CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
ETF hopes power Bitcoin over $59,000
With the news Bitcoin exchange traded funds could be about to land in the US, BTC intensifies its upswing.
Bitcoin bounces on positive SEC noise
Reports from Bloomberg indicate that the SEC would be in favour of approving at least some Bitcoin ETFs.
The SEC is reviewing 40 Bitcoin exchange traded funds right now. It is believed that the commission will approve at least some of these. That would make any new ETFs the first of their kind in the United States.
The news filled crypto traders with renewed confidence this morning, sending BTC prices soaring. Prices nudged the $60,000 mark with highs of $59,931 registered on Thursday. At the time of writing, BTC was trading for $59,395.
Bitcoin Futures passed $60,000 this morning before falling back to around $59,650. Both BTC and futures are up over 3% on the day.
If the SEC approves a Bitcoin ETF it will be the first of its kind in the US. Previously, commissions in places like Brazil, Canada, and Europe had given the green light to crypto exchange traded funds.
So, who is making the applications? Bloomberg mentioned ProShares and Invesco and two frontrunners who may see their applications approved next week.
Valkyrie, VanEck and Galaxy Digital Funds have all made ETF applications this year too.
The Bloomberg report said that ProShares and Invesco’s proposals are based on futures contracts. They were reportedly filed under mutual fund rules that SEC Chair Gary Gensler has said provide “significant investor protections”.
Gensler helped boost Bitcoin prices last week when it was reported that he said the SEC had no plans to launch a crypto ban. His comments came in the wake of a move by the People’s Bank of China that made digital token transactions illegal in China.
That said, Gensler had previously stated he believes that the crypto market could encourage price manipulation and expose millions of investors to significant risk.
However, this time Gensler and the SEC’s actions appear to have instilled high confidence in crypto traders.
Other tokens have been brought up by the Bitcoin surge. This is a regular occurrence. When Bitcoin is up, certain coins tend to perform well, and vice versa. Ethereum, for example, reached $3,855 after Bloomberg’s report was published.
Eight consecutive weeks of inflows for the crypto market
Data from digital asset managers CoinShare said cryptocurrency products attracted $226.2m in investments for the week ending October 8th. Fittingly, that marked the eighth consecutive week for inflows across the digital token sector.
Across that eight weeks, the total invested came to $638m. The overall figure for the year-to-date is $6.3bn.
Big business, but, with the global digital currency sector worth over $2 trillion, we knew that already.
No prizes for guessing which coin attracted the most attention. Yep, it was bitcoin. CoinShare says the world’s most popular token attracted $225m during the review period. Unlike other cryptocurrencies, Bitcoin has only had four consecutive weeks of sustained inbound investment.
Ethereum saw minor outflows totalling $14 million. While still the world’s second most valuable token by capex, ETH continues to lose ground to the Bitcoin behemoth. Altcoins such as Solana and Cardano posted inflows of $12.5 million and $3 million.
Litecoin, Ripple and Polkadot all posted outflows.
FTSE makes new post-pandemic high, Bitcoin up on ETF hopes
GPs will be paid more to do what they used to do before the pandemic, like see patients face to face. This is what dislocation and the ‘new normal’ looks like: same service, costs more. That’s one of the reasons why inflation is not going to be as transitory as central bankers have been telling us.
Markets are not that concerned by this, so it seems. The FTSE 100 has broken out to a new post-pandemic high, stretching its recent range by a few more points on the upside to hit a high of 7,242 this morning. This marks a roughly 400pt reversal from the Sep 20th intraday low. It’s been a very tight range of that size since April but there are encouraging signs the FTSE can yet end the year at its pre-pandemic level of 7,700.
Why the rally? Key is energy – BP and Shell among the top performers of the last month and have a big index weighting. That’s BP and Shell, which are both up more than 20% in the last month as oil and natural gas prices have soared. WTI is back above $82 this morning. Next is the two big reopening stories – IAG and Rolls Royce, they are the best performers of the last month among the blue chips. Reopening of travel has been a major factor and we see more good news today with the move to lateral flow tests for international arrivals. Then third we have the big banks – HSBC, Lloyds, StanChart and NatWest have all rallied over 10% in the last month as rates have risen and the macro environment has held up pretty well. Bets the Bank of England is far closer to raising rates have helped, but global bond yields have also been moving higher. The FTSE is exposed to the winds of the global economy and trade, which despite it all are holding up well, and UK shares remain heavily discounted to peers. The FTSE 250, a better gauge of the UK economy, has ticked higher in the last few sessions but is down by around 5% from its Sep high.
