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Week in Review

Week in Review: Red October – Equities, Cryptos Take the Plunge

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Global equity markets sold off sharply this week, as rising bond yields and a weaker growth outlook rattled investors’ appetite for riskier assets. The shift to risk-off mode benefited gold but not cryptocurrencies, as the latter market booked an 11-figure plunge on Thursday.

China was the center of the storm this week as investors returned from Golden Week celebrations to disappointing economic data, escalating trade tensions and an insufficient response from central bank policy.

Bull Market in Jeopardy

After recording their best quarter in five years, U.S. stocks have experienced multiple steep declines to start October. This culminated on Wednesday and Thursday with a 1,300-point plunge in the Dow Jones Industrial Average, marking the worst two-day stretch since February. The broader S&P 500 Index also fell to more than three-month lows, which triggered a sharp rise in volatility.

The CBOE VIX, Wall Street’s preferred measure of investor anxiety, spiked above 26 this week en route to its highest level in six months. The so-called fear gauge tracks inversely with S&P 500 Index futures roughly 75% of the time.

Wall Street’s dramatic declines triggered even bigger losses for China’s benchmark indexes, which on Thursday plunged to multi-year lows. The Shanghai Composite Index experienced a modest rally on Friday but still ended the week with a loss of 7.6%. Markets in Europe, Japan, Canada and Australia also ended firmly lower.

IMF Downgrades Outlook

The International Monetary Fund (IMF) has downgraded its outlook on global growth, citing rising import tariffs as a primary concern. The Washington-based lending institution lowered its outlook on global, Chinese and U.S. economic growth by 0.2 percentage point each for 2019. At 6.2%, China’s expansion is forecast to be the weakest since 1990.

A tit-for-tat trade war with the United States only exacerbates China’s broad economic slowdown, which began several years ago when Beijing embarked on a slow transition away from smokestack industries toward consumption. Although Beijing has responded to the Trump administration’s tariff policy, it will not be able to match duties on a dollar-for-dollar basis.

As Hacked reported Thursday, President Trump and his Chinese counterpart Xi Jinping are scheduled to hold high-level trade talks at the upcoming Group of 20 summit in November. Both sides were planning in-depth negotiations last month before the U.S. enacted a new round of tariffs targeting $200 billion of Chinese goods.

Cryptocurrencies Fall but Bitcoin Maintains Support

After weeks of relative calm, cryptocurrencies experienced a brisk selloff Thursday. More than $16 billion was wiped from the combined market capitalization with bitcoin, Ethereum and other major assets leading the declines.

There was no immediate catalyst for the sudden reversal, though the pattern of quick declines following relative calm have been observed before. Cryptocurrencies are struggling to make new technical breakthroughs despite improving fundamentals.

Despite the loss, bitcoin continues to defend $6,000 – a critical level that is commonly associated with the cost of mining the virtual currency. The 6% drop on Thursday dragged prices to the low $6,200 region before recovering 24 hours later.

Week-on-week, the cryptocurrency market cap is down roughly $18 billion. However, trading volumes are up slightly.

The Week Ahead

All eyes will be on government bond yields next week as investors continue to evaluate the impact of rising interest rates on the market. Despite a sharp drop mid-week, the yield on the benchmark 10-year U.S Treasury note continues to show upside potential. According to Jeffrey Gundlach, the so-called “bond king,” the benchmark yield could make it to 3.6% in the short term.

“If you look at the charts and you look at the way the market’s behaving and you think about the trends that are underneath the bond market, it wouldn’t be surprising at all to see the 30-year go to 4% before this move of the breakout above 3.25 percent is over,” Gundlach told CNBC Thursday.

Until now, cryptocurrencies like bitcoin have not benefited from safe-haven demand amid the broad market downturn. It remains to be seen whether mainstream investors will find comfort in bitcoin’s status as a non-correlated asset should bond yields continue to pressure stocks.

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 643 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: NAFTA 2.0, Bond Yields and ErisX

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Traditional markets stole the headlines this week, as Canada, Mexico and the United States wrapped up a new free-trade agreement. Surging bond yields pressured stock markets, leading to the biggest one-day selloff on Wall Street since late June. In crypto news, Ripple Labs concluded a successful Swell conference with the launch of a new xRapid product and TD Ameritrade announced it was backing a new regulated cryptocurrency exchange.

NAFTA 2.0

Canada and the United States ended a 13-month impasse late Sunday by reaching a new free-trade agreement ahead of a self-imposed deadline. The new United States Mexico Canada Agreement (USMCA) rebalances continental trade after more than two decades of NAFTA rule.

By striking a deal, Canada ensures that more than one-fifth of its gross domestic product (GDP) isn’t compromised by the loss of tariff-free access to the United States. In exchange for accommodations on auto tariffs and dispute resolution, Canada offered American farmers greater access to the nation’s highly protected dairy industry.

