Weekly Recap: Crypto New Year Begins Quietly as Apple Roils Traditional Markets
Crypto markets opened 2019 on a soft note, as bitcoin and the major altcoins saw more stable trading ranges following weeks of volatility. Ethereum emerged as the week’s biggest gainer following a 16% surge in price, which allowed it to reclaim the second spot from XRP in the market-cap ranking.
In traditional markets, Apple’s admission that it may have a big China problem wreaked havoc on stock prices, with the Dow Jones Industrial Average plunging more than 600 points in a single day of trade. Stocks remain highly vulnerable to extreme swings, a trend that is expected to continue for the duration of the first quarter.
The cryptocurrency market showed greater upside potential this week, as bitcoin clawed back above $4,000 on multiple occasions and Tron showed signs of a bullish breakout. However, on balance, the market is little changed compared with last week. Since peaking near $136 billion on Wednesday, the cryptocurrency market capitalization has drifted back below $130 billion.
Bitcoin is once again benefiting from positive sentiment tied to Intercontinental Exchange’s forthcoming BTC futures market. Unlike CBOE and CME, the Bakkt trading platform will offer physically settled bitcoin futures, a move that many in the blockchain community believe could boost institutional adoption of digital assets.
Bitcoin is currently trading slightly above $3,800 and is down less than 1% for the week. Percentage-wise, bitcoin SV (BSV) was the worst performer among the majors this week, falling 4%.
Ethereum Pulls Ahead
Ethereum pulled ahead of the pack this week, climbing 16% to overtake XRP for second spot in the market-cap rankings. XRP, which fell nearly 3% this week, held the no. 2 spot for the better part of six weeks.
At the time of writing, ether’s price was valued just above $150 for a total market value of $15.5 billion. The so-called developer’s cryptocurrency peaked near $16.3 billion on Wednesday as the price approached $160.
For the first time in months, Ethereum is benefiting from positive news flow ahead of the highly anticipated Constantinople upgrade. The soft fork, which is scheduled to take place Jan. 16, will introduce much needed upgrades to the protocol. It will also lower the block reward for mining ETH, thereby boosting demand for the digital currency. Read more: Ethereum Flips XRP for Second Spot in Crypto Market Ranking Following 12% Gain.
Apple’s Ominous Warning
Apple has finally admitted that it might have a big China problem. On Wednesday, CEO Tim Cook issued a letter to investors warning of an unexpected downturn in revenue for the holiday quarter. It was the iPhone maker’s first revenue cut in 15 years and couldn’t come at a worse time.
The company already faces an uphill battle in an overly saturated Chinese market where low-cost handhelds are taking away market share. As we pointed out on CCN, global smartphone sales likely fell in 2018 and while growth is expected to pick up, it won’t be more than single digits.
Apple’s stock price tanked nearly 10% on Thursday, dragging the company’s market cap below $700 billion. The company’s value peaked north of $1 trillion last year. The selloff in AAPL shares had a noticeable impact on Wall Street, dragging the Dow Jones Industrial Average lower by 660 points. Markets recovered sharply on Friday and are on track for a solid weekly gain.
The Week Ahead
Crypto markets are still in a long-term downtrend, but optimism about the future is quietly growing after bitcoin celebrated the ten-year anniversary of its Genesis Block. Although technical trading continues to dominate prices, a shift to fundamentals is likely in the coming weeks as investors prepare for the launch of Bakkt, the first physically-settled bitcoin futures market.
In terms of traditional assets, the fallout from Apple’s announcement will continue to resonate next week as FAANG stocks continue to struggle. A resolution to the partial U.S. government shutdown, now in its second week, will also be in focus.
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.
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