Connect with us

Bitcoin

Where’s the Money Gone?

Published

on

By now it is clear that we are in the throes of a historic market sell off. Money is flying off the table at a record-breaking pace and it’s affecting everything from stocks to bonds to commodities to cryptos.

One of my colleagues asked a really smart question yesterday if everything is selling off where is the money actually going?

We know that in most major market sell-offs other assets tend to rise in relation. Gold is usually a benefactor as it is seen as a safe haven and hedge. Many times the US Dollar and the Japanese Yen will rise as stock investors move to hold cash.

In this case, everything is just falling. The answer is that it doesn’t go anywhere it simply disappears.

Let’s think about Market Cap. This metric is calculated by multiplying the total number of shares by the current value. So, if Apple is worth $180 per share and there are 5 Billion shares so we get to a market cap of $900 Billion. ($180 X 5 Billion)

Here’s the fun part. Let’s say there are only two people on the floor of the NYSE today and one person wants to sell his shares but the other guy doesn’t want to buy. The seller will have to keep lowering his price until the buyer agrees to pay for it. If the price they place the trade is $160 then that becomes the market price.

We then adjust the entire Market Cap to incorporate the current price to ($160 X 5 Billion) $800 Billion. Boom!

With one trade everybody holding apple lost money and the company itself lost $100 Billion worth of value.

Now, between you and me, some of the most successful investors in history have gotten their start in the markets just after a huge crash. So for those of you who are just thinking about getting in, maybe not right now, but very soon, we will likely see the best buying opportunities in decades.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Global Multi-asset Sell-off

Please note: All data, figures & graphs are valid as of February 6th. All trading carries risk. Only risk capital you can afford to lose.

Volatility Spike

We looked at this chart yesterday but already need to check it again as the level of the VIX Volatility Index (AKA the fear gauge) has nearly doubled in the last 24 hours.

In fact, this index has only ever been higher than it is now four times since it was created.

I would like to call your attention to the previous spike (red circle), which occurred in August of 2011. Some will recall that this was the sell-off related to the European debt crisis with Greece, Italy, and Spain dragging down the French and German economies.

Here you can see the effects of that sell off (yellow circle) in the Dow Jones.

As you can see, the Dow’s plunge over the last two trading sessions is already worse than that. If not in percentage value than certainly by number of points shed.

Why is this happening?

Well, nobody has really figured it out just yet. However, we can look at where it all started to get some clues.

As we noted in the daily update (titled: Let’s Take the Power Back) from January 10th. There was a sudden spike in Bond Yields that caused some concern in the stock markets.

Furthermore, the selling pressure really intensified last Friday after the US government reported that the job market was much stronger than expected.

The running theory is that a stronger economy could spur mega-inflation in the United States. Let’s not forget that the US Federal Reserve has created $4.5 Trillion over the last decade and has essentially pumped the system full of money.

Back when they started the quantitative easing program in 2009 there were concerns that all this money creation would eventually lead to large-scale inflation and asset bubbles. So now this is simply playing out.

What about Gold?

One thing I haven’t quite figured out is, if there are fears of inflation, why isn’t gold going through the roof as it did from 2009 through 2011?

Here we can see, it hasn’t budged much since the recent rout began…
One analyst that I heard this morning had a good theory. He was saying that at present time stocks traders are panicking. As their accounts go into margin call, they need to free up some cash in order to support their positions. Gold and oil are easy targets to close positions in the green to support those red positions.

What about Crypto?

Crypto is just as much a part of this sell off as everything else in the world. Here we can see the proof of that…

This chart from Bloomberg shows bitcoin in white at the S&P500 in yellow since January 23rd. Notice any similarities???

So, to conclude we must try and think of a trigger for all this. One idea that I’m playing with is that it may have something to do with Korea. Remember, the North and the South joined together for talks on January 9th, the day before the sell-off in bonds.

I know it’s a half-baked theory but it’s the best I could come up with on short notice. I’d be very happy to hear from my readers if any of you have a clue what has recently changed in the world that would suddenly prompt investors to remove all risk from their portfolios?

In any case, as mentioned above this market volatility can potentially create abundant opportunities. In the short term, I expect that many people will take some losses, even the most diversified investors will get a draw down, but for those who know how to react to such events we’ll be seeing great gains.

Let’s make it an amazing day!

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.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
18 votes, average: 4.94 out of 518 votes, average: 4.94 out of 518 votes, average: 4.94 out of 518 votes, average: 4.94 out of 518 votes, average: 4.94 out of 5 (18 votes, average: 4.94 out of 5)
You need to be a registered member to rate this.
Loading...

4.7 stars on average, based on 122 rated postsSenior Market Analyst at Etoro.com.




Feedback or Requests?