Wall Street closed firmly higher yesterday amid a rush of positive earnings reports from the big banks. Walgreens and UnitedHealth also delivered positive results that indicate the large corporations are still able to deliver earnings growth and higher profits despite the rising costs. Supply chain problems will become more obvious when some more consumer discretionary names report, but so far the storm is being weathered. Meanwhile lower rates lifted the big tech boats. The 1.7% rally for the S&P 500 was its best day since March.
On the data front, US initial jobless claims fell below 300,000 for the first time since the pandemic, but inflation is not going away. US PPI was a tad cooler than expected but still running hot at 8.6% year-on-year, however core PPI ticked up to 6.8% from 6.7%. The headline 8.6% was the largest advance since 12-month data were first calculated in November 2010. Today – US retail sales, Empire State mfg index.
Bitcoin eyes $60,000 as traders bet the SEC is poised to allow the first exchange-traded fund based on BTC futures. The SEC is reviewing around 40 Bitcoin-linked ETFs and a report from Bloomberg suggests the regulator will approve some of these. Bitcoin spiked on the report, which indicated that Invesco and ProShares could be among the providers cleared to start trading on Bitcoin ETFs. With the kick on to the $60k level it may be a matter of time before we see a fresh all-time high.
Gold – pulling back to the 23.6% retracement as it pares gains in the face of the $1,800 test.
GBPUSD: Nudging up to the trend line again at yesterday’s 3-week high.
These stocks could help you ride the next crypto surge
Bank of America has picked out a number of stocks that could help investors get a slice of the cryptocurrency pie. Here they are.
Digital tokens on the rise?
Despite what some objectors and sceptics might say, it looks like cryptocurrency is here to stay.
Bitcoin has recently started heading upwards again. The token, which is the most popular in the world, recently passed the key $57,000 level – the highest levels since May. April’s $65,000 all-time high is still the target for BTC, but the industry is not just Bitcoin.
There are hundreds, thousands, of other digital tokens available. The industry’s collective valuation is currently north of $2 trillion – higher than the GDP of Canada with its bountiful natural resources.
Coins like Ether, Ripple, Cardano and even meme-based internet favourite Dogecoin, all have their own fans, representing billions in capital.
Cryptocurrencies seem like they’re becoming more resilient to outside pressures too. For example, Bitcoin’s current high performance flies in the face of China’s recent crypto ban. Before, such a measure would have sent the token spiralling downward. Now, even a flat out ban from one of the world’s foremost crypto markets isn’t enough to slow it down.
That being said, digital token prices can still show high volatility. Many investors and traders are still unsure if it’s a smart investment. Others prefer to stick with old school wealth stores like gold. But many are finding crypto a worthwhile pursuit. It’s basically down to how much volatility you can stomach.
But coins do not just generate themselves. To operate, the crypto industry requires an extensive ecosystem. It incorporates everything from technology providers, blockchain developers, payment platforms and plenty in between.
For investors to get involved in the next crypto gold rush without committing to coins, there are ways they can get involved. Of course, it goes without saying that any investments carry risk of capital loss. Investing should only be undertaken if you are comfortable taking any losses.
With that in mind, Bank of America analysts have selected several stocks they believe could offer investors value as the crypto industry grows.
Bank of America’s crypto stocks to watch
“A new generation of companies for digital assets trading, offerings and new applications across industries, including finance, supply chain, gaming and social media has been created. And yet we’re still in the early innings,” Bank of America said in a note, as reported by CNBC.
The bank’s digital finance stock selections look at the wider cryptocurrency sector.
Let’s start with power. Cryptocurrency mining, the process of minting fresh coins, is power intensive. Very power intensive. In fact, in 2020, Bitcoin mining alone used as much energy as Sweden.
