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U.S. Stocks Bounce Back on Trade Optimism; Crypto Meltdown Resumes

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Stocks rose sharply on Monday, buoyed by optimism that the U.S. and China were making progress toward a new free trade agreement. Cryptocurrencies headed in the opposite direction, undoing much of last week’s rally as bitcoin fell below $3,900 once again.

Benchmarks Rise

All of Wall Street’s major indexes opened firmly higher, with the Dow Jones Industrial Average adding more than 400 points through the early morning session. The blue-chip index settled with a gain of 288.03 points, or 1.1%, to close at 25,826.49.

The much broader S&P 500 Index climbed 1.1% to finish at 2,790.37. Nine of 11 primary sectors finished higher, led by energy and consumer discretionary shares. Information technology also rose sharply, extending last week’s impressive recovery.

The tech-driven Nasdaq Composite Index climbed 1.5% to 7,441.51.

Trade Optimism Builds

President Trump and China’s Xi Jinping have made strides to resolving their bitter trade dispute following weekend talks in Buenos Aires, Argentina. China has vowed to cancel proposed tariffs on U.S. automobiles in exchange for an extended grace period on $200 billion worth of U.S.-bound imports. Trump announced that the proposed duty hike on Chinese goods slated for Jan. 1 will be put on hold indefinitely to allow both sides to negotiate a new deal.

Despite the good gestures, both countries remain locked in a trade war that will take considerable effort to overcome. The biggest takeaway from Buenos Aires is the 90-day truce both leaders agreed to pursuing. Trade talks are expected to ramp up over that period.

Optimism that both sides are making progress rubbed off on the commodity markets Monday, as oil prices surged to their highest level in almost two weeks. The impasse over free trade and its impact on global economic health have weighed heavily on crude markets the last two months.

Cryptocurrencies Fall Anew

The cryptocurrency market plunged anew on Monday, as bitcoin and the major altcoins/tokens experienced a brisk technical selloff. The combined value of all coins reached a low near $125 billion, a reversal of $17 billion from last week’s high.

Bitcoin fell through the $4,000 support level en route to fresh six-day lows. Market-wide data collected by CoinMarketCap show a daily drop of 7.2% to $3,886.

Every one of the majors in the top 20 by market capitalization finished in the red. In percentage terms, EOS was the biggest loser, shedding 12.1% to $2.60. Monero’s XMR currency dropped 10.8% to $54.13.

Ethereum and Stellar XLM each fell more than 7%. The ETH price was last valued at $108.24 while XLM settled just below $0.1500.

The crypto market finished November deeply in the red and its recent performance casts doubt about the potential for a late-year rally. Bitcoin has registered firm gains in each of the last three December months, including a record-setting run last year.

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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4.7 stars on average, based on 773 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




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Market Overview

MindChain Conference: ‘Blockchain Isn’t Our Saviour’; Romania’s Growth Says Different

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Blockchain was picked apart at the MindChain conference this week, where one prominent commentator said blockchain won’t make the world a better place, and that it won’t be our saviour.

Blockchain Won’t Make the World a Better Place

One of Forbes’ ‘30 Influential Europeans Under 30’, Cornel Amariei took aim at blockchain, which he said was a buzzword, and that there weren’t too many places it could be applied:

“I hate buzzwords because they give a false impression about what is happening. Blockchain is a buzzword – I’m not a big fan, and I’m not against it either – but it’s nothing more than an encryption and decentralization technology – there aren’t that many areas where it can really be applied well.”

The 22 year old inventor and author suggested blockchain’s reach will be more limited than most in the crypto space would like to believe. He said:

Blockchain will solve a lot of issues, but it won’t really make the world a better place. It’s not our saviour.

Romania: Blockchain and Crypto Tech Hub

Held by Business Review, the conference comes from Romania – the latest addition to the European Union having joined in 2007. Romania’s economy has grown at twice or even three times the rate of its larger EU neighbours in recent years. Its approach to tech innovation is a big reason why.

Sixteen blockchain and cryptocurrency startups have launched in Romania in the past year, while Google, Facebook, Amazon and Microsoft all have offices scattered around its major cities.

Those startups include a blockchain-based energy supplier, an augmented reality (AR) project, and many more, including the recently covered Ark (ARK).

Romania’s new role as a tech hotspot can largely be attributed to its encouraging tax policies – the country’s corporations are taxed at 16%, hence the arrival of Google, Amazon, et al. Meanwhile, low income earners only have 10% of their earnings taxed.

