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Week in Review: Bitcoin Through the Stratosphere, and Nothing Even Comes Close

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Bitcoin put up an epic rally this week, upstaging equities and political developments centered on tax and the Federal Reserve. An impressive rise in crude oil also made headlines, as investors continued looked on favorably to speculation that OPEC is considering extending its production cuts well into 2018.

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BTC/USD Hits $7,000, and then Blows Past It

Bitcoin posted one of its more dramatic rallies this week en route to fresh records. BTC/USD surged to $7,000 and beyond, adding a staggering 24% over a five-day stretch. At press time, BTC/USD was trading at $7,213 for a market capitalization of $120 billion.

A multitude of forces have combined to give bitcoin a market cap that rivals some of Wall Street’s biggest companies. Chief among them is the prospect of greater institutional cash flow following news that CME Group is planning to launch BTC futures contracts. In doing so, CME joins rival CBOE in embracing digital currency.

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Bitcoin’s rally failed to generate additional buying interest in altcoins this week. Though the altcoin market improved on Friday, the likes of Ethereum, Ripple and Litecoin struggled throughout the week.

Stocks Return to Record Territory

Wall Street put up steady gains this week, as all three major benchmarks closed at record highs. The Dow Jones Industrial Average climbed rose 0.4% during the week to finish at 23,539.19. The large-cap S&P 500 Index eked out a five-day gain of 0.2% to close at 2,587.84. Meanwhile, the tech-driven Nasdaq Composite Index added nearly 1% to settle at 6,764.43 on Friday.

Technology stocks continued their upward climb after being responsible for 75% of equity returns in October.

Implied volatility also dropped to their lowest level since the summer, as investors kept their portfolios heavily invested in the stock market. The Chicago Board Options Exchange (CBOE) Volatility Index plunged 8% on Friday to close at 9.14. The so-called “fear index” trades on a scale of 1-100, where 20 represents the historic mean.

Powell Gets Fed Nomination

On Thursday, U.S. President Donald Trump  nominated Jerome Powell to lead the Federal Reserve once Janet Yellen’s term expires in February. The move ensures continuity in terms of monetary policy only without Yellen, a Democrat who was on the outs with the current administration.

“Today is an important milestone on the path to restoring economic opportunity to the American people,” Trump said in a press conference Thursday.

“He’s strong, he’s committed and he’s smart, and if he is confirmed by the Senate, Jay will put his considerable talents and experience to work leading our nation’s independent central bank,” Trump said in reference to Powell.

Powell is a current governor with the Fed, and is a voting member of this year’s Federal Open Market Committee. Speculation surrounding his appointment upstaged the Fed’s two-day policy meeting that ran until Wednesday. As expected, policymakers kept interest rates on hold until December.

Crude Oil at 2017 Highs as Rally Continues

Oil prices continued to soar this week, reaching their highest levels of the year on an improved demand outlook and signs that peak supplies were simmering down. U.S. West Texas Intermediate (WTI) for December settlement added 3.2% for the week to close at $55.64 a barrel.

The January futures contract for Brent crude added 2.7% for the week to finish at $62.07 a barrel.

Crude prices received a boost on Friday after rig-services provider Baker Hughes reported another weekly drop in active rigs. Drillers operated 11 fewer rigs last week, most of which was due to a loss in the number of active oil rigs. That was the largest decline this year.

U.S. Jobs Market Back on Track

It has been a positive month for the U.S. labor market after two devastating hurricanes took a knife to the official jobs numbers.

On Thursday, the Labor Department said weekly jobless claims fell to the lowest level in over 44 years. Twenty-four hours later, the same department announced the creation of 261,000 jobs for the month of October. Though far below forecasts of 310,000, the prognosticators discounted a sharp upward revision during the previous month. As it turns out, the economy created 18,000 jobs in a hurricane-ridden month. The original report showed a decline of 33,000 jobs.

Fewer layoffs and more hiring are positive signs for an economy that has shifted into higher gear over the last eight months. America under Trump has been more confident and far more optimistic about the future – at least when measured along certain economic indicators and the stock market. The president is still dealing with an abysmal approval rating, although that could be attributed to sharp partisanship on the part of U.S. voters.

Featured image courtesy of Shutterstock. 

