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Weekly Forecast: Cryptocurrencies Look for Direction After Turbulent Month

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A wave of selling pressure has swept the cryptocurrency markets this month, casting a shadow over April’s bullish reversal. Though cryptos have declined for three consecutive weeks, downside pressure appears to be slowly fading as investors await the latest developments on the regulatory and adoption fronts.

Among correlated assets such as stocks, bonds and commodities, attention will be paid to ongoing geopolitical developments, free trade negotiations and economic data.

Cryptocurrencies: The End of the Downtrend?

Proponents of the price manipulation theory believe we may be nearing the end of the crypto-market downtrend as large investors continue to dump their oversized holdings of bitcoin.

This view is corroborated by the fact that the last three downtrends – starting in December and continuing to this day – have been accompanied by higher lows and shallower recoveries. At the same time, trading volumes are thinning with each major correction. Case in point: cryptocurrency trade volumes fell on Sunday to their lowest in six weeks.

That said, bitcoin is currently eyeing support in the high $6,000 range after briefly falling below $7,300 on Sunday. Analysts such as Willy Woo believe that a further breakdown below $6,000 is possible before we see any major rebound. Much of that will depend on bitcoin’s ability to hold the critical $6,500 support level, which the market has failed to breach since early February.

The cryptocurrency market bottomed at $320 billion last Thursday. A stalled weekend recovery knocked prices back toward $326 billion from a high near $340 billion.

Usually, signs of institutional adoption – like the ones we’ve seen repeatedly over the past three weeks – are a boon to crypto assets. However, it appears as if wider institutional adoption has already been priced into the market (i.e., “buy the rumor, sell the fact”). This suggests traders are now looking for tangible evidence of a new product or service being launched before they rally behind bitcoin like they did in December.

In the author’s view, the actual launch of Goldman Sachs’ bitcoin operation could provide that spark.

Geopolitics in Focus

A meeting between U.S. President Donald Trump and North Korea’s Kim Jon-un is back on as talks resumed in the wake of last week’s diplomatic breakdown.

The planned summit, which is scheduled to take place in Singapore next month, was salvaged after South Korean leader Moon Jae-in held an unannounced meeting with his northern counterpart on Saturday. According to Moon, the North Korean leader has “again made clear his commitment to a complete denuclearization of the Korean peninsula.”

Stock markets are likely to respond favorably to the developments, as easing geopolitical tensions tend to boost risk-on assets. Investors should pay attention to futures trading in the coming hours for an indication of how the market will perform.

Economic Calendar

In terms of economic data and other key developments, below is a rundown of everything you need to know for the next five days.

Monday

U.S. stock markets are closed for Memorial Day.

No major data releases are expected.

Tuesday

The Dallas Federal Reserve Bank will release its monthly manufacturing business index, while S&P/Case-Shiller will report on U.S. house prices.

Meanwhile, New Zealand’s central bank will release its Financial Stability Report.

Wednesday

A deluge of economic data will make its way through the financial markets Wednesday, beginning in Europe with German retail sales, unemployment and consumer inflation. Europe’s largest economy likely saw a pickup in annual inflation for May, with analysts forecasting year-over-year growth of 1.9%.

Meanwhile, the European Commission’s statistical agency will report on a series of economic and business sentiment indicators.

Shifting gears to North America, the U.S. Commerce Department will release revised first-quarter GDP data. The ADP Research Institute will also release its monthly report on private-sector employment.

In terms of monetary policy, the Bank of Canada will deliver a verdict on interest rates early Wednesday. Canada’s benchmark interest rate is forecast to hold steady at 1.25%.

Thursday

Reports on Eurozone consumer prices and unemployment will headline European trading on Thursday. The consumer price index (CPI) for the 19-member euro area likely rose 1.6% annually in May compared with 1.2% the previous month.

In the U.S., the Department of Commerce will issue its monthly report on personal income and outlays. The data set also includes core personal consumption expenditures (PCE), the Federal Reserve’s preferred measure of inflation. The core PCE rate likely strengthened to an annual rate of 2% for April from 1.9%.

North of the border, the Canadian government will release first-quarter GDP figures.

Friday

U.S. nonfarm payrolls will headline Friday’s session, with the May report expected to show the creation of 185,000 jobs. Unemployment is projected to hold steady at 3.9% and average hourly earnings likely picked up to 2.7% annually from 2.6%.

Separately, the Institute for Supply Management (ISM) will report on U.S. manufacturing PMI. The May reading is expected to print 57.7 on the PMI scale. Anything above 50 signifies expansion.

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 461 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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Market Overview

It’s Getting Hot

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Hi Everyone,

Welcome to the first day of summer!!

Top news in crypto-land today is the flash announcement from world-famous rapper Akon, who is now getting into the ICO market with his own crypto called Akoin.

It doesn’t stop there though. Apparently, his vision includes building a brand new crypto city in Senegal to use the currency exclusively.

I suppose with the recent updates from the in the United States it would be very difficult to raise money for an ICO of the coin there. Perhaps Akon can do some other type of token introduction without raising money from the public to get started.

In Senegal of course, this isn’t the first attempt at localized currencies in the region.

