Mati Greenspan, Senior Market Analyst at FX broker eToro, has provided his daily commentary on traditional and crypto markets for December 27, 2018.
Highlights include:
- Dow Shatters Single-Day Record: One trading day after US indices officially entered a bear market, the Dow rose 1,086 points — its largest single day gain of all time. These enormous leaps are actually more common in a bear market.
- Crypto Markets Remain Steady: Crypto has remained steady with bitcoin testing support at $3,680. Meanwhile, in a strange role reversal, the rest of the markets are experiencing major volatility.
- Volatility Rocks Oil Prices: Low trading volumes during holiday trading has led to high volatility in oil prices. Despite Russia’s statement that they will help OPEC stabilize prices in 2019, oil fell 6.6% on Monday and rose 8% on Wednesday.
- Scientists Turn Copper Into Gold: Recent reports of Chinese scientists discovering a way to “turn copper into gold” is misleading — while the metal takes on properties of gold, it still isn’t gold. It is possible that someone discovers a way to reproduce an ounce of gold in a lab, but it’s equally possible that someone figures out how to reproduce a bitcoin — both unlikely scenarios.
Traditional Markets
Today we mark the 6th day of the US government shutdown. As I mentioned in yesterday’s update, trading during the holiday season can be a bit wonky. When volumes are low, prices tend to be a bit more slippery.
We can see that in oil as well, which fell 6.6% on Monday and rose 8% on Wednesday.
Russia has now indicated that they’ll do more to assist OPEC in stabilizing the price going into 2019, but at this point, it’s unclear what they can really do when even that announcement has appeared to cause volatility.
Another indication of this may be that Asian markets have not continued the US market’s enthusiasm, despite news that…
Spinning Copper into Gold
As a person who began his trading career in 2008, I’ve always been partial to keeping a bit of gold in my portfolio. It’s great for diversification purposes, as a hedge against risk and many traders recommend to hold between 5% and 20% on low leverage.
Yesterday, there was a rather shocking breakthrough out of China that some think could jeopardize this though.
Some on social media were quick to point out that they’ve figured out a way to “fork gold” and that this could have implications for bitcoin.
The headline here is rather misleading though. Yes, they found a way to chemically alter copper so that it produces a substance that has similar properties to gold but it is not gold itself.
The idea is that with some fine tuning, copper may be able to step it up a bit in the manufacturing sector. Still, there’s little indication of how efficient this would be to do on a mass scale and no matter what, gold retains its status as the premier store of value.
In my mind, it is possible that someone figures out how to reproduce an ounce of gold in a lab, but it’s equally possible that someone figures out how to reproduce a bitcoin. Neither scenario seems very likely but both are certainly within the realm of possibility. This is why we diversify.
In a strange instance of role reversal, the crypto markets remain calm and collected while the rest of the markets hop around like Mexican Jumping Beans.
Bitcoin continues to test its newfound support level of around $3,680.
Not sure what else we can say here, it’s been a blessedly quiet day. Hope you’re enjoying the holiday!