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Week in Review: Cryptocurrency Freefall Erases $40 Billion in Market Cap

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Cryptocurrencies headed for their third consecutive down week Friday, with some major coins shedding 10% or more. Bitcoin and the major altcoins fell to their lowest levels in about six weeks as institutional traders awaited regulatory clarification before entering the market.

Geopolitics and strained trade relations between China and the U.S. triggered a flight to safe havens, with gold prices reaching their highest level in ten days. Stocks finished slightly higher after Federal Reserve meeting minutes showed no urgency on the part of policymakers to hasten the pace of interest rate hikes.

Crypto: The Great Unwind Continues

Cryptocurrency prices collapsed this week, with the total market cap bottoming near $326 billion as bitcoin threatened a bearish reversal and altcoins suffered a brisk selloff. By Friday, the market had recovered near $330 billion, having declined more than $55 billion from its recent peak.

Bitcoin bottomed below $7,300, with bounces limited to the mid-$7,500 range. The world’s largest cryptocurrency saw its share of the total market rise above 38% as other coins fell.

Compared with seven days ago, BTC prices are down more than 7%, according to data provider CoinMarketCap.

Cardano was the biggest decliner in the top ten, falling more than 15% week-on-week. Bitcoin cash plunged more than 12% and Ethereum shed 11.5%.

Crypto Bulls Maintain Their Optimism

Bitcoin bull Tom Lee described the recent slide in prices as “typical market volatility” as he held firm to his long-term price forecast. Fundstrat’s head of research still believes bitcoin will reach $25,000 this year as institutional interest heats up and mining remains profitable.

Lee also reminded investors that the vast majority of bitcoin’s yearly gains are concentrated over a ten-day period. Without those days, bitcoin is down about 25% each year.

“So as miserable as it feels holding bitcoin at $8,000, the move from $8,000 to $25,000 will happen in a handful of days,” Lee told CNBC earlier this week.

John McAfee has bet on bitcoin reaching $15,000 by the end of next month, a virtual doubling of today’s prices. The technologist has also predicted huge gains for bitcoin cash and EOS.

Geopolitics Drive Markets

Geopolitical tensions weighed on investors this week after U.S. President Donald Trump cancelled a planned summit with North Korean leader Kim Jong-un.

The mood improved on Friday as Pyongyang expressed its willingness to still go ahead with the meeting, which was scheduled for June 12 in Singapore.

“Very good news to receive the warm and productive statement from North Korea,” Trump tweeted Friday. “We will soon see where it will lead, hopefully to long and enduring prosperity and peace. Only time (and talent) will tell!”

Stocks resumed their slide on Friday as gold prices held near ten-day highs. Meanwhile, oil prices plunged after Russia said it was content with $60 a barrel oil.

“We’re not interested in an endless rise in the price of energy and oil,” Putin told said at the International Economic Forum in St. Petersburg, adding that Russia and OPEC do not plan to extend output cuts. “If you asked me what is a fair price, I would say we’re perfectly happy with $60 a barrel.”

The Week Ahead

After a thunderous rally in April, the month of May is shaping up to be a dud for crypto traders. It remains to be seen whether the downtrend will continue heading into June or whether a bounce back is in order. There are no major events scheduled in the cryptocurrency market next week, although developments concerning regulation and institutional adoption will continue to sway investors.

In terms of economic data, revised U.S. nonfarm payrolls and revised GDP figures will be in the spotlight next week. The Commerce Department will also issue the latest reading of core personal consumption expenditures, the Federal Reserve’s preferred measure of inflation.

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 465 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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Week in Review

Week in Review: Crypto Recovery Runs Into  Hurdles as Market Plummets Friday 

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Friday marked another down week for cryptocurrencies after a series of technical hurdles failed to spur the bullish revival many had hoped would materialize. Surprisingly, the market exhibited relative calm following yet another hack of a high-profile digital currency exchange.

