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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 128 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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Analysis

Pre-Market: Sell The Rumor, Buy The News?

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After a long period of uncertainty, the US finally decided to commence with the second round of tariffs directed at China, slapping a 10% levy on $200 billion worth of goods, and threatening with tariffs on another $267 billion of goods in case of a Chinese retaliation. The tariffs will increase to 25% in 2019, but for now, the Chinese response was measured, with only an announcement coming from the Chinese ministry of commerce, saying that the country has no choice but to retaliate.

Shanghai Composite, 4-Hour Chart Analysis

While stock futures fell initially following the after-hours announcement by Donald Trump, today equities are slightly higher across the board, with even the Shanghai Composite staging a rally off its fresh bear market low. The new tariffs were widely expected by the market, so the “buy-the-news” response is understandable, but for a sustained rally in Chinese assets, a resumption of the trade talks between the two largest economies would likely be needed.

DAX 30 Index, 4-Hour Chart Analysis

The main European indices are little changed with the DAX still hovering around the 12,000 level and the EuroStoxx 50 being stuck ear 3350. Both benchmarks hit three-week highs in early trading, but the rally on the Old Continent is still lacking real momentum, especially given the distance to the bull market highs.

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Emerging markets are still very weak with the recent bounce being barely visible on the charts, and the segment is still stuck in a strong downtrend, with especially the most vulnerable countries weighing heavily. Emerging market currencies are mixed today, with the Turkish Lira completely erasing its rate hike gains, but with the Brazilian Real, the Chinese Yuan, and the Argentinean Peso being relatively stable after the US trade announcement.

S&P 500 Index Futures, 4-Hour Chart Analysis

Stocks are set to open slightly in the green on Wall Street, with the major indices still being within striking distance of their all-time highs, and with only the Nasdaq pulling back meaningfully recently. The S&P 500 is just a tad below its record high, and with the MACD indicator back in neutral territory, a move to new highs could still be just around the corner.

Dollar Stable as Oil Jumps Amid Syria Escalation

Interestingly forex markets remained stable despite the trade war escalation, with the Dollar drifting slightly lower compared to its major peers, and losing a bit more ground against the main China-related currencies. Commodities are also higher today, with especially the China-linked copper and crude oil being in the green and gold trading virtually unchanged.

WTI Crude Oil Futures, 4-Hour Chart Analysis

While the scope of the Syrian conflict shrank in recent months, the tensions around the last rebel stronghold Idlib are rising. Russia and Turkey (which back opposing forces) surprisingly announced the formation of a demilitarized zone around the city to avoid a siege and a likely bloodbath, but overnight, a Russian recon plane was downed, which could lead to a reescalation in the country.

Russia is blaming Israeli forces for the casualty, and an open conflict between the two countries would be increase risks in the region, and possibly drive oil prices higher. The Brent Oil contract has been already outperforming the WTI one thanks to the sanctions against Iran, and today Saudi officials stated that the Kingdom is comfortable with the $80 per barrel Brent price, further widening the divergence between the two contracts.

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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4.6 stars on average, based on 347 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

Market Update: U.S. Stocks Fall as Trump Set to Unveil New China Tariffs; Crypto Selloff Resumes

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U.S. stocks declined on Monday as investors once again weighed the prospects of an all-out trade war between the United States and China. On the cryptocurrency front, Ethereum led a broad decline in afternoon trading.

Stocks Fall

All of Wall Street’s major indexes headed for losses on Monday. The technology-heavy Nasdaq Composite Index was the hardest hit, falling 1.4% to 7,895.79. The large-cap S&P 500 Index fell 0.6% to 2,888.80, with losses mainly concentrated in information technology and consumer discretionary shares. Dow industrials closed down 92.55 points, or 0.4%, to 26,062.12.

The CBOE Volatility Index, commonly known as the VIX, spiked 12.8% to 13.62. The so-called “fear index” had declined in each of the past five sessions. Prior to that, it reached two-month highs as stocks declined following Labor Day.

U.S.-China Trade War

The White House is preparing to unveil a new round of tariffs on China targeting $200 billion in goods, marking the most dramatic escalation in the year-long trade war. According to the Financial Times, Washington’s trade haws are urging President Trump not to back down on tariffs, which are believed to run as high as 25% for certain goods. U.S. officials had previously said they are likely to impose a 10% tariff rate on 40% of Chinese imports.