According to Bank of America, nuclear power firms could be ready to pounce on the crypto sector. Environmental concerns around token mining’s emissions could push miners to look for low-carbon alternatives to their current options. With low emissions and round-the-clock reliability, nuclear could be the ideal fuel source for crypto mining.
With that in mind, BoA suggests Exelon, NRG Energy and Vistra could be energy companies to watch if they move into the crypto space.
Let’s talk data centres. Since China prohibited crypto mining in its territories, there’s been a mass exodus of mining operations. It looks like North America might become mining next hotspot.
“As digital asset mining migrates to North America due to China’s near complete ban of mining activities, public data-centre companies could view this niche market as an opportunity,” BoA analysts said.
A data centre boom may be on the way. To capitalise on this, Bank of America analysts recommend two stocks: Digital Reality and Equinix.
“Greater focus on the energy consumption of digital asset mining could increase demand for data centre operators with greater renewable energy sources,” the analysts said. “Equinix data centres are powered with 37% renewable energy with a target of 100% over the next decade.”
Payment platforms and banks should also be considered.
PayPal in particular is a “must own” for Bank of America.
“We view [Paypal] as a scarce asset with accelerating structural tailwinds, while the company is well on its way to transforming its digital wallet/app into a financial ‘Super App’ for its massive global consumer base,” the bank said.
Cryptocurrency update: Bitcoin bounds upwards
Bitcoin continues its big comeback by reaching five-month highs in trading this morning.
Buoyant Bitcoin clears $57,000
The Bitcoin rally looks like it’s got some teeth.
The token reached its highest levels since May on Monday morning after clearing the $57,000 mark. Prices have subsequently pulled back, leaving BTC at around $56,500, but the coin is still up around 4.75% on the day.
This comes after Bitcoin notched 14% gains across last week. For the last two consecutive weeks, BTC has made double-digit gains.
Things are bullish in Bitcoin town.
For now, Bitcoin appears to be more resilient against potential macro trends that usually send the token’s price on a wild spiral. For example, China’s continued crypto crackdown does not seem to have blunted Bitcoin’s edge at all.
Other revelations like the Soros Foundation announcing it had started investing in Bitcoin have helped. These include US SEC Chairman Gary Gensler coming out and saying the Securities and Exchange Commission has no plans to pull a Beijing and ban Bitcoin transactions in the US.
Even the anti-crypto comments JPMorgan CEO Jamie Dimon made last week were not enough to knock BTC of its stride.
However, regulatory reform is probably on its way. Certainly, the perceived threat digital token traders have felt regarding tighter regulation has caused price wobbles in the past. Will a White House executive order waylay Bitcoin’s progress? Reports indicate that reform could be closer than it looks.
Is the White House planning a crypto regulation surprise?
Reports from Washington suggest the Biden administration is working on an executive order that could lead to wider crypto industry regulation.
According to White House insiders speaking to Bloomberg, the order would see the creation of federal agencies tasked with making recommendations on Bitcoin and Crypto. It would also touch on financial regulation, economic innovation, and national security.
A new crypto Czar could even be appointed if the order goes through.
That said, there is no hard or fast date attached to this measure. A White House spokesperson told Bloomberg that, regardless of the order making it into law, the US’ crypto strategy will be made public. It’s just a question of when.
Pressure has been building on US financial authorities to make some sort of noise regarding crypto. The market has been burning white-hot for the past couple of years, and with markets caps zig-zagging between $1.5 and $2 trillion given BTC’s performance, it’s clear something has to budge.
Treasury Secretary Janet Yellen has been agitating for a regulatory framework for digital currency regulation for some time now. Elizabeth Warren is also one of the influential voices calling for more to be done.
We don’t know when regulation will be stepped up in the US – but if these reports are accurate then we may see some sort of framework or regulatory tightening in the near future.
Blockchain firm ConsenSys announces funding round
ConsenSys, a blockchain firm specialising in Ethereum-based projects, is in talks for a new funding round. The Brooklyn-based business is hoping this fresh cash injection would take its value up to $3bn.
If it does reach this valuation, then ConsenSys would be a good case study in just how much blockchain and digital finance systems have expanded over the past 18 months.
