The alternative investment community has crowned bitcoin as the king. August was a good time for the entire crypto market and everything surged. September was red and we saw plenty of pullbacks, which is as can be expected given the previous rise.
October is still in question. An answer may have come from the market action yesterday afternoon where we saw bitcoin rising sharply while the rest of the cryptocurrencies fell. Of course, the weakening US Dollar may have had something to do with this as well as we’ll see in the charts below.
Market overview
Now just one and a half weeks from the general elections in Japan and the current Prime Minister Shinzo Abe has already been handed a major victory. The biggest threat was coming from an extremely popular new player. The first female mayor of Tokyo Yuriko Koike. Koike’s Party of Hope has seen some excellent gains in the polls these past few weeks. However, she has gracefully decided not to go after the full sushi platter and so will not be running personally fro Prime Minister.
This move could very well hand the crown back to Abe by default as his main opposition seems to be in tatters at the moment. Of course, it’s still too early to call but the way things look at the moment, September 22nd could simply be a coronation day rather than a battle.
Abe is one of the world’s leading figureheads in loose money policy so this generally means more support from the BoJ for the financial markets. The Nikkei 225 is celebrating the welcome sign of a stable government and the prospect of continued stimulus. It is now close to it’s highest level since 1996.
Gold & Oil
Also, take a look at gold and oil today. Gold has been one of the best performing assets (besides crypto) so far this year. After peaking in early September at $1357 an ounce we’ve seen a pullback of $97 (blue rectangle).
Donald Trump has introduced a new policy for the US Dollar, which is contrary to just about every US president and economist before him. Rather than advocating for a strong Dollar, Trump has chosen to join the global currency wars to try and make America more competitive by weakening the Buck.
Whether this policy will be effective remains to be seen but the effect on the Dollar is clear and it has been sinking like a stone since inauguration day on January 20th. A natural way to hedge Dollar weakness is by adding Gold to your portfolio. Many hedge fund managers recommend a conservative amount of 5% to an aggressive 15% of your overall assets.
Trade on gold with eToro platform
After the major pullback, and now with three solid green days, we could be looking for some fine entries. Oil on the other hand is less appreciative of the Dollar depreciation. The oversupply has been apparent since 2014 and according to OPEC’s Secretary General is now rebalancing itself. Of course, it’s really his job to say that since OPEC’s entire purpose for existing is to keep the price of Oil elevated.
One of the world’s biggest oil producers, Saudi Aramco, has just announced that they will be making the deepest cuts to production in history and will reduce total output by 560,000 barrels per day.
The news of this did send the price up slightly we’re now looking at a support level of $49. At the moment the big question will be if OPEC and the East can get the price above $50 and hold it there before producers from the West turn open their spigots and flood the markets once again.
Another simple way to invest in energy and metal is through eToro’s unique low risk and well diversified CopyFund @GoldenEnergy.
The Crypto Crown
When two things are moving in space it is extremely difficult to prove which is moving in relation to the other. That’s one of the main reasons that people who argue that the sun revolves around the earth are so annoying.
So, we ask the question. Is bitcoin rising against the Dollar, or is it the other way around?
Either way, this chart from Bloomberg shows the correlation between the two. With Bitcoin in blue rising on every major drop in the US Dollar Index (yellow).
Yesterday, we had some unique price action within the cryptomarket as we saw a rare flight to safety. The clear winner was BTC which rose about 7%, while all the altcoins dropped by roughly the same amount.
Bitcoin’s dominance can be further depicted in this chart from coinmarketcap.com…
As we can see, Ripple had a go at Ethereum back in May that lasted a few days. Ethereum then took a shot at the title in June and nearly surpassed Bitcoin. Since then the trend has been clear. Yesterdays moves have put the original blockchain and the dominance level is now above 52% of the total market share.
Many thanks to everyone who is reading these daily market updates and sending me your awesome feedback, helpful comments, and relevant links. I honestly couldn’t write them without you.
