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Week in Review

The Week in Review: Bitcoin Surges as Syrian War Looms

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Weekly Recap

Asset Current Value Weekly Change
S&P 500 2355 -0.30%
DAX 12225 -0.71%
WTI Crude Oil 52.23 2.78%
GOLD 1257.50 0.81%
Bitcoin 1090 10.10%
EUR/USD 1.0599 -0.53%

 

The second quarter started with a hectic week for global financial markets, as the central banks remained in the center of attention before the US missile attack in Syria took over the headlines. Stocks remained stable with a slight rotation between the main indices, as the previously strong DAX and Eurostoxx 50 were among the weaker benchmarks during the period. The Fed’s and the ECB’s meeting minutes were the most anticipated announcements of the week (dwarfing even the expectations regarding the usually crucial US employment report), and the US Dollar came out as the strongest currency after the choppy period, as the Fed still seems to be the most committed to raising interest rate and tackling inflation.

Crude oil was among the winners of the period, despite the rally in the Dollar. Gold had a mixed week, as it finally topped $1260, but plunged back below the crucial resistance on Friday as stock markets recovered, possibly pointing to a more significant correction ahead. The Euro was very weak in the second half of the week, as the dovish comments from Mario Draghi cooled down expectations regarding an imminent monetary tightening in the Eurozone. The Pound also lost ground against its major peers although British equities were holding up well.

 

Gold Futures, 4-Hour Chart Analysis

Bitcoin and Litecoin dominated the cryptocurrency market, as the stellar weekend rise of Ripple was halted by a deep correction. Bitcoin rose back near the $1200 level just two weeks after testing the 880 level, while Litecoin hit $12.50 following a strong breakout from below the $4.50 zone. Ethereum traded sideways throughout the week above the $40 level, while Monero drifted lower after a failed rally attempt. Dash found support near the $60 level after rising 5-fold from $20 to $100 between the end of February and mid-March.

The UK provided a number of negative surprises on the economic front this week, as the manufacturing PMI, the construction PMI, manufacturing production, and industrial production all disappointed, with only the services segment showing strength. US and other European numbers were mixed, but remained mostly in line with the stable growth narrative. The ISM non-manufacturing PMI provided the biggest negative surprise, but it still shows robust growth in the sector. US initial jobless claims dipped lower after a worrying jump, although the employment report was mixed once again. Canada is still a bright spot globally, despite the weakness in the local real estate market.

Technical Corner

Range contraction was the name of the game for the most watched stock index in the world, as last week’s bounce stalled out near the upper boundary of the dominant technical pattern (a so-called Megaphone). The benchmark got stuck in a narrow interval towards the end of the week, and this phenomenon often precedes a significant move, as the “tension” in the market grows. The MACD also shows how compressed the recent days were for US stocks, as the indicator didn’t leave the neutral zone, and failed to give a meaningful signal in any direction.

S&P 500, 4-hour Chart

The S&P 500 finished the week right in the middle of the crucial 2350-2355 support/resistance zone that played a key role in recent weeks. The recent all-time high near the 2400 level is the most important resistance ahead, while the 2332 support could also be in play next week, should the index leave the current holding pattern on the downside. The financial sector that we have been monitoring recently also traded in a narrow range throughout the week, so the first few sessions could be critical next week.

Key Economic Releases of the Week

Day Country Release Actual Expected Previous
Monday AUSTRALIA Retail Sales (monthly) -0.10% 0.30% 0.40%
Monday UK Manufacturing PMI 54.2 55.1 54.6
Monday US ISM Manufacturing PMI 57.2 57 57.7
Tuesday AUSTRALIA RBA Rate Decision 1.50% 1.50% 1.50%
Tuesday UK Construction PMI 52.2 52.5 52.5
Tuesday CANADA Trade Balance -1 billion 0.7 billion 0.8 billion
Tuesday US Trade Balance -43.6 billion -46.7 bill -48.5 bill
Tuesday US Factory Orders (monthly) 1.00% 0.90% 1.2%
Wednesday UK Services PMI 55 53.5 53.3
Wednesday US ADP Employment Change 263,000 184,000 298,000
Wednesday US ISM Non-Manufacturing PMI 55.2 57 57.6
Wednesday US Crude Oil Inventories 1.6 millon -0.1 million 0.9 million
Wednesday US FOMC Meeting Minutes
Thursday GERMANY Factory Orders (monthly) 3.40% 3.50% -0.80%
Thursday EUROZONE ECB Meeting Accounts
Thursday CANADA Building Permits (monthly) -2.50% 5.40%
Thursday US Initial Jobless Claims (weekly) 234,000 251,000 258,000
Friday CANADA Employment Change 19,400 5,700 15,300
Friday CANADA Unemployment Rate 6.70% 6.70% 6.60%
Friday US Hourly Earnings 0.20% 0.20% 0.20%
Friday US Employment Change 98,000 175,000 235,000
Friday US Unemployment Rate 4.50% 4.70% 4.70%

