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Market Overview

What’s Behind the Cryptosurge

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If you’re reading this you’re probably aware of the unimaginable gains that have been seen across the crypto market this year. Last night we saw a new and very important milestone that has provoked some interesting commentary.

The total value of all digital assets as listed on coinmarketcap.com has surpassed $500 Billion for the first time. To think, this number has grown from just $14.5 Billion one year ago today making for an unbelievable percentage growth of 3448%.

These numbers spark a lot of questions. Ethereum’s founder and one of the most notable figures in the crypto-space Vitalik Buterin posted a lot of these questions on his twitter feed this morning.

Mostly, Vitalik wants to know if this valuation is justified and more importantly how are we changing the world for the better?

What cryptotraders like myself want to know is how long will this current surge last and what is likely to drive the market going forward.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

Fed Day!!

Insane Inflation hits UK

Urgent Crypto Updates

Please note: All data, figures & graphs are valid as of December 13th. All trading carries risk. Only risk capital you can afford to lose.

Market Overview

Though I realize that many of you are here for crypto, there are some huge things happening in the traditional markets that we need to get out of the way first. At the end of the day, I’m a markets man and as such cannot ignore Fed Day.

This evening, the US Federal Reserve Bank who has been the biggest driver of market prices over the last decade will raise their interest rate from 1.25% to 1.5%. In Forex markets this type of move is usually a really big deal as we can see many large players moving their funds into Dollars in order to take advantage of the bigger rate.

However, as the market has already been certain that this move will come over the past month the increase of 0.25% is already priced into the markets. What investors really want to know is how much will they increase rates going forward?

Even though the Fed has boldly lied to us about how fast they will be raising the rates many times in the last few years, somehow what they say still holds meaning and so we must listen.

Overall, the Fed is on an extremely gradual pace to make money more expensive. US Dollars have been cheap and easy since the financial crisis of 2008, a policy that many say is causing some bubbles in the stock markets and imho is a major contributing factor to the current boom in cryptocurrencies.

This graph shows the expectations of 16 Fed members over the next few years. Each one places one dot for each year telling us where they think rates will be at that time. As we can see, even the most aggressive member is still expecting the rates to remain below 4% by 2020. So money is likely to remain extremely cheap.

Hyperinflation Is Happening Already

All this cheap money is extremely unsettling and even dangerous, for some regions more than others. Especially when there is an external event that suddenly changes the picture.

For example, a political crisis in Zimbabwe or Venezuela. But it’s not just the third world anymore. Yesterday the Bank of England announced a shocking inflation report showing that prices are up 3.1% in the last year.

Particularly concerning is the price of specific goods. Fish is up 15%, olive oil 9.3% and butter is up 23% over the past year.

Meanwhile, salaries in the UK have not gone up nearly enough to cover these higher prices. Today the UK will release their Average Earnings Report, which analysts are forecasting has risen just 2.5%.

Forex traders will react directly to the data as it comes out in real time. Though crypto-investors will not be reacting in such a methodical way, they are being affected by the overall trend and certainly feel their pockets getting pinched by the flawed system that increasingly favors the ultra-wealthy at the expense of Mr. Joe Public.

What’s next on this CRYPTO Surge?

It’s been a powerful run in the crypto market, especially over the last few weeks. Traders seem to be taking turns with the different top cryptos buying up one at a time, in many cases doubling or tripling the value within a 48 hour window.

It started with Ether Classic, then Dash, then IOTA, then Litecoin, and last night we saw Ripple nearly double in 12 hours.

Here’s a few important updates that may drive prices going forward…

Internet giant eBay is now considering to add bitcoin!! = Huge news if they do it!!

UBS and several others using Ethereum for MiFID compliance. MiFID 2 is a huge deal right now in the financial world and many large banks have announced a pilot to start storing data on the Ethereum Blockchain.

Emergency Crypto Meeting in South Korea. South Korea is by far the largest buyer of cryptocurrencies. Updates about what will happen in this meeting on Friday are sure to move the markets.

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.

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 134 rated postsSenior Market Analyst at Etoro.com.




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3 Comments

3 Comments

  1. mvppvm_07

    December 13, 2017 at 3:33 pm

    “At the end of the day, I’m a markets man”, you say. Mati. May I pick your brain then (and hopefully the knowledgeable insights of others who are market people)?

    December: Christmas, New Year, holidays, end of quarter, end of year.

    December third week: options settle (right?).

    To what degree, at the moment of this significant increase in money into crypto does an end of quarter, end of year, options settling component correlate from these drivers in legacy markets to crypto?

    I am studying to understand the different modeling that exists in the “pink sheet world” of crypto. What legacy bias does the new money from sophisticated institutional buyers bring to our brave, audacious and speculative investments?

    I’d love to see what folks who are market people see with these attempted correlations.

    Thanks.

