already announced relocation plans to Singapore. BTC.Top, another major mining operation, is opening up shop in Canada. Meanwhile, ViaBTC already has facilities in the United States and Iceland.

India’s New Opportunity

India appears to be fully embracing cryptocurrency miners in the wake of China’s mass exodus.

According to local media, India’s top crypto players have been approached by government officials to set up mining centers in the country. One such individual was recently quoted anonymously by DNA India, an English broadsheet daily website:

“We have received several offers over the past few days. We are considering it as a business opportunity as mining operations. We are now waiting for the government of India’s guidelines for crypto business.”

Indian power rates are even more competitive than China’s. According to data provider Statista, Indian power rates averaged 8 cents per killowatt hour in 2017, compared with 9 cents in China. Rates are roughly three times as high in advanced economies.

That being said, India isn’t the only jurisdiction trying to lure crypto miners. Promoter of crypto startup BFX Coin told India DNA that several countries are offering miners free electricity, rebates, tax advantages and even citizenship for setting up shop in their jurisdiction. BFX Coin has chosen India for its mining operation.

The Indian government is planning to implement new regulations to oversee the cryptocurrency market. This includes forming a panel to investigate the role of black money in the crypto world. A government official recently quoted by the Hindustan Times said the government had two issues with cryptocurrency: the source of funds being used to buy them and whether existing exchanges are adequately protecting the consumer.

Bitcoin Market

It has been a difficult start to the year for bitcoin, with the cryptocurrency failing to rise in value. Prices returned above $17,000 on Jan. 5 and 6 before running into heavy selling pressure over the next nine days. The market tested $13,000 last week on multiple occasions. Bitcoin was last seen trading at $13,454.

Bitcoin’s struggles have been largely shrugged off by the broader market. Many cryptocurrencies not named bitcoin have surged to record highs, with altcoins now dominating roughly two-thirds of the market.

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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