 

The Story of the Week: Quarterly Performance of Asset Classes

Performance of different asset classes in Q1, Source: Deutsche Bank

If you follow financial markets on a daily basis, it is sometimes inevitable that you lose track of the big picture. As the first quarter of 2017 ended last week, we take a look at the performance of the major global asset classes with the help of Deutsche Bank’s cheat sheet. Generally speaking, the quarter was quiet, as volatility remained tame, especially in the US where the Volatility Index (VIX) hit record lows, as the S&P 500 didn’t fall by 1% for more than a 100 trading days in a row.

Interestingly commodities are found on both ends of the performance chart, as Crude Oil was the worst performing asset thanks to the technical breakdown of the last week of March, while precious metals sit at the top of the list after a healthy rally. Emerging markets were also among the best places for investors in the quarter with the Brazilian Bovespa Index yielding more than 10%.  The Hang Seng (Hong Kong) and the DAX were the strongest major indices, but the FTSE and the main US benchmarks also performed well. Russian equities lagged their global counterparts as the weakness in oil coupled with the increasing political tensions weighed on the country’s assets.

Looking at currencies, the Dollar’s correction was the main theme of the quarter, as the greenback retreated a bit, off its multi-decade highs against the Pound and the Euro after the post-election euphoria faded away. Donald Trump’s first months in office were less significant to financial markets than most analysts expected, although the media-hype was constant. US indices hit all-time highs throughout the period as the global bull market turned 8 on the 6th of March.

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 466 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Week in Review

Jamie Dimon Gets Crypto Fever as JPMorgan Develops Stablecoin; Bitcoin Fundamental Improve

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JPMorgan Chase & Co, America’s largest bank by a significant margin, shocked the crypto landscape this week by unveiling a new stablecoin project designed to enhance its $6 trillion payment market. For CEO Jamie Dimon, the launch of ‘JPM Coin’ is a significant departure from the anti-crypto tirades of 2017-18. While JPM Coin may not be a cryptocurrency by the traditional sense of the term, its creation comes on the heels of a blockchain revolution that started ten years ago with the launch of bitcoin – the same asset Dimon derided as a “fraud.”

Introducing JPM Coin

On Thursday, JPMorgan Chase unveiled a new stablecoin geared toward enhancing its multi-trillion-dollar payments business. JPM Coin will help clients reduce the cost, risk and processing time associated with cross-border payments. In doing so, it takes a playbook out of Ripple Labs, whose institutional clients are leveraging XRP technology to streamline global payment networks.

As a stablecoin, JPM Coin has a fixed value pegged to the U.S. dollar. The bank said it will support other major currencies in the future. No further details were provided.

In an official press release, the bank said: “We have always believed in the potential of blockchain technology and we are supportive of cryptocurrencies as long as they are properly controlled and regulated.”

More on this story: Morgan Chase’s JPM Coin: A Banker’s Intranet, or the First Major Attack on Bitcoin?

Bitcoin Volatility Drops, Transactions Rise

Although bitcoin’s price failed to attract bids this week, the network’s underlying fundamentals continued to improve. As Hacked reported on Thursday, bitcoin’s January transactions reached their highest level in a year and were nearing levels not seen since the bull market in 2017. At the same time, median fees plunged to their lowest levels since 2015.

The data were presented in a weekly cryptocurrency publication by Diar.

On the price front, bitcoin continued to find support near $3,600. Trade volumes remained elevated throughout the week, only falling below $6 billion on Friday. Average volatility over the past 30 days has fallen to the lowest level in three months, according to data from bitvol.info. Volatility has been in firm retreat since mid-December, right around the time bitcoin established new lows near $3,100.

After surging by $10 billion last Friday, the total cryptocurrency market was little changed this week. At last check, the combined market capitalization was $120.5 billion.

Trump to Declare National Emergency

U.S. President Donald Trump is expected to approve a new budget deal on Friday that avoids a second government shutdown, but will only do so after declaring a national emergency over border funding. By declaring a national emergency, the president can divert funds from the Department of Defence toward the construction of a new border-security fence along the U.S.-Mexico border.

Republicans and Democrats in Congress reached a tentative budget deal late Monday that included $1.38 billion in additional funding for border security. That’s only enough to fund an additional 55 miles of border protection and does not include appropriations for the steel barrier the president proposed. Trump wants $5.7 billion for a steel barrier that extends for 234 miles.