U.S. President Donald Trump called the new agreement a “historic transaction” and praised leaders on both sides of the border for getting it done. By striking a deal by Sept. 30, negotiators gave Mexico’s current president enough time to sign it into law before leaving office in November.

Surging Bond Yields

U.S. government bond yields set multiyear highs this week as investors continued to unload U.S. Treasuries at an accelerated pace. The yield on the benchmark 10-year U.S. Treasury note crossed 3.20% on Thursday, the highest since 2011. The yield on short-term notes peaked at ten-year highs. Bond yields rise when prices fall.

The selloff in U.S. government debt comes amid heightened expectations that the Federal Reserve will continue raising interest rates at an aggressive pace. The U.S. economy is riding a tailwind of consumer optimism, corporate tax cuts and declining unemployment with GDP on track for another blowout quarter.

Yield watchers should keep tabs on interest rate expectations ahead of the Federal Reserve’s December policy meeting. Officials are expected to hike rates again in their final meeting of the year.

Bitcoin Volatility Declines

Bitcoin’s price volatility declined this week to the lowest level in 15 months, underscoring tepid trading conditions in the cryptocurrency market. The bitcoin volatility index, which monitors BTC’s price fluctuations over time using the standard deviation of daily open prices, declined to 2.52% on Wednesday compared with 30 days ago.

Declining volatility is a double-edged sword. On the one hand, it shores up confidence among investors that bitcoin’s market is maturing after years of dramatic price swings. On the other hand, it makes massive price rallies like the ones we saw in 2017 less likely. As such, billionaire investor Mike Novogratz believes bitcoin is unlikely to crack $9,000 this year.

The bitcoin price saw highs near $6,650 on Thursday but has since fallen back toward the $6,550-$6,600 range. The combined capitalization of all cryptocurrencies hovered around $220 billion all week.

TD Ameritrade Backs Regulated Crypto Exchange

One of America’s largest retail brokers has announced plans to invest in an up-and-coming cryptocurrency exchange that will be fully regulated by the U.S. Commodity Futures Trading Commission (CFTC). TD Ameritrade, which boasts 11 million users and $1.2 trillion in assets under management, has made a strategic investment in ErisX, a platform that will offer spot crypto and futures trading.

“We listened to our customers – what we continued to hear was that they wanted access to trade digital currency products,” JB Mackenzie, managing director, said in an interview with CNBC.

ErisX provides retail stock and ETF traders access to regulated cryptocurrency markets, potentially spearheading wider adoption of digital assets.

The Week Ahead

Crypto markets have stabilized following a rocky month of September, but declining trade volumes and a lack of new buyers continue to limit upside. Although fundamental developments continue to point to wider mainstream acceptance of digital assets, this hasn’t translated into higher prices.

Nevertheless, optimism over Ripple’s commercialization efforts and chatter over the upcoming Bakkt trading platform could add a positive spin to tepid market conditions. It remains to be seen whether this will generate sustained interest among buyers.

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 643 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 Rally Gains Momentum as Bitcoin Makes Technical Breakthrough

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After an early-week selloff, cryptocurrencies are rising again, with bitcoin and bitcoin cash picking up the slack following XRP’s mid-September push. From Sept. 21 to Sept. 26, the cryptocurrency market cap fell $25 billion peak-to-trough but has since recovered nearly two-thirds of the lost value.

Mainstream appetite for all things blockchain was a factor in the latest rally, as institutions and governments continued to explore new use cases for distributed ledger technologies. The announcement of a multi-billion-dollar blockchain IPO put traditional markets on a collision course with cryptocurrencies, as the debate over institutional adoption continues to swirl.

Bitcoin’s Technical Breakthrough

The bitcoin market completed a bullish crossover on Friday, setting the stage for a much larger short-term rally, according to an analysis of RIG trend lines.

RIG trend lines use a combination of RSI and momentum studies to gauge future price trends. For the fourth time this year, bitcoin’s momentum indicator crossed the RSI. The last time this occurred, in mid-August, prices exploded 21% over a three-week stretch.

Bitcoin’s price peaked at $6,826.40 on Friday but was last seen hovering around $6,660. Prices are more or less at breakeven over the past seven days but well off the Wednesday low near $6,330. Bitcoin’s most recent bottom occurred on Sept. 19 after prices briefly flashed $6,100.

Bitcoin Cash Rises on Bitmain IPO

Bitcoin cash notched double-digit gains this week after Bitmain Technologies Ltd., the world’s largest crypto mining company, revealed plans to launch an initial public offering (IPO) in Hong Kong.

Bitmain’s IPO plans were confirmed by a 438-page financial filing with the Hong Kong Stock Exchange. According to the statements, Bitmain earned $740 million in profit in the first half of 2018 while revenues surged 1,000% to $2.8 billion.

As CCN reported last month, Bitmain owns a large stake in bitcoin cash. According to various estimates, the firm holds between 664,000 and 1.33 million BCH. This includes $600 million in holdings that were confirmed about six months ago in a leaked pre-IPO investment deck.

