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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 699 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

Week in Review: EOS Goes Against the Grain, VanEck Blasts Allianz Over Crypto

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The crypto crash of the last six weeks has widened the chasm between early adopters of digital assets and those who believe they are a scam and should be outlawed. This debate is now raging within institutional circles, with the CEO of VanEck taking Allianz to task over calls to ban cryptocurrencies outright.

In terms of market dynamics, not much has changed in the last week. Bitcoin succumbed to new yearly lows Friday, capping off a relatively uneventful week of lower highs and lower lows. EOS emerged as a net gainer while bitcoin SV registered the biggest percentage drop among the majors. Since breaking off from bitcoin cash, SV has shown a propensity to move inversely with its peers.

Bitcoin Extends Slide

The bitcoin price on Thursday set new lows for the year, capping off a disappointing week that failed to generate higher bids for the leading digital currency. At its lowest point Thursday evening, BTC/USD traded around $3,204 on Coinbase Pro. Over the past seven days, bitcoin’s average price fell 2.8%, according to CoinMarketCap. Aggregate data currently show an average price of $3,300.

Accounting for 55.1% of the entire cryptocurrency market, bitcoin’s slide had a gravitational pull on altcoins and tokens. The combined market cap of all coins fell by $4 billion this week to $104.5 billion.

Long-term holders of bitcoin have been advised by Weiss Ratings that now is the best time to increase their positions. The Florida-based rating agency told its audience via Twitter that crypto is “here to stay,” and that bitcoin’s current price represents its “least speculative investment.”

EOS’ Incentive Spiral

Losses among the major cryptocurrencies this week ranged from 0.5% (Ethereum) to 28% (bitcoin SV), but EOS managed to string together a gain of 10.6% following a devastating stretch that dragged prices to $1.50. The rebound this week appears to be technical in nature after prices reached extreme oversold territory. The cryptocurrency last traded around $1.86.

As Hacked reported earlier this week, EOS’ block producers are struggling to stay alive amid the downtrend. A new survey by altShiftdev, the creator of My EOS Wallet, showed that the EOS break-even point for block producers is $4.14. While EOS can easily adjust the fee it pays producers, the reward is essentially meaningless when the coin is valued at less than $2.

Mediocre incentives and cyclical bear markets present difficulties for the EOS network. What’s more, some people are convinced that the U.S. Securities and Exchange Commission (SEC) will bring the hammer down on the project over its year-long crowdfunding campaign. This warning came from none other than Charles Hoskinson, the founder of Cardano. More on that story can be found here: EOS Price Analysis: Cardano Founder Charles Hoskinson Warns of Regulatory Action Against EOS.

VanEck Tells Allianz to “Shut the Fuck Up”

It didn’t take long for VanEck’s chief executive to take Allianz to task over claims that the cryptocurrency industry should be outlawed. The war of words, which was reported by CCN, basically goes like this: Allianz CEO Andreas Utermann told a panel in London that regulators should “outlaw” cryptocurrencies. A few days later, VanEck’s Gabor Gurbacs told Allianz to “shut the fuck up on anything crypto or insurance” (the latter is a reference to Allianz’s poor handling of an insurance claim submitted by Gurbacs’ mother).

Gurbacs’ reaction came via Twitter, though the thread has since been deleted.

The exchange is significant when we consider the players involved. Allianz is one of Europe’s biggest asset managers. VanEck is no slouch, either, with nearly $50 billion in assets under management. Gurbacs’ company is pushing hard for a bitcoin exchange-traded fund (ETF), and is working with CBOE and SolidX to make that happen.

Gurbacs lashed out against the insurance industry as a whole. From CCN:

“Insurance companies regularly mislead investors, their disclosure systems are questionable and leave clients behind when they most needed. Insurance companies need more regulation, not crypto…The state by state regulation of insurance companies, and inconsistencies across the board, make it practically impossibly for policy buyers to understand what the heck they are buying. Buying insurance is like intending to buy bread but getting horse-shit instead.”

Interestingly enough, the blockchain revolution is proposing to upend the way insurance companies do business. It’ll be interesting to see how firms like Allianz react.

The Week Ahead

December is shaping up to be another disappointing month for cryptocurrencies. Investors in search of a silver lining may take solace in knowing that the worst of the downtrend appears to be over. This doesn’t mean new lows aren’t over the horizon; it simply means that weekly declines of 30% are less likely now that bitcoin is testing a critical long-term support.

