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Market Overview

The New World

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Hi Everybody,

“Man, it’s goin’ crazy this cryptocurrency man..”

So says the new hit single from the well-known rapper Soulja Boy. This is following closely on the heels of Eminem who mentioned the world’s favourite cryptocurrency in his single Not Alike, which states that “now, everybody doin’ Bitcoin.”

When he says everybody, he’s speaking directly to one of the most significant socio-economic trends of our generation.

Indeed, over the last two months, we’ve seen a push towards innovation and adoption of cryptoassets by some of the giants in the financial services sector.

The fact that bitcoin’s price has remained stable over the last few months is only adding to the confidence that this new global currency is being seen as a valid alternative to fiat money, which is controlled by governments and central banks.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • The New World
  • China’s Reserves
  • Segwit Adoption Growing

Please note: All data, figures & graphs are valid as of October 8th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

We’d like to wish all of our colleagues and clients in the United States a very happy Columbus Day. Today is also a national holiday in Japan and Canada so we can expect volumes to be a bit light, especially in the afternoon.

China, on the other hand, is just coming back from a week off and have wasted no time catching up on the declines in the stocks and bond markets that we saw at the tail end of last week.

China’s Fresh Cash

It is a bit strange that shares are dropping in China though, especially after this…

As we know, the fiat system relies on a system called fractional reserve banking. Which means that banks are allowed to create new money based on a smaller amount of money they’re holding.

These reserves are monitored by the central bank and the central bank of China, the People’s Bank of China, has just allowed some of their banks to increase the amount of money created by lowering the minimum amount of cash required to be held in reserve.

This move was intended to boost confidence in the system but it seems to have backfired as many analysts are seeing this move as too small, and that China’s central bank will simply have to take more drastic measures down the road.

In this chart, we can see that the Yuan is also taking a hit from this announcement.

Segwit adoption Growing

One of the harshest criticisms of bitcoin is the difficulty we’ve seen in scaling the network. One of the possible solutions is SegWit.

Even though SegWit was installed on the main bitcoin blockchain in August 2017, adoption of this service has been, well… slow.

The way it works is that it allows some of the information from each transaction to be stored in a separate place, which is off the main blockchain. That way, each transaction takes up less space and you can squeeze more transactions on each block.

However, this does require each wallet provider to actually begin using the solution.

I’m pleased to report that SegWit adoption (the orange line in the graph below) has recently reached an all-time high and is on an excellent trajectory…

As we’ve stated many times, a stable price is great for adoption, and great for development of the network. So, we really are in a positive place for Bitcoin right now.

Can’t wait for the lightening network to be ready!!

Let’s have 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.

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 | LinkedIn: MatiGreenspan | Facebook:MatiGreenspan

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 138 rated postsSenior Market Analyst at Etoro.com.




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2 Comments

2 Comments

  1. tommudd

    October 8, 2018 at 3:10 pm

    This was a excellent article and we need more like this

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Market Overview

Breaking the Silence

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Hi Everyone,

You know the thing I love most about Ethereum upgrades?… They’re silent.

The last Ethereum major upgrade, known as Byzantium, went live in October of 2017 and barely any end users even noticed. Even though Byzantium was implemented using a hard fork, no new Ethereum coins were created. For a better understanding, see this article about how forks work.

The next Ethereum hard fork is now scheduled for mid-January. Constantinople is mostly a maintenance and optimization upgrade that will pave the way for most of the big league scaling solutions and more.

The field of decentralized networks and computing is still very new and presents various challenges. So these type of upgrades, though sometimes take longer than expected, are an excellent example of how dev communities get it right and pave the way for a better future.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • EU Japan Trade Deal
  • Yellen’s Warning
  • 1 Year B-day: Bitcoin Futures

Please note: All data, figures & graphs are valid as of December 12. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Today we’ll start off with some positive news for global trade. The European Union and Japan have finalized a deal that’s been 5 years in the making.

It’s nice to think that even at the present time when many politicians are advocating for more isolation, some countries can continue making deals.

The President of the European Commission was on record as saying,

“We’re saying…we believe in open, fair and rules-based trade,”

Stocks are enjoying a rally this morning. After holding steady during the US session yesterday, Asian and European markets are well off the lows.

Yellen Breaking the Silence

Life comes at you fast sometimes.

The former Chair of the US Federal Reserve said a bit more than a year ago that

It seems her rhetoric has changed completely since then and it now seems that she’s expecting something bad to happen soon.

In this interview, she pointed out the $9.1 trillion corporate debt and gave a stern warning that it could cause a lot of bankruptcies, especially for companies with less than sparkling credit.

Catch it on YouTube at this link: https://youtu.be/gcYTU1sQniI

Interesting times.

Happy Birthday Bitcoin Futures

The bitcoin futures market on Wall Street turns one today.

Many will argue and many often do about what effect this has had on Market prices. Though it’s often downplayed, even by the CBOE themselves, volumes in these CBOE and CME contracts often reach up to about 8% of the volumes reported by major global exchange sites.

For better or for worse, they’re part of this market now and it’s only going to grow when the new Nasdaq futures come online in Q1.

Happy birthday!!

Let’s have 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.

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:MatiGreenspa

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 138 rated postsSenior Market Analyst at Etoro.com.




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Market Overview

U.S. Stocks Struggle for Direction as China Lowers Auto Tariffs; Cryptos Teeter on New Yearly Lows

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U.S. stocks struggled for direction on Tuesday, as markets digested the latest round of trade talks between the United States and China. Cryptocurrencies were back on the defensive and dangerously close to setting new lows for the year.

Stocks Sputter

After swinging between gains and losses for much of the day, the S&P 500 Index settled virtually flat at 2,636.78. Financials companies were the biggest laggards, falling 1% on average. Gains in consumer staples and health care helped to offset the loss.

