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Week in Review

Week in Review: The Two Tales of Volatility

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When it comes to volatility, stocks and cryptocurrencies diverged wildly this week. On the equities front, major selloffs in China and Wall Street were followed by equally large single-day rallies, as investors bought on the dip. For cryptocurrencies, the picture was largely unchanged for most of the week, as bitcoin and the broader market hovered near break-even.

Cryptos Stabilize

Despite experiencing a minor dip on Friday, cryptocurrency prices have held within a remarkably narrow range over the past five days. The cryptocurrency market capitalization, which accounts for all digital assets including bitcoin, has hovered around $210-$212 billion for much of the week. On Friday, the market dipped to around $207 billion as bitcoin fell below $6,500.

Tether on Monday induced heavy volatility in the market as traders cut ties to the controversial stablecoin. The value of USDT not only lost its peg to the dollar, it briefly fell below $0.90. A collapsing USDT triggered a sharp spike in the value of bitcoin, with major exchanges like Bitfinex reporting a large premium on BTC. That’s because Bitfinex, among others, processes a much larger volume of BTC/USDT trades.

Bitcoin’s volatility index, which tracks daily fluctuations in the digital currency’s opening price, is hovering below 1.9% over the last 30 days. Bitcoin’s average fluctuations over the last 120 days are 2.91%, according to bitvol.info.

China Takes the Plunge

Chinese equities resumed their massive selloff this week, as a U.S.-led trade war continued to roil mainland markets. An attempt by the People’s Bank of China to ease capital controls was also met by skepticism by investors who remain critical of the country’s long-term growth outlook.

As of Thursday, China’s benchmark Shanghai Composite Index was down a staggering 12% for the month of October. The index rebounded sharply on Friday, gaining 2.6%, as government officials offered soothing comments about the health of the economy.

The Chinese yuan fell to nearly two-year lows this week after the U.S. Treasury refrained from labelling the country a “currency” manipulator in its biannual report. The Trump administration has called out China for undercutting the yuan as a means of gaining unfair trading advantage over its peers.

Pressure on Saudi Builds

Saudi Arabia is in the hot seat after a known dissident journalist was reportedly drugged, tortured and killed at the Saudi consulate in Istanbul, Turkey. Jamal Khashoggi, the journalist in question, was last seen entering the consulate on Oct. 2.

U.S. President Donald Trump has moved closer to acknowledging Riyadh’s role in the disappearance of Khashoggi amid new evidence indicting Crown Prince Mohammed Bin Salman. A source familiar with the investigation has told CNN that Saudi Arabia’s first secretary was involved in planning the attack.

The Saudis have denied any involvement in Khashoggi’s disappearance but are prepared to admit that he was killed in the consulate. Earlier this week, Riyadh implicitly threatened to use oil as a weapon should Western powers pursue sanctions against it.

The Week Ahead

The crypto bulls failed to show up after Monday’s sudden accumulation, a sign that bear-market conditions are likely to persist for a while longer. A lack of trading catalysts, combined with negative sentiment already present in the market, are clear signals that prices will remain subdued as we head into the final week of October.

The outlook on equities is much more mixed, as investors weigh a new batch of corporate earnings against a backdrop of political and trade-related concerns. It also remains to be seen whether the Trump administration will take decisive action against the Saudis should conclusive evidence link the government to Khashoggi’s disappearance.

On the data front, the U.S. government will release preliminary third-quarter GDP data next Friday. The world’s largest economy is said to have expanded 3.9% between July and September, according to the latest Atlanta Fed GDP Tracker.

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 743 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Weekly Recap: Crypto Volatility Declines as Bitcoin Shows Renewed Stability; U.S.-China Trade War Could Soon End

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Cryptocurrencies remained under pressure this week, though newfound stability for bitcoin alleviated the risk of a new bearish breakdown. The leading digital currency has managed to hold above a critical long-term support line, which has had a stabilizing effect on the broader market.

