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Week in Review

Week in Review: Epic Selloff Hit Cryptos, Stocks as Volatility Reaches 2016 Levels

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It was a sea of red across multiple asset classes this week, with stocks and cryptocurrencies experiencing epic-style collapses. The crypto market slump was largely driven by fears of regulatory bottlenecks after India sounded the alarm on illicit financing. On Wall Street, concerns over rising interest rates put the major indexes on track for their worst weekly performance in two years.

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Carnage Hits Crypto Market

The violent selloff that has rocked cryptocurrencies since January continued this week, as bitcoin and the major altcoins shed hundreds of billions in market cap. The market appears to have bottomed on Friday at roughly $348 billion, which was the lowest since early December.

At press time, the total market capitalization for all coins was roughly $417 billion.

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Bitcoin led the massive reversal, falling 21% over five days to trade as low as $8,530. The world’s top cryptocurrency by market cap was last seen trading around $8,780. Its share of the total market increased slightly toward the end of the week, reaching a high of 37.5%.

Digital currencies have been on edge ever since South Korea announced plans to introduce stricter regulations on the market. Those efforts amounted to a ban on anonymous trading accounts, which went into effect Jan. 30.

Earlier this week, India’s Finance Minister said his government will scrutinize more closely black market activity involving cryptocurrency. Media outlets erroneously took this to mean that the government was “killing” the crypto market.

Even if we ignore fake news, investors still have reason to be alarmed. The cryptocurrency market continues to be infested by cyber criminals targeting exchanges as well as ICOs. On Thursday, Bee Token became the latest crowdfunding campaign to get attacked (this time, it was a phishing scam targeting emails and Telegram).

Rising Interest Rates Trigger Equity Rout

U.S. stocks posted heavy losses on Friday, with the Dow Jones Industrial Average recording its first 600-point drop in two years. Though slumping all week, equities sold off more intensely Friday after government data showed a surprise pickup in wages.

Average hourly earnings for U.S. workers climbed 2.9% annually in January, the Labor Department reported Friday in its monthly nonfarm payrolls data series. That was the fastest increase in more than eight years, a tangible sign that inflationary pressures are building and that the Federal Reserve will move to raise interest rates more intently.

The report also showed that overall employment rose by a faster than expected 200,000 as joblessness held steady at 4.1%.

Stocks are reversing sharply from their best start to a year in decades. The CBOE VIX, a measure of 30-day volatility, rose on Friday to its highest level since 2016. The VIX closed the week at 17.31, where it was seen inching closer to its normal historic range.

Monetary Policy

U.S. monetary policy was left unchanged this week, as the Federal Reserve concluded its final rate meeting under the guidance of Janet Yellen. Beginning this month, the central bank will be headed by Jerome Powell. He will chair his first Federal Open Market Committee (FOMC) meeting in March.

That’s when the central is expected to raise interest rates again, based on the 30-day Fed Fund futures prices, which gauge the market’s outlook on monetary policy. The Fed is keeping a close eye on inflation, and will likely press forward with additional rate hikes to ensure price growth doesn’t overstep its 2% target.

Policymakers use the core personal consumption expenditure (PCE) index to gauge inflation. On Monday, the Commerce Department said the inflation measure fell to 1.7% annually in December, down from 1.9% the previous month.

The Week Ahead

The major question heading into next week is whether cryptos and stocks are experiencing a momentary correction or a more protracted downturn. For cryptocurrencies, it appears to be the former. Market fundamentals haven’t changed very much since the start of the year, when the total capitalization blew past $800 billion.

Investors are cautioned against reading too much into the media hysteria. As we wrote on Thursday, the mainstream media outlets have successfully talked down cryptocurrencies on several occasions. This is unlikely to change anytime soon as more governments consider regulating the crypto sphere.

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 404 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: Another Down Week for Cryptocurrencies as Consensus Summit Fails to Inspire Rally

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Digital currency prices headed for their second down week in a row, as the Consensus blockchain summit failed to spark its annual rally despite being the largest crypto event on record. Altcoins shouldered the heaviest burden of the decline, while bitcoin briefly fell below $8,000 for the first time in a month.

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Commodities and currencies were the other big stories this week, as oil prices surpassed $80 a barrel for the first time since 2014 and the U.S. dollar rose to fresh five-month highs.

Stocks struggled for direction this week, as rising bond yields and geopolitical tensions undermined risk sentiment in the financial markets.

Crypto Prices Sink

Cryptocurrencies were down as much as $20 billion in market cap over the past seven days despite a virtuous news cycle shining a positive light on blockchain adoption.  The total market capitalization bottomed near $361 billion on Friday, mere days after the market hit highs above $411 billion.

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At the time of writing, crypto assets were collectively valued at $376 billion, according to CoinMarketCap.

