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Redrawing The Lines

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Shock and horror grip the entire world. Yesterday’s events in Las Vegas have set a new record for human brutality and is a reminder that no matter how far we’ve come as a society, we need to do better.

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My humble request is that each reader of today’s market update does one thing today to help somebody else. Any act of kindness that you can think of. This is the only way to change the world for the better.

@MatiGreenspan
eToro, Senior Market Analyst

 

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Please note: All data, figures, and graphs are valid as of October 3rd. All trading carries risk. Only risk capital you can afford to lose.

Market Overview

We all know that most politicians don’t like to play by the rules. Or rather, they like to rewrite the rules in order to suit their own purposes.

In the United States, they have a process of redrawing lines on a map within a state to benefit the political party who is doing the drawing. This process is known as gerrymandering.

In the state of Wisconsin, a key battleground that frequently decides the outcome of presidential elections, about half of the citizens are Republicans. However, thanks to creative boundaries they win about 66% of assembly seats.

Today the Supreme Court will review this process for the first time since 2004 and possibly pass a ruling. Though the status quo is largely expected to be upheld, one can’t help but hope that action may be taken to ensure that democracy remains democratic.


Dollar is Gaining

The US Dollar continued to climb at the start of this week. Markets are focused on the interest rate decision that the Fed will publish in December. Currently, there is a 70% chance of a rate hike and it’s driving the currently undervalued Dollar upward.

After reaching an extremely low level on September 8th, the Dollar has been on a bullish swing for the past two weeks. The move was spurred largely by the FOMC meeting of September 20th (big green candle in the center of the chart).

The Dollar strength is indeed having a knock-on effect on the commodities, which are priced in Dollars.

Gold has now reached its lowest level since August and Oil fell 2% yesterday. Here we can see both Oil and Gold getting bucked by the US Dollar over the past week.

US stocks on the other hand, which are also priced in Dollars, don’t seem to notice anything. They continue to climb despite deteriorating geopolitics, extreme weather, a national tragedy, and mounting unsustainable US debt.

Both the Dow Jones and the SP500 closed on record highs yesterday and the Nasdaq didn’t do so bad either.

The reason for this extreme move is likely due to the lack of trading activity. The low volatility has a way of influencing prices because each buy order that is made on a market where nobody is selling tends to drive prices upward.

The VIX volatility index has just opened very close to its lowest level ever at 9.31 points.

Crypto Divergence

Yesterday we saw some divergence in the cryptocurrency market for the first time since August. All throughout September, all cryptos were moving together as a pack. Yesterday we saw Bitcoin rise about 1.5% while Ethereum fell by an approximately equal margin.

This morning it seems we’re back inline with the single market though as we see declines across all the top 10 cryptos.

One comforting thing that is on the minds of alternative investors is the headline that Goldman Sachs is now considering to add bitcoin as a tradable asset for their clients. If they do, it would no doubt be a large boost of confidence in the young borderless global currency.

Wishing you an amazing 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 money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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3 Comments

3 Comments

  1. mvppvm_07

    October 3, 2017 at 3:56 pm

    Key to the Goldman Sachs approach: Bitcoin as an asset, not as a currency. While crypto traders argue about a store of value comparisons among the “coins”, they (we) have become like blacksmiths arguing about the purity of the horseshoes we put on the animal while the new (old grizzled wise man) decides to buy a car to get around. Goldman Sachs is revving their engine while crypto bellows out the hot air of better horseshoes.
    As always, follow the money.
    As almost never, follow by leading.

  2. embersburnbrightly

    October 3, 2017 at 5:14 pm

    Gerrymandering is ridiculous. The U.S. stock market, when it does finally fall, is going to fall horribly, given its unnatural rise despite all indicators that it should be psusing by now (“irrational exuberance,” anyone? But the main reason for my comment here is to give a hearty second motion to your request: “My humble request is that each reader of today’s market update does one thing today to help somebody else. Any act of kindness that you can think of. This is the only way to change the world for the better.” Indeed, and agreed!

  3. embersburnbrightly

    October 3, 2017 at 5:16 pm

    *pausing, not “psusing”. Perhaps I should have “psused” and proof read that comment before submitting it…

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Altcoins

Monero Forges Ahead as Prices Cross $290

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Monero shot up again on Tuesday, as the privacy-focused altcoin approached new highs on the promise of lower transaction fees.

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XMR/USD Price Levels

Monero has been on a tear for the past five weeks with prices more than tripling since Nov. 5. At press time, XMR/USD was up 7.5% at $289, where it was not far from session highs. The cryptocurrency recently established new lifetime highs north of $307. A re-test of those highs could be imminent as XMR continues to push north of $290.

With the latest gain, Monero has added 20% over the past five days, and is ranked no. 7 in terms of dollar-denominated market cap. The total value of XMR in circulation is now $4.6 billion, according to CoinMarketCap. That puts it above NEM (XEM), bitcoin gold (BTG) and Stellar Lumens (XLM).

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Monero’s trade volumes remain well below altcoin leaders Ethereum, Litecoin and IOTA. As of Tuesday, XMR turned over $188 million over the previous 24 hours, with South Korea’s Bithumb responsible for about a quarter of total transactions. The XMR/BTC exchange on HitBTC saw nearly 17% of the daily turnover. XMR/USD traded on Bitfinex also saw more than 16% of total transactions.