In traditional markets, signs of progress on U.S.-China trade talks pushed stock prices to new monthly highs even as the partial government shutdown in Washington entered its fourth week. Corporate earnings have been mostly positive, helping Wall Street extend its recovery from a brutal fourth quarter.

Cryptocurrencies Lack Direction

Cryptocurrency prices turned green on Monday, overcoming a potentially devastating correction that appeared imminent last weekend. Bitcoin swung below $3,550 on several occasions ahead of Monday’s session, setting the stage for a deeper fall back toward December lows. As we reported earlier, a sustained fall below $3,550 would put bitcoin in “GTFO” territory.

In other news, Ethereum’s long-anticipated Constantinople hard fork was delayed this week after developers identified a critical security flaw in one of the proposed changes. Read more here.

The cryptocurrency market cap bottomed at $116.3 billion on Sunday before recovering closer to $125 billion on Monday. Crypto markets have been directionless ever since despite the presence of larger than normal volumes. Bitcoin’s daily trading volumes have surpassed $5 billion since Monday.

At the time of writing, the total cryptocurrency market was worth $121.5 billion, little changed compared to seven days ago. Trade volumes reached $16.7 billion, which is fairly consistent with the weekly average.

Bitcoin’s Accumulation Phase?

2019 is shaping up to be the year of accumulation for bitcoin, as long-term holders and new market entrants look to capitalize on more affordable prices. According to technical analyst Eric Thies, the next 12 months could mirror the trend observed in 2015, a year where many crypto holders bolstered their position following a protracted bear market. This view holds water regardless of whether you believe bitcoin has bottomed or not.

In less than 30 days, bitcoin and other cryptocurrencies will enter their longest bear market in history. As of Friday, the crypto bear market had stretched on for 392 days. The longest bear trend was observed back in 2014-15 at 420 days, according to Ran NeuNer of CNBC’s Cryptotrader.

The amount of bitcoin in circulation suggests more traders are entering the market. Whether they will be buyers or sellers is yet to be determined. As we recently noted, the supply of active bitcoin in the market has increased by 40% since last summer, with much of the influx occurring since October. Read more: Bitcoin Likely Headed Lower as Whales Activate Long-Dormant Accounts.

Trade War Winding Down?

The Wall Street Journal reported Thursday that the Trump administration is considering lifting tariffs on Chinese goods in an effort to broker a new trade agreement with Beijing. The speculation was a welcome sign for investors who were growing more concerned with the backlash against Huawei and its potential impact on a trade deal. Read: Why the Huawei Scandal Will Reignite the US-China Trade War.

U.S. and Chinese trade delegations made important progress in their first round of talks in Beijing earlier this month. China has reportedly agreed to purchase more U.S. agriculture and energy commodities as well as open up its domestic market to American companies. Talks are expected to heat up over the next six weeks ahead of a self-imposed deadline in March. That’s when the 90-day truce agreed to by President Trump and China’s Xi Jinping is scheduled to end.

Stock Markets in Recovery Mode

Wall Street and global stocks have risen sharply this week, as a combination of trade optimism and upbeat corporate earnings lifted investor sentiment. U.S. stock markets have recovered more than 11% since Christmas Eve, when they plunged to their lowest levels in over a year.

Strong earnings from Bank of America Corp (BAC) and Goldman Sachs Inc. (GS) set the tone early this week. Both banks beat on profit forecasts, with Goldman shattering both top- and bottom-line estimates.

The CBOE Volatility Index, also known as the VIX, is currently trading at half of its December peak. This not only puts it below the long-term average, it signals renewed optimism in the stock market. The VIX trades in the opposite direction of the S&P 500 Index roughly three-quarters of the time.

The Week Ahead

Corporate earnings will dominate the headlines next week, as several Dow blue chips and S&P large-cap stocks report fourth quarter results. New proposals to end the U.S. government shutdown are also expected next week. The shutdown, now in its 28th day, is the longest in U.S. history.

In cryptocurrencies, all eyes will be on key technical levels. A lack of trading catalysts has kept markets subdued for the past four days. It remains to be seen whether this will alleviate bearish pressure or invite new sellers back into the fold.