As we’ve been saying, the real need for Bitcoin and other decentralized currencies comes specifically from emerging markets. Only once natural growth picks up there, will the institutions get involved. If that takes a day or a year, nobody can say.

Today’s Highlights

  • Dollar Rising
  • Gold Falls Further
  • Crypto Ramps up Regulation

Please note: All data, figures & graphs are valid as of June 21st. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Stocks are mixed to negative today but the currency markets are in the throes of a strong US Dollar swing.

This is primarily the result of the new direction in policy from the US Federal Reserve, which is planning to increase interest rates while the rest of the world largely sustains their very low rates.

We’ve discussed before how the Dollar may be reversing the trend but now we can see that it is at its highest level in almost a year.

On this chart, I’ve put a Fibonacci Retracement line. For those of you who are green on technical analysis, fib lines are used to predict the likelihood in nature of a specific price being reached, according to Fibonacci’s patterns found in nature.

As we can see, we’re now approaching the 50% level.

 

Metals Moving

The main mover lately has been gold and other precious metals which are currently dropping like it’s hot.

As the Dollar get’s stronger gold tends to get weaker as you can buy more ounces of gold with a single dollar.

The recent slide has brought us all the way back to the medium term trend line that we’ve been watching for the last year.

Of course, everyone draws their trendlines a bit differently, but for those that are bullish on the long-term prospects for precious metals, this might be a good time to start looking for an entry.

On the other hand, the hotter it gets, with the USD and other reasons, the more gold tends to melt.

Also watch out for the Bank of England today, which will deliver its decision (most likely not to raise rates) at noon in London.

Though there will be no press conference following this decision, Governor Mark Carney will be speaking later tonight at the Mansion House Dinner.

Crypto Regulation

As we go forward, the role that governments play in cryptocurrencies is increasing at a rapid pace.

In response to hacks on Coinrail and bithumb, the government of South Korea has already released the details of a new bill to regulate crypto exchanges.

Europol is also ramping up efforts to get a handle on the space and will be meeting this week with more than a dozen major crypto exchanges, discussing anti money laundering initiatives.

Here at eToro, we’re doing our part as well. Yesterday, our very own Iqbal Gandham,UK Managing Director, addressed the Treasury Select Committee in London and did an amazing job representing the crypto industry.

Iqbal is not only the managing director of eToro UK but he is also the Chairman of Crypto UK self-regulatory body and a huge advocate for the sensible regulation of cryptocurrencies.

You can catch the recording at: https://www.parliamentlive.tv/Event/Index/252986ff-cec8-4647-a208-787618136dfb

The more clarity we see from global governments about how the space will be regulated the more people will feel free to invest and use cryptocurrencies regularly.

Let’s have an awesome day ahead!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation. The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro. Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose. Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

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 103 rated postsSenior Market Analyst at Etoro.com.




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Market Overview

Market Update: Technology Stocks Power Nasdaq to Record High; OPEC Meeting in Focus

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Technology stocks propelled the Nasdaq Composite Index to record highs on Wednesday, as investors eyed potentially improving trade relations between the United States and European Union.

Technology Stocks Rally

The technology sector outperformed Wednesday as shares of Netflix (NFLX) and Facebook (FB) set fresh record highs. The large-cap S&P 500 Index rose 0.2% to 2,767.32. Its IT component advanced 0.4%. Meanwhile, real estate rose 1.1% and discretionary shares added 0.5%.

The Nasdaq climbed 0.7% to close at 7,781.51. The tech-driven index is up 4.6% for June, having set record highs on half a dozen occasions.

Dow industrials extended their slump to seven days, falling 42.41 points, or 0.2%, to close at 24,657.80.

Dow blue-chip Disney Co (DIS) upped its bid for Twenty-First Century Fox (FOXA) assets to $38 per share, or $71.3 billion, surpassing an earlier offer made by Comcast. Last week, the NBCUniversal parent offered $65 billion in cash.

Expected volatility over the next 30 days declined on Wednesday, as calm trading conditions returned to Wall Street. The CBOE Volatility Index fell 4.1% to 12.80. The VIX trades on on a scale of 1-100 where 20 represents the historic mean.

U.S.-EU Trade Rift Thaws

Investors received some reprieve Wednesday from trade-war rhetoric amid reports that the U.S. and European Union were working out a new deal on automobiles.

According to The Wall Street Journal, the U.S. ambassador to Germany has met with German automakers BMW, Volkswagen and Daimler, where they proposed the idea of ending car tariffs between the U.S. and its EU allies. Germany has reportedly offered to scrap the EU’s 10% tax on EU automobiles  as part of a broader pact involving industrial goods.

Stocks have been pressured all week by the threat of all-out trade war between the United States and China after President Trump announced tariffs on up to $50 billion worth of Chinese goods. The president late Monday directed his administration to identify $200 billion worth of Chinese goods for additional duties after Beijing threatened counter-tariffs on American-made products.

OPEC Meeting in Focus

A Saudi-led plan to boost oil production is being met with resistance by Iran ahead of a high-profile OPEC meeting later this week.

