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Week in Review

Week in Review: Crypto Market Sheds Hundreds of Billions, Trump Signs $1.5 Trillion Tax Cut

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The week before Christmas delivered huge developments in the global financial markets. On the policy front, U.S. President Donald Trump officially signed new tax legislation after both chambers of Congress approved $1.5 trillion in tax cuts. Wall Street largely shrugged off the news as trade volumes plummeted before the holidays.

In the world of cryptocurrency, bitcoin and dozens of altcoins underwent a massive correction that shaved roughly $190 billion from their combined market cap. The market would later recover despite trading well off its peak.

Cryptos Suffer Major Decline

Cryptocurrencies just posted their biggest-ever correction on Friday, with the market shedding 30% in a matter of hours. At its lowest point, the market cap for all cryptocurrencies fell to roughly $418 billion. That represents a decline of $232 billion from the recent peak of $650 billion.

There were no immediate catalysts for the price collapse, but it appears that the altcoin universe continues to track closely with bitcoin. The world’s most traded cryptocurrency briefly traded below $12,000 on Friday before paring its losses later in the day. Prominent altcoins such as Ethereum, Litecoin, IOTA, Dash and bitcoin cash all posted double-digit percentage losses. Ripple XRP also fell, but managed to reverse losses later in the day.

At press time, global cryptocurrencies are collectively valued at roughly $542 billion, according to CoinMarketCap.

The decline in cryptos was associated with a large drop in bitcoin futures. Data from both CBOE and CME showed that all contracts expiring in the first quarter of 2018 are falling more than 20% Friday. In particular, CME’s January contract reached the circuit breaker at $12,265. A circuit breaker is triggered when a financial asset falls too far, too fast.

President Trump Scores Major Legislative Win

President Trump officially signed the new GOP tax bill on Friday, delivering huge tax cuts to corporations and a temporary overhaul of personal income taxes. Under the new spending measure, the corporate tax rate will be reduced to 21% from 35% and individual tax rates will be cut across the board.

“I consider this very much a bill for the middle class and a bill for jobs,” Trump said in the Oval Office before signing the new bill. “Corporations are literally going wild over this. I think even beyond my expectations.”

The new legislation will reduce federal revenue by nearly $1.5 trillion over the next ten years, although individual tax cuts are scheduled to expire in 2026 to avoid inflating the deficit in future years. The Trump administration says tax cuts will stimulate faster economic growth, which will more than offset the lost revenue.

Wall Street Heads for Fifth Straight Weekly Gain as Europe Slumps

U.S. stocks rounded out their fifth straight weekly gain even as trade volumes thinned ahead of the holidays. The benchmark indexes rose to fresh records on Monday before paring gains later in the week.

The large-cap S&P 500 Index closed down 0.1% on Friday, but still managed to gain 0.3% for the week. The index settled at 2,683.34.

Wall Street has been on a tear all year long on expectations the Trump administration will implement much-needed reforms to reduce taxes and stimulate growth. With tax reform out of the way, investors will be keen to monitor President Trump’s push for infrastructure spending and regulatory reform in the coming year.

European stocks struggled throughout the week, eventually settling lower amid signs that Spain may be headed for another regional crisis involving Catalonia. Parliamentary elections this week handed Catalonia’s separatist movement a clean victory, sparking fresh fears of renewed tensions with Madrid. Spain’s Ibex 35 plunged 1.2% on Friday. The Euro Stoxx 50 index declined 0.5% Friday to finish lower for the week.

North American and European markets will be closed on Monday. Most European markets will remain closed Dec. 26.

The Week Ahead

For crypto investors, the biggest question heading into next week is whether the most recent correction will continue. If history is any indication, investors are keen on buying the dips.

Equities will experience lower trade volumes after Christmas, with the ‘Santa Claus Rally’ likely to underpin the market in the final week 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 603 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: Ethereum Returns from the Abyss

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The cryptocurrency Ethereum took a steep dive this week, culminating in a fresh 16-month low on Wednesday. Concerns over scalability, ICO cash-outs and future growth of the sector all fueled the declines. The selloff, which mirrored a wider slump in the cryptocurrency market, was eventually picked up by bargain hunters, triggering a 22% rebound in ether’s price over two days.

Bitcoin’s trajectory has been much more predictable relative to its peers. The leading digital currency by market capitalization has virtually broken even for the week, with the technical charts showing the potential for bigger upside in the near future.

Ethereum Crashes

It has been a rollercoaster week for Ethereum. On Wednesday, the developer’s cryptocurrency dived below $170 for the first time since May 2017 amid signs that initial coin offerings are offloading their raised funds. Ether-based tokens spent 157,700 ETH over a seven-day stretch in what was the biggest selloff since March. Presumably, startups are cashing out their ether for fiat money after a large-scale transfer to digital currency exchanges during the month of August.

Ether’s price experienced a sharp reversal on Thursday as traders swept up oversold tokens at a discount rate. The cryptocurrency would soon return above $200, eventually hitting a high of $223. The rebound helped ether pare its weekly decline to just under 6%.

