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The Bear is Coming – Are you prepared?

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More bickering in Washington among the Republican party with Trump taking to Twitter to rail against one senator and another announcing his retirement only to dig into the President.

The fun continues in politics but doesn’t seem to have any effect on the stocks. Tax reform is still widely expected to happen and that’s all that investors care about right now. That and earnings season, which is well underway.

@MatiGreenspan
eToro, Senior Market Analyst

 

Please note: All data, figures & graphs are valid as of October 25th. All trading carries risk. Only risk capital you’re prepared to lose.

Market Overview

Sometimes all you need is a little push in order to really fly. After taking some minor losses on Monday, the Dow Jones leaped 161 points yesterday.

For dramatic effect, here is a chart of the benchmark index since the turn of the century…

Some great results from CAT and MMM have propelled the markets. AMD put out some good numbers after the closing bell but investors were disappointed about their source of revenues going forward and it is expected to open about 10% lower when the market opens this afternoon.

The VIX volatility index has also woken up and is well above the record low levels seen earlier this month.

Though most analysts agree the market is overpriced, it still doesn’t make sense to go in short. One of my clients on eToro put an excellent rant on the network this morning explaining that this is where patience comes in and predicting that for those who prepare correctly, there could be an opportunity to 10X shortly.

Here’s my favorite part…

The author @NestorArmstrong from Mexico has delivered himself and about 80 copiers a return of 30% since the beginning of the year with an incredibly low stable risk score and virtually no drawdown…

Of course, predicting a market crash can be even tougher than predicting an earthquake so while most investors are still wildly bullish on the markets, now is the time to prepare for the eventuality that the markets will turn and for the abundant opportunities such a turn can bring.

Bitcoin Technical

As we’ve been discussing in these updates, bitcoin has been trading counter to the rest of the digital currencies lately. Here we can see that the original blockchain asset is up about 30% since the beginning of the month even though most of the others are still in negative…

If we do see the digital king start to trek further above $6000 and mark new highs that could certainly kick in the FOMO factor and we could see further surges in price. However, as Nestor says, we need to be prepared and sow the seeds.

Bitcoin has broken just about all the rules of technical and fundamental analysis but for now, it’s the only thing we have to go by. By fundamental analysis, we’ve got some calling for $0 and some for $100,000 and just about everything in between.

If we’re looking for a perfect entry and if the price does indeed come down further, we need to look at the graph from the beginning of the year. A mighty graph indeed.

The white line does indeed represent a solid form of resistance. Even though it’s quite a sharp incline the line has yet to be broken.

On the bottom, however, it’s difficult to find the exact support. Many are of the mind that the dotted blue line can indeed hold and we have only to go up from here. The yellow line in my mind is a bit more practical. Meeting that yellow line at about $4500 a coin would represent a total pullback of 25% from the peak.

As always, all questions, comments, and feedback are extremely welcome. Tag me on eToro or any other social network. I’m always glad to hear from you.

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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4.7 stars on average, based on 115 rated postsSenior Market Analyst at Etoro.com.




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Bitcoin

Bitcoin Price Holds Steady as Market Dominance Hits 3 1/2 Month High

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The bitcoin price was undeterred by a wider slump in crypto assets Friday, with its share of the total market reaching the highest level since early April.

Bitcoin Price Update

On a 24-hour basis, bitcoin’s price is little changed Friday, with values continuing to hover north of $7,400. Coin values briefly surpassed $7,500 before reverting all the way back to the low $7,400 region.

The largest digital currency by market capitalization booked most of its gains in the span of 24 hours on Tuesday and Wednesday. The uptrend followed a week-long consolidation where markets successfully defended the $6,000 price floor. A confluence of support later emerged near $6,400, propelling a short-term rally toward $7,000 and, eventually, a high near $7,600.

Bitcoin is on track for weekly gains of nearly 19%. Trade volumes have surged 40% week-over-week, including a peak of $6.8 billion.

Bitcoin Dominance Index

Bitcoin’s strength relative to other cryptocurrencies is exemplified by its growing share of the overall market. As of Friday, bitcoin accounted for 45.4% of the total market capitalization for cryptocurrencies, its highest since early Aprilm according to CoinMarketCap. The so-called bitcoin dominance index is up nearly 3 percentage points since Tuesday, when BTC/USD first broke out.

At nearly $128 billion, bitcoin’s market share is nearly three times that of Ethereum, the second largest cryptocurrency by value. Ethereum narrowed the gap to less than half last year, right around the time the bull market began to take off.

As last year’s bull market demonstrated, bitcoin’s dominance index usually declines during a major market uptrend as more capital flows into altcoins. However, the recent rally had the distinction of being largely concentrated in bitcoin. While this may bode well for long-term holders of the digital currency, it can also be viewed as a bearish sign for the overall market. That’s because altcoin price independence is considered an important feature of a healthy cryptocurrency market.

Measured by market cap, cryptocurrencies not named bitcoin (BTC) have gained 10.5% over the past seven days. By comparison, bitcoin’s total capitalization has increased nearly 19%.