2 Comments

2 Comments

  1. fwheban@gmail.com

    February 6, 2018 at 2:14 pm

    well then… can’t wait for your tips to buy the dips!

  2. winthorpeautomatons

    February 6, 2018 at 3:05 pm

    I believe the real money moved into bonds and we are seeing that in large volume. The stock market has been the real earner lately, but now things are changing and it’s back to bonds.

You must be logged in to post a comment Login

Leave a Reply

Altcoins

Crypto Market Cap Falls Below $200 for the First Time Since November Amid ICO Backlash

Published

on

Cryptocurrencies extended their selloff overnight Tuesday, as the total market capitalization pierced below $200 billion for the first time since November. The decline was far-reaching and severe, with 78 of the top 80 altcoins recording double-digit percentage losses.

Crypto Market Update

Roughly $26 billion was wiped from the cryptocurrency market overnight, a sign that the bears were firmly in control and not giving up their position anytime soon. The market bottomed at $189.6 billion late Monday and has since recovered to around $193 billion. Twenty-four hours ago, coins were collectively worth more than $217 billion.

Below are two snapshots of the crypto top-50, as reported by CoinMarketCap.

Although the declines were largely concentrated in altcoins, bitcoin also experienced a tumultuous overnight session, with prices coming within $100 of a new yearly low. The bitcoin price bottomed at $5,858.60 on Bitfinex but has since recovered above $6,100.

Ethereum’s downward spiral intensified Tuesday, with prices crashing to fresh 14-month lows. At press time, ether was down 16.6% at $267. The second-largest cryptocurrency by market cap has shed more than 35% over the past seven days.

The Market’s Next Move

The rout in altcoins has left bitcoin with a 54.1% share of the total cryptocurrency market – the highest since December. Although this gives bitcoin a stronger gravitational pull on other digital assets, it’s also an indicator that investors are shifting their portfolios away from more speculative altcoins and tokens.

As Bloomberg pointed out on Monday, Ethereum’s massive decline could be a sign that ICOs are cashing out. If this is true, ether could face a deeper short-term correction as token offerings fizzle out.

Biswa Das, the head of quantitative hedge fund BloomWater Capital, said the following of ICOs:

“These startups are raising a lot of funds but they don’t have treasury management or enough cash management experience, so they’re selling too early and causing a lot of pressure in the market. It was fine last year but right now the market is so fragile that it causes a lot of pressure.”

The cryptocurrency market has lost a staggering $140 billion since June 1, and a look at bitcoin’s technical chart suggests more pain could be on the way. The bitcoin price faces a critical support test at $5,800; a break below that level could expose the digital currency, and the broader market, to new yearly lows as early as this week.

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.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
2 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 52 votes, average: 5.00 out of 5 (2 votes, average: 5.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.6 stars on average, based on 544 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.




Feedback or Requests?

Continue Reading

Bitcoin

Bitcoin Price Stabilizes Above $6,000 as Altcoins Get Rearranged

Published

on

Bitcoin has emerged as the victor from the bloody chaos of the past week, but perhaps only by default. The 5% losses incurred by BTC in the past seven days would be considered a poor week at the markets in a different climate; but within the current context BTC looks positively bullish in comparison to its nearest competitors.

Bitcoin Stabilizes Above $6,000

Bitcoin’s fall over the last 24 hours didn’t come quite so fast or as hard as that of the altcoins, although it did eventually drop below $6,000 at one point during the night. At around 03:00 UTC the BTC coin price sunk to the $5,970 range, but by the time people were waking up for breakfast the $5,000’s had been rejected and BTC was back up above $6,000.

With just under 18% of BTC trades coming against USDT Tether, it seems the price dip was more a case of cautious hands taking refuge in USDT for the night while the storm cleared. After a 40% drop off in volume overnight, BTC is now starting to gear up for more, as the daily volume has grown from $4.1 billion to $5.3 billion in the last six hours.

A quick glance at the market cap beyond Bitcoin is enough to justify the most dramatic of language, and once again one of the worst periods in recent times has fallen on ‘Monday Bloody Monday’.

Altcoin Top-Ten Rearranged

Everything looks different in the top ten this morning, with several pieces of altcoin furniture having been rearranged during the night’s turmoil. All of a sudden Stellar (XLM) finds itself in 5th spot, while EOS has been kicked down to 6th spot for the first time since its ICO ramped up to completion in early 2018. EOS has incurred 17.8% losses in the last 24 hours, descending to a coin price of $4.27 at the lowest point of the night.

Further down the pack, USDT Tether has jumped into 8th spot and is battling it out with Cardano (ADA), which plunged 24% today before stabilizing at net losses of 19%. ADA coins dipped to levels not seen since early November 2017 when they reached a value of $0.086 this morning, although they’ve since rebounded to the $0.09 range at the time of writing.