ERC-20 tokens also recovered significant losses but double-digit declines weren’t uncommon. Vechain, ICON, Zilliqa and several others reported weekly declines of at least 10%.

Bitcoin Holds Steady

With altcoins and tokens in meltdown mode, bitcoin charted an entirely different path this week, as prices returned tot heir stable and predictable trading range. BTC is virtually unchanged compared with seven days ago, with prices returning to the $6,500 range. By Friday, bitcoin’s trade volume had returned above $4 billion on global exchanges, a sign that capital was flowing back into the market.

Bitcoin’s dominance rate swelled to 58.1% during the height of the Ethereum/token crash, according to CoinMarketCap. That was the highest since December. By Friday, bitcoin’s share of the overall market was roughly 56%.

Bitcoin’s technical indicators suggest that a short-term uptrend is likely. Prices have moved above the 50-day moving average and are fast approaching the longer-term average.

ICOs are Securities, Says Federal Judge

A U.S. federal judge has ruled that ICOs may be treated as securities following a criminal case involving a former cryptocurrency promoter. The decision, which was handed down Tuesday by U.S. District Judge Raymond Dearie, affirms the SEC’s position that it has authority over token offerings.

The ruling was delivered against Maksim Zaslavskiy, a fraudulent ICO promoter accused of raising money for assets that never existed. The Brooklyn-based businessman was charged with conspiracy and two counts of securities fraud related to ICOs purportedly backed by investments in diamonds and real estate.

“Per the indictment, no diamonds or real estate, or any coins, tokens, or currency of any imaginable sort, ever existed — despite promises made to investors to the contrary,” Dearie said. “Simply labeling an investment opportunity as a ‘virtual currency’ or ‘cryptocurrency’ does not transform an investment contract – a security – into a currency.”

The Week Ahead

The cryptocurrency market appears to have reached rock bottom, though it’s unwise to rule out further declines in the near future. Ethereum’s protracted selloff has raised red flags about the future of ICOs and whether the long-awaited token mass extinction event is nearing.

Bitcoin, on the other hand, is charting an entirely different path as prices appear to have formed a solid bottom near $6,000. This is an encouraging sign for the bulls and the broader mining industry.

For traditional markets, monetary policy and trade negotiations top the agenda next week. The Federal Reserve on Wednesday is expected to raise interest rates for the third time this year. Meanwhile, China and the United States will likely provide greater clarity on upcoming trade negotiations after Beijing accepted the Trump administration’s offer to resume talks.

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 603 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: From Economic Abstraction to Fake News, Cryptocurrencies Plunge $35 Billion

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The cryptocurrency market declined suddenly and sharply on Wednesday, with Ethereum and its ERC-20 contingency leading the decline after a prominent crypto investor cast serious doubts about the protocol’s future. Meanwhile, bitcoin plunged by as much as 14% from its recent high after Business Insider reported that Goldman Sachs is abandoning its plans to open a cryptocurrency trading desk. This is nothing but fake news, according to a top Goldman executive.

Bitcoin Falls $1,000

After reaching its highest level in a month, bitcoin suffered a fresh selloff in the latter half of the week as negative headlines and profit-taking spurred a mass exodus from the cryptocurrency market. The bitcoin price bottomed near $6,300 on Thursday after reaching a high above $7,400 earlier in the week.

Prior to the latest skid, bitcoin had exhibited newfound stability defined by narrower trading ranges and incrementally higher prices. This eventually led to a bullish crossover of the 50-day moving average the 200-day moving average.

The selloff wiped $16 billion off bitcoin’s market cap, bringing its total value to around $111 billion. However, BTC now accounts for 54.7% of the cryptocurrency market’s total value. Bitcoin’s dominance rate peaked at 55.3% on Wednesday, according to CoinMarketCap.

Goldman Sachs Responds to “Fake News”

Bitcoin’s sudden reversal this week was accompanied by a report from Business Insider suggesting that Goldman Sachs has decided to ditch its forthcoming crypto trading business. Cryptocurrencies shed a combined $35 billion in market capitalization within 24 hours of the report being released.

Shortly after the report went viral, a Goldman Sachs executive sought to clear the air about the bank’s bitcoin ambitions.

“I never thought I would hear myself use this term but I really have to describe that news as fake news,” Goldman Sachs Chief Financial Officer Martin Chavez said on stage at the TechCrunch Disrupt Conference, as quoted by CNBC.

“The next stage of the exploration is what we call non-deliverable forwards, these are over the counter derivatives, they’re settled in U.S. dollars and the reference price is the bitcoin-U.S. dollar price established by a set of exchanges,” Chavez said.

Economic Abstraction

Ethereum was this week’s biggest loser as prices fell 20% to new yearly lows. Ether’s collapse was accompanied by a rapid selloff of ERC-20 tokens, which mirrored last month’s cash-out.

Ethereum is the center of a growing debate over economic abstraction, a term used by some members of the community to describe gas payments in a non-ETH asset. Simply put, economic abstraction is basically paying smart contract fees through an ERC-token rather than Ethereum. According to cryptocurrency entrepreneur Jeremy Rubin, abstraction will eventually render Ethereum obsolete and drive its price down to zero.

