Mati Greenspan, Senior Market Analyst at FX broker eToro, has provided his daily commentary on traditional and crypto markets for December 13, 2018.
Highlights include:
- ETH Futures Market Could Spark Innovation: The CFTC is accepting comments on an Ethereum futures market, a development which could allow entrepreneurs to develop Ethereum-based projects, while hedging against the price of ETH declining.
- Sentiment Tampers Stocks Rally: Traders are having difficulty building momentum as economists warn of a potential economic crisis. Crude oil is testing lows and could be a destabilizing factor if it breaks below $50.
- Crypto Slide Mirrors Past Retracements: Bitcoin’s 84% slide from its all-time high to Friday’s lows are in line with previous retracements of the asset. BTC has support at $3,000 but could either break below that level, or push up towards $5,000 if a short squeeze drives prices up.
Traditional Markets
Yesterday’s global stock rally seems to be stalling today. Indices are in the green today but the excitement may be fading. With all the recent comments from economists about how the cycle might soon come to an end or that we could be heading for another crisis, it’s difficult for traders to fully buy into any upward momentum at this time.
Crude oil is also testing the lows at the moment, and if does manage to break below $50 a barrel it could be potentially destabilizing.
Source: etoro
European Central Bank Event
By the time you get this, the European Central Bank will probably have concluded their press conference already.
At the moment, expectations are that they will continue to wind down the quantitative easing program or possibly end it all together. Even though interest rates are not expected to rise for another year or more, it seems apparent that the ECB is following in the footsteps of the US Federal Reserve in tightening up monetary policy.
Money has been flowing freely into global markets over the last decade and it’s going to be very interesting to see what happens when that money begins to be tightened once more.
Crypto Floor Possible?
With all the progress in the crypto industry lately, it’s extremely difficult to understand why prices have fallen over the last month.
Here we can see the massive slide down in bitcoin that’s been happening since November 14th. From its all-time high to the new low from last Friday bitcoin has fallen a total of 84%, which is more or less in line with the level of retracements that the asset has seen in previous cycles.
Source: etoro
As we have previously discussed when bitcoin broke below the psychological level of $5,000, the current area of support is between $3,000 and $3,500. So we are very much in this area right now.
A breach to the downside could certainly cause further selling and a lower low. However, a strong push upward from these levels could actually serve to shift sentiment and change the trend.
With the high number of short sellers across various exchanges right now, even a small push up could potentially affect a short squeeze in the market. Imagine such a squeeze on the level that would bring us firmly above $5,000. Such a move would very likely be interpreted in hindsight as the capitulation that everyone has been waiting for.
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