In April, the business acquired $65m from the likes of JPMorgan and Mastercard in April. According to reports, ConsenSys is looking to raise $250m in its current funding round. Golden Tree Asset Management and Arca are alleged to be holding talks with ConsenSys.
ConsenSys mostly operates on the Ethereum platform, which is fuelled by the token of the same name.
Its projects have been used in several major Decentralised Finance (DeFi) operations. The most prominent of these is MetaMask – an important gateway for the DeFi ecosystem. More than $9bn has been facilitated by MetaMask via its token swap feature across its lifetime so far.
Bitcoin signals fight back after clearing $55,000
Bitcoin staged an impressive rally yesterday, gaining more than 10% in trading. What’s behind this latest BTC surge? We take a look.
BTC reaches $55,000
It was good news for Bitcoin traders last night when the world’s most popular cryptocurrency cleared $55,000 for the first time since May.
The token bounced on the news that billionaire George Soros’ hedge fund confirmed it is trading BTC.
Bitcoin reached a five-month high of $55,499 last night. It has fallen back to around $54,680, but bulls believe it’s only a matter of time before BTC reaches a new all-time high. Its highest levels were reached in April 2021, when Bitcoin broke above $64,000 for the first time.
Whenever Bitcoin moves it usually takes other tokens with it. This is true today. Ether, for instance, is trading up nearly 1% at $3,594, while Cardano is showing similar growth of 1.10%. Cardano is now trading for $2.26.
It appears the China crypto crackdown has not had the effect that bears were bracing for. Beijing has ruled all cryptocurrency transactions as illegal and is doing its utmost to stamp out mining and trading operations across China.
However, it seems Bitcoin is showing new levels of resilience to potentially damaging external factors.
Extra support for Bitcoin
In addition to the Soros Fund’s Bitcoin backing, a number of other institutions, organisations, and even a country potentially, are helping support the token.
For instance, Reuters reports that the Bank of America Corp published its first research coverage focused on cryptocurrencies and other digital assets on Monday. Additionally, US Bancorp has launched a new crypto-focussed service for private fund managers in the US and Cayman Islands.
“Investor interest in cryptocurrency and demand from our fund services clients have grown strongly over the last few years,” said Gunjan Kedia, Vice Chair of US Bank Wealth Management and Investment Services in a news release. “Our fund and institutional custody clients have accelerated their plans to offer cryptocurrency.”
We’ve also had reports from the SEC that it doesn’t plan to ban cryptos at all. Chairman Gary Gensler was grilled by the Senate on Tuesday if the Securities and Exchange Commission would be mirroring China’s recent harsh actions. The answer was an emphatic no. It’s really for Congress to decide, according to Gensler.
Federal Reserve Chairman Jerome Powell recently also said the Fed has no intention of implementing a crypto ban either.
Regulation will likely be the name of the game. We just don’t know when it’s going to land, but for now digital token trading and investing is still A-OK in the US of A.
Bitcoin might even become currency in Brazil if comments made by Federal Deputy Aureo Riberio on Tuesday are anything to go by.
Riberio said in an interview with local media Brazilians could soon be able to use Bitcoin to buy houses, cars, and even fast food. Bill 2.303/15, which regulates cryptocurrencies, might approve the legal use of the asset, similar to El Salvador.
Not everyone is convinced by digital tokens
This new wave of digital finance fever has been tempered somewhat by a few important dissenting voices.
At the start of the week, we saw one of South Africa’s top hedge fund managers, Jean-Pierre Verster of Protea Capital Management, compare Bitcoin to a Ponzi scheme.
Now, JPMorgan CEO Jamie Dimon has spoken out against Bitcoin.
Dimon was interviewed on HBO’s Axios on Monday when he was asked if BTC is the “fool’s gold of the future?”.
The JPMorgan Boss replied: “It’s got no intrinsic value, and regulators are going to regulate the hell out of it.”
Dimon went on to say: “You can call it a security or an asset or something like that, but if people are using it for tax avoidance and sex trafficking and ransomware, it’s going to be regulated, whether you like it or not. So, it’s not a moral statement. It’s a factual statement.”
Several prominent finance figures have made their anti-Bitcoin stance very clear. Christine Largarde of the European Central Bank and Bank of England Governor Andrew Bailey have all spoken out against digital tokens.