Despite bitcoin’s outsized gains, the market is enjoying wider institutional support and important regulatory breakthroughs that could bring greater stability to the asset class. Business Insider and CCN have reported that Coinbase, one of the world’s major crypto exchanges, has scored a major institutional client. Although names have not been disclosed, the client is said to be a $20 billion hedge fund.

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 502 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

Crypto Update: Divergence Deepens as Altcoins Fall, Bitcoin Flat

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The unusual discrepancy between BTC and the rest of the cryptocurrency market continued today, with the top 10 coins all losing ground with the exception of Bitcoin itself. Tuesday’s surge, which carried the segment to $300 billion in total market cap quickly fizzled out, at least as far as the major altcoins are concerned, but the largest digital currency is still holding on above the strong $7000 and $7350 support/resistance levels.

Altcoins are on short-term sell signals according to our trend model, but Bitcoin is still on a buy signal as the declining trend was broken by the break-out that remains intact, despite the segment-wide weakness.

Given the mixed, but one-sided setup, and the lack of bullish follow-through, odds still favor a bearish outcome, and traders should remain cautious with new positions here, even in BTC, the positive outlier. A broad trend change would require a meaningful leadership, and until that develops, a test of t eh June lows remains likely, with the possibility of new lows in the coming week as well.

BTC/USD, 4-Hour Chart Analysis

While Bitcoin failed to durably stay above the $7500 level, bulls successfully defended the support zone near $7350, despite the overbought short-term momentum readings. The coin is well above the line-in-the-sand $7000 level and the long-term support near $5850 that was in danger just one week ago.

Although the altcoin weakness makes BTC’s rally suspicious, the short-term bullish pattern is intact, as is the buy signal in our trend model. Further support is found at $6750, and $6500, while primary resistance is still ahead at $7650.

Selling Pressure Apparent in Altcoins

ETH/USD, 4-Hour Chart Analysis

All intraday rally attempts have been sold so far in most of the major altcoins, and Ethereum is just holding up above primary support at $450 despite the rally in the beginning of the week. The coin is on a short-term sell signal, and a test of the June lows is likely after the failed break-out. Strong resistance is ahead at $500 and between $555 and $575, while support is found at $420, $400, $380, and $360.

XMR/USDT, 4-Hour Chart Analysis

While Monero has been holding up relatively well in the last couple of days after getting stuck below the $150 level during the Tuesday surge, but the coin is still among the structurally weak majors, being on a long-term sell signal. As the other bearish leaders, NEO, LTC, and Dash are also trading below key long-term levels, we expect the coin to fall back below the $125 support and likely test the June lows in the coming weeks.

XRP/USDT, 4-Hour Chart Analysis

The third largest coin Ripple is already testing the $0.45 level after drifting lower ever since the Tuesday rally, and as its relative weakness is still clear, a break below that level seems to be imminent. Below that, the crucial long-term support zone near $0.42 could stop the decline of XRP again, but a move under that could trigger a long-term sell signal.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

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 296 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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Bitcoin

Up to 10% of Gold’s Assets Could Flow Into Bitcoin

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With so much focus on bitcoin as a payment method among regulators, the leading cryptocurrency’s other use case might get overlooked. Bitcoin’s other definition is a store of value, and these days investors are getting more value than they have in a long time even as the price of gold, a rival store of value, tumbles.

Indeed, bitcoin is taking its place as a safe haven and an uncorrelated asset to the broader financial markets. This is why bitcoin it’s been dubbed “digital gold,” because it has taken on some of the key attributes of the precious metal.

The price of gold has been on the decline for the past three months, during which time it’s lost more than 10% of its value to about “$1,228.70 per ounce today for Comex August. Bitcoin, on the other hand, has been in rally mode, in recent days proving once again it can rally hundreds of points in a matter of minutes as it surpassed the $7,000 level. BTC just surpassed the $7,500 level.

Gabor Gurbacs, who according to his LinkedIn profile is the director of digital assets strategy at VanEck/MVIS, believes that bitcoin is going to be the beneficiary of investors fleeing gold as a store of value. He told CNBC: “I would say as a message to investors that bitcoin is a safe haven asset or digital gold, one that trades like a tech stock.”

Gurbacs offered a forecast that takes a different tack from the usual price predictions. He looks at the digital asset in terms of capital flows, and he’s expecting bitcoin’s value to balloon in size. He pointed to the size of the gold market, which is comprised of $7 trillion outstanding in assets. Gurbacs suggests between 5%-10% of that could be directed into bitcoin, adding “investment products are necessary to get there.”

Based on bitcoin’s current market cap of approximately $128 billion and the top end of Gurbacs’ range, gold flows into bitcoin could bolster the cryptocurrency’s value more than threefold, as pointed out by CNBC.

Gurbacs pointed to three requirements for this to happen, all of which he sees a path forward for.

  • “Proper pricing benchmarks and price valuation”
  • Liquidity (he believes there’s “enough liquidity to support ETFs that institutional investors may use in these markets.”)
  • A supportive regulatory framework for digital assets

MVIS has digital asset indices including a Bitcoin Index, which Gurbacs described as an independent and regulated source for the bitcoin price, which is preferred over a site like CoinMarketCap for bitcoin-fueled ETFs and other financial products.

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 24 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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