If that sounds good get this: if you work in the IT industry your income doesn’t get taxed at all. Same goes for R&D workers and those involved in technological development. (Side note: construction workers are also exempt from income tax).

Breakdown of Romania’s tax exemption policies – designed to encourage growth and worker participation.

New Transylvanian Silicon Valley

It’s thanks to policies like these that Romania recorded 5.7% growth year-on-year leading into 2017 – the fastest rate of growth in the European Union. Romania’s tech growth has been such that it has drawn comparisons with Berlin; while Techcrunch once referred to the nation as the ‘Silicon Valley of Transylvania’.

Blockchain is currently benefiting from this new wave of Romanian innovation and optimism. Sixteen crypto startups from a population of just 19 million – all within the past year or so – must be one of the strongest ratios in existence right now.

It’s true that blockchain didn’t have much of a hand in Romania’s glowing recent past, but it may yet have a big role to play in its future.

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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4.5 stars on average, based on 147 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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Market Overview

How to Escape Inflation

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Hi Everyone,

After years of economic crisis and hyperinflation, it seems that Zimbabwe may finally be taking their first steps toward stabilization.

For more than a decade the African nation has been relying on a multi-currency system that relies heavily on the US Dollar. However, in a country of 16 million people, there aren’t always enough dollar bills to go around. Talk about a liquidity issue.

So most Zimbabweans receive their monthly paycheck by electronic transfer to their bank account, which they then need to figure out how to spend in the grocery store.

In 2016 the government issued a new currency called a bond note, the exchange rate of which has been controlled by the government. In a recent update, the Reserve Bank of Zimbabwe has ditched capital controls and is now allowing bond notes to trade according to the free market.

In a country that has full mobile penetration, it’s really a wonder to me how cryptocurrencies are not playing a larger role.

Hint hint, wink wink, to Dash, Bitcoin Cash, and Litecoin.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • US-China trade deadline: 7 days | Days to Brexit: 35
  • Crypto Changing Landscape
  • Ethereum’s Rate of Inflation

Please note: All data, figures & graphs are valid as of February 22nd. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Stocks pulled back a bit yesterday but this morning investors are looking to reverse the losses. We’ve been counting down on geopolitical timers for so long that many market participants are already dreaming of a day when those counters get to zero and all is resolved.

The tricky one remains Brexit. At this point, analysts have identified three possible yet unlikely outcomes.

1. No deal Brexit
2. Theresa May’s deal, or some variation
3. A time extension

Each of the above seems to be extremely unlikely yet we know that one of them has to happen. Should option one materialize, it’s very likely that the British Pound will fall, and in the event of option two, the Pound should rise.

The Pound has been falling pretty steadily since May. Here we can see the GBPJPY kissing her 200-day moving average (blue line).

Also, the New York session today should be really interesting as we’ll hear from a slew of central bankers including Mario Draghi and no less than four Fed members as well as receiving a monetary policy report from the Fed.

Remember, these are the guys who drive the markets. So it pays to pay attention.

SEC Watchers

Just as traders in traditional markets watch the Fed, cryptotraders seem to be forming a habit of watching the SEC.

Today, we got some pretty astonishing news that an ICO called Gladius Network LLC received a pass from the SEC despite them selling $12.7 million worth of unregistered securities tokens. This is quite a different outcome than the SEC took with Paragon and Airfox just three months ago, who each needed to pay a fine of a quarter million dollars.

While the SEC is the most important regulatory body in the United States when it comes to securities, other regulators may be influencing policy as well. Our US Managing Director Guy Hirsch wrote me this morning…

How about the Crypto Rally?

Well, excitement is still high but seems to be fading. Volumes did peak out at $35 billion during the full moon on Tuesday, February 19th. Today we’re down to $23 billion traded across global crypto exchanges.

Some have pointed to the volumes on Wall Street’s bitcoin futures, provided by the CME group, which reached a new record high of 18,338 contracts during Tuesday’s madness. That comes out to a total volume of approximately $357 million, or approximately 1% of the amount traded on exchanges.

Also, the major price surge actually happened on Monday, when the CME was closed for President’s day. So, it’s clear that Wall Street is the passenger here and not driving.

So, to find out whether this rally is about to continue or claw back we need to look at the root. As we’ve been discussing, this entire rally seems to have been caused by a shortage in the supply of new Ethereum.

