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Week in Review

Week in Review: South Korea Triggers Crypto Meltdown; Stock Rally Reaches Epic Proportions

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It was a roller coaster week for cryptocurrencies, as investors misread South Korea’s aim to regulate the market as an all-out ban on crypto exchanges. Meanwhile, U.S. stocks put up huge gains as earnings season kicked off.

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Commodities rallied on a weak U.S. dollar, with crude futures climbing above $70 a barrel for the first time in three years.

Cryptocurrencies Plunge as South Korea Mulls New Regulations

Cryptocurrencies suffered a brisk selloff on Thursday on reports that South Korea was considering new reforms to stamp out speculation from the market. Investors had initially believed that regulators were looking to ban crypto exchanges all together. It would later surface that the government was actually looking to ban anonymous trading and ensure banks do not settle unverified cryptocurrency transactions.

Local media group Yonhap News agency provided more clarity on the proposed legislation:

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“Under the new measure, only real-name bank accounts and matching accounts at cryptocurrency exchanges can be used for deposits and withdrawals, while the issuance of new virtual accounts to cryptocurrency exchanges will be banned.”

The cryptocurrency market briefly fell more than $100 billion on Thursday, as investors exited their bitcoin and altcoin positions. At one point, all but five of the top 100 cryptocurrencies were trading in the red, based on data provided by CoinMarketCap. (It’s important to note that CoinMarketCap now excludes South Korean exchanges from its daily volume and pricing data.)

Markets were in recovery mode on Friday, with the total coin value climbing back above $711 billion.

Stocks are Sizzling as Earnings Season Begins

Wall Street put up huge gains this week, as the major indexes closed at new records in four of five sessions. This culminated in back-to-back 200-point gains for the Dow Jones Industrial Average.

On Friday, the blue-chip index closed at 25,803.19, with all but six of its 30 components registering gains.

The broader S&P 500 Index rose 0.6% to 2,786.24. Meanwhile, the Nasdaq Composite Index added 0.7% to close at 7,261.06.

With the most recent gain, the major indexes have added between 4.2% and 5.2% since the new year.

Interestingly, the CBOE VIX Volatility Index has increased in six of the last seven weeks. The so-called “fear index” closed at 10.16. Despite the recent string of gains, it’s still too early to conclude whether volatility is making a comeback.

Fourth-quarter earnings season is also off to a good start, with more than two-thirds of S&P 500 companies reporting better than expected profit results, according to FactSet. While only 5% of S&P 500 companies have reported so far, their blended earnings growth rate is 10.2%.

Oil Hits $70

Oil prices extended their recovery over the past five days, as prices rose to their highest levels in three years.

Brent crude for February settlement briefly traded above $70 a barrel in the latter half of the week before settling at $69.88 a barrel on London’s ICE Futures exchange. The West Texas Intermediate (WTI) benchmark for U.S. crude also put up strong gains, eventually settling at $64.48 a barrel on the New York Mercantile Exchange.

Crude markets on Friday were unfazed by U.S President Donald Trump extending sanctions relief to Iran. One of the primary catalysts for oil prices had been the threat of new sanctions on Tehran, which would have likely affected its crude exports.

NAFTA on the Rocks

One of the world’s largest free trade agreements appears to be in limbo after two Canadian government officials said they were increasingly convinced President Trump will exit NAFTA. The North American Free Trade Agreement (NAFTA) has guided continental commerce for more than two decades.

President Trump has called NAFTA a horrible treaty for the United States given the country’s ongoing trade deficits with both Canada and Mexico. It is unclear whether Trump intends to pull the plug on the deal or use it as a bargaining chip.

The sixth and penultimate round of negotiations between Canada, the U.S. and Mexico will take place in Montreal later this month.

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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4.5 stars on average, based on 152 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: Billions Flow Back into Stocks and Cryptos as Recovery Deepens

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Stocks, commodities and cryptocurrencies all rose this week, rebounding from a sharp selloff that had triggered a severe bout of risk aversion. In the crypto sphere, concerns of an imminent ban on trading continued to recede, leading speculators back into the market.

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Despite the recent gain, the outlook on so-called riskier assets remains tainted by economic and financial risks, not to mention the loss of technical momentum.

Crypto Market Gains Momentum 

Cryptocurrencies bounced back sharply this week on technical trading and reassurance that South Korea has no intention to ban digital currency exchanges.  The market cap for all coins rose sharply for the week as bitcoin topped $10,000 for the first time in over two weeks.

At the time of writing, the total value of all cryptocurrencies in circulation was $485 as the market overcame a brief intraday correction. With the gain, the market has now added more than 16% over the past seven days.