Altcoins incurred heavy losses this week, with bitcoin cash experiencing a brisk sell-off in the wake of its most recent hard fork upgrade. Ripple XRP, EOS and Litecoin also booked losses for the week.

Bitcoin briefly fell below $8,000 Friday but has since recovered to trade around $8,250. BTC now accounts for roughly 37.4% of the total crypto market.

Consensus Fails to Inspire Rally

Over 7,000 blockchain enthusiasts crowded Midtown Manhattan this week for the annual Consensus conference. The three-day event, which featured panelists from industry, government and academia, was well receive by the crypto community. However, unlike previous years, the 2018 summit failed to inspire a price rally that many had anticipated.

Bitcoin values had risen between 10% and 69% during the last three Consensus summits, leading several analysts to forecast even bigger gains for 2018. Tom Lee of Fundstrat Global Advisors told clients before the event that Consensus 2018 will likely see a crypto-price rally that exceeds the previous three summits.

Though the event failed to generate price gains like many had predicted, the “post-Consensus” rally usually takes months to peak.

There has been no shortage of positive developments from the crypto industry in recent weeks. On Wednesday, Goldman Sachs-backed Circle announced it was launching a cryptocurrency pegged to the U.S. dollar in an effort to streamline merchant payments through digital currency. IBM and fin-tech startup Veridium Labs have also announced a joint cryptocurrency that seeks to monetize carbon credits.

Rising Bond Yields Boost Dollar

The U.S. dollar dominated the currency markets this week, as investors continued to rally behind expectations of faster rate-hikes by the Federal Reserve. The dollar index (DXY), which tracks the performance of the greenback against a basket of six currencies, reached its highest level in five months.

DXY closed at 93.67 Friday, its highest settlement since Dec. 18.

Rate-hike expectations are firmly embedded in U.S. government bond yields, which rose this week to their highest levels since at least 2011. The yield on benchmark 10-year U.S. Treasuries peaked above 3.1% for a gain of about 14 basis points this week. Yields rise as debt prices fall.

A stronger dollar couldn’t contain the continued rise of energy prices, as Brent crude futures topped $80 a barrel for the first time since 2014. The international futures benchmark has added more than 12% over the past month, with recent gains driven by geopolitical concerns tied to the Iran nuclear deal.

U.S. President Donald Trump exited the nuclear deal last week, putting Iran back under sanctions.

The Week Ahead

Crypto prices have faltered for two consecutive weeks, putting investors on high alert for a possibly bigger reversal in the short term. However, the balance of news coming out of crypto space has been overwhelmingly positive, which suggests that a recovery could materialize.

Economic data, Federal Reserve speeches and the minutes of the most recent FOMC meetings will also generate market-moving headlines next week. Developments on the geopolitical front involving Iran and North Korea could also influence markets.

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 404 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: Cryptocurrencies Surrender Gains as Stocks Surge

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Stocks and cryptocurrencies diverged sharply this week, as capital poured out of the digital asset class following a month of gains. Stock markets received a boost from strong corporate earnings, the easing of geopolitical tensions and tamer than expected inflation for the world’s largest economy.

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Cryptocurrencies Give Back Gains

The combined value of cryptocurrencies plunged more than $65 billion this week, with the bulk of the decline occurring Friday after Korean prosecutors raided the country’s largest digital currency exchange.

South Korea’s UpBit has been raided by federal authorities over suspicion of fraud, Reuters reported Friday, citing local news sources. The company issued a formal statement on its website informing traders that it is complying with the investigation and that all transactions and withdrawals are operating normally.

UpBit is the world’s fourth largest crypto exchange by volume.

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Bitcoin prices plunged to three-week lows after spending most of the week above $9,000. Bitcoin bottomed near $8,500 Friday but later recovered to trade at $8,620.

The vast majority of coins in the top-100 lost double digits on Friday, including Ethereum, Ripple XRP and bitcoin cash. The combined value of all cryptocurrencies reached a low of $379.8 billion Friday before recovering near $392 billion.

Despite recent declines, cryptocurrency prices are still being underpinned by positive fundamental drivers, including greater institutional adoption and key acquisitions of major exchanges. That said, the bulls have certainly lost momentum with the recent UpBit news souring investor sentiment.

Stocks Book Solid Gains

U.S. stocks capped off one of their best weeks since January, with energy shares leading the market higher.

All of Wall Street’s major indexes finished in the black, with the Dow Jones Industrial Average notching its seventh consecutive daily advance Friday. The blue-chip index closed at 24,831.17, its highest since March. For the week, the Dow added 2.4%.

The broader S&P 500 Index gained 2.6% for the week to close at 2,727.72. Meanwhile, the technology-focused Nasdaq Composite Index surged 2.7% over five days to finish at 7,402.88.

Wall Street’s impressive rally was accompanied by a sharp fall in volatility. The CBOE VIX, commonly known as the “fear index,” fell to its lowest level since January.  The index, which trades on a scale of 1-100, closed at 12.65 on Friday.

