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Market Overview

Welcome to the Party

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The first bitcoin futures contracts are now up and running on the CBOE. The excitement was everything we expected and more.

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Overall, $40 Million worth of volume was added by Wall Street, which comes out to about 0.3% of yesterday’s total volume. A slow but significant start.

The lack of short sellers emboldened the entire crypto-market causing prices of bitcoin and many other tokens to skyrocket towards their all time highs.

CBOE’s circuit breakers that are designed to halt trading should the price swing too wildly kicked in… twice.

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In addition, the CBOE’s website experienced a remarkable surge in visitors causing the website to crash several times and delayed service, though the trading mechanisms held up well.

Welcome to the party. You’ve got a lot of catching up to do.

@MatiGreenspan
eToro, Senior Market Analyst

 

Please note: All data, figures & graphs are valid as of December 11th. All trading carries risk. Only risk capital you’re prepared to lose.

Market Overview

The US Jobs report comfortably beat expectations on Friday causing the stock markets to rise nicely. The momentum seems to have carried through the weekend with Asian markets up this morning and futures pointing to a positive open in Europe.

In addition, the Federal Reserve is expected to raise their interest rates this Wednesday and a fresh round of stimulus from the People’s Bank of China may be on the cards shortly after.

Thursday will be a huge day for Forex traders as we get interest rate announcements from the Swiss National Bank, the Bank of England, and the European Central Bank.

Though the Fed is gradually tightening their belt, money around the world is still cheap and easy, which is why many stock indices are breaking new record highs.

Trouble on the Border

The ground-breaking deal that was reached between the UK and the EU last week hinged heavily on the deal that the UK reached with their neighbors in Ireland. The idea is that the border between Ireland and Northern Ireland will not revert to a hard border.

Meaning, that the UK will need to keep the flow of goods and services into North Ireland following the regulations dictated by the EU. However, over the weekend we saw some controversy as the UK government tried to backpedal a bit on this deal saying that it was contingent on the upcoming negotiations with the EU.

The Irish were notably miffed as they understood these negotiations to be final and we’re now back at a point of contention.

The GBPUSD is once again testing the rising support level that it has been building since early November. So much rests on a comprehensive and favorable deal to be struck.

Crypto Gone Wild

In the old markets, we used to say “buy the rumor sell the news.” In what is being called the new normal we say “buy the rumor buy the news.”

In crypto, we just say “buy everything as much as you can.”

Though this market is extremely risky, investors in this space don’t even seem to notice. With the introduction of Bitcoin futures on Wall Street came a strong and powerful rally across the crypto-world. Out of the top 100 biggest cryptocurrencies, 94 of them are in the green today.

Revision: In Friday’s update we mentioned that there is a chance that the price of the CBOE futures may become disconnected from the rest of the market. A few readers have pointed out that this is not correct.

The CBOE’s XBT futures are actually fixed to the price traded at Gemini.com and are settled in cash daily. The CME Group’s contracts will be a bit more advanced and the price will be set by an index that is derived from several exchange sites.

Regardless of the excitement in the market, we must remember that Wall Street has only so far dipped their toes in the water and it may take a month or two to really understand how much they will be able to impact the prices around the world.

The good news is that the bitcoin miners have been working hard over the weekend and managed to reduce the backlog of unconfirmed transactions. The mempool is back under 100,000. 🙂

Keep a close eye on the all time highs of your favorite coin. If we start seeing any breakouts, there’s no telling how high we might go.

Have an amazing week 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.

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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Market Overview

Market Update: Stocks Recover Slightly on Upbeat Earnings; Cryptocurrencies Give Back $30 Billion in Gains

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U.S. stocks finished mostly higher on Wednesday, with the Dow snapping a five-day losing after Boeing shattered earnings expectations with its first-quarter report.

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Meanwhile, cryptocurrencies corrected sharply lower as investors took profits following two weeks of steady gains.

Stocks Mostly Higher

Wall Street recovered from a sharp selloff after the open to trade mostly higher on Wednesday. The Dow Jones Industrial Average posted gains of 59.70 points, or 0.3%, to close at 24,083.83. The index was down 200 points earlier in the day.