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 743 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Week in Review

Weekly Recap: Crypto Winter Grows Colder; Trump Goes Prime-Time

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Weeks of steady progress in the cryptocurrency market unraveled on Thursday, as bitcoin headed for its worst drop since November. Bitcoin’s quick and sudden collapse triggered a market-wide correction, with the likes of Ethereum, bitcoin cash and Litecoin heading for double-digit declines.

Stock markets traded in the opposite direction of cryptocurrencies thanks to renewed optimism that the United States and China will reach a new trade agreement. Both sides met for longer than expected this week, highlighting progress on a number of important issues.

Crypto Markets Crumble

The cryptocurrency market experienced a sharp and sudden pullback on Thursday after bitcoin plunged 5% in less than an hour. The leading digital currency continues to exert a gravitational pull on the broader market, which exposed assets like Ethereum, XRP, bitcoin cash and others to heavy selling pressure.

Prior to the selloff, bitcoin had successfully regained $4,000, leading the broader crypto market cap north of $138 billion. It has since fallen to $123.5 billion. There was no immediate catalyst for the drop, which likely means technical trading was the biggest factor.

Most major assets are headed for weekly losses, with Ethereum and bitcoin cash experiencing the biggest percentage drop. Tron is still on track for a weekly gain of around 26% after prices peaked at five-month highs earlier in the week. Read: Tron Surges to Five-Month High as BitTorrent Token Enters Circulation.

Ethereum Hard Fork

After nearly doubling in price over a three-week stretch, Ethereum dropped more than 14% on Thursday. As a result, ether dropped back to third spot in the crypto market ranking, with XRP returning to no. 2.

After Doubling in Price, Ethereum Faces Inevitable Correction Ahead of Big Upgrade

Ethereum had enjoyed strong momentum ahead of a highly-anticipated technical upgrade. Constantinople is scheduled to go live between Jan. 14-18, and will bring much needed upgrades to the network. The hard fork created a sense of urgency for investors and miners, who will see their block reward lowered to 2 ETH from the current rate of 3 ETH. The upgrade will be hardly noticeable to average users but is considered an essential component of the development road map, including future improvements to scalability.

Stock Recovery Deepens

U.S. stocks rose sharply this week, with the major indexes building on a recovery that began in earnest on Boxing Day. The S&P 500 Index is in the midst of its strongest two-week stretch since 2011, having rebounded 10% over that period.

Markets were propelled higher last Friday by better than expected nonfarm payrolls numbers. This week, positive developments around U.S.-China trade negotiations were among the biggest catalysts. Trade delegates from both countries met in Beijing this week, where they ironed out important details concerning U.S. commodity purchases and access to mainland China markets.

Investors are gearing up for a potentially volatile earnings season now that Apple has lowered its guidance on Q4 sales. Corporate reporting season will begin later this month.

Trump Goes Prime-Time

President Donald Trump delivered his first Oval Office address on Tuesday, where he urged Americans to support his fight for increased border protection. The president described the situation on the U.S.-Mexico border as a “humanitarian crisis” that needs to be resolved immediately. Read: President Trump Makes His Case for a Border Wall as Economy Hangs in the Balance.

Trump and congressional Democrats remain locked in a bitter dispute over a proposed border wall that will cost $6 billion. Democrats’ refusal to approve the funding has blocked a new budget from being formed and caused several government agencies to shut down. As many as 800,000 federal workers lost their first full paycheck on Friday as the impasse continued.

The latest talks between Trump and Democrats broke down on Wednesday after House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer said they would refuse to grant wall funding even if government reopened.

The Week Ahead

The longest government shutdown in U.S. history will certainly have ramifications on Wall Street unless Democrats and Republicans are able to reach a solution shortly. There’s already signs that the federal shutdown is starting to make investors anxious, which could put additional pressure on the Trump administration to reach a compromise.

In cryptocurrencies, bitcoin will look to defend a critical support level over the weekend. Its ability to hold $3,500 could dictate whether the market enters full-blown capitulation mode or recovery. The hard fork of Ethereum will also be of interest to crypto traders looking to evaluate ether’s technical progress.