There’s no denying that the recent skid is positively correlated with the hard fork of bitcoin cash on Nov. 15 (after all, prices began to plunge on the eve of the highly anticipated event). However, the longer we have been able to evaluate the trend, the more apparent it has become that the capitulation was triggered by multiple technical selloffs after bitcoin fell below $6,000 – a critical support that represents the long-term breakeven price for miners. With this view in mind, the outlook for the remainder of the year remains overwhelmingly bearish, and investors shouldn’t add to their positions until a definitive bottom has been reached.

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 699 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

Week in Review: Carnage Engulfs Cryptocurrencies and Stocks; Bitcoin Mining Difficulty Plunges 24%

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From a risk-on perspective, the global financial markets took a beating this week. Digital assets like bitcoin, EOS and bitcoin cash plunged anew while equity prices slid back into the abyss following a strong end to November. Seasonal influences that normally accompany the holiday season have thus far eluded the market, leaving investors with a considerable loss. Market participants with exposure to cryptocurrencies, stocks and ETFs have likely seen their holdings wither away as a result of the bearish trends taking shape.

Crypto Crash Intensifies

The carnage that has engulfed the cryptocurrencies since mid-November intensified on Friday, as bitcoin and the leading altcoins plunged to new yearly lows. The combined value of all cryptoassets bottomed at $106 billion earlier this morning, according to CoinMarketCap. Over the past four weeks, the market cap has lost more than $100 billion.

Since last Friday, losses among the top-ten cryptocurrencies have ranged between 7% and a staggering 40%. Bitcoin cash occupied the latter, as prices fell below $100 for the first time in its history. Bitcoin SV and Tether’s USDT stablecoin were the only two cryptocurrencies to emerge from the weekly rout unscathed. This led bitcoin SV to briefly overtake bitcoin cash and Tether as the world’s fifth-largest blockchain.

Bitcoin Mining Difficulty Falls

Bitcoin on Friday fell below $3,400 for the first time since September 2017, with price action and trading volume signaling that a bigger pullback toward $3,000 is likely. At this rate, mining bitcoin is a money-bleeding endeavor that offers little return on investment. Bitcoin’s mining difficulty peaked in mid-October but has since fallen by a whopping 24%, according to Blockchain.com. The following chart highlights how drastically mining difficulty has fallen in recent months.

The price collapse since mid-November has reportedly caused hundreds of thousands of bitcoin miners to halt operations temporarily. As Hacked previously reported, most mining operations depend on a bitcoin price of around $6,000-$7,000 just to break even.

The month-long crash began on the eve of the bitcoin cash hard fork, accelerated during the ABC/SV hash war and then somewhat stabilized following the official chain split. The selloff re-emerged on Friday as short-sellers continued to strangle the market.

U.S.-China Tensions Rattle Stocks

U.S. stocks on Tuesday experienced one of their worst drops of the year, as trade tensions between the United States and China resurfaced. The major indexes were on track for another brutal decline on Thursday after it came to light that a senior Chinese executive of Huawei Technologies Co was arrested in Canada following a lengthy investigation by U.S. authorities.

Meng Wanzhou, the chief financial officer of the China-based tech giant, was apprehended in Vancouver Dec. 1. According to various news outlets, she risks extradition to the United States amid allegations of money laundering and sanctions violations.

The Dow Jones Industrial Average fell 800 points on Tuesday. It was on track for a more than 500-point drop on Thursday before paring losses in the final hour of trading. U.S. stock markets were closed on Wednesday to mourn the death of former President George H.W. Bush.

OPEC and Russia Come to Terms

On Friday, the Organization of Petroleum Exporting Countries (OPEC) secured an agreement with Russia to slash crude production by 1.2 million barrels per day. According to Bloomberg, the 15-member cartel will shoulder 800,000 barrels of the burden and its partners will be responsible for the remaining balance.

The cuts follow marathon negotiations between OPEC, Russia and their allies on how to best distribute the cuts following two months of bear-market conditions. Oil prices are down more than a third since early October.

U.S. President Donald Trump has criticized OPEC’s production policies and has called on Saudi Arabia and its allies to refrain from manipulating prices. The United States could be well on its way to becoming a stable net exporter of crude by the end of the president’s first term. As Hacked recently reported, the world’s largest economy became a net exporter last week for the first time in 75 years.