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Some of the week’s most notable movers included Litecoin and Ripple, which benefited from positive business news.

Litecoin announced it will launch its LitePay payment platform later this month, making it easier for e-commerce businesses to accept cryptocurrency payments in real time.

Ripple’s native XRP token also gained traction this week after Western Union confirmed it will pilot the xRapid platform. In doing so, Western Union becomes the second major money transfer system to work with xRapid.

Stocks Bounce Back

Wall Street staged a massive relief rally this week, as the benchmark indexes regained more than half of what they lost in early February. The s&P 500 Index posted its biggest weekly gain since 2013 even as the rally faltered on Friday. The benchmark average closed at 2,732.22, having gained 4.3% on the week.

The Dow Jones Industrial Average mounted a six-day winning streak through Friday, where it closed at 25,219.38. The blue-chip index bottomed at 23,860.46 on Feb. 8.

Meanwhile, the technology-heavy Nasdaq Composite Index closed at 7,239.47 for a weekly gain of 5.3%.

The CBOE VIX Volatility Index closed right around the historic mean Friday, as the market overcame a severe bout of risk aversion. Wall Street’s so-called “fear index” closed at 19.46 on a scale of 1-100 where 20 represents the historic mean. Even though it fell this week, the volatility gauge has risen more than 76% since the start of the year.

Stocks settled well off session highs on news that special counsel Robert Mueller indicted 13 Russian nationals for allegedly meddling in the 2016 U.S. presidential election.

Oil Prices Rebound as Dollar Crumbles

Crude prices bounced back this week from their biggest loss in two years,  as strong demand drivers boosted investor sentiment. The West Texas Intermediate (WTI) benchmark for U.S. crude futures finished the week at $61.68 a barrel after briefly falling below $59. Brent crude for April settlement ended Friday at $84.84 a barrel.

Commodities were aided by a renewed slide in the dollar, which fell to fresh three-year lows this week. The U.S. dollar index (DXY), which tracks the performance of the greenback against a basket of six currencies, bottomed at 88.59 on Thursday. By the end of trading Friday, it had recovered 0.6% to finish at 89.10.  So far this year, the dollar has backtracked 3.3% even as investors become increasingly convinced the Federal Reserve will raise interest rates more rapidly than previously expected.

The Week Ahead

Calm has returned to the financial markets, but it is unclear how long it will last. From the perspective of cryptocurrencies, positive reinforcement on the regulatory front may serve to reinvigorate buying interest following the most recent month-long correction. If this week was a guidepost for things to come, upward consolidation may continue in the near-term.

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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4.5 stars on average, based on 152 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: Cryptocurrencies and Stocks Fall Deeper into Correction as Volatility Spikes

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The global financial markets are wrapping up a highly volatile week of trade, with widespread losses reported across multiple asset classes. Cryptocurrencies plunged by as much as $550 billion from their record peak, while stocks narrowly avoided their worst week since the financial crisis. The narrative underpinning the Trump rally is slowly unraveling with rate-hike jitters threatening the sustainability of the global economic recovery.

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Cryptocurrencies Stabilize After Massive Correction

After a chaotic week, the global cryptocurrency market settled above $400 billion on Friday, with bitcoin and major altcoins recovering. The market’s total value bottomed near $276 billion on Tuesday, as regulatory uncertainty triggered a panic sale across virtually all major assets. This would later fuel a major technical reversal sending bitcoin below $6,000.

By Friday, bitcoin’s value recovered above $8,500, accounting for roughly 36% of the market’s total capitalization.

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The rout in cryptos immediately followed a prolonged buying frenzy that pushed the market north of $830 billion. The sharp correction has many traders searching for a bottom. Prognosticators haven’t been very helpful, with experts predicting anything from a zero-bound crash to multi-trillion-dollar gains.

On the regulatory front, U.S. securities agencies struck a cautiously optimistic tone about the future of cryptocurrency trading. In prepared testimony before the Senate Banking Committee, the heads of the Securities and Exchange Commission and Commodity Futures Trading Commission made no mention of a major regulatory shakeup.

Highly Volatile Week for Stocks Ends Positive

U.S. stocks were on track for their biggest weekly drop since the financial crisis before a late-session surge Friday pared some of the losses. Even with a 330-point Friday rally, the Dow plunged 5.2% for the week, its worst showing in two years.

The broader S&P 500 Index also lost 5.2% following a brief stint at three-month lows.

A measure of implied volatility known as the CBOE VIX spiked above 40 on Friday after reaching a high of 50 earlier this week. The spike in volatility is perhaps the clearest signal yet that smooth gains under President Trump are no longer guaranteed.

