Mati Greenspan, Senior Market Analyst at FX broker eToro, has provided his daily commentary on traditional and crypto markets for July 3, 2019. The text below is an excerpt and does not contain the full analysis.
Today’s Highlights
- Lagarde to the ECB
- Physical & Digital Gold
- Bounce off 10k
Please note: All data, figures & graphs are valid as of July 3rd. All trading carries risk. Only risk capital you can afford to lose.
Traditional Markets
European politicians have finally settled on a replacement for Mario Draghi as the next President of the European Central Bank. No doubt, you’ve heard the name before…
I guess now we’ll need to figure out who will replace her at the IMF?
Kidding aside, this does seem like an excellent choice given her diplomacy skills and connections across Europe. However, pundits have pointed out her clear lack of experience in setting monetary policy. Hopefully, she learns quick.
Many analysts see Lagarde as a someone who will continue the policies of Draghi and follow in the path that he’s set. She’s often been quoted as agreeing with the soon to be former ECB boss, so it seems a reasonable assumption. Accept that as a diplomat, it might be difficult to tell when in the past she’s agreed with people publicly without actually being of the same mind.
All in all, Lagarde is very popular across the EU and I’m sure that if there were an actual election where people could pick the head of the financial system, she would’ve won it hands down.
Stock markets continue into uncharted territory today as the everything rally continues. A topic we explored deeply in yesterday’s all-access webcast. (link below).
Bitcoin & Gold are both Strong
No doubt the world’s most popular precious metal and the world’s first cryptocurrency have a lot in common, but until now, price action wasn’t really one of them. Until now…
Here we can see the price of gold (yellow) against bitcoin (blue) have been moving very similarly since the beginning of May.
We’ve previously pointed out how bitcoin doesn’t really correlate with other markets on a day to day basis, but this perception has now been challenged big time.
Here we can see the 90 correlation between physical gold and digital gold is at it’s highest level since September 2016.
So, what happened in May that caused both assets to rise?
Well, the Fed of course. If you’ll recall, the beginning of May is when the Fed took their foot off the gas pedal and started emphasizing caution and patience rather than talking about further rate hikes.
So it seems, that a loose fed is good for all assets, including bitcoin. The thing is, bitcoin is the only asset that really represents a hedge against them getting too loose with their policy.
Bitcoin Bounce
Bitcoin is getting some much-needed R&R at the moment. After the incredible rally since April 2nd, it’s good to see it finally in a state of relaxation.
Volumes have come down significantly over the last week and at this point, it’s a bit difficult to know exactly where it will go next. The bounce off the $10,000 key psychological support was critical but so far not enough to know if the pullback is over or if it will go deeper.
The amount of time it takes from now until it recovers back to fresh highs should prove useful in determining if we’re in a parabolic run or not.
Many thanks to everyone who attended the webcast yesterday and thanks a lot for all the amazing questions. Very sorry we couldn’t get to all of them but please do feel free to hit me up any time, I always appreciate these type of well thought out questions and will do my best to answer them to the best of my ability.
Have a fantastic day!
Mati Greenspan can be found on LinkedIn, Twitter, or etoro.
This is a marketing communication and should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been prepared without having regard to any particular investment objectives or financial situation, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to past performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared utilizing publicly-available information.