Historically, the Ethereum network produces about 20,000 to 30,000 new ETH per day. However, since the beginning of the year the amounts have been tapering off and as of last week, the new supply was more like 13,000 per day.

The Constantinople upgrade which is currently scheduled for block height 7,280,000 (approximately February 27th), is supposed to stabilize supply to about 5,700 blocks per day and reduce the block reward from 3 ETH to 2 ETH per block. So, by these metrics, we can deduce that new production after the fork will be about 11,400. Far less than the current rate mentioned above.

Now, another part of Constantinople is that it’s supposed to reduce the amount of gas needed per transaction. However, it’s not apparent how the new gas fee structure will affect demand.

So even though we know supply will be reduced drastically, we don’t know if this will affect bottom line inflation because we don’t know exactly what demand will look like under the new system.

Clearly, forward guidance on monetary policy is not the largest concern for Ethereum’s community leaders.

As far as the rest of the crypto market, this recent rally certainly has the big fish nibbling. We’ve been in the accumulation zone for a while now and this latest push off the floor might just be enough to bring the market out of a slump, but there are several technical levels that need to be broken before that happens.

Wishing you an awesome weekend!

Best regards,

Mati Greenspan
Senior Market Analyst

Connect with me on….

eToro: @MatiGreenspan Twitter: @MatiGreenspan LinkedInMatiGreenspan |Facebook:MatiGreen

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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Market Overview

U.S. Stocks Post Biggest Drop in Two Weeks as Business Investment Spells Trouble for the Economy

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The U.S. stock market declined on Thursday, snapping a three-day winning streak and heading for its worst loss in two weeks after the latest report on durable goods revealed a sharp slowdown in business investment. Crypto markets corrected lower as trade volumes continued to unwind from their yearly peak.

Stocks Retreat

All of Wall Street’s benchmark indexes headed for losses, with the Dow Jones Industrial Average falling 103.81 points, or 0.4%, to close at 25,850.63. The broad S&P 500 Index fell 0.4% to 2,774.88, with seven of 11 primary industries reporting losses. The technology-focused Nasdaq Composite Index closed down 0.4% at 7,459.71.

Disappointing quarterly results weighed on the major indexes after Domino’s Pizza Inc. (DPZ) reported earnings and revenue that disappointed investors. Hormel Foods Corporation (HRL) also missed analysts’ expectations.

S&P 500 companies have mostly beaten quarterly earnings estimates, but that could soon change, according to FactSet. The research firm anticipates a sharp downturn in profitability for Q1 2019 based on January EPS estimates. More on that story can be found here.

Economic Data Mostly Positive, with One Big Caveat

U.S. economic indicators were largely positive on Thursday, with one very big caveat: a gauge of business investment fell for the fourth time in five months.

The Commerce Department reported on Thursday that durable goods orders – a proxy for manufacturing demand – rose at a seasonally adjusted 1.2% in December. When removing the volatile transportation category, orders rose at a much slower 0.1% pace. A closer look at the report revealed that new orders for nondefense capital goods, a bellwether for business investment, fell 0.7% in December. Clearly, American businesses are feeling the effects of global economic uncertainty.

Most of the other major releases Thursday were positive. Initial jobless claims fell by 23,000 to a seasonally adjusted 216,000 in the latest week, the Labor Department said.

A measure of U.S. private-sector business known as the Composite purchasing managers’ index (PMI) improved to eight-month highs in February. Markit’s PMI gauge climbed to 55.8 from 54.4 in January. All of the monthly gains were attributed to the services sector, which accounts for the vast majority of economic output.

Cryptocurrencies See Minor Pullback

The major cryptocurrencies posted modest declines on Thursday, as the total market cap fell by around $3 billion. Daily exchange trading has also fallen by roughly $10 billion from its peak on Tuesday. As far as we can tell, the daily turnover printed on Tuesday was the highest in at least ten months.

Crypto Update: Litecoin Leads Pullback in Majors

Litecoin (LTC) led the pivot lower among the majors, falling 4% to $49.12. The LTC price peaked at four-month highs earlier this week.

Bitcoin cash (BCH) posted a drop of 2.9% to $142.72. XRP`s price broke below 32 cents after falling 2.4%. Ethereum (ETH) edged down 1.2% to $145.83.

Losses for Bitcoin (BTC) were capped at 1% during the day. It was last down 0.9% at %3,948.36, according to aggregate data from CoinMarketCap.

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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4.7 stars on average, based on 773 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




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