The global multi-asset sell-off continues. Stocks, commodities, bonds, and even crypto continue to fall as investors are quite suddenly shying away from everything risky.
The famous groundhog Punxsutawney Phil indeed predicted six more weeks of winter last Friday, but market participants seem a bit more concerned about a different animal that may now be emerging from deep hibernation, the bear.
This far more fearsome animal tends to sleep a bit longer than his much smaller peers. However, there’s no telling when he might just wake up early from the hunger.
@MatiGreenspan
eToro, Senior Market Analyst
Today’s Highlights
Volatility is Through the Roof
The Fed’s New Direction
Bitcoin Bank Ban = Fresh FUD
Please note: Please note: All data, figures & graphs are valid as of February 5th. All trading carries risk. Only risk capital you can afford to lose.
Stocks Are High
So says outgoing Fed Chair Janet Yellen with a surprise statement just before leaving office.
These comments are in line with recent sentiment from former Fed Chair Alan Greenspan…
Despite having the same last name, this is probably the first time I feel that Greenspan and I are on the same page. 😛
Economists continue to debate just how high is high and whether or not we’re in a bubble but investors are definitely fearful at this point. The Dow Jones dropped nearly 700 points on Friday after a stronger than expected jobs report. Not a great sign.
Still, the benchmark index has been performing so well lately that it could conceivably drop as low as 23,500 points without even breaching its long-term upward trend line.
We can also see a massive spike in volatility. The VIX “fear” index is now up to it’s highest levels in more than a year. To put it in proportion though, the levels we’re seeing now are rather comfortable when put into historical context.
The negative sentiment has continued into the start of this week in Asia with the Nikkei 225 down a killer 2.75%, and European indexes have opened up in deep red territory.
Central Bank Likely Reactions
Today Jerome Powell will be sworn in as the country’s 16th head of the Federal Reserve. Many expect that given the anticipation of larger inflation numbers ahead, Powell will be compelled to be a bit more aggressive on raising interest rates going forward.
Typically, expectations that interest rates in the United States will rise are accompanied by a stronger US Dollar, as are stock market declines. However, over the last week, Dollar has remained rather weak.
Here we can see the Dollar’s main rival, the Euro at rather elevated levels, much to the chagrin of the ECB (European Central Bank)…
Today, the President of the ECB Mario Draghi will speak on an unrelated matter but just might drop some words to try and cool the Euro down.
Bitcoin Sentiment
This morning, some breaking news gripped the crypto-community. It seems that the bankers are moving in on Bitcoin. Taking the lead is Lloyd’s bank who will block about 9 million customers from purchasing digital assets with their credit cards.
Looking at the current situation, the fear that global regulators will try to squash cryptocurrencies has been overplayed. In fact, regulators have little to lose from blockchain innovation. Rather, the bigger fear should come from established financial institutions. The ones who have the most to lose from economic disruption.
In line with that, the results of a recent survey from Goldman of 1,300 economists and institutional clients have come out rather bearish….
It should be noted however, that a large portion of people who filled out this survey indicated “no view” or have little understanding.
On the other hand, a survey that I ran on my twitter feed, though having much fewer participants, came out much more bullish, with 76% of traders expecting to see Bitcoin higher than $10,000 in the next three months.
So clearly, different types of people voting in these two surveys.
Getting technical, we can now see bitcoin testing it’s long term trendline, which will very likely be a make it or break it moment for the world’s favorite cryptocurrency.
Wishing you and yours 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.
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source https://cryptocurrencyonline.co/market-update-black-monday-2018/
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