The Trump administration is escalating its trade war against China amid reports that Beijing was looking to take a more assertive stance on tariffs. That said, China’s Foreign Ministry has once again reiterated that a trade war isn’t in anyone’s interest.

“We have always maintained that the only correct means to resolve the trade dispute is through dialogue and consultation on an equal basis with mutual trust and respect,” ministry spokesman Geng Shuang recent said, as quoted by CNBC.

The new round of tariffs will be announced mere days after both countries signaled their readiness to return to the negotiating table.

Cryptos Decline

The cryptocurrency market was back on the defensive Monday, with Ethereum leading a broad downtrend that included tokens, altcoins and bitcoin. The combined market capitalization of all coins fell to a low of around $193 billion, according to CoinMarketCap.

Ether’s price pivoted lower after regaining more than 30% of lost value. The second-largest cryptocurrency plunged10.5% to $197.50. Among the top-ten ERC-20 tokens by market cap, nine reported losses.

Bitcoin also pulled back sharply after failing to make new highs. BTC was down 3% to $6,311 despite relatively strong technical indicators that pointed to short-term upside.

There was no immediate catalyst for the sudden reversal, a sign that bearish sentiment continues to dictate market trends. In terms of news, Ripple has confirmed that one of Japan’s largest financial institutions will soon launch a payment app using the company’s xCurrent technology. Meanwhile, security issuer XBT has announced plans to launch a new product designed to give investors access to a basket of cryptoassets.

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 601 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Analysis

Pre-Market: China Bear Market Deepens as Shares Hit 4-Year Lows

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Global stocks and other risk assets started the week with slight losses so far, and the recently weak segments continue to struggle, while US markets are still acting relatively strong, suggesting the continuation of the recent trends. European markets are among the weaker ones again, even after last week’s bounce, with the major benchmarks all being around 10% off their highs, in stark contrast with their US peers.

Shanghai Composite, 4-Hour Chart Analysis

With all eyes on the second round of US tariffs directed to China, it’s no surprise that the pressure on the Shanghai Composite didn’t ease yet, and the benchmark slid to yet another almost 4-year low this morning. The Chinese Yuan is holding on well in the meantime, with the August low being in no danger, as of now.

USD/TRY (Turkish Lira), 4-Hour Chart Analysis

That said, emerging market currencies are back in the crosshairs, with Argentinean Peso, the Brazilian Real, and the Turkish Lira all drifting in early trading.  The Lira, which got a boost from the emergency 6% rate hike by the local central bank last week, is headed towards pre-rate hike levels, and that doesn’t bode well for the coming weeks with regards to Turkish and other emerging market assets.

Dow Futures, 4-Hour Chart Analysis

Economic releases will be few and far between this week compared to last week’s busy calendar, and today, only the Empire State Manufacturing Index made some waves, missing the consensus estimate, and suggesting a slowdown in the recently well-performing US segment. The final CPI in the Eurozone didn’t cause any surprises, coming in at the originally reported 2.0% annualized rate. The Dow, the Nasdaq, and the S&P 500 all opened slight below Friday’s levels after the releases, but the more interesting moves are in Forex markets.

Dollar Declines Against Majors as Commodities Mixed

DXY, 4-Hour Chart Analysis

After Friday’s bounce, the Dollar couldn’t maintain its momentum and today, the reserve currency is lower against most of its global peers, with the Dollar index sliding towards its July lows. With the Fed’s next rate hike just around the corner, the current move is more the product of Mario Draghi’s inflation warning, which is pushing the Euro higher since Thursday’s ECB meeting.

From a longer-term perspective, the Dollar’s strength could be undermined by the Trump administration’s pro-cyclical fiscal expansion, at least against the majors, but until the US economy keeps on booming, we expect bulls to be in control of the Greenback’s market.

Gold, 4-Hour Chart Analysis

Commodities are trading without a clear direction today, with copper following Chinese stocks lower, maintaining the strong correlation, while gold and crude oil are slightly higher. The WTI crude contract is edging towards the $70 per barrel price level again, still trading within a narrowing range, while the main precious metal is also stuck near the $1200 level following a four-month-long decline.

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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