Senate Majority Leader Mitch McConnell, who broke the news on Thursday, said he supports the declaration. However, the plan has been met with criticism from both parties, with Democrats vowing to challenge any efforts to move money without congressional approval.

The Week Ahead

Crypto winter is in a deep freeze at the moment. The landscape has grown colder in recent months as traders continue to discount major fundamental developments centered on adoption and institutional investment. This is further evidenced by the lack of response to JPM Coin, whose creation may usher a new era of legitimacy for crypto projects – at least, in the eyes of traditional finance.

While things are pretty much status quo in crypto and, traditional markets will be forced to contend with the fallout from President Trump’s national emergency as well as ongoing trade negotiations between the U.S. and China. These factors could present new risks for Wall Street’s bullish revival since Boxing Day.

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 772 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




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Week in Review

Weekly Recap: Crypto Markets Get a Shake-Up as Litecoin Ascends; Bitcoin ETF Has Another Backer at the SEC

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Cryptocurrencies were on the path to recovery Friday, as Litecoin’s sudden ascendancy propelled markets higher. This had a domino effect on the top 10 coins, whose rankings shifted following Litecoin’s explosive move north. The market’s performance on Friday helped offset a lackluster start to the week that saw coin values plunge to new yearly lows.

Proponents of the VanEck SolidX Bitcoin Trust reignited the debate over crypto ETFs last week after they resubmitted their application with the U.S. Securities and Exchange Commission (SEC). According to an unpublished interview with the Commission’s lone Democrat, it’s only a matter of time before the regulator approves its first bitcoin exchange-traded fund.

Litecoin Surge

Litecoin caused quite the stir on Friday after prices surged 16% in a matter of hours. This allowed LTC to scale three spots in the crypto rankings, overtaking bitcoin cash, EOS and Tether for fourth spot by market capitalization. At the time of writing, Litecoin is nurturing gains of 13% to trade at $37.74, the highest in nearly a month.

While there was no immediate catalyst for the sudden surge, the market appears to be benefiting from news that the Litecoin Foundation is looking to implement new privacy features through the MimbleWimble protocol. This was confirmed by Charlie Lee, Litecoin’s founder.

Market participants also pointed to an upcoming Litecoin halving event as a potential early catalyst for the rally. If that’s the case, investors can expect interest in LTC to gather pace for months to come. The next halving event is projected to occur around Aug. 5, 2019.

Binance Coin: Biggest Weekly Gainer

Binance Coin (BNB) entered the top-ten crypto index for the first time this week, as traders rallied behind a bevy of fundamental news surrounding the exchange.

BNB has been riding a wave of momentum tied to Binance Launchpad, a new platform for token sales. On Jan. 28, BitTorrent Token (BTT) became the first cryptocurrency to be sold on the platform. In the BNB session, all 23.76 billion BTT were sold to participants in less than 14 minutes. The Tron session sold all of its 35.64 billion BTT in less than 15 minutes.

More on the BTT sale: 100% Completed: The BitTorrent ICO is a 15-Minute Sellout.

The market cap for BNB has surpassed $1.1 billion following a 23% weekly surge. The cryptocurrency has gained 31% since the start of 2019.

Bitcoin ETF: Only a Matter of Time

It’s only a matter of time before the U.S. Securities and Exchange Commission approves the first bitcoin ETF, according to Robert J. Jackson, Jr., the agency’s lone Democratic Commissioner. In a soon to be released interview with Congressional Quarterly, Jackson said it probably won’t be long before someone satisfies the SEC’s standards for a crypto-backed fund.

“Eventually, do I think someone will satisfy the standards that we’ve laid out there? I hope so, yes, and I think so,” he said, according to Drew Hinkes, an Adjunct Professor at New York University.

Jackson added: “Getting the stamp of approval from the deepest and most liquid capital markets in the world is hard, and it should be. Once we make it available to everyday mom and pop investors, we are taking risks that Americans can get hurt.”

The Commissioner didn’t elaborate on when a bitcoin ETF could be approved or whether the recently re-submitted VanEck-SolidX application could satisfy the SEC’s criteria. However, Jackson did dispute the SEC’s decision to turn down the Winklevoss application last year. More on this story: Crypto Markets See Modest Gains as SEC Commissioner Hints at Bitcoin ETF Approval.

The Week Ahead

The crypto rally on Friday has done little to alleviate concerns that a more protracted bear market is looming. That’s because bitcoin is coming dangerously close to its December 2018 low, having given back a majority of its post-crisis recovery. Where bitcoin goes, the broader market will follow. This remains true with very few exceptions.