Iran’s oil minister Bijan Zanganeh called the cartel an “American organization” and signaled his country’s opposition to higher production quotas. Earlier, the Islamic Republic had reportedly agreed to make a compromise on a small increase in output.

“OPEC is not an organization to receive its instruction from President Trump,” Zanganeh said upon his arrival in Vienna, Austria, the venue of the upcoming meeting.

“The U.S. president has blamed OPEC for the price hike. Indeed, the real responsibility for the current oil price hike lies with the U.S. president himself,” he added, as reported by the Financial Times.

Saudi Arabia is scrambling to convince fellow members of the Organization of the Petroleum Exporting Countries to pass a resolution relaxing production cuts as the kingdom seeks to maintain market share.

Russia, which openly backs a production hike, wants OPEC and its allies to boost output by a combined 1.5 million barrels per day.

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 461 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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Market Overview

What Doesn’t Kill you Makes you Stronger

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Hi Everyone,

This is it. After months of wheeling and dealing in the UK government, Prime Minister May’s showdown with her own party comes to a head this evening.

They’ve already decided that parliament should have a say in what Brexit will look like. Today we’ll get a better understanding of what level of authority that “say” will carry. In other words, do they have an advisory role or are they the decision makers.

Opponents of the “meaningful vote” amendment say that it will weaken May’s hand. Proponents say that, if passed, the amendment will weaken May’s hand. May has maintained that “no deal is better than a bad deal.” It would seem that most economists and authorities disagree, so this parliamentary vote is about blocking the no-deal option.

Though the average citizen maybe feeling fatigued by now, the EU negotiators will be keeping a keen eye on the countdown timer, which is now set for just nine months.

As far as the markets g, their concerns are aligned with the economists. Any chance of a no-deal Brexit could hurt confidence in local companies and in the Pound.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Please Remain Calm
  • Metals Melt & Oil Leaks
  • Another Crypto Hack

Please note: All data, figures & graphs are valid as of June 20th. All trading carries risk. Only risk capital you can afford to lose.

Etch-a-Sketch Markets

Whatever trade war concerns may have been in the market yesterday seems to be completely gone by now. The People’s Bank of China might have had something to do with that.

The following headline may be translated in laymen’s terms as: don’t worry about trade, take some cash and settle down.

The amount of the cash injection may also be symbolic. Even though ¥200 billion is only worth 15% of the $200 billion proposed tariffs, the number itself is more than enough to raise eyebrows.

The CEO of Goldman Sachs, Lloyd Blankfein was also on Bloomberg this morning playing down the trade risks. Saying basically that Trump has made his point but he’d need to be crazy to carry out the threat and that this is more likely just a reminder to China that the U.S. has more available tariff firepower.

In any case, here we can see that stock indexes this morning are all green.

Platinum Got Smelted

In the weirdest way, during the height of the trade tensions yesterday gold took a massive plunge.

This strange behavior is something we mentioned in Monday’s update as well (Title: Let’s Break the Internet). Gold usually acts as a safe haven and goes up during times of uncertainty, but now it seems to be doing the opposite.

I still haven’t heard any convincing theories as to why this might be. The best I got was a few reassurances that the world isn’t about to end and therefore there’s no demand to hold physical gold.

The effect on Platinum seems to have been even more dramatic, as it got slammed down to the lowest level in 2.5 years, and is now relatively close to its lowest point in a decade.

It is also important to note the three day OPEC meeting in Vienna. Though any final decisions are usually reserved for the end of the meeting, there’s a strong possibility that we could get some leaks or even a complete breakdown.

Some countries want to start increasing output and some would rather decrease it. Both from a fundamental and technical perspective, this could go either way. Will be interesting to watch what happens.

What Crypto Hack

Less than two weeks ago, mainstream media was attributing a $1,000 drop in bitcoin prices to a minor hack attack on a previously unknown Korean crypto exchange.

Last night, the largest, most well known, crytpo exchange in South Korea got hit and cryptotraders across the globe woke up to this

The price of bitcoin however, seems to have barely budged. Here we can see the time of the bithumb news circled in purple and the drop following the Coinrail hack in yellow. What’s wrong with this picture?

One disadvantage to bitcoin is its immutability. Once a transaction happens, it can never be undone, which is one of the reasons cryptocurrencies can be a target for hackers.

However, immutability is also one of bitcoin’s most attractive qualities. The fact that it operates transparently and independently is a clear advantage for many.

The industry is certainly getting better at dealing with these types of attacks as well. Bitcoin’s high level of transparency makes it easier for authorities and businesses to track any illicit activity or stolen goods and eventually return them to their rightful owner. Very likely, we’ll continue to see more emphasis and development around security and the trusted custody of cryptocurrencies and that’s ultimately a good thing for the industry.

As always, please feel free to connect with me at the links below. I’m always glad to hear any questions, comments, and feedback. Let’s have an amazing day ahead.

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Best regards,
Mati Greenspan
Senior Market Analyst

eToro: @MatiGreenspan | Twitter: @MatiGreenspan | LinkedIn: MatiGreenspan | Facebook:MatiGreenspan

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 103 rated postsSenior Market Analyst at Etoro.com.




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