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Shares of Boeing Co (BA) surged 4.2% after the defense contractor posted much stronger than expected corporate earnings. The company delivered per-share earnings of $3.64 on revenue of $23.38 billion. Analysts in a consensus forecast called for EPS of $2.58 on $22.26 billion in revenue.

The broader S&P 500 Index advanced 0.2% to close at 2,639.40, with eight of 11 primary sectors reporting gains. Energy and telecommunication were the biggest gainers, rising 0.8% apiece.

Meanwhile, the technology-heavy Nasdaq Composite Index was back in negative territory by the close, falling 0.1% to 7,003.74.

The CBOE Volatility Index, commonly known as the VIX, edged down a mere 1% to close at 17.84. The so-called “fear index” touched a session high of 19.84 after the open.

Cryptocurrencies Correct Lower

The cryptocurrency market suffered a brisk selloff on Wednesday, as bitcoin and the altcoins shed as much as $50 billion.

Cryptocurrencies as a whole bottomed near $381 billion before recovering at $403 billion, according to CoinMarketCap. Despite the decline, daily trading volumes eclipsed $40 billion, rounding out one of the most active sessions in months.

 

Several major altcoins reported double-digit percentage losses, including Ripple’s XRP, which fell 11.7% to $0.83. Litecoin plunged nearly 10% to $148.25. Bitcoin cash, the market’s top performer over the past week , gave back nearly 9% to settle near $1,336.

Stellar, Cardano and IOTA were all down at least 10% on Wednesday.

Meanwhile, bitcoin hovered near $9,100 by the early evening, where it was down 3.6% from the previous close. However, its share of the total crypto market edged up to 38.3%.

Prior to the selloff, crypto assets had risen by a combined $180 billion in less than three weeks.

Coins failed to rally even after the CEO of Nasdaq said the stock exchange would be open to hosting cryptocurrencies in the future. In an interview with CNBC, CEO Adena Friedman said Nasdaq “would consider becoming a crypto exchange over time,” provided that appropriate regulations were in place to safeguard investors.

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 353 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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Analysis

Pre-Market: Stocks Up Slightly After Plunge but Sellers Clearly in Control

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Global stocks continued the bearish trend that initiated last week, while volatility increased significantly yesterday during the US session. The major US indices plunged by more than 2% and dragged global benchmarks lower as well, so suddenly the correction lows are in sight again. The momentum of the move suggests that we will see at least a test of the lows, as the charts continue to show bearish pressures across the board.

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NASDAQ 100 Futures, 4-Hour Chart Analysis

Today, stock futures have been slightly above the lows from yesterday, but the short-term charts are clearly wounded and any bounce should be treated as a counter-trend move here. While significant new correction lows are not guaranteed here, bulls should wait until a short-term trend change rather than guess the bottom, as the risks of a deep downswing are high.

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US 10-Year Treasury Yield, 4-Hour Chart Analysis

The rising trend in Treasury yields is among the catalysts of the move, as we painted out several times, and with the whole yield curve still drifting higher to new multi-year highs, the short-term trend could continue. European stocks are holding up well compared to their US peers, and the Japanese Nikkei is also relatively strong, and all of that could be attributed to one thing, the Dollar’s strength.

EUR/USD at Make-Or-Break Level

EUR/USD, 4-Hour Chart Analysis

Forex markets are very active these days, as the massive move in yields boosted the Dollar, which has been gaining ground compared to all of the majors. The most-watched EUR/USD pair is just above the March low, very close to hitting a 3-month minimum, with only 30 pips of cushion remaining for bulls.

Dollar Index, 4-Hour Chart Analysis

The trend in the Dollar index suggests a breakdown in the coming period, as the broader measure broke out from a range that has been intact for several months. Of course, a hawkish ECB statement tomorrow could save Euro bulls here, but given the bearish positioning regarding the Dollar, the “pain trade” would probably be a strong Dollar rally.

Commodity currencies continue to trend sharply lower, despite the stability in the price of oil, and as we noted several times, the Australian Dollar and the Canadian Dollar have been reliably leading risk assets in the last couple of months, so this trend doesn’t bode well for equities.