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Market Overview

Asian Market Update – Friday: Coins mixed; Asian stocks tumble as investors assess Fed, ECB decisions

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ECB

The Big Question: What’s next for ethereum and litecoin?

The major cryptocurrencies were in a mixed mode on Friday morning in Asia, with bitcoin posting decent gains, and ethereum and litecoin taking losses.

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After modest gains on Thursday and a big loss on Wednesday, bitcoin on Friday edged up again. As of midday in Hong Kong, the virtual currency was up 4 percent to $17,400. Overall, bitcoin has gained about 13.50 percent so far this week – the fifth straight week of gains.

Ethereum entered into a relatively steep fall in Asian trading on Friday morning. At midday, ethereum was down 6.5 percent to $656 on Coinbase. Though the coin surged on Thursday morning, it finished the day down by about 0.5 percent.  Overall, ethereum had a great week, gaining as much as 50.7 percent in the week after two straight weeks of losses.

Litecoin was down for a third consecutive day on Friday. As of midday, the virtual currency was down 2.85 percent to $275. The fall on Friday morning followed a 9.5 percent loss on Thursday and 11 percent fall on Wednesday.

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It has still been a fantastic week for litecoin, which surged from around $150 to reach as high as $420 on Coinbase on Tuesday. Overall, the virtual currency has gained more than 80 percent for the week – its sixth straight week of gains.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan- Nikkei 225 22,537 -0.69%
China-Shanghai Composite Index 3,264 -0.85%
Hong Kong –Hang Seng 28,826 -1.16%
South Korea-KOSPI 2,480 0.46%
Australia-ASX 200 5,999 -0.19%
S&P 500 E-Mini Futures 2,656 0.11%

Major Asian equities were pointing lower on Friday morning, with significant losses seen in Hong Kong, the Chinese mainland and Japan, while stocks in South Korea edged up slightly. The drop came as investors digested the latest monetary policy clues from the US Fed and the ECB meetings.

In Hong Kong, the Hang Seng Index lost 1.16 percent to 28,826 at midday. A move by the Hong Kong Monetary Authority on Thursday to raise the base rate by 25 basis points in response to the US rate hike did not appear to help investor sentiment.

On the Chinese mainland, the Shanghai Composite Index edged down 0.85 percent at midday on Friday to 3,264. The People’s Bank of China also raised its short-term and medium-term borrowing rates on Thursday after the Fed decision. A slew of figures out on Thursday, including retail sales, foreign direct investment, showed positive signs, but fixed-asset investments cooled in November.

In Japan, the Nikkei 225 Index was off 0.69 percent to 22,537 at midday. The drop followed a new survey released by the BOJ suggesting business sentiment at Japanese companies have improved significantly, having hit a 11-year high.

Down under, the ASX 200 was also down a slight 0.19 percent to 5,999 at midday.

The S&P 500 E-Mini Futures was up 0.11 percent to 2,656.

Stocks in South Korea edged up on Friday morning. At midday, the Kospi was up 0.46 percent to 2,480.

The Fed on Wednesday hiked interest rates, as was widely expected, but maintained its outlook for the coming years despite improvements in the US economy.

The ECB, on its end, kept its cautious stance on the prospect of reaching inflation goals even though it vowed to keep stimulus in place.  Investors are carefully examining these stances as they plan their investments for the next year.

Also, lingering uncertainties over the prospect of the US tax reform passing congress continues to weigh on investor sentiment. The latest reports showed that the bill hasn’t gained full support from key Republican lawmakers like Marco Rubio, who demanded changes to a child tax credit.

Currencies

The Japanese yen firmed 0.08 percent against the US dollar at midday Friday, changing hands at 112.29 per dollar.

The Chinese yuan firmed 0.03 percent against the US dollar at 6.6072 per dollar.

The Australian dollar firmed 0.02 percent on the dollar, changing hands at 1.3042 per dollar at midday.

Commodities

WTI Oil was up 0.02 percent to $57.14 per barrel at midday on Thursday.

Brent Crude was down 0.16 percent to $63.28 per barrel.

Gold was up 0.24 percent to $1,254 an ounce.

News across Asia

In China, British officials, including finance minister Philip Hammond and Bank of England chief Mark Carney, are trying to ink trade and investment deals with China worth a billion pounds during a visit to Beijing. The deals are part of wide-ranging talks between the UK and China during what officials on both sides call a “Golden Era” of bilateral relations.