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 743 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Week in Review

Weekly Recap: Crypto New Year Begins Quietly as Apple Roils Traditional Markets

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Crypto markets opened 2019 on a soft note, as bitcoin and the major altcoins saw more stable trading ranges following weeks of volatility. Ethereum emerged as the week’s biggest gainer following a 16% surge in price, which allowed it to reclaim the second spot from XRP in the market-cap ranking.

In traditional markets, Apple’s admission that it may have a big China problem wreaked havoc on stock prices, with the Dow Jones Industrial Average plunging more than 600 points in a single day of trade. Stocks remain highly vulnerable to extreme swings, a trend that is expected to continue for the duration of the first quarter.

Cryptos Stabilize

The cryptocurrency market showed greater upside potential this week, as bitcoin clawed back above $4,000 on multiple occasions and Tron showed signs of a bullish breakout. However, on balance, the market is little changed compared with last week. Since peaking near $136 billion on Wednesday, the cryptocurrency market capitalization has drifted back below $130 billion.

Further reading: Projects Like Tron are “Just Garbage,” Says Jed McCaleb; TRX Price Ticks Higher on New Year’s Day.

Bitcoin is once again benefiting from positive sentiment tied to Intercontinental Exchange’s forthcoming BTC futures market. Unlike CBOE and CME, the Bakkt trading platform will offer physically settled bitcoin futures, a move that many in the blockchain community believe could boost institutional adoption of digital assets.

Bitcoin on Track for Narrow Weekly Gain as Outlook Brightens; Breakout Imminent?

Bitcoin is currently trading slightly above $3,800 and is down less than 1% for the week. Percentage-wise, bitcoin SV (BSV) was the worst performer among the majors this week, falling 4%.

Ethereum Pulls Ahead

Ethereum pulled ahead of the pack this week, climbing 16% to overtake XRP for second spot in the market-cap rankings. XRP, which fell nearly 3% this week, held the no. 2 spot for the better part of six weeks.

At the time of writing, ether’s price was valued just above $150 for a total market value of $15.5 billion. The so-called developer’s cryptocurrency peaked near $16.3 billion on Wednesday as the price approached $160.

For the first time in months, Ethereum is benefiting from positive news flow ahead of the highly anticipated Constantinople upgrade. The soft fork, which is scheduled to take place Jan. 16, will introduce much needed upgrades to the protocol. It will also lower the block reward for mining ETH, thereby boosting demand for the digital currency. Read more: Ethereum Flips XRP for Second Spot in Crypto Market Ranking Following 12% Gain.

Apple’s Ominous Warning

Apple has finally admitted that it might have a big China problem. On Wednesday, CEO Tim Cook issued a letter to investors warning of an unexpected downturn in revenue for the holiday quarter. It was the iPhone maker’s first revenue cut in 15 years and couldn’t come at a worse time.

The company already faces an uphill battle in an overly saturated Chinese market where low-cost handhelds are taking away market share. As we pointed out on CCN, global smartphone sales likely fell in 2018 and while growth is expected to pick up, it won’t be more than single digits.

Apple’s stock price tanked nearly 10% on Thursday, dragging the company’s market cap below $700 billion. The company’s value peaked north of $1 trillion last year. The selloff in AAPL shares had a noticeable impact on Wall Street, dragging the Dow Jones Industrial Average lower by 660 points. Markets recovered sharply on Friday and are on track for a solid weekly gain.

The Week Ahead

Crypto markets are still in a long-term downtrend, but optimism about the future is quietly growing after bitcoin celebrated the ten-year anniversary of its Genesis Block. Although technical trading continues to dominate prices, a shift to fundamentals is likely in the coming weeks as investors prepare for the launch of Bakkt, the first physically-settled bitcoin futures market.

In terms of traditional assets, the fallout from Apple’s announcement will continue to resonate next week as FAANG stocks continue to struggle. A resolution to the partial U.S. government shutdown, now in its second week, will also be in focus.

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 743 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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