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Sunday, November 25, 2018

Get Ready for Cryptocurrency Market Volatility

Volatility is back in the crypto market

Bitcoin and other cryptocurrencies plummeted once again on Monday. Bitcoin has dropped through the $6000 level, fell to a one year low, and almost touched the $4500 barrier. What is a worry for bitcoin and altcoin holders, is a great opportunity for CFD traders that can take short positions.
Make sure you have your trading accounts ready when huge price swings come. If it comes on November 22-23, you can trade with SimpleFX WebTrader with -50% spread on each transaction with no limits!
On Sunday and Monday, November 18-19 digital coin market capitalization fell by more than $14 billion. On Monday morning (UCT) Bitcoin fell sharply reaching the lowest point in over a year.
The leading cryptocurrency almost touched the psychological barrier of $5000. Major altcoins - Ethereum, XRP, Bitcoin, and Litecoin followed. Bloomberg Galaxy Crypto Index dropped by almost 7 percent to a one year low, too.

Before the mid-November, it seemed that the $6,000 level for Bitcoin is a hard barrier. The bulls defended it for over half a year. As you can see the price dropped below the barrier and the market started testing the next $4500 wall.
Analyst comment that finally the volatility may have returned to the cryptocurrency market. The recent sell-off was probably caused by two events. First is the growing concern about the bull market last. As you can see on the 1-day Nasdaq 100 Index chart below, the stock market is falling since the beginning of October.

Second is the uncertainty and division among the cryptocurrency leaders and developers. Last weeks' Bitcoin Cash hard fork may have caused some of the stir. The network divided after rival software-development groups failed to reach an agreement on how to improve the altcoin. That led to a kind of cold war with computing power, instead of nuclear power, arms race.

BCH division and controversy

Since it's creation, which came as an effect of a feud between original Bitcoin factions, Bitcoin Cash was supposed to perform a scheduled protocol upgrade twice a year. It was always assumed to be a hard fork, that is a protocol change where the nodes running previous versions will no longer work with the new version nodes.
The newest hard fork was supposed to happen on November 15 but was sabotaged by competing groups. As a result, BCH split into three factions -  a conservative Bitcoin ABC led by Roger Ver that believes BCH worked well, a progressive Bitcoin SV led by Craig Wright, who had declared himself as BTC creator Satoshi Nakamoto, and a neutral consolatory fraction Bitcoin Unlimited.
Here's what happened to BCHUSD as a result of the conflict among the developers, source: SimpleFX WebTrader.

Get your CFD account ready for the stormy crypto forecasts

At the moment the most aggressive crypto bulls are reviewing their forecasts. A managing partner at Fundstrat Global Advisors Thomas J. Lee cut his BTCUSD target for the end of 2018 from $25,000 to $15,000. His explanation is quite clear: "Crypto-specific events have led to greater uncertainty in the crypto market, including the contentious hard fork for Bitcoin Cash," said Lee quoted by Bloomberg.
An influential crypto trader Hsaka commented on Twitter: "$BTC Update. Could be forming a nifty little range here. Swept shortstops and tested range bottom. Swept long stops. Now if price can reclaim the zone around $5,400, a retest of $5,600s looks likely."

XRP has been an attractive CFD trading instrument recently, source: SimpleFX WebTrader
Make sure you make the most of the possible price swing coming. Deposit some money on your crypto CFD trading accounts.
SimpleFX WebTrader app designed for mobile is a perfect solution for reactive trading. It offers free multicurrency accounts, including Bitcoin, Bitcoin Cash, Dash, Litecoin, Ethereum, and no minimum deposits. Give it a try now, and make sure you keep SimpleFX WebTrader in your pocket when you learn about next steep crypto price moves.
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Four months until 2019: Currencies to watch

What to watch for as we close out the year

This year has been interesting, both for the markets and the general geopolitical scene. We saw the beginning and escalation of a trade war between two of the most economically powerful nations in the world - China and the U.S.
And judging by the rhetoric coming out of both camps, the end doesn't not seem near. We saw Putin win the popular vote to renew his presidency that he has had intermittently held since the early 2000s. We have seen Trump alienate U.S. allies while admiring and socializing with leaders that have been outright hostile to Western interests. Market analysts and market-watchers are warning of a new impending recession (didn't we just have one of those?).
We saw both the economy of Venezuela and Turkey implode, causing their currencies to go into a tail spin - and threatening to destabilize other currencies correlated to them. The UK and the EU seem to be in a brutal punch for punch bout for what the Brexit conditions will be. And as the March 29th 2019 deadline looms (or maybe later according to some news sources) it seems that the UK's Brexit Negotiation team is a bit more battered than the economic bloc's fighters.
Market darlings' cryptocurrencies have left the public eye (finally some would say), but some analysts have hinted that 2019 might be the year cryptocurrencies rise like a phoenix from their post bubble-burst slump. 
It can be easily assumed that certain currencies are going to remain in spotlight in the coming year, including the US Dollar, the British pound and the Euro. What is the currency market landscape going to look like in 2019 though, that is just four months away?
Institutional Intuition
The World Bank, is seeing a slight slump in global GDP from the two previous years of 2017 and 2018 (to date) - which both recorded 3.1. 2019 is forecasted to lose 0.1% dropping to 3.0. There are a few factors that are playing into this, one advanced-economy countries' production is poised to slow down, and emerging markets rapid growth should normalize. When it comes to major economies, the World Bank forecasts:
  • US GDP to drop from the previous year's 2018 of 2.7 to 2.5 but the forecast for 2020 is a significant drop to 2.0.
  • The Eurozone GDP will take a bigger hit dropping from 2018 level of 2.1 to 1.7 but is forecasted only to lose 0.2% in 2020
  • Japan's is going to drop a significant 50% of its GDP rate by 2020 - going from 1.0% to 0.5%
Although included in the Eurozone GDP, the United Kingdom might be on its own, once the 2019 Brexit decision is made. Depending on the outcome - it could pull down the GBP and bolster the EUR (hard exit or no-deal) or bolster the GBP which would leave the EUR largely unchanged (soft exit or favorable deal) or bolster both currencies if (and this is an extreme scenario) a second public referendum is performed that reverses the now infamous "leave" vote.
Around the end of last year Business Insider UK asked 11 analysts to speculate what would happened to the GBP in 2018 - JP Morgan estimated in the end of December 2017 that the GBP would be banded between 1.26 to 1.47 in 2018. This estimation has been surprisingly accurate. 
Although there is no conclusive proof that GDP and the nominal exchange rate (i.e. the value of one country's currency when purchased by a different country's currency) are positively correlated - or if a drop in GDP is caused by a drop in the exchange rate or visa-versa.
The only true effect that has been observed