This alone doesn’t preclude the possibility of range-bound trading continuing next week. However, prolonged periods of lateral moves have been detrimental for bitcoin, as they are almost always followed by deeper moves south (at least, this has been the case during the last half of the bear market). For now, day trading should be relegated to those willing to assume significant risk. The value proposition for long-term holders remains intact.

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 772 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




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Week in Review

Weekly Recap: Crypto Winter Continues as NEM Foundation Crumbles, Bitcoin Falls 7.6% in January

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Crypto winter shows no signs of abating anytime soon. In the past week, bitcoin rounded out its sixth consecutive month in the red while the NEM Foundation suspended all projects and partnerships due to the sinking XEM price.

The news wasn’t all bad, however. XRP received a major boost on Wednesday after Swift, the international payments network, announced it had partnered with a crypto startup to test new GPI payments. This was a significant development for the so-called ‘banker’s cryptocurrency,’ which seeks to disrupt the Swift network’s grip on $200 billion in daily transactions.

Bitcoin Continues to Sink

The end of January marked bitcoin’s sixth consecutive month in the red, highlighting the severity of the bear market. Over that stretch, the leading digital currency has tumbled 55%. Bitcoin fell another 7.6% in January, with the bulk of the declines concentrated in the early part of this week.

On Monday, bitcoin fell by as much as 4% to reach fresh six-week lows. The pullback dragged BTC below a vital long-term support that will likely pave the way for further downward pressure in the near term. Read: Bitcoin Risks Bigger Pullback as Prices Fall to Six-Week Low.

The sudden selloff weighed heavily on the broader cryptocurrency market. The combined value of all cryptocurrencies reached a low of $111 billion. Bitcoin cash, Ethereum, Stellar and bitcoin SV were among the hardest hit.

CBOE Resubmits Bitcoin ETF Application

The Chicago Board Options Exchange (CBOE) has resubmitted a joint application with VanEck and SolidX to list a bitcoin exchange-traded fund (ETF), reigniting a long-standing debate over crypto securitization and its impact on the market. The submittal was confirmed on Thursday by Gabor Gurbacs, VanEck’s chief digital asset strategist.

Just a week earlier, Gurbacs and his partners said they had pulled their application for the VanEck-SolidX Bitcoin Trust. At the time, the proponents felt their application risked immediate dismissal due to the prolonged government shutdown. By re-starting the process from scratch, VanEck and its partners are buying themselves a lot more time to convince the U.S. Securities and Exchange Commission (SEC) to approve their fund.

NEM Foundation Crumbles

The NEM Foundation announced earlier this week that it was edging closer to bankruptcy in the wake of a devastating bear market that first began in early 2018. Despite organizational restructuring and a prior agreement to cut spending by 60%, the nonprofit foundation said it wouldn’t’ survive more than a month without support from the NEM community.

The foundation has appealed to its community for 160 million XEM tokens to help cover operational expenses. At current values, that’s equivalent to $6.57 million. The NEM community will vote on the matter later this month. Layoffs are expected to be announced later this month unless the full funding request is approved, according to Alex Tinsman, the foundation’s newly-appointed president.

Read more: Crypto Winter’s First Victim; NEM Foundation Crumbles as XEM Coin Price Sinks.

XEM is currently valued at $0.0411 for a total market cap of $370.6 million. It ranks 18th among active cryptocurrency projects.

Wall Street Receives an Earnings Boost

U.S. stocks extended their relief rally this week, with the S&P 500 Index clinching its best January returns since 1987. The large-cap index rallied almost 8% during the month, extending its post-Christmas recovery to almost 15%.

Positive earnings surprises from Facebook Inc. (FB), Apple Inc. (FB) and others have underscored the month-long recovery. As of Jan. 25, the fourth-quarter earnings growth rate for S&P 500 companies was 10.9%, according to FactSet. More than two-thirds of companies have reported positive earnings surprises and more than half said their revenues were higher than expected.

The Week Ahead

With a bitcoin ETF application back on the table, the debate over crypto securitization will likely intensify in the coming weeks and months. However, this debate could be put to rest again if Democrats and Republicans don’t agree to a permanent funding solution. The stopgap spending bill announced last Friday covers the affected government agencies for up to three weeks. President Trump has warned that he will declare a national emergency if Democrats don’t approve his proposed border-security funding.

The fallout from the NEM Foundation’s monumental restructuring will also be on investors’ radar next week. As large-cap coins continue to crumble, the long-term sustainability of the market as a whole will come into question. As we’ve speculated before, the long-awaited altcoin extinction event is growing nearer the longer the bear market persists.

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 772 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




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