  2. dbenn8

    December 14, 2017 at 9:38 am

    Also, it looks like South Korea is banning a lot of Crypto activity (the virtual bank accounts that are some sort of pre-req to getting fiat into and out of the crypto markets?). How big an impact on the current surge do we expect this to have?

    • mvppvm_07

      December 14, 2017 at 2:35 pm

      Because crypto is international, and essentially border-less, those whose interest is beyond hobby investing will find “the edges”, accounts in locales that give them the opportunity to move their investments. The assets/coins/tokens/currencies/commodities (the list is getting big, isn’t it?) that can accommodate cross-border transactions anonymously at lightning speed will benefit, starting this week. XRP one example already?

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Analysis

Pre-Market Analysis And Chartbook: Brexit Chaos Sparks Turmoil Across Markets

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Thursday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,685 -0.63%
DAX 30 11,360 -0.47%
WTI Crude Oil 56.40 0.71%
GOLD 1,215 0.31%
Bitcoin 5,389 -3.72%
EUR/USD 1.1302 -0.04%

The Brexit process continues to be the main driver in financial markets across asset classes, and the situation in the UK could be best described as chaotic at the moment. While yesterday the British Cabinet’s approval of the draft Brexit plan sparked a brief risk rally, with the Euro the Pound and equities rising hand-in-hand, today, the plan is in serious jeopardy. Several ministers, including the Brexit-Secretary resigned, and the outcome of vote in the Parliament seems doubtful, at best.

GBP/USD, 4-Hour Chart Analysis

The Pound lost significant ground against all of its peers, with the currency’s losses also being exaggerated by the much worse than expected British Retail Sales data. The GBP/USD pair hit its lowest level this month, touching the 1.2750, while the Euro is relatively strong today, the Dollar’s broad rally still seems intact, and a no-deal Brexit could push the Cable back towards its historic low near 1.20 from late 2016.

Dow 30 Futures, 4-Hour Chart Analysis

While equities are little changed so far today, the charts still look wounded globally and even the relatively strong US benchmarks are likely headed for, at least, a test of their lows from October. Economic numbers were mixed today in the US, with the Retail Sales report beating the consensus estimates across the board, but with the Philly Fed Index showing an unexpected slowdown in the manufacturing sector.

The Dow, which has been the strongest benchmark recently is hovering near the 25,000 level, after underperforming the broader market yesterday, and with the other indices being in even worse technical shape, the coming days could see another surge in volatility, despite the pullback in Treasury yields across the curve.

Heavy Trading Continues in Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Oil finally found support following two months of steep losses and Tuesday’s liquidation event, with the WTI contract rising above the $57 per barrel level yesterday, before a late-day pullback. Today the crucial commodity is performing relatively well in the nervous environment, and although bulls are still not out of the woods, we still expect a bounce above $60 in the coming week.

We will still have the weekly US crude inventory data coming out during the morning session on Wall Street, and volatile trading will likely continue in the throughout the day, with the $54.50 short-term support level and the $57.50 resistance level being in the center of attention.

Gold Futures, 4-Hour Chart Analysis

Gold is also having an interesting session so far, as it is testing the short-term resistance zone near $1215 due to the Brexit uncertainty and the pullback in yields. The precious metal is still well below the consolidation pattern that developed in October, and it would need to rise above $1220 to trigger a short-term trend change, but should risk assets continue their downtrend, gold could quickly rally as high as $1250.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Nasdaq 100 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

Copper Futures, 4-Hour Chart Analysis

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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4.7 stars on average, based on 394 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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Market Overview

Capitulation

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Hi Everyone,

Those of you who’ve been reading these market updates, as well as our crypto research papers, know that one of my favorite subjects is the evaluation of cryptoassets.

Last week, we released a video that introduces some of the concepts for assigning value to different projects. Last night, the popular crypto website CoinDesk has released a tool that takes this to an entirely new level.

Make no mistake, this visualization tool is nothing less than groundbreaking. It allows alternative investors to easily compare the various cryptoassets using five key parameters: Price, Network, Exchange, Social, and Development.

Here’s a screenshot comparing Ethereum to XRP….

Another interesting thing you can see in these visualizations was the effect of the recent stress tests on the Dash blockchain that happened on November 12th and 13th.

CoinDesk has also been very transparent about their methodology and how they arrive at the figures so we can be sure that we’re looking at actual data and not any personal biases by the tool makers.

You can read more and watch their intro video here and of course play around with the tool at: coindesk.com/data

We still have a long way to go to develop these concepts but this is one massive step forward. Well done!

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • More Tech Stock Trouble
  • Brexit Capitulation
  • Crypto Selloff

Please note: All data, figures & graphs are valid as of November 15th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Stocks fell yesterday, again led by Apple, the tech sector and manifesting in the Nasdaq. Today things seem to be bouncing upwards despite uncertainty in the press about the Brexit negotiations.

