When it Rains it Pours

A myriad of bad news hit the cryptocurrency markets yesterday causing double-digit losses on many of the biggest digital assets and Bitcoin itself dropped significantly below the psychologically important level of $10,000 per coin.

Rumors that one of the largest crypto-exchange sites in the world was hacked caused panic and confusion across social networks for several hours. But it soon became clear that the reports were in fact exaggerated and what actually happened was that there was a malicious trading bot using their API. All was fixed and back to normal before most people even knew what was happening.

At the same time, there were reports of a bear whale in the market. The trustee in the bankruptcy case against Mt. Gox exchange reported that he’d sold $400 Million worth of coins over the last 5 months.

Perhaps the most significant of the simultaneous news updates was an announcement from the SEC in the USA. The Securities and Exchange Commission has passed a ruling that crypto-exchanges to in fact qualify as “exchanges” and that they need to be registered as such, especially if they offer tokens that are classified as Securities.

Though Bitcoin is not usually seen as a Securities token, many of the other top cryptos may end up being classified as such.

The rapid succession and timing of all three above events was a lot to take in for this young market. As the top cryptotrader on eToro wrote in a post “when it rains it pours.”

But the clouds are clearing now and we seem to have found some support. Still, it’s good to see a spike in volume to get things moving again.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Tariff Week Continues
  • New CopyFund for You
  • Europe’s Central Bank

Please note: All data, figures & graphs are valid as of March 8th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

A particularly stormy day on Wall Street yesterday. Yet, somehow even with the resignation of Gary Cohn still on the top of the news cycle, and fresh news that Trump will almost definitely go ahead with the steel and aluminum tariffs, the global stock markets managed a meager recovery.

Though the Dow was down by a third of a percent, the S&P500 managed a flat close and the Nasdaq even gained a third if a percent.

What we’re increasingly seeing in the market and displayed by the above charts is that people are getting very selective about the stocks that they’re picking.

On that note, eToro has just launched a brand new CopyFund that is designed to outperform the rest of the markets using the power of big data collected by our platform and using machine learning to refine our algorithms.

You can see the new Copyfund @OutSmartNSDQ and so far, it’s done exactly that. From the time we started testing it in live, it has almost doubled the performance of the benchmark index.

This is because, rather than just weighing the index by the market cap of the shares within, we weight it based on our users who are trading the individual stocks to get a better picture of the sentiment.

The Big Bank Announcement

Early this afternoon (13:30 GMT), the global markets will be focused on a big press conference from the European Central Bank.

The ECB has been holding their cards very close to their chest lately as they try to tighten their monetary policy without sending the Euro through the roof.

The economy is looking much better than when they started printing billions of Euros each month and many feel that it’s time to end the easing. However, the less they print, the more the market sends the Euro higher.

Adding to the difficulties is the possibility of a global trade war. So it will be interesting to see how ECB governor Mario Draghi reacts to that, if at all.

Here we can see the EURUSD strengthening since the beginning of last year. Those yellow lines at the top are known by technical analysts to be a “bullish flag pattern.”

I’d like to wish a very happy Women’s Day to all our female readers. Wishing you the best of success in everything you do.

Note: I’m hoping to have a trip to Germany in the second week of April to meet some clients. Let me know if you’d like to meet up there during that time and I’ll do my best to see you too.

As always, please let me know if you have any questions on anything above or if you need any further assistance with your portfolio.

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