According to Vitalik Buterin, Rubin’s claim is partially correct if one assumes that economic abstraction is going to happen. However, developers are currently tendering two proposals – modified fee market and storage maintenance fees – that would make ether-based gas fees mandatory. This means block proposers will need to “cough up” ETH regardless of what happens at the user level.

The Week Ahead

As the events of the past week demonstrated, crypto prices can rise and fall on the turn of a speculative dime. The latest selloff has pushed major assets into oversold territory, making a short-term recovery likely. However, with the long-term bull market negated, cryptocurrencies will struggle to regain their footing as debates over regulation and ETFs continue.

Emerging markets will remain in the spotlight next week as Turkey and Argentina battle a brewing currency crisis and South Africa contends with a new economic recession. These factors will likely keep emerging-market stocks under pressure for the foreseeable future.

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 603 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 Is Getting Bullish

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Cryptocurrencies’ long road to recovery took a positive step this week, as bitcoin’s newfound stability resonated with the broader market. BTC clocked highs north of $7,100 on Wednesday, having recovered roughly $1,200 from its recent low. The leading digital currency has faded somewhat in the latter half of the week but continues to show signs of a bullish breakout, based on the technical charts.

On the adoption front, Yahoo Finance rolled out trading with three cryptocurrencies, giving laypeople easier access to bitcoin, Ethereum and Litecoin. Meanwhile, mobile payment processor Square secured a patent with the U.S. Patent and Trademark Office to develop a new cryptocurrency payment network.

Bitcoin’s $7,000 Test

Bitcoin is on track for a 6% gain this week, offering compelling evidence that the worst of the August bear market had passed. The leading digital currency first crossed $7,100 on Tuesday and continued on to fresh three-week highs on Wednesday. In doing so, BTC crossed the overbought threshold on the RSI, sending prices back down to the $6,800 range. It was there that bitcoin’s price found support near the 200-day moving average, based on the 4-hour chart.

Looking ahead, bitcoin is generating positive price action, with the 50-day moving average inching closer to the 200-day MA. A crossover could generate additional bullish momentum in the near term.

At current values, bitcoin is capitalized at $120 billion, which represents 53.3% of the entire cryptocurrency market.

Yahoo Finance Integrates Three Cryptocurrencies for Trading

Yahoo Finance this week integrated three cryptocurrencies into its online trading platform, a move that could hasten adoption of digital assets at the retail and institutional levels.

In addition to looking up vital statistics, users can now buy and sell bitcoin, Ethereum and Litecoin on the Yahoo Finance platform.  Although the announcement flew under the radar of major news outlets, its significance cannot be overstated. That’s because Yahoo Finance is the most popular personal finance website in the United States, based on monthly visits.

According to Statista, the website received 70 million visitors during the month of May, well ahead of MSN MoneyCentral, CNN Money and Google Finance. Sites like Motley Fool and Investopedia receive only a fraction of Yahoo Finance’s monthly visits.

Square Secures Patent

Mobile payments processor Square Inc. has secured a new patent that would allow merchants to accept payments in cryptocurrencies, possibly opening the door to wider acceptance of digital assets.

Square, which filed the patent in September 2017, was approved by the U.S. Patent and Trademark Office to begin developing the new system. To be sure, the patent is not just crypto focused but allows merchants to accept payments in any currency, including bitcoin and altcoins.

“The disclosed technology addresses the need in the art for a payment service capable of accepting a greater diversity of currencies … including virtual currencies including cryptocurrencies (bitcoin, ether, etc.)… than a traditional payment system in a transaction between a customer and a merchant, and specifically for a payment service to solve or ameliorate problems germane to transactions with such currencies,” the patent said.

Stocks Forge Ahead

U.S. stocks are rounding out their best August since 2014 thanks to strong earnings, pro-growth optimism and signs of easing trade tensions with China.

The S&P 500 Index returned to record highs for the first time since January, culminating in the longest bull market in U.S. history. The Nasdaq Composite Index also traded at fresh records, while the Dow notched new seven-month highs.

Wall Street and global stocks continue to trade in the opposite direction, as emerging-market risks weigh on key markets in Asia and Europe. All of Europe’s benchmark indexes registered heavy losses for the month of August, with the Euro Stoxx 50 Pr falling 3.5%. Mainland China’s CSI 300 Index plunged 5.2%.

The Week Ahead

Bitcoin’s road to recovery will likely see better days in the near future as the market shakes off its bearish bias. Activity in the futures market, coupled with the sharp decline in volatility, suggests that the worst may be over for the leading digital currency. However, investors shouldn’t expect linear gains quite yet.

Over time, August and September have been the worst months for stocks. Although Wall Street defied the August trend, a repeat performance in September will be more difficult to justify as trade volumes return to normal. The Federal Reserve’s rate-hike path is sure to spook some investors at a time when home sales are crumbling.

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 603 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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