Geopolitics in Focus

Developments on the geopolitical front were front and center for commodity traders this week after President Trump decided to exit the 2015 Iran nuclear deal. U.S. fallout from the deal means Iran will once again be subject to economic sanctions, which includes limitations on crude exports.

U.S. companies were also hit hard by the resumption of Iranian sanctions, with Boeing and Airbus said to have lost a combined $40 billion in contracts with the Islamic Republic.

However, on the subject of North Korea, investors had much more to be optimistic about after President Trump confirmed that he would meet with Kim Jong-un at a summit in Singapore next month.

The two Korean nations have pledged peace and denuclearization on their peninsula following U.S. and Chinese diplomatic intervention.

The Week Ahead

A stalled cryptocurrency rally will have some speculators concerned about the voracity of the spring recovery. Last week, crypto assets appeared poised to test the $500 billion market cap level. Price action over the last five days showed relative stability with the bulk of the declines concentrated on Friday.

Equities have returned to health following a prolonged period of volatility. However, the real test will come after corporate earnings season as investors contend with rising interest rates. The yield on the benchmark 10-year U.S. Treasury note exceeded 3% this week, signaling renewed concern over the health of the U.S. economy.

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 404 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: Bitcoin and Ethereum Lead Crypto Market Higher as Goldman Sachs Embraces Digital Assets

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Long-term holders of digital currencies were rewarded again this week, as bitcoin and Ethereum led a broad market recovery past $450 billion. Gains were partly driven by positive speculation over Goldman Sachs’ entry into the space as an institutional money maker, which likely puts more pressure on Wall Street banks to follow suit.

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Meanwhile, equities rounded out a turbulent week on a positive note, as anticipated volatility briefly fell to its lowest level since January.

Cryptocurrency Recovery Takes Root

The cryptocurrency market rallied more than 12% this week, as bitcoin broke above $9,700 and Ethereum approached $800. Both digital currencies grew in market cap as investors continued to anticipate broader institutional adoption of digital assets.

Ethereum prices surged nearly 20% this week to $778 a coin despite reports that federal regulators were conducting a deeper investigation into the digital asset. Hacked reported Tuesday that the U.S. Securities and Exchange Commission (SEC) was researching Ethereum and other crypto assets to determine if they meet the standard definition of a security.

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Bitcoin’s gains were far less dramatic this week, though signs of price stability gave investors confidence that the cryptocurrency had entered a long-term recovery phase. Bitcoin rose by about $400 over the past seven days, having established its narrowest trading range in nearly six months. At the time of writing, bitcoin was valued at $9,671.

The crypto market peaked near $461 billion on Friday, its highest since early March. At the time of writing, the total market was worth roughly $456 billion, according to CoinMarketCap.

Stocks Recover

Equity markets ended the week on a positive note, as shares of Apple Inc. (AAPL) reached all-time highs and the broader technology sector followed suit.

The world’s most valuable company reported better than expected earnings this week even as sales of its flagship iPhone product fell.

Wall Street’s major indexes reversed weekly losses following a strong Friday session. The S&P 500 Index, Dow Jones Industrial Average and Nasdaq Composite Index rose between 1.3% and 1.7% on Friday.

The CBOE Volatility Index, commonly known as the VIX, briefly fell below 11.00 for the first time since January. The VIX, which historically trades around 20, settled down 7.1% at 14.77.

Corporate earnings continue to deliver positive results, with the S&P 500 Index now poised for its strongest quarter since 2010. As of Friday, blended earnings for S&P 500 companies had grown 24.2% in the first quarter based on 81% of firms reporting.

Nonfarm Payrolls Disappoint

U.S. employers added 164,000 workers to payrolls last month, undershooting estimates by 31,000, the Department of Labor reported Friday.

Softer job creation was offset by a bigger than expected fall in unemployment, which many analysts said was evidence of a stronger labor market. However, a closer evaluation of the numbers reveals that the decline in the unemployment rate was caused by 236,000 workforce exits.

In other words, the number of Americans searching for work fell during April.

Still, a jobless rate of 3.9% is the lowest in nearly two decades.

Average hourly earnings, a proxy for wage inflation, rose just 0.1% month-on-month and 2.6% annually, official data showed. Both were lower than expected.

The Week Ahead

Cryptocurrencies are edging closer to $500 billion thanks to a broad relief rally led by bitcoin and the major altcoins. While a repeat performance of April is unlikely, strong fundamentals and favorable developments on the institutional front could generate even more interest in digital assets.

The winding down of corporate earnings season could spell trouble for stock markets as investors shift their focus to economic data and monetary policy. The Federal Reserve has made it abundantly clear that it intends to raise interest rates steadily over the next three years as inflation and economic growth approach, and possibly exceed, their targets.

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 404 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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