Meanwhile, traditional markets were consumed by trade-war fears and a key production meeting of the Organization of the Petroleum Exporting Countries (OPEC). Monetary policy was also on the radar as the European Central Bank (ECB) hosted a forum in Portugal while the Bank of England (BOE) signaled that an interest rate hike could be on the way this summer.

Crypto Rally Fizzes

Cryptocurrencies lost $22 billion in combined market cap this week, though all the declines were concentrated in Friday trading.

Although there was no immediate catalyst for the Friday selloff, which wiped as much as $29 billion from the market, the declines reflect a continuation of a bearish cycle that re-emerged last month.

EOS, Ethereum and bitcoin cash were the majors’ biggest decliners after recording double-digit losses over a 24-hour period.

Bitcoin also fell sharply after the bulls failed to rally past the technically significant $6,800 level.

The biggest development of the week came out of South Korea after Bithumb confirmed it fell victim to a cyber breach costing $30 million in cryptocurrency. The attack compromised roughly 6% of the exchange’s capital.

It is not yet clear how the perpetrators pulled off the heist. Bithumb has fallen prey to multiple attacks over the past 12 months, prompting management to invest millions more in cyber security and IT staff.

OPEC Agrees to Raise Crude Production

The Organization of the Petroleum Exporting Countries (OPEC) reached a tentative agreement Friday to raise crude-oil production by around 600,000 barrels per day following high-level talks in Vienna, Austria.

The Wall Street Journal confirmed that the deal is only in principle and involves so-called effective barrels, which refers to “real” barrels that will actually reach the market. Saudi Arabia, the group’s de facto head, entered the meeting with the stated goal of boosting output by one million barrels per day.

In 2016, the cartel agreed to limit output by about 2% of global production, which at the time amounted to roughly 1.8 million barrels per day.

After a prolonged bear market for crude, OPEC’s production rollback supported a global recovery in oil prices, with Brent briefly trading above $80 a barrel last month. U.S. President Donald Trump has blamed OPEC for inflating oil prices through its production policies, adding pressure on the cartel to raise outputs.

Monetary Policy in Focus

Central-bank meetings have carried more significance as of late as policymakers in the United States and Europe seek to clarify their positions on monetary policy. This week, the Bank of England held interest rates in check at 0.5% but sent a strong signal that changes could be looming over the horizon.

Andrew Haldane, the Bank’s chief economist, joined two other Monetary Policy Committee members in voting to raise interest rates by 25 basis points following the meeting on Thursday. Although they were offset by six votes in favor of keeping rates unchanged, the split suggests that a shift in policy could be coming.

Meanwhile, European Central Bank (ECB) President Mario Draghi told a central-bank summit in Sintra, Portugal that he will take a gradual approach in raising interest rates once officials wind down crisis-era policies later this year. Last week, the ECB’s Governing Council said it would put an end to bond purchases by the end of 2018.

The Week Ahead

The crypto markets appear to have found a bottom but the near-term outlook remains shaky. This is partly owed to abnormally low trading volumes. Last weekend, daily turnover plunged to its lowest level in over two months. Daily volumes fluctuated between $11 billion and $13 billion for most of the week.

On the economic calendar, investors can expect a steady stream of market-moving data, including revised U.S. GDP, durable goods orders and core personal consumption expenditures.

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 465 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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Week in Review

Week in Review: Cryptocurrency Market Extends Collapse with $60 Billion Decline but SEC Provides Silver Lining

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The cryptocurrency market plunged by as much as 21% this week in an apparent selloff that was driven by volatile futures trading. Negative headlines concerning Tether price manipulation, a South Korean exchange hack and widening investigation by CFTC regulators all hastened the collapse as cryptos approached their lowest levels since February.

However, a top official with the U.S. Securities and Exchange Commission (SEC) gave investors something to cheer about by concluding that Ethereum is not a security. Meanwhile, a government-appointed panel in India is expected to challenge the central bank’s unilateral ban on digital currency trading, according to multiple reports by local media.