As Hacked reported earlier this week, products that short volatility shed billions this week, with the VelocityShares XIV ETN falling from $1.9 billion in assets to just $110 million.

The Wall Street selloff triggered broad declines globally, with Chinese stocks leading the declines and Japan’s Nikkei 225 falling into correction territory.

The Week Ahead

The biggest question heading into next week is whether equities and cryptos will fall deeper into correction, or whether the market will rebound from its recent bottom. The general decline of pro-growth optimism has left Wall Street worse off than it was at the start of the year.

The cryptocurrency market has also entered a period of uncertainty, as investors continue to fret about possible regulatory action against digital currency exchanges. So far, these fears have been overblown, with South Korea adopting only limited measures to control the market and the United States expressing cautious optimism about the future of regulation.

In terms of economic data, the middle of February offers up several high profile releases, including U.S. CPI and Eurozone GDP. The final batches of Q4 earnings are also expected.

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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4.5 stars on average, based on 152 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: Epic Selloff Hit Cryptos, Stocks as Volatility Reaches 2016 Levels

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It was a sea of red across multiple asset classes this week, with stocks and cryptocurrencies experiencing epic-style collapses. The crypto market slump was largely driven by fears of regulatory bottlenecks after India sounded the alarm on illicit financing. On Wall Street, concerns over rising interest rates put the major indexes on track for their worst weekly performance in two years.

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Carnage Hits Crypto Market

The violent selloff that has rocked cryptocurrencies since January continued this week, as bitcoin and the major altcoins shed hundreds of billions in market cap. The market appears to have bottomed on Friday at roughly $348 billion, which was the lowest since early December.

At press time, the total market capitalization for all coins was roughly $417 billion.

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Bitcoin led the massive reversal, falling 21% over five days to trade as low as $8,530. The world’s top cryptocurrency by market cap was last seen trading around $8,780. Its share of the total market increased slightly toward the end of the week, reaching a high of 37.5%.

Digital currencies have been on edge ever since South Korea announced plans to introduce stricter regulations on the market. Those efforts amounted to a ban on anonymous trading accounts, which went into effect Jan. 30.

Earlier this week, India’s Finance Minister said his government will scrutinize more closely black market activity involving cryptocurrency. Media outlets erroneously took this to mean that the government was “killing” the crypto market.

Even if we ignore fake news, investors still have reason to be alarmed. The cryptocurrency market continues to be infested by cyber criminals targeting exchanges as well as ICOs. On Thursday, Bee Token became the latest crowdfunding campaign to get attacked (this time, it was a phishing scam targeting emails and Telegram).

Rising Interest Rates Trigger Equity Rout

U.S. stocks posted heavy losses on Friday, with the Dow Jones Industrial Average recording its first 600-point drop in two years. Though slumping all week, equities sold off more intensely Friday after government data showed a surprise pickup in wages.

Average hourly earnings for U.S. workers climbed 2.9% annually in January, the Labor Department reported Friday in its monthly nonfarm payrolls data series. That was the fastest increase in more than eight years, a tangible sign that inflationary pressures are building and that the Federal Reserve will move to raise interest rates more intently.

The report also showed that overall employment rose by a faster than expected 200,000 as joblessness held steady at 4.1%.

Stocks are reversing sharply from their best start to a year in decades. The CBOE VIX, a measure of 30-day volatility, rose on Friday to its highest level since 2016. The VIX closed the week at 17.31, where it was seen inching closer to its normal historic range.

Monetary Policy

U.S. monetary policy was left unchanged this week, as the Federal Reserve concluded its final rate meeting under the guidance of Janet Yellen. Beginning this month, the central bank will be headed by Jerome Powell. He will chair his first Federal Open Market Committee (FOMC) meeting in March.

That’s when the central is expected to raise interest rates again, based on the 30-day Fed Fund futures prices, which gauge the market’s outlook on monetary policy. The Fed is keeping a close eye on inflation, and will likely press forward with additional rate hikes to ensure price growth doesn’t overstep its 2% target.

Policymakers use the core personal consumption expenditure (PCE) index to gauge inflation. On Monday, the Commerce Department said the inflation measure fell to 1.7% annually in December, down from 1.9% the previous month.

The Week Ahead

The major question heading into next week is whether cryptos and stocks are experiencing a momentary correction or a more protracted downturn. For cryptocurrencies, it appears to be the former. Market fundamentals haven’t changed very much since the start of the year, when the total capitalization blew past $800 billion.

Investors are cautioned against reading too much into the media hysteria. As we wrote on Thursday, the mainstream media outlets have successfully talked down cryptocurrencies on several occasions. This is unlikely to change anytime soon as more governments consider regulating the crypto sphere.

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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4.5 stars on average, based on 152 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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