Further down still and IOTA was temporarily kicked down to 12th spot, behind TRON, as it recorded 24% losses for the day alone. TRON isn’t much better off, with losses similarly approaching the 24% mark.

While Ethereum won’t be displaced any time soon, it has been shaken as bad as any coin in the top ten today, with 20% losses coming as ETH falls to a coin price not seen since September 2017 at $256.58. Despite a rebound to $264 at the time of writing, Ethereum is still down nearly 40% over the last seven days.

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.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
3 votes, average: 4.67 out of 53 votes, average: 4.67 out of 53 votes, average: 4.67 out of 53 votes, average: 4.67 out of 53 votes, average: 4.67 out of 5 (3 votes, average: 4.67 out of 5)
You need to be a registered member to rate this.
Loading...

4.4 stars on average, based on 38 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




Feedback or Requests?

Continue Reading

Analysis

Crypto Update: Altcoin Crash Continues, Ethereum Hits $250 as Bitcoin Holds Up

Published

on

The cryptocurrency segment endured another ugly overnight session, with the major altcoins plunging by double digits across the board yet again. The total value of the market is now handily below the $200 billion mark after the latest selloff, and despite the deeply oversold momentum readings, there is still no sign of even a short-term bottom, and our trend model continues to flash red too.

While Liteocin and Monero provided a glimmer of hope for bulls during the initial phases of the current leg lower, the coins that are among the laggards from a long-term perspective followed the broader market below support later on. With no bullish leadership forming, the strong downtrend is still dominant and traders should still remain defensive, despite the already heavy losses in the segment.

That said, in time, a more durable bottom is likely close, thanks to the negative sentiment and the oversold environment, but percentage-wise, further steep losses could be ahead.

ETH/USD, 4-Hour Chart Analysis

Ethereum is still in the epicenter of the decline, with a more than 15% daily decline, as the coin quickly got below the $275 level just after violating the $300 support, and even touched 4250 in early trading. The second largest coin fell through key zones without even a blink, and that points to forced liquidations in the market.

The coin is still on sell signals on both time-frames and traders still shouldn’t enter new positions. Support is now found at $260 and $230, while resistance is ahead between $275 and $280, and near $300.

BTC/USD, 4-Hour Chart Analysis

While sellers have been trying to push Bitcoin below the $6000 level amid the altcoin rout, the coin always managed to bounce back so far, and it continues to hold up clearly above the structurally important $5850 level.

The coin is still in a bullish secular trend and while the long-term picture is overwhelmingly bearish in the segment, the strength of the largest coin might be the basis of a coming recovery.  That said, the short-term downtrend is clearly negative in the BTC, and traders shouldn’t enter new positions. Resistance is still ahead at $6275, $6500, $6750, and $7000, while initial support is at $6000, while further support is found between $5000 and $5100.

Relentless Selling in Altcoins

XRP/USDT, 4-Hour Chart Analysis

Ripple still resembles a falling knife, similarly to most of the majors, and the coin continues to slide lower, as last week’s break-down led to a series of support breaches. The coin is now down by 40% in a bit more than a week, and it is currently testing the strong support zone near $0.26 after spiking briefly below it overnight. Should XRP hold above the spike low, traders could be looking for signs of a bottom, but for the coin is still on a clear sell signal.

XMR/USDT, 4-Hour Chart Analysis

With the smaller coins also being hammered lower, there is no real hiding place beside BTC in the segment, and yesterday’s slightly strong coins also broke down overnight. Monero violated the key long-term support near $80, which served as a base for the late-2017 run-up, and the coin is trying to hold its ground above that after the spike lower. While the downtrend is clearly intact, and the short- and long-term sell signals are in place, a recovery above $90, could point to the exhaustion of sellers.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

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.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
5 votes, average: 4.80 out of 55 votes, average: 4.80 out of 55 votes, average: 4.80 out of 55 votes, average: 4.80 out of 55 votes, average: 4.80 out of 5 (5 votes, average: 4.80 out of 5)
You need to be a registered member to rate this.
Loading...

4.6 stars on average, based on 317 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.




Feedback or Requests?

Continue Reading

5 of 15 Seats Available

Learn more here.

Recent Comments

Recent Posts

A part of CCN

Hacked.com is Neutral and Unbiased

Hacked.com and its team members have pledged to reject any form of advertisement or sponsorships from 3rd parties. We will always be neutral and we strive towards a fully unbiased view on all topics. Whenever an author has a conflicting interest, that should be clearly stated in the post itself with a disclaimer. If you suspect that one of our team members are biased, please notify me immediately at jonas.borchgrevink(at)hacked.com.

Trending