Even Jerome Powell, who as mentioned above said the Fed has no plans to ban crypto transactions in the US any time soon, has mirrored Dimon’s comments in the past.
Despite its CEO’s feelings, JPMorgan currently offers six crypto funds for its customers.
European stocks steady after big tech rout on Wall St.
Wall Street declined as the selloff in the tech sector picked up pace, though European stock markets have opened up in the green this morning. The DAX eased up from its 200-day SMA support – it’s not traded below this since Nov 2020. The FTSE 100 is mildly higher around 7,050 and remains well within the 6-month range still, marking time. Index composition explains some of the relative performance of US vs European markets – higher oil prices was a positive in Europe at the start of trade, absence of mega-cap momentum tech working out to be a positive. More cyclical, more defensive, more value all doing the FTSE a bit of a favour today – it’s not participated in the ride up, so it’s not swept up in the payback.
The S&P 500 dipped below last week’s low at 4,288.52, hitting 4,278.94 at one point before paring losses to finish the day at 4,300, its weakest finish since July and it’s now down 6% from the all-time high and well below its 100-day SMA. The Nasdaq bore the brunt of the selling, declining more than 2% with MSFT, AMZN, AAPL all –2-3%, and the index is 8% below its high. Index composition is playing a big role here – the heavy tech weighting in the S&P 500 has built on itself, so when it sells off it pulls it down fast. This very large corner of the market drove the index higher over July and August and is paying it all back now. Interesting to see rates not doing anything – US 10yr yields hovering under 1.5% still so this is a technical/momentum selling in equities rather than the bond market-leading stocks by the hand; though expectations for higher inflation/higher rates has clearly been a factor in the initial trip-up.
Big tech under pressure but in particular Facebook on mounting regulatory/reputational damage – FB shares fell on the whistle-blower reveal, which threatens to do some damage to the company’s already well-tarnished reputation. We’ve been here before with FB and nothing has really stuck – but its Teflon character will be tested with these revelations. Twitter and Snap shares also fell in sympathy – regulators are coming for social media companies, mark it.
ARKK – the Innovation ETF – took a pounding as the big-tech growth names were in the firing line, especially some of the more growthy-momentum names. The fund is now roughly 31% below its Feb all-time high.
Interesting to see just how far off their record highs some of the largest-cap stocks are now, roughly: Microsoft: -7%, Alphabet: -9%, Apple: -11%, Tesla: -10% (though had a better day on Monday), Facebook: -15%, Amazon: -14%, Shopify: -20%, Twitter: -25%, Twilio: -30%, Peloton: -50%, Zoom: -56%.
Tesla shrugged off the trouble for big tech as a strong quarterly delivery report buoyed the stock and took it past $800 again the slow and steady grind higher off the Mar-May double bottom continues to find headroom. However, it closed well off the daily high at $781, up less than 1% for the session as the drag from the broader tech rout pulled it down.
We’re at a point where the pessimism over the supply chain problems is probably nearing a peak, and expectations for growth have washed out. Likewise, we may be at peak inflation/stagflation fears – the reopening is apace. Cyclicals/value are not doing enough to compensate for what amounts to a pretty sizeable pullback for the tech sector now, but there could be room for this area of the market to rally again as the economic situation starts to feel like it could pick up. Still this selloff looks like it has a little further to run before the equilibrium is restored.
OPEC+ gave oil bulls a red rag to bid up futures contracts as it stuck to the planned increase in production for November at 400k bpd. Some had thought it could raise output a little more than the summer plan had set out, or frontload the increase in output in December by bringing into Nov (ie, 800k bpd in Nov), but the cartel stuck to the script. WTI and Brent both surged on the news and made a 7-year high. It’s not that demand is suddenly forecast to improve, it’s more that OPEC+ is keeping such a tight grip on supply and the US rig count just isn’t there to mop up excess demand. So, the market is going to be tight for a while yet – at least until well into 2022.
MACD crossovers still proving to be a sound indicator for oil trades. WTI now starting to look a little overbought.
Elsewhere, Bitcoin moving higher again in the wake of the bullish MACD crossover – a generally solid indicator for the near-term trend. Looking for the recent swing high at $53,000.