The Week Ahead

It’s difficult to imagine a scenario where bitcoin and cryptocurrencies stage a meaningful recovery this month. The digital asset class is expected to remain under pressure for the foreseeable future as short-sellers continue to dominate market flows. That being said, investors can expect an upward consolidation over the next seven days before profit-taking knocks prices back a couple of notches.

Against this backdrop, it’s important to remember that the fundamental picture on bitcoin has not changed as drastically as the price suggests. If anything, market developments have been overwhelmingly positive now that derivatives and custody solutions have taken center stage. 2019 is shaping up to be a big year for bitcoin; new futures products, regulated exchanges and the push for the first U.S.-based ETF product will likely shape the outlook moving forward.

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 699 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

Week in Review: Have We Reached Crypto Bottom?

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The search for an elusive ‘crypto bottom’ may have finally come to an end this week. Between Sunday and Thursday, the combined market cap of all cryptocurrencies witnessed a peak-to-trough swing of $27 billion in favor of the bulls, with bitcoin and the major altcoins engineering double-digit rallies. The recovery engine lost steam on Friday, putting coin values on track for a weekly loss of around $10 billion.

In traditional markets, U.S. stocks staged a large relief rally this week as investors turned optimistic about the prospect of a new trade agreement between the United States and China. Oil prices notched fresh yearly lows as oversupply concerns continued to weigh.

Cryptocurrencies Bounce

Cryptoassets recovered as much as $27 billion in lost market cap this week, as bitcoin and the broader altcoin universe staged double-digit rallies across the board. The market peaked at $142 billion on Thursday after setting a new 14-month low of $115 billion over the weekend.

Bitcoin rose more than $1,000 peak-to-trough, as the leading digital currency broke through $4,500 during the height of the recovery. A technical selloff on Friday drove price back toward the $4,000 support level, where it now resides.

Tron was among the top performers this week, registering a peak-to-trough gain of more than 55%. Despite falling out of the top-ten, TRX has been aided by positive fundamental drivers and a bullish Justin Sun, who recently advised market participants to check back on prices in two years’ time.

Interestingly, TRX was one of a small handful of cryptocurrencies to report a gain over the seven-day cycle. Compared to last Friday, TRX is up 4%. By comparison, bitcoin is down more than 6% and XRP 12% over that stretch.

Bitcoin SV Cracks Top-10

The bitcoin cash hard fork of Nov. 15 created a permanent split in the BCH community, resulting in a new coin entering circulation. Bitcoin cash ABC, which was widely regarded as the primary implementation of the upgrade before the fork, retained the BCH symbol after winning the hash war against the rival SV chain.

Bitcoin SV entered circulation as the no. 9 cryptocurrency by market cap, overtaking the likes of Cardano, Monero and Tron. SV was the only cryptocurrency in the top-ten to avoid the market correction on Friday. Prices were last seen trading steady just north of $94.

The hard fork had a devastating impact on the cryptocurrency market. It not only diverted hash power away from mining bitcoin, but undermined investor sentiment. Calvin Ayre, one of the primary backers of bitcoin SV, offered a peaceful resolution to the hash war last week by urging both sides to abandon the BCH moniker. In his view, bitcoin cash no longer exists and has instead been replaced by two new cryptocurrencies.

Stocks Recover, Oil Slides

U.S. stocks staged a large relief rally this week, as investors turned their attention to a high-profile G20 summit in Buenos Aires on Friday. A planned meeting between U.S. President Donald Trump and Chinese counterpart Xi Jinping will be the highlight of the conference as both sides look to resolve a bitter trade dispute. The Dow Jones Industrial Average surged more than 600 points on Wednesday, returning to positive territory for the year.

The rout in oil prices intensified this week, as U.S. futures fell below $50 a barrel for the first time in over a year. Prices were down again on Friday as investors continued to doubt OPEC’s ability to drain the market from excess supply. The 15-nation oil cartel will meet in Vienna, Austria Dec. 6 to set new production limits.

The Week Ahead

Cryptocurrencies like bitcoin, XRP and Ethereum remain firmly entrenched in bear-market territory, and this reality is unlikely to change in the near future. The main question is whether the bottoming process has been completed or whether a new round of fresh lows can be expected. The resolution of the bitcoin cash hard fork is promising from the perspective of the bulls; however, a fractured community is likely

Economic data are also on the docket next week, culminating in the keenly awaited U.S. nonfarm payrolls report on Friday. The U.S. labor market remains on solid footing, though weekly jobless claims have risen in consecutive weeks, signaling the potential for a slowdown in the months ahead.

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 699 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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