Conferring with my clients and colleagues in London lately it seems that just about everyone is struggling to keep up with exactly what is going on. So here’s a helpful flowchart that displays just how simple this is.

The complexity of course is showing up directly in the price of the Pound Sterling. This whipsaw action on the GBPUSD seems to be intensifying lately and the above news this morning is seeing the Pound capitulate.

Crypto Capitulation

As you may have noticed, the crypto markets took a sizable hit yesterday following the sell-off in the tech sector. Though we’ve seen that Bitcoin is usually fairly disconnected from the stock markets, there have been distinct moments lately where they have moved in tandem, which leads me to believe that there can be some level of spillover.

A wide variety of factors may have contributed to the fall yesterday. I even saw one analyst trying to peg this on Brexit, which somehow just doesn’t seem very likely.

Most of the news in the crypto sector over the last few days has been about the Bitcoin Cash hard fork happening today. The fear is that the hash wars in BCH could end up affecting BTC. To be clear, any miner that switches their BTC hash over to BCH will be paying a very heavy price.

Even in the unlikely event that we see a sizable reduction in Bitcoin’s hashrate, it might temporarily affect transaction costs on Bitcoin but it will probably not have any lasting effect on bitcoin’s price and certainly not its stability.

From everything I’m seeing, the move last night was more technical in nature. The break below $6,000 was quite significant and there has no doubt been a slew of stop losses that have been built up over the last few weeks.

Several analysts have been talking about the capitulation phase that often marks the end of a bear market. This poll from NewsBTC could also be an indication that we’ve now seen some of the last weak hands shaken off their position and that those who remain are likely not to be scared off by further downward pressure.

Whatever the cause of this move and even though the price action is down, in some way, it’s good to see volatility returning to this market.

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.

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

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

eToro is a multi-asset platform which offers both investing in stocks and cryptocurrencies, as well as trading CFD assets.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

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

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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: U.S. Stocks Plunge; Carnage in Crypto Land

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U.S. stocks declined sharply on Wednesday, as global growth concerns and a rollover in technology shares triggered a fresh selloff on Wall Street. Meanwhile, cryptoassets lost their yearly price floor as bitcoin and the major altcoins plunged double digits on the eve of the BCH hard fork.

Stock Selloff Resumes, Then pauses

All three major U.S. indexes booked heavy losses midweek. The large-cap S&P 500 Index declined 0.8% to 2,701.61. Losses spread across nine of 11 primary sectors, with financials and information technology leading the downtrend.

Slumping tech shares undercut the Nasdaq Composite Index, which fell 0.9% to close at 7,136.40.

The Dow Jones Industrial Average lost 205.45 points, or 0.8%, to end the day at 25,081.04. Tech bellwether and Dow blue-chip Apple Inc. (AAPL) flirted with bear-market territory as concerns over iPhone shipments continued to weigh. Since peaking above the trillion-dollar mark, Apple’s market capitalization has fallen by over $200 billion.

Concerns about peak revenue and disappointing sales targets have contributed to a mass exodus out of technology shares in recent months. The S&P 500’s information technology index has pared its year-to-date return to less than 7% amid the latest drop. The index was up more than 20% for the year through Oct. 2.

Global Growth Woes in Focus

Signs of a slowing global economy have lowered risk appetite across major asset classes, with recent data showing downturns in both emerging and industrialized markets. On Wednesday, the German government said its economy shrank in the third quarter for the first time in over three years.

German gross domestic product (GDP) contracted 0.8% annually in Q3, casting a large shadow over the Eurozone economy. Germany accounts for roughly one-fifth of euro area output and is the backbone of its manufacturing sector.

Separately, Japan reported that its economic output declined 1.2% annually during the same period, as global trade tensions undermined business confidence.

The latest data show a dramatic divergence in economic fortunes between the United States and its global allies. Under President Trump, the U.S. economy expanded 3.5% annually in the third quarter. In Q2, GDP growth reached multi-year highs at 4.2%.

Cryptocurrency Market Notches New Yearly Low

The crypto market took a decisive shift lower on Wednesday, as coin values lost a combined $30 billion in value in just over 24 hours. Among the top 20 coins, losses ranged between 9% and 17%, with bitcoin, Ethereum and the leading tokens losing billions in market cap.

Bitcoin’s selloff touched 13-month lows, with prices briefly falling below $5,400. Despite the loss, bitcoin’s share of the overall market cap increased.

While there was no single catalyst for the selloff, anxiety over bitcoin cash and its pending hard fork seems to have influenced investor sentiment. At the time of writing, BTC was down 17%, having completely erased the 50+% gains it registered in the weeks leading up to the Nov. 15 hard fork.

The combined crypto market cap reached a new yearly low of $182 billion on Wednesday. Trade volumes spiked nearly 40% to $19.7 billion.

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 664 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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