Mati Greenspan, Senior Market Analyst at FX broker eToro, has provided his daily commentary on traditional and crypto markets for September 11, 2019. The text below is an excerpt and does not contain the full analysis.
Hi Everyone,
Sometimes things seem so far away but in reality, they might be much closer than we think. We’ve been talking about the possibility of a Bitcoin ETF hitting Wall Street for almost three years now and the latest indication is that it might be right around the corner.
In an interview on CNBC earlier this week, the Chairman of the United States Securities and Exchange Commission (SEC), who seems to be the one man standing in the way of the BTC ETF, confirmed that we are getting closer and progress is being made but that he still has two main concerns.
- “How do we know that we can custody and have hold of these cryptoassets? That’s a key question.”
- “An even harder question, given that they trade on largely unregulated exchanges, is how can we be sure that those prices aren’t subject to significant manipulation?”
From what it seems, these are the last two roadblocks in the chairman’s mind for this to be approved. Now, if that’s true, we could be extremely close at this point. In fact, both of these concerns should be easily assuaged with just a little bit of knowledge and understanding.
- Bitcoin was born to solve the custody question. In fact, verifying ownership is kind of what crypto does best.
- The decentralized nature of price discovery in the crypto market is another one of its star qualities and makes it far more resilient to price manipulation.
If indeed these are the only two roadblocks to a bitcoin ETF, then we are probably much closer than you think.
Today’s Highlights
- eToro Survey Finds more than two-thirds of US investors fear a recession is looming: In the event of a recession, Gen Z would prefer real estate as a safe haven, Millennials would invest in crypto, and Gen X would bank on commodities.
- Reality of Bitcoin ETF may be around the corner: The one man who seems to be standing in the way of a BTC ETF, Chairman of the SEC, confirmed in an interview with CNBC that progress is being made, but he still has two main concerns. These concerns can be easily addressed with a little bit of knowledge and understanding.
- All eyes on European Central Bank’s interest rate announcement: Markets are expected to react as the ECB is predicted to cut interest rates tomorrow, as well as deliver some sort of stimulus for banks.
- Litecoin’s halving causes 40% hashing drop: In addition to the hash rate dropping, the price has fallen more than 50% since the highs in June. The number of transactions on the blockchain, however, has not been affected by the halving – it remains consistent at around 25,000 per day.
Please note: All data, figures & graphs are valid as of September 11th. All trading carries risk. Only risk capital you can afford to lose.
Traditional Markets
The mood on social media and in the United States is somber today as we commemorate the attacks on New York’s twin towers 18 years ago. In general, the markets have been pretty quiet lately save for a sudden inexplicable movement in the bond yields.
Yields have been moving lower for a year straight, but since the start of this month, it seems we’re getting some opposite movement.
As we still don’t know what’s causing this, for now most investors are taking a cautious approach. Misinterpretation could very well lead to the wrong action so until a dominant narrative emerges, it may be best to limit exposure on key assets.
ECB Tomorrow
Whatever’s funk the markets are in right now is very likely to be snapped tomorrow though as the European Central Bank delivers their interest rate announcement and subsequent press conference.
From what it seems, several analysts are expecting the ECB to cut their interest rates tomorrow as well as deliver some sort of stimulus, most likely one that will be good for banks. Most bankers are no doubt very frustrated by the low-interest-rate policy as it cuts directly into their profits so if Mario Draghi wants to save himself from a mutiny he might need to throw them a bone if rates are indeed cut.
Here we can see a group of several predominantly European banks, who’ve been suffering over the last two years. Check out that sharp turn upward in the last few days. Almost resembles the chart above…
Lite Hash Drop
It’s no secret that the original altcoin, Litecoin, is one of the top altcoins in my portfolio at the moment. In fact, this is quite possibly the most controversial holding I’ve got right now.
One thing that I was wrong about with Litecoin however, was the effect that halving might have on LTC’s hashrate. When asked by a journalist before the event, my statement was that the halving itself would have minimal impact on mining operations. Indeed, the day after the August 5th event saw a noticeable drop. By now, hashrates are about 40% from the peak.
As well, the price seems to have been corrected even before the event took place. At this point, the price has fallen more than 50% since the highs in June.
Some are even reporting that confidence in the network has started to shake.
Still, if we’re thinking long term and past this specific event, I’m staying in. What draws me here is the level of usage and the community around this coin. The number of transactions on the blockchain remains extremely consistent at around 25,000 per day. This has not been affected by the halving whatsoever.
As well, the number of nodes is spread well across the globe. Right now there are more than 1,700 computers running LTC nodes, which is actually quite comparable to the ~10,000 bitcoin full nodes operating at the moment.
So, now that the hype of the halving has died down and the inflation rate has successfully been cut, we’ll get a chance to see how the economics of the network will proceed.
Have a wonderful day!
Mati Greenspan can be found on LinkedIn, Twitter, or etoro.
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