 is that significantly negative GDP has more of an impact on the exchange rate than positive changes in GDP.
Emerging Markets
Although most news outlets and market watchers put heavy emphasis on advanced economies in the preceding years - East Asia and Pacific economies seemed poised to blow EU and US rates out of the water. Although their GDP is also predicted to drop, it's from the significant 6.3 in 2018 to 6.1 in 2019 and 6.0 in 2020.
So, exotics might be something to watch in the next four months. 
It seems that Bitcoin - the granddaddy of cryptos - has lost a bit of its shine. Its newer competitor for the crypto-throne seems to Ethereum, even though Google shows that Bitcoin seems to surpass both Ethereum and Ripple for global searches in the last 30 days and the picture is about the same over the past 12 months. Some postulate that Google Trends is actually a pretty good indicator of market sentiment. 

BTC - yellow
ETH - red
Ripple - blue
USD, GBP, EUR - the main currencies will probably never leave traders' terminals, but 2019 may prove to be a dynamic year with new protagonist from emerging markets. Luckily most brokers offer an extensive suite of analytical tools - some that are even integrated into the trading terminal like easyMarket's platform which can help you keep a finger on the pulse of markets.

Dollar posts largest weekly gain in one month as oil slumps

NEW YORK (Reuters) - The dollar rose on Friday, posting its biggest weekly percentage increase in a month, as risk appetite declined and investors sought the currency’s safety following a steep drop in oil prices that suggested global growth is slowing.

U.S. dollar and Euro banknotes are seen in this picture illustration taken May 3, 2018. REUTERS/Dado Ruvic/Illustration
The safe-haven yen and Swiss franc also advanced.
The drop in oil prices fuelled a risk-off wave across the board. U.S. crude futures were last down nearly 8 percent on the day.
“Risk aversion has been the main driver all week, with oil prices driving market sentiment,” said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.
“The dollar is better overall for the week because of the risk-off stance, despite a fairly significant pricing out of 2019 rate hike expectations,” he added.
In afternoon trading, the dollar index was up 0.3 percent at 96.959. It has gained in five of the last six sessions.
The dollar’s near-term outlook, however, has dimmed a little bit as some of the recent U.S. economic numbers have come in weaker than expected and several Federal Reserve officials have struck a cautious tone on the economy. All told, investors increasingly believe the Fed may be nearing the end of its tightening cycle.
That said, Jane Foley, senior FX strategist at Rabobank in London, believes the dollar will still find decent support as investors are likely to remain cautious on emerging market assets.
“The huge liquidity associated with the greenback, the fact that there is no real default risk on U.S. Treasuries, and the credibility of the U.S. legal system are enough to endow the U.S. dollar with sufficient safe-haven appeal for many investors,” Foley added.
The euro, on the other, fell to a one-week low on signs economic growth could be slowing across the euro zone, with worries about Brexit and Italy’s budget negotiations also weighing on the single currency.
Business growth in the euro zone slowed much more quickly than expected this month, a Purchasing Managers Index survey showed. After German private-sector growth slowed to its lowest level in nearly four years, the euro dropped into negative territory and was last down 0.7 percent at $1.1329 .
In other currency trading, the yen rose broadly on fears about the implications of lower oil prices on global growth.
The dollar slipped 0.1 percent against the yen to 112.86 yen, while the euro tumbled 0.7 percent to 127.86 yen.
The Australian dollar, often considered a gauge for global risk appetite, weakened 0.4 percent to U$0.7225.
Analysts expect the Aussie to remain subdued ahead of a meeting between U.S. and Chinese leaders at a G20 meeting in Argentina at the end of the month, with markets watching for any sign of whether they may agree to de-escalate their trade war.

Get Ready for Cryptocurrency Market Volatility

Volatility is back in the crypto market Bitcoin and other cryptocurrencies plummeted once again on Monday. Bitcoin has dropped throug...