Cryptocurrency update: Bitcoin eyes $50k
After a strong weekend, Bitcoin travels upwards. Could it really be ready to punch above the $50k level once more?
Bitcoin makes gains
Sometimes tracking Bitcoin undulations can be exhausting.
The token gained over 8% on Friday and continued on its upward path to scrape slightly above $48,000 over the weekend. Analysts are now putting the psychologically important $50k level as BTC’s new target.
But this IS Bitcoin we’re talking about here. Even when making gains it does still feel like a case of one step forward, two steps back. At the time of writing, Bitcoin was in the red, trading down 1% at $47,559.
Even so, Bitcoin has made solid gains across the end of September and into October. In fact, it’s still up 60% this year, despite major price swings and volatility.
There are a couple of reasons why Bitcoin could be on the up.
For starters, US Federal Reserve Chairman Jerome Powell said they have no plans to ban crypto transactions. This pro-digital finance move stands in stark contrast to China. Last week, the People’s Bank of China ruled cryptocurrency transactions were illegal, sending BTC down.
The Bitcoin hash rate, the rate at which new tokens are mined, is reaching all-time highs. This is a bit surprising as just five months ago China began to kick crypto miners out of the country. After this clampdown, the world was expecting the hash rate to fall dramatically.
Despite the hash rate and the computing power required to complete the complex algorithms required to mine new coins being basically unmeasurable, the overall trend is broadly upward.
CoinWarz recorded 201 exahashes per second (EH/s) on October 2nd, while MiningPoolStats currently shows just 138 EH/s. At the highest estimates, the hash rate would be a full 32 exahashes higher than the previous peak.
Exahashes per second is the preferred metric analysts use to measure hash rate.
“China kicked out nearly 90% of bitcoin miners in the country earlier this year. Hash rate fell approximately 50% as a result,” Morgan Creek Digital co-founder Anthony Pompliano said, regarding the hash rate. “Only a few months later and we are almost back to an all-time high. Economic incentives drive further network decentralization.”
PlanB bets on Bitcoin bull run…
In response to the upward trend, Bitcoin showed across the last week, some of the more well known Twitter analysts are saying the best is yet to come.
PlanB, a favourite of the crypto Twitterati, says Bitcoin may hit $63,000 by the end of October before pushing on to a bumper $98,000 November close.
On-chain analyses finished tonight: IMO we are midway, no sign of weakness (red) yet. Note color overlay is not months to halving but an on-chain signal. My guess: this 2nd leg of the bull market will have at least 6 more months to go. pic.twitter.com/HAEMYfQ1pT
— PlanB (@100trillionUSD) October 2, 2021
PlanB is a pioneer of the “stock-to-flow” charting model. Stock-to-flow measures the current stock of an asset against the flow of new production or how much is mined in a year. A higher ratio indicates more scarcity, which in turn indicates a higher value.
…but South African hedge fund manager warns off crypto
It’s fair to say Bitcoin and cryptocurrency as a whole has had an equal share of champions and detractors.
While the likes of PlanB are putting all their chips on crypto, others remain unconvinced.
Jean-Pierre Verster, founder of South African hedge fund Protea Capital Management, has joined the chorus of those who believe digital tokens have “no intrinsic value”.
In an interview with Biznews, Verster said: “I think the technology of blockchain is a wonderful technology. And will find applications when it comes to having open ledgers – when it comes to transactions that you need to make sure are captured somewhere or recorded somewhere in a way that people can’t after the facts – fiddle with those recordings. For that blockchain is great.”
Even so, Verster was keen to point out that volatility is off-putting for some investors.
“It [crypto] has got these elements of a Ponzi scheme, which means that for a long period of time, prices go up, go up, and it looks like value increases, and then it all comes crashing down,” Verster said. “So, I have not invested in crypto myself.”
Apart from the government of China, there have been other major players that have called into question the validity of digital tokens as investment vehicles.
In May, Bank of England Governor Andrew Bailey called cryptocurrencies “dangerous”, and advised people only invest if they are prepared to lose all their money.
Monthly recap: German elections, hot UK inflation and NFP miss
We recap some of the key market movers from September in this monthly round-up.
