Mati Greenspan, Senior Market Analyst at FX broker eToro, has provided daily commentary on traditional and crypto markets for November 29, 2018. Highlights include:
- BTC Found Bottom? Bitcoin has found a new line of support following yesterday’s news about the Nasdaq pursuing BTC futures. Other institutional voices such as Mohamed El-Erian of Allianz have voiced their support for the asset class as well.
- Bitcoin Moves in Lockstep With Equities: There is little or no correlation between stocks and crypto on a day-to-day basis, but the two asset classes are clearly connected as their prices have moved in the same direction over the past two weeks.
- Volatility Sparks Interest in BTC: Lower volatility would help cryptocurrencies’ use cases as forms of payment, but Google searches for bitcoin tend to rise during times of higher volatility.
- US Stocks Jump on Fed Chair Remarks: US equities jumped following remarks from Fed Chair Jerome Powell that indicate the fed will move slowly with rate hikes, in support of markets. The sentiment was felt in Asian markets as well, but Chinese investors remain nervous ahead of this weekend’s G20 summit where President Xi Jinping will meet with Trump and likely discuss trade.
The complete commentary from Mati Greenspan can be seen below:
Certainly, it would be better for the use case of cryptocurrencies if they remained more stable, or to see a slow but steady increase in prices. But let’s be straight, would bitcoin be as popular as it is today if not for the wild volatility?
The outrageous bull run of 2017 has been largely responsible for bringing an unprecedented number of new users into the network but it seems that excitement can be generated on the way down as well.
Google searches for the term bitcoin are up sharply since the volatility came back and are now at their highest level since April.
Source: etoro
Of course, they’re still nowhere near the levels that we saw in late 2017, but they are well above anything seen before May of 2017.
Source: etoro
Searches for “buy bitcoin” are seeing a slight uptick as well but this is not investment advice.
Traditional Markets
Fed Chair Jerome Powell managed to bolster the stock markets yesterday with some unexpectedly supportive statements. One of the biggest fears in the markets lately has been the notion that the US Federal Reserve might tighten monetary policy too hard and too fast, so yesterday’s speech showed their willingness to remain supportive of the market.
Even before Powell took the stage (purple circle), stocks were having a great day but as you can see the opening statements, which were widely interpreted to mean that the Fed would go easy on hiking interest rates, put things right over the top.
Source: etoro
The positive sentiment has spilled over into the Asian market but the enthusiasm has not. No doubt Chinese investors are still quite nervous about the upcoming G20 meetings this weekend and what it might mean for international trade.
Things aren’t looking too great for Chinese stocks on a technical level either. The China 50 index is now displaying a pattern on the chart that is all too familiar to bitcoin traders, the descending triangle.
Source: etoro
BTC/DJ30
Speaking of bitcoin, and more specifically its relationship to the stock markets, it’s impossible to ignore that it’s been moving in lockstep with the equities lately. In this next graph, we can see bitcoin in orange and the Dow Jones in purple over the last week and a half.
Source: etoro