BCH rose by as much as 26% on Wednesday as the IPO details went public. The fourth-largest cryptocurrency by market cap currently sits at $546, having gained more than 12% during the week.

Support for Blockchain

Circle, another Goldman-backed venture, announced this week it has launched a dollar-backed stablecoin called USDC. The coin was made immediately available on the recently acquired Poloniex exchange.

Meanwhile, reports from Austria suggest the government is planning to launch a bond sale using Ethereum’s public blockchain. Beginning Oct. 2, Austria will issue €1.15 billion of government bonds in a public auction that will be notarized on the network via OeKB, one of the country’s largest banks.

The Week Ahead

While bearish trends continue to dictate cryptocurrency prices, the rate of collapse and its resulting volatility have slowed considerably in recent months. This is perhaps the strongest indicator of a maturing market. However, long-term holders should continue to expect a damper on price growth resulting from market manipulation, bitcoin whales and the continued fallout from the ICO boom.

That said, the short-term outlook on several leading coins has improved considerably. Bitcoin’s technical indicators and the recent breakouts in XRP, XLM and BCH point to greater upside over the next seven days.

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 643 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: XRP’s 115% Power Surge Leads Cryptocurrency Market Higher

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XRP was the standout performer in the cryptocurrency world this week. The so-called banker’s cryptocurrency rebounded more than 115% after a Ripple Labs executive teased an upcoming product release that could streamline XRP adoption.

The broader cryptocurrency market followed XRP higher after the U.S. Securities and Exchange Commission (SEC) announced it would delay a ruling on a keenly awaited bitcoin exchange-traded fund (ETF).

In traditional markets, U.S. stocks resumed their record-setting gains as pro-growth optimism outweighed lingering fears of an all-out trade war with China.

XRP Leads Crypto Uptrend

XRP is coming off its best week since the bull market as investors rallied behind the anticipated launch of the first xRapid product.   Ripple’s Sagar Sarbhai told CNBC this week he’s “confident” that a new cryptocurrency product will be released “in the next month or so.”

The value of XRP rocketed 115% between Tuesday and Friday, reaching its highest level in three-and-a-half months. The broader cryptocurrency market gained $25 billion on Friday to reach $224.3 billion, the highest in over two weeks. Altcoins and tokens led the end-of-week surge, dragging bitcoin’s dominance rate all the way back down to 51.8%.

XRP does risk a pullback at some point in the foreseeable future as markets contend with overbought levels. Traders also routinely “buy the rumor and sell the fact,” which explains price declines that occur after an anticipated positive event has occurred.

SEC Weighs Bitcoin ETF Decision

Washington’s securities regulator has announced it will seek further comments on a highly touted bitcoin ETF, a sign that officials were still grappling with a proposed rule change that would make it easier for issuers to securitize cryptoassets. The ETF in question – the VanEck SolidX Bitcoin Trust – was initially filed on June 6.

In a notice published on Thursday, the SEC outlined 18 key issues that require more input from the public. In particular, regulators are weighing the assertion that physically-backed bitcoin is less susceptible to manipulation than other commodities available in exchange-traded products.

From the notice:

“The Commission is instituting proceedings to allow for additional analysis of the proposed rule change’s consistency with Section 6(b)(5) of the Act, which requires, among other things, that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade,’ and ‘to protect investors and the public interest’.”

U.S. Stocks at Record Highs

The Dow Jones Industrial Average and S&P 500 Index notched record highs this week, as investors shrugged off an escalating trade war between China and the United States. Gains were largely driven by a rebound in technology shares as well as optimism that the U.S. economy is on solid footing.

Labor market data confirmed that outlook on Thursday as initial jobless claims fell to nearly five-decade lows. Last week, the Department of Labor reported a stronger than expected jump in hourly wages, a sign that plentiful jobs and declining unemployment was leading to higher pay.

The U.S. economy is coming off its best quarter of growth since 2014. Unlike 2014, the Q2 upsurge didn’t follow a ‘polar vortex,’ which had temporarily disrupted economic activity four years ago. According to the Atlanta Federal Reserve, the economy is forecast to grow at an even faster rate in the third quarter. Current estimates peg Q3 growth at 4.4% year-over-year.

The Week Ahead

Is this the end of the dreaded crypto market downtrend? It’s too early to be sure but the latest rebound in XRP and bitcoin suggests that the bears have relinquished their grip on the market, at least in the short term. Stepping back, however, bitcoin remains in a protracted bear market that could continue for the foreseeable future. For investors, this means lateral moves and tighter trading ranges are to be expected.

Monetary policy is back on the agenda next week as the Federal Reserve meets in Washington. The Federal Open Market Committee (FOMC) is widely expected to raise interest rates on Wednesday and may signal for one additional hike this year. The FOMC policy statement will be accompanied by quarterly projections for GDP, unemployment and inflation, as well as the ‘dot-plot’ summary of interest rate expectations.

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 643 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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