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Too Many Assumptions

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Too Many Assumptions

Introduction

This article was posted on Tuesday, 11:51, UTC.

I’d like to wish all of our clients in France and Italy a happy Assumption Day. In the financial markets, we try not to make any assumptions but apparently in religion it’s Ok. 😉

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@MatiGreenspan
eToro, Senior Market Analyst

 

Please note: All data, figures & graphs are valid as of August 14th. All trading carries risk. Only risk capital you can afford to lose.

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Market Overview

They’re calling it a de-escalation but that assumption may be a bit premature. The fact that Donald Trump and Kim Jong Un have not traded spats in the past 48 hours does not mean that the situation is any less tense. However, stocks are climbing again as investors try to buy the dip and so the headlines suggest that investors fears about nuclear war between the two nations are dissipating.

As we’ve mentioned before, the stock market has not been a very accurate gauge of fear in the last few years. Therefore, this may simply be a case of financial journalists trying to determine the narrative according to the market movements instead of the other way around.

Nevertheless, regardless of the apparent problems in the world the markets are indeed expressing less fear at the moment. Gold has come away from her highs and the USDJPY has managed an impressive gain thanks to some good data from Japan.

One asset that doesn’t quite support the move away from safe haven trading is oil. Crude took a significant dive yesterday. Proving, that at least in the energy market, there is still some level of fear.

In this graph we can see all the assets mentioned above. Crude oil is in candlesticks. Notice the build up and let down of gold (green) as investors moved to safety and then away from it. As well, we can see the risk assets USDJPY (blue) and Dow Jones (orange) doing exactly the opposite of gold.

Bitcoin Boom

Seeing a blockchain boom is always exciting. To watch any asset move as fast as the cryptos sometimes do is simply a thing of beauty.

Today, bitcoin touched a new all time high of $4,413 before seeing a $220 retracement. The total market cap of all bitcoins in circulation reached an astounding milestone of $70 Billion this morning as BTC continues to lead the crypto market higher.

Bitcoin dominance is now firmly above 50% as consensus forms around the original form of digital money.

Watch out though! As with anything that moves this quickly sharp swings are always a possibility in either direction. The cryptocurrency markets remain the most volatile and risky market mankind has ever seen so please trade with caution.

Ethereum’s Win

Though the price movement has not been as impressive as bitcoin, the Ethereum network has been seeing huge success in other areas.

Vitalik Buterin, the founder of Ethereum tweeted this morning that transactions are at an all time high. The tweet that he’s quoting even suggests that this might be a record level of transactions for any blockchain ever.

Of course, that “I believe” statement is still just an assumption until proven right or wrong.

Either way, technical analysis of the Ether token reveals that the price may be finding some sort of stability even if that stability is more like a flag pole in the centre of a tornado.

For now, the range that’s been built is between $200 and $300. We should get confirmation soon enough if this range will hold or if we see another cryptastic breakout.

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.

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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Mati Greenspan

Mati Greenspan

https://www.etoro.com/

Senior Market Analyst at Etoro.com.

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