Take away: Britain is looking to strengthen trade and investment ties with countries such as China, as it seeks to build new relations after exiting the European Union.

In Japan, big Japanese manufacturing companies’ confidence improved for a fifth consecutive quarter in the fourth quarter of 2017 and hit a 11-year high, a BOJ survey out on Friday showed.

Take away: This is just one of the many positive signs in the Japanese economy with robust exports and rising corporate profits, and the BOJ indicates that it will continue its massive stimulus package and ultra-easy monetary policies.  

Featured image from Flickr.

Disclaimer: The author owns bitcoin, ethereum and litecoin. He holds investment positions in the coins, but does not engage in short-term trading.

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Market Overview

Asian Market Update – Thursday: Ethereum Extends Rally; Asian Stocks down After US Rates Hike

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Janet Yellen

The Big Question: Is ethereum finally catching up with bitcoin?

Bitcoin, ethereum and litecoin were all pointing higher on Thursday morning in Asia, with large gains seen in ethereum, and slight gains in bitcoin and litecoin.

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By midday, ethereum had edged up 5.68 percent to $752. Although a bit more subdued than litecoin, ethereum has also made huge gains over the past a few days. Etheruem is now up about 67 percent over the course of the week.

Litecoin also surged 1.22 percent to $316 as of midday Thursday in Asia, following a correction yesterday that brought the prices on Coinbase and Bitfinex closer together.

Litecoin gained more than 130 percent on Monday and Tuesday, reaching as high as $420 at one point on Coinbase, before falling back. On Wednesday, litecoin dropped about 11 percent on Coinbase while it was up around 1 percent on Bitfinex.

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Bitcoin was also up 0.66 percent to $16,799 at midday on Thursday. The slight gain came after big losses on Wednesday. The virtual currency dropped about 6 percent on Wednesday, after a 16 percent increase over the previous two days.

Outgoing US Fed Chair Janet Yellen voiced criticism against bitcoin on Wednesday, saying the cryptocurrency is a “highly speculative asset” and “not a stable source of value,” according to media reports.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan- Nikkei 225 22,704 -0.24%
China-Shanghai Composite Index 3,296 -0.20%
Hong Kong –Hang Seng 29,216 -0.02%
South Korea-KOSPI 2,503 0.92%
Australia-ASX 200 6,020 -0.02%
S&P 500 E-Mini Futures 2,670 0.06%

Major Asian equities were narrowly down on Thursday morning, following the US Fed delivering a much-anticipated US rate hike, but voicing concern over inflation next year and rate hikes in China and Hong Kong.

In Japan, the Nikkei 225 Index was off 0.24 percent to 22,704 at midday. The loss, though small, came even after fresh data out on Thursday suggested positive signs in the Japanese economy.  The Markit/Nikkei Japan Manufacturing Flash Purchashing Managers Index rose to 54.2 in December, up from 53.6 in November – the highest reading in more than three years.

On the Chinese mainland, the Shanghai Composite Index edged down 0.20 percent at midday on Thursday to 3,296. That came after the People’s Bank of China raised the country’s short- and medium-term interest rate by 5 basis points on Thursday morning, in response to the US rate hike. Though the move was unexpected, the increase was minimal and will likely not make any significant impact.

In Hong Kong, the Hang Seng Index was down 0.02 percent to 29,216 at midday. The Hong Kong Monetary Authority also raised the base rate by 25 basis points on Thursday after the US Fed’s rate hike.

Down under, the ASX 200 was down a slight 0.02 percent to 6,020 after midday in Australian trading.

Stocks in South Korea edged up on Thursday morning. At midday, the Kospi was up 0.92 percent to 2,503 at midday.

The S&P 500 E-Mini Future was up 0.06 percent to 2,670.

The Fed on Wednesday raised interest rates for the third time this year as expected, while maintaining a projection of three more rate hikes in 2018. However, the thing that got the attention of investors was concerns raised by the Fed about the low inflation, downplaying expectations for a tightening in 2018.

Currencies

The Japanese yen lost 0.04 percent against the US dollar at midday Thursday, changing hands at 112.56 per dollar.