Cryptocurrency Market Plunges

Cryptocurrencies bled more than $60 billion over the past seven days, as the market approached the February bear-market low. The declines were largely concentrated in the first half of the week as investors reacted to a security breach of a South Korean exchange and news of a widening investigation by CFTC officials into bitcoin futures.

While these factors certainly played a role, the main culprits of the decline appear to be volatile futures trading and the gradual exit of long-term holders from the market.

According to crypto analyst Tom Lee, traders are longing bitcoin and shorting the futures contract to generate profits before the expiry of the monthly contract. This works by selling a large share of holdings in the futures market at a volume weighted average price, and then selling the remaining amount during expiration.

On the other side of the spectrum, a lack of new buying interest is keeping the supply of bitcoin elevated. Based on Google search trends and overall trading volumes on major exchanges, the influx of new buyers is the lowest it has been this year.

Research carried out by Chainanalysis also suggests that long-term holders of cryptocurrency are gradually unwinding their positions, possibly due to frustration, tax requirements or other factors. The researchers said bitcoin’s long-term backers sold about $30 billion worth of digital currency between December and April.

Bitcoin bottomed near $6,100 this week but has since recovered to around $6,700. Some analysts believe that a bigger reversal is in play, possibly exposing new lows of around $5,000.

Bitcoin, Ethereum Not Securities by SEC Standards

A high-ranking official at the U.S. Securities and Exchange Commission (SEC) has publicly stated that Ethereum is not a security, ending months of speculation that the world’s second-largest cryptocurency would fall under the purview of federal regulators.

Speaking at the Yahoo cryptocurrency summit in San Francisco on Thursday, corporate finance director William Hinman issued the following statement:

“Based on my understanding of the present state of ether, the Ethereum network and its decentralized structure, current offers and sales of ether are not securities transactions.”

Although the statement doesn’t reflect the SEC’s official position on the matter, the regulator’s view of Ethereum likely falls in line with its approach to bitcoin, which it says is too decentralized to be a security. Likewise, Ethereum is not a security because its network is too decentralized.

On the subject of tokens, however, the SEC has an entirely different view. SEC Chairman Jay Clayton believes all initial coin offerings (ICOs) should be classified as securities. Hinman offered a more nuanced approach Thursday by acknowledging that some ICOs can be structured like a consumer good rather than a security.

Nasdaq’s Record Surge

U.S. stocks headed for another week of gains, as pro-growth optimism and the easing of geopolitical tensions spurred demand for riskier assets. The technology-driven Nasdaq Composite Index continued to outperform the market by notching its fifth record close in two weeks.

Wall Street has now vastly outperformed its global peers over the past month, with the major indexes returning between 1.2% and 4.9%. European and Asian markets are virtually all lower over the same period.

A successful meeting between President Trump and North Korea’s Kim Jong-un Tuesday helped reassure investors that diplomacy would prevail in Washington’s attempt to denuclearize the Communist state. Trump and Kim issued a joint statement following the meeting where they pledged to continue negotiations.

Central Banks in Focus

Monetary policy was a primary focus this week as investors monitored central-bank meetings in Washington and Riga.

The U.S. Federal Reserve voted Wednesday to raise the target for the federal funds rate to 2% in a decision that was widely expected by markets. In doing so, policymakers dropped neutral language about the economy and priced in two more rate adjustments this year.

The European Central Bank (ECB) kept monetary policy unchanged Thursday but vowed to wind down its crisis-era stimulus plan this year. ECB officials said they are planning to end monthly bond purchases by the end of the year.

ECB President Mario Draghi vowed to cut quantitative easing from the current rate of €30 billion per month to €15 billion beginning in September. The program will come to a full stop in December.

However, by urging caution, the ECB struck a dovish tone in the currency markets, triggering a landslide in the euro and sending the U.S. dollar to its highest level of the year.

The Week Ahead

Fallout from crypto carnage will be top of mind for digital currency traders next week. It remains to be seen whether the recent lows will attract bargain hunters or keep potential buyers out of the market indefinitely. As a benchmark, trading volumes during the April rebound averaged between $20 and $30 billion. Daily market turnover is now struggling to break $15 billion.