The Dow Jones Industrial Average fell 53.02 points, or 0.2%, to close at 24,370.04. The blue-chip index was down triple-digits earlier.

Meanwhile, the technology-focused Nasdaq Composite Index managed to climb 0.2% to settle at 7,031.83.

Wall Street finished mostly higher on Monday after the major indexes clawed back from brutal intraday losses. Markets are coming off one of their worst weeks of the year, highlighted by a nearly 6% drop in the S&P 500.

Tariffs Reduced

Initial trade talks between the United States and China have yielded positive results after Beijing confirmed it will reduce tariffs on American automobiles to 15% from 40%. The news suggests that both sides are working amicably on a new free trade agreement following a bitter feud that threatened to throw global economic growth off course.

According to The Wall Street Journal, Chinese Vice Premier Liu He delivered the news to Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer during a phone call Monday evening. The tariffs were implemented initially in response to escalating duties on Chinese imports by the Trump administration. The rift between the U.S. and China has cooled following face-to-face meetings between presidents Trump and Xi Jinping on the sidelines of the G20 summit earlier this month. At the time, both sides committed to resolving their trade dispute within 90 days.

The trade truce also includes considerations for upending certain elements of the Made in China 2025 plan, which is intended to boost Chinese companies across various industries including artificial intelligence.

Cryptos at Risk

The cryptocurrency market is teetering on the edge of new lows Tuesday, leaving very little doubt that another round of selling was in play. As Hacked recently reported, Stellar (XLM/USD), Litecoin (LTC/USD), Ethereum (ETH/USD) and XRP (XRP/USD) all face considerable risk of setting new lows in relatively short order.

All the majors were down over the past 24 hours, with the notable exception being Tether. The stablecoin has benefited from the recent downturn and is currently trading above parity with the greenback. Tether is now the fifth-larges crypto by market cap with a total value of $1.9 billion. Bitcoin cash has fallen back down to sixth spot following a 35% weekly plunge.

Bitcoin continues to exert significant influence on other cryptocurrencies, with its share of the market growing to 55%. The leading digital currency has posted a series of lower highs and lower lows, a recipe for disaster in the short-run. Technical traders should keep a close watch of the $3,200 threshold as it could be the next to fall amid the relentless downtrend.

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 694 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: Euro and Pound Under Pressure Amid Brexit Chaos

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Forex Market Snapshot

Asset Current Value Daily Change
EUR/USD 1.1318 -0.32%
GBP/USD 1.2515 -0.35%
USD/JPY 113.27 -0.04%
AUD/USD 0.7200 0.14%
GOLD 1,247 -0.23%
WTI Crude Oil 51.63 1.43%
BTC/USD 3,336 -2.10%

The forex market has been very active today with Europe being in the epicenter of the moves. The Euro and the Great British Pound are both trading with a bearish bias, despite an early rally. The initial move higher in the main risk-on currencies was triggered by the Chinese proposal of reducing car tariffs on vehicle’s made in the US, which gave back hope that the US-Chinese talks could be back on track despite the recent arrest of Huawei’s CFO. The brief bounce in Europe was also fueled by the better-than-expected German ZEW Sentiment data, even as the indicator still points to a slowdown.

While the risk rally faded in late European trading, the US Dollar got higher across the board following the better-than-expected Producer Price Index (PPI) report. Analysts expected a flat headline number due to the sharp decline in the price of oil while the more reliable core measure was expected rise modestly. The higher-than-expected producer inflation caused a rise in rate-hike odds and in turn, a bounce in the Dollar.

Technical Analysis

EUR/USD, 4-Hour Chart Analysis

The Euro, which is among the weakest majors from a technical standpoint due to the Brexit troubles the Italian budget debate and the slowing global economy, is back near the 1.13 level, still in a clear long-term downtrend.

The short-term trading range is intact in the pair, and for now, the prior low near 1.12 is not in danger, but despite the very favorable seasonality for the common currency, it failed to maintain its bounce above the key 1.1440 level, pointing to strong selling pressure and likely new lows in January.

GBP/USD, 4-Hour Chart Analysis

The Pound crashed below the 1.27 level following the delay of the key Brexit vote that was supposed to take place today, and the weakest major currency hit new 20-month lows against the US Dollar as we expected.

The pair is still well above its 2016 low near 1.20, but there are no major support zones that could stop the decline, should the political uncertainty persist. Both the short- and long-term trends remain bearish in GBP/USD, and only a quick recovery above 1.27 would help bulls here.

EUR/GBP, 4-Hour Chart Analysis

The EUR/GBP pair broke out above the 0.90 level and the long-standing trading range that has been dominant for almost a year, besides a failed break-out attempt in August. Given the Pound’s overall weakness a move towards the 2017 highs near 0.93 is possible in the coming months and a move above that could open up the way to the historic 0.95 level, and the 0.9750 level which was hit briefly during the panic in 2008.

Gold Futures, 4-Hour Chart Analysis

Gold pulled back below the $1250 level after hitting its highest level since July, and although the precious metal is close to confirming a new uptrend, a failed break-out formation is still in the cards. That said, the long-term outlook is still positive for the safe-haven asset, and should the pull back in US yields continue, gold could be in for a bull run even against the relatively strong US Dollar. The next major resistance zone is found near $1300 while support is at $1215 and $1080.

Key Economic Events Tomorrow

ChartBook

Forex

USD/JPY, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

EUR/JPY, 4-Hour Chart Analysis

AUD/JPY, 4-Hour Chart Analysis

GBP/JPY, 4-Hour Chart Analysis

USD/CHF, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 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 413 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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