Monthly markets recap: September 2021
Germany waves goodbye to Angela Merkel in tight federal elections
After sixteen years at the helm, Angela Merkel will step down as German Chancellor following late September’s closely contested German elections.
It’s a hugely fragmented result. Pretty much all parties did worse than they thought. The SPD is the majority party, but they’re still very close to the CDU to really have a massive advantage. You could only separate them with a cigarette paper really.
The Green’s, after topping the polls four months ago, came in third while the FDP came in fourth.
Olaf Scholtz, the leader of the SPD, now has his work cut out trying to turn these close results into a working coalition. But what we’ve seen is what our political guru and Blonde Money CEO Helen Thomas calls a Code Red for Germany – that is a shift to the left with a bit of a green hint too.
What the next German federal government looks like now is up for debate. The Green Party is probably going to be central, after doubling their Reichstag presence, but it’s out of the CDU and FDP to see who becomes the third coalition partner. See Helen Thomas’ election round-up below for more information.
Nonfarm payrolls’ massive miss
Nonfarm payrolls came in well below expectations in a wobbly US jobs report.
In August, 275,000 new jobs were added to the US economy, falling far below the 750,000 forecast.
The unemployment rate dropped to 5.2% while labour force participation stayed unchanged at 61.7%. Hourly earnings rose 0.6% in August, surpassing market predictions of a 0.3% rise.
Jerome Powell and the Federal Reserve keeps a close eye on the jobs report. Labour market participation has been one of the key metrics the Fed has been looking at throughout the pandemic to decide on whether to start tapering economic support.
We know that Jerome Powell and the Fed loves a strong jobs report. But we also know that tapering is on its way anyway – likely in November. August’s job data may not have impacted decision making too much, given the tapering signals were made long before its release.
However, Fed Chair Powell still believes the US is still far from where he’d comfortably like employment to be.
Speaking last week, Powell said: “What I said last week was that we had all but met the test for tapering. I made it clear that we are, in my view, a long way from meeting the test for maximum employment.”
A recent survey taken by the National Association for Business Economics showed 67% of participating economists believed job levels won’t reach pre-pandemic levels until the end of 2022.
UK inflation jumps
August’s CPI data, released in September, showed UK inflation had reached 3.2%. That’s the highest level since 2012.
Rising from 2% in July, the latest CPI print also showed a huge month-on-month rise in prices. Inflation soared well clear of the Bank of England’s 2% target – although the UK central bank did say it believed inflation would hit 4% in 2021.
However, some market observers believe there is a risk that inflation will overshoot even the 4% level.
The question is how will the BoE respond? A more hawkish tilt could be possible.
Markets.com Chief Markets Analyst Neil Wilson said: “Unanchored inflation expectations are the worst possible outcome for a central bank they’ve been too slow to recognise the pandemic has completely changed the disinflationary world of 2008-2020.
“My own view, for what it’s worth, is that the Bank, just like the Fed, has allowed inflation overshoots to allow for the recovery, but it’s been too slow and too generous. Much like the response to the pandemic itself, the medicine (QE, ZIRP) being administered may be doing more harm (inflation) than good (growth, jobs).”
China intensifies its crypto crackdown
Bitcoin was rocked towards the end of September after being hit with a body blow landed by the People’s Bank of China.
The POBC has ruled that all cryptocurrency transactions in China are illegal. That includes all transactions made by Chinese citizens domestically and those coming from offshore and overseas exchanges.
BTC lost over 8% and nearly dropped below the $40,000 mark on the news from Beijing. It has subsequently staged a comeback, but this latest move from China tells us a couple of important things about crypto.
Number one: volatility is ridiculous. The fact that Bitcoin is still so susceptible to big swings on both positive and negative news shows it’s still very volatile. It seems hard to see a future driven by crypto right now if such price swings will be the norm. If this is the case, let’s hope it calms down in the future.
Secondly, it’s that central banks are still wary of digital finance. In China’s case, it loves control.
Beijing’s official stance is that cryptocurrency is a) illegitimate, b) an environmental disaster, and c) something it cannot control completely. Freeing finances from government oversight is the entire point of decentralised finance (DeFi) after all. In a country as centralised as China, that’s a no-go.