On the economic calendar, the Bank of England and Swiss National Bank are scheduled to deliver their next policy edicts June 21. Fed Chairman Jerome Powell is also scheduled to speak publicly next week following the central bank’s decision to raise interest rates on Wednesday.

European Central Bank (ECB) President Mario Draghi will also deliver multiple public addresses after his Governing Council vowed to put an end to crisis-era policy by the end of the 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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4.6 stars on average, based on 465 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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Week in Review

Week in Review: Where’s the Volume? 

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It has been a slow grind higher for cryptocurrency prices. After four consecutive weekly declines, the market is showing signs of recovery, though tepid trading volumes are limiting gains across the digital asset class.

The stock-market picture brightened this week, as tech shares led the Nasdaq Composite Index to three consecutive record highs.

On the the political front, leaders from the Group of 7 nations touched down in Quebec, Canada on Friday for the first of a two-day meeting that could exacerbate growing trade tensions between the United States and its allies.

Cryptocurrencies Stabilize in Low-Volume Trade

Digital currencies stemmed losses this week, as bitcoin avoided a major technical reversal and the major altcoins stabilized following a month of volatility.

The total value of all cryptocurrencies rose by $15 billion over the past seven days, the first weekly gain in over a month. At the time of writing, the total market was valued at $342 billion.

Bitcoin successfully defended the $7,000 support level as the world’s largest cryptocurrency recovered near $7,600. The bulls are now eyeing a breakthrough of the $7,800 resistance for confirmation of further upside.

Among the majors, EOS and bitcoin cash were the biggest weekly gainers. Each currency added double digits compared with seven days ago.

Despite the gains, the crypto-market uptrend was severely limited by declining trade volumes. Daily market turnover ranged between $14 billion and $18 billion all week long, according to CoinMarketCap.

A Record-Setting Week for the Nasdaq

The technology sector carried the U.S. stock market higher this week, with the Nasdaq Composite Index notching three consecutive record closes.

Tech shares continue to outperform the broader market by a wide margin. The S&P 500’s information technology index has returned 13.5% this year, compared with 3.6% for the broader market.

The CBOE Volatility Index, commonly known as the VIX, touched its lowest level in over four months as calm returned to Wall Street. However, that optimism could be short-lived as the Federal Reserve eyes multiple interest rate hikes in the second half of the year.

G7 Summit Begins

Protests were underway Friday morning in Quebec as leaders of the powerful G7 nations began their two-day meeting.

U.S. President Donald Trump is outnumbered on key issues ranging from trade to environmental policies. Those differences came to light in a Twitter spat between Trump, French President Emmanuel Macron and Canada’s Justin Trudeau.

“Please tell Prime Minister Trudeau and President Macron that they are charging the U.S. massive tariffs and create non-monetary barriers. The EU trade surplus with the U.S. is $151 Billion, and Canada keeps our farmers and others out. Look forward to seeing them tomorrow,” Trump tweeted on Thursday.

In a follow-up message, Trump called Prime Minister Trudeau “indignant” by invoking Canada’s long-standing relationship with the United States while failing to acknowledge the country’s unfair trade practices.

Trump will depart the G7 meeting early Saturday and quickly shift his focus to North Korea.

The Week Ahead

President Trump and North Korea’s Kim Jong-un will meet in Singapore on June 12 for high-level talks on denuclearization. The historic face-to-face meeting could signal the beginning of bilateral talks between the two adversaries in pursuit of a comprehensive peace treaty for the Korean peninsula.

On the same day, the U.S. Federal Open Market Committee (FOMC) will kick off its two-day policy meeting in Washington. On Wednesday, the Fed is widely expected to raise the benchmark interest rate for the second time this year. The official rate statement will be accompanied by a revised summary of economic projections covering GDP, unemployment and inflation.

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 465 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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