The Chinese yuan firmed 0.07 percent against the US dollar to 6.62084 per dollar.

The Australian dollar firmed 0.43 percent on the dollar, changing hands at 1.3035 per dollar at midday.

Commodities

WTI Oil gained 0.09 percent to $56.70 per barrel.

Brent Crude edged up 0.22 percent to $62.79 per barrel.

Gold was up 0.24 percent to $1,258 an ounce.

News across Asia

In China, investment in the real estate sector cooled in November, following a slew of measures from the government to crack down on speculation in overheated real estate markets. New figures out on Thursday showed that property investments grew 4.6 percent in the month, slower than the 5.6 percent growth in October.

Take away: Though the government measures, which include tough mortgage rules and sales regulations, could contain the overheated housing market, it could also very well weigh on the overall economic growth in China.

In Japan, the government is reportedly expected to reduce new bond issuance for the fiscal year 2018. Total bond issuance could fall as much as several hundred billion yen in 2018 from the current 34.37 trillion yen, the Nikkei reported.

Take away: The decision is likely to have been supported by rising tax revenues from the government following a recovery in economic growth in recent months.  

Featured image from Flickr.

Disclaimer: The author owns bitcoin, ethereum and litecoin. He holds investment positions in the coins, but does not engage in short-term trading.

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Analysis

Daily Analysis: Dollar Falls, Gold Jumps after Yellen’s Final Move

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Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2668 -0.02%
DAX 13125 -0.45%
WTI Crude Oil 56.65 -0.68%
GOLD 1258.00 1.35%
Bitcoin 16,100 -6.32%
EUR/USD 1.1842 0.73%

The Federal Reserve hiked interest rates as expected today, and although the central bank’s monetary statement was slightly more hawkish than expected, the market’s reaction didn’t reflect the much-anticipated move. The worse than expected Core CPI reading that underlined the low-inflation narrative weighed on the recently strong Greenback, while stocks were unchanged after decision and bonds gained ground as yields retreated.

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EUR/USD, 4-Hour Chart Analysis

The major indices are hovering near their all-time highs with the DOW leading the way higher, hitting a new record for the second day in a row. While volatility Is expected to remain low as we approach the end of the year, market internals and valuation levels are still concerning from a long-term perspective, and stocks outside the US are also negatively diverging. The action in crude oil could be slightly more interesting as the commodity is starting to act in a slightly bearish manner after a grinding multi-month rally.

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WTI Crude Oil, 4-Hour Chart Analysis

The Brexit process is still in the center of attention in Europe, although volatility took a nosedive on the old continent as well, and it’s unlikely that the Christmas period will be much different, given the predictable drop in volumes and trading activity. The date of the next election in the financially and politically troubled Italy has been set to March 4th next year, and the early date caused some turmoil in the countries assets, which dragged the Euro Stoxx 50 lower today, together with the DAX and the other major indices.

Cryptocurrencies

As the total market cap of the crypto-market crossed the incredible $500 billion mark, Ripple, NEO, and Ethereum made headlines with lofty gains in the face of the severely overbought readings elsewhere in the segment. While XRP and NEO are still not overbought from an investment perspective, Ethereum reached our final target for its break-out and triggered a long-term sell signal.

ETH/USD, 4-Hour Chart Analysis

The previously surging IOTA continued its correction, Litecoin consolidated in a relatively narrow range, while Dash, ETC, and Monero scored marginal new highs before turning lower together with BTC. The most valuable coin that has lost some of its momentum “mojo” in recent days fell back below last week’s highs, and that could mark a failed break-out and a start of the deeper correction that seems more and more likely.

BTC/USD, 4-Hour Chart Analysis

Key Economic Releases on Wednesday

Time, CET Country Release Actual Expected Previous
11:30 UK Average Earnings 2.5% 2.5% 2.3%
11:30 UK Claimant Count Change 5,900 3,300 6,500
11:30 UK Unemployment Rate 4.3% 4.2% 4.35
15:30 US Core CPI 0.1% 0.2% 0.2%
15:30 US Crude Oil Inventories -5.1 mill -3.6 mill -5.6 mill
21:00 US Fed Rate Decision 1.5% 1.5% 1.25%
21:00 US FOMC Statement

Featured image from Shutterstock

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