The same goes to the negative reaction of the most-watched quarterly earnings releases (Google parent Alphabet, Caterpillar), so for now, caution is the name of the game for equity investors.

Featured image from 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 233 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Bitcoin

Stocks Money is Flowing into Bitcoin

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Despite what is looking to be an outstanding earnings season on Wall Street, stocks yesterday took a major hit. At the same time, Bitcoin and the other cryptocurrencies soared.

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It’s not that it’s unusual for Bitcoin and the Dow Jones to move in opposite directions. In fact, it happens quite frequently. What’s interesting here is that the volumes of the Bitcoin futures on Wall Street saw a major spike yesterday.

The CBOE futures contract that expires on May 16th has been trading between 1,700 and 4,000 Bitcoins over the last week. Yesterday it traded a total of 6,653 BTC.

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The CME contract (expiring this Friday) usually trades less than 15,000 coins, saw the volume spike up to 23,405 Bitcoins. This means that between the two exchanges yesterday’s volume was more than 60% above their weekly averages.

Though it’s still a bit early to draw concrete solutions, this does seem to indicate that at least some of the money that came off the stock market yesterday ended up in the world’s favorite cryptocurrency.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Trumpcron
  • Fed Research on Bitcoin
  • Ethereum Hacked

Please note: All data, figures & graphs are valid as of April 25th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

It was interesting to watch the awkward body language between Donald Trump and his French counterpart over the last three days. However, even though the pair now appear to be friends, it doesn’t seem like much has been accomplished as far as any substantial policy change. At least, nothing that would improve the mood in the markets.

At the moment, the US Treasury Secretary Steve Mnuchin is on his way to China to see what he can do about avoiding an all-out trade war. This is typically something that the Secretary of State takes charge of, but with Rex Tillerson out of the picture, the Trump White House appears to be a bit understaffed.

One thing that seemed to cause some worry in the stock markets and may have been a catalyst for at least some of the selling was the Bond Yields, which spiked up early in the New York trading session.

Here we can see the US 10 Year Yield since the financial crisis. That 3% level has been a psychological pain point that has not been crossed since 2011.

Fed Research on Bitcoin

This research really speaks for itself but I did want to mention this outstanding report that was just published by the Federal Reserve Bank of St. Louis.

It gets a bit complicated but their general conclusion seems to be that Bitcoin is a very good middle ground between governments who have the obligation to control money flows as best they can and citizens who have the incentive for money to be more independent.

I must admit that it did take me a few minutes to wrap my head around this graph but once I did it really makes a lot of sense.

It’s really incredible to see such outstandingly positive research coming from a central bank in the United States. This really fits into the narrative that I’ve personally been advocating for a while now, that Bitcoin should be an excellent compliment to the current global monetary system.

Ethereum Hacked

A few of Google’s servers fell yesterday causing a disruption in Internet service in some parts of the world.

This is not all that uncommon and the incident is still being investigated. The bigger issue is that it seems some hackers managed to exploit the downtime to hijack MyEtherWallet.com (MEW)

MEW is the main website that many crypto enthusiasts use to store their Ethereum and Ethereum based tokens, so this is kind of a big deal. Some people who tried to access the website at that time were redirected to a lookalike phishing site that then gathered their login information (private keys) and emptied their wallets.

Word quickly spread throughout the cryptowebs and a patch was quickly released. All in all, it seems that only 216 ETH was stolen.

This is a reminder that in these early days of crypto and blockchain we must remain alert. Always check the URL of the website you’re visiting and if you do see any security warnings like the one below, please do not ignore them.

The crypto-market was in the thrall of a raging bull run but it does seem that the hack may have stopped it in its tracks. The initial reaction in Ethereum (yellow circle) was quite small…

…but it does seem that this morning we’re seeing a wider pullback across the board this morning.

Over the next few hours, we should be able to get a good test of cryptotrader sentiment and see how dedicated they are to buying the dips.

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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4.6 stars on average, based on 71 rated postsSenior Market Analyst at Etoro.com.




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