Although significant, Monero’s gains have occurred in lockstep with the broader cryptocurrency universe, with altcoins benefiting significantly from bitcoin’s record highs.

Bulletproofs Present Cost-Saving Potential

Monero Research Labs is working hard to reduce the network’s transaction fees by up to 80%, a signs of a bright future for the leading altcoin. The implementation of Bulletproofs also appears to be working in favor of lowering transaction sizes on the network.

For the uninitiated, bulletproofs are essentially an improvement in the bandwidth efficiency of Monero’s confidential transactions. Bulletproofs are also capable of lowering both the transaction size and transaction fee of the Monero platform. The implementation of this protocol is expected to benefit Monero in other important ways, such as faster verification times.

Monero developers are implementing bulletproofs in two stages, the first being the single-output proofs. This will be followed by multiple-output proofs at a later stage. As of last week, Monero said bulletproofs are moving into testnet shortly.

“Overall, bulletproofs represent a huge advancement in Monero transactions,” Sarang Noether wrote in a Dec. 7 blog on the Monero website. “We get massive space savings, better verification times, and lower fees.”

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 money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Altcoins

Ethereum Flirts With Record Highs as Buterin Compares Crypto Surge to Salvator Mundi Auction

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Ethereum prices climbed to fresh records on Tuesday, as crypto mania picked up where it left off before the launch of bitcoin futures over the weekend.

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ETH/USD Price Levels

The value of ether touched an intraday high of $522.63, which was the highest level ever recorded for the world’s no. 2 cryptocurrency. Ether’s previous record was set on Saturday when prices crossed $518.

At press time, the coin was valued at around $513 for a gain of more than 8%. That gave ether a total market cap of nearly $50 billion. The cryptocurrency has added more than 4,000% this year, putting it among the world’s top altcoins.

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Trade volumes approached $2 billion over the previous 24 hours, which is equivalent to 118,000 bitcoin. Coinbase’s GDAX exchange had the highest turnover, with ETH/USD accounting for more than 9% of the volume. Bitfinex also processed more than 9% of ether transactions via ETH/USD. Meanwhile, Bithumb’s ETH/KRW cross saw 6% of the daily volume.

In all these cases, more than half a billion in ether was transaction.

Ether has successfully traded above $500 on several occasions, but has struggled to maintain those price levels. The previous record high was partly associated with the latest CryptoKitties craze, which promises frictionless trading of digital assets via blockchain.

Looking ahead, ether could struggle to break free from its recently defined trading range between $450 and $500. Although the market is slowly recovering from a congested network, record highs have been much harder to come by in recent months than other cryptocurrencies. By comparison, bitcoin has set multiple record highs over the same period. Several leading altcoins have also managed to climb to new heights on multiple occasions. Ethereum’s rally continues to be very much off-and-on.

Buterin Weighs In

Ethereum creator Vitalik Buterin recently compared the cryptocurrency market with the Salvator Mundi auction, which raised $450 million in November. The 23-year-old said growing interest in cryptocurrencies was “a reflection of the world at large. Buterin highlighted the growing popularity of CryptoKitties in sending his point across.

“I actually like the digital cat games,” Buterin said in a Dec. 4 tweet about CryptoKitties. “They illustrate very well that the value of a blockchain extends far beyond applications that would literally get shut down by banks or governments if they did not use one.”

Ethereum Use Cases on the Rise

Ethereum’s smart contract capability is being used by Switzerland’s largest banks to prepare for new European financial regulations. UBS announced Monday it has entered into partnership with Barclays, KBC and others to advance the MiFID II data collection initiative. The program will be driven by Ethereum smart contracts and run on the Microsoft Azure platform.

The combination of smart contracts and cloud will ensure banks can meet more stringent regulations on a common platform that will enable industry-wide reconciliation. Presently, these institutions must perform checks independently.

MiFID II will officially launch Jan. 3, 2018, and will replace the current regulatory directive.

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. 

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Analysis

Technical Analysis: Litecoin Continues Surge as Bitcoin Tests Highs

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With the crypto world being focused on the historical futures launch, the major coins all enjoyed buying following a hectic weekend, and a volatile week as a whole. BTC itself got another boost from the widespread publicity and the volatile correction of the recent days ended, with the most valuable coin bouncing back towards its all-time high.

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While the long-term picture remains severely overbought, the short-term picture is not stretched and further gains are possible even amid the elevated correction risk. That said, investors should wait for a more favorable entry point to ad dot their holdings, while traders should control position sizes in the light of the long-term setup. Major support levels are now near $13,000, $11,300, and $10,000, with stronger levels still at $8200 and $7700.

BTC/USD, 4-Hour Chart Analysis

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The major altcoins are all up today, but only Monero and Litecoin are still within short-term uptrends, and the segment as a whole is still dangerously overextended, and a deeper correction is very likely in the coming weeks. LTC continued its recent break-out, getting close to the $200 level, and joining the extremely overbought group regarding the long-term momentum, and triggering a long-term sell signal in our trend model. Key support levels are found $100 at $75 and $64, with a weaker primary level at $125.

LTC/USD, 4-Hour Chart Analysis

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