China has pledged to step up its anti-crypto, anti-mining efforts further. This could cause major ripples for Bitcoin and the digital finance sector as a whole. A significant chunk of global token supply comes from Chinese miners. Someone else will have to pick up the slack.
Oil & gas prices stage major rally
A global gas shortage and tighter oil supplies pushed prices into overdrive towards the end of September.
Natural gas, in particular, was flourishing. At one point, gas had climbed above $6.30, reaching highs not seen for three years. Basically, there’s not enough gas to go around. High demand from the UK and EU is pushing prices up, while the US, which is meant to be in injection season, is also suffering. Asian demand is also intensifying.
In terms of oil, a supply squeeze coupled with higher demand caused by major economies reopening is putting a support under oil prices.
Traders are also confident. Energy markets are the place to be right now. As such, trader activity appears to be pushing these new highs and is confident regarding the market’s overall strength.
Goldman Sachs has also revised its oil price targets upwards.
Goldman said: “While we have long held a bullish oil view, the current global oil supply-demand deficit is larger than we expected, with the recovery in global demand from the Delta impact even faster than our above-consensus forecast and with global supply remaining short of our below consensus forecasts.
“The current oil supply-demand deficit is larger than we expected, with the recovery in global demand from the Delta impact even faster than our above-consensus forecast and with global supply remaining short of our below consensus forecasts.”
Cryptocurrency update: China’s crypto clampdown intensifies
Beijing announces some of the toughest measures against cryptocurrency to date.
China announces harshest anti-crypto measures yet
Bitcoin was rocked on Friday by a big right hook delivered by the People’s Bank of China.
China’s central bank has ruled that all cryptocurrency transactions made in the country, and all those coming from overseas made by domestic Chinese citizens, are illegal.
Naturally, this caused a landslide in BTC prices. The coin dropped over 8% on the day – although it has since clawed back some of those losses and is trading into the green as of Monday 27th September.
This is the harshest and most blatant anti-crypto measure undertaken by China to date.
Beijing’s official stance is that cryptocurrency is a) illegitimate, b) an environmental disaster, and c) something it cannot control completely. Freeing finances from government oversight is the entire point of decentralised finance (DeFi) after all. In a country as centralised as China, that’s a no-go.
From here on out, it’s pretty much a given that Chinese measures against crypto will get even tighter.
The POBC has said monitoring will step up to stop banks handling any crypto-related transactions. Bank bitcoin transactions were ruled out by China as early as 2013, so really this shouldn’t come as a surprise.
Authorities will now seek to eradicate mining operations entirely. Recently, over 10,000 mining rigs were seized in Inner Mongolia, one of the busiest regions for cryptocurrency mining in China, as the nation steps up its efforts.
This could have major consequences for global Bitcoin supplies. The hash rate slowed dramatically when the last wave of Chinese anti-mining operations went into overdrive back in June. Expect more of the same – although that could benefit prices (scarce supply + high demand = profit?).
Now it’s a scramble from international exchanges to drop Chinese customers.
Huobi and Binance, two of china’s biggest exchanges, has stopped registrations for new Chinese clients. Wallet supplier TokenPocket has also said it will be winding up services for mainland Chinese customers and would willingly embrace regulation.
Twitter rolls out Bitcoin tipping
The rest of this article will look at those who feel more positively about crypto. Twitter CEO Jack Dorsey is certainly one of them.
It was announced last week that Twitter will now start accepting tips in the form of Bitcoin payments. That’s right: if you like a tweet you can show your appreciation by sending the original poster a little chunk of cryptocurrency for their troubles.
Twitter has turned to Lightning to enable Bitcoin integration. The feature is currently available for iOS users only. Android Twitter browsers will support it soon, according to Dorsey, but the launch date is yet to be revealed.
Clicking on the feature enables users to tip creators through third-party services like CashApp, which is operated by Square, Jack Dorsey’s payment platform.
There is also talk of Twitter going in hard on non-fungible tokens (NFTs) – a new digital way to present and own media.
These digital assets — often JPEG artwork — have exploded in popularity and are often used as profile pictures. Twitter is working on a solution to authenticate whether a user actually owns said JPEG.
This could give NFTs a fresh sheen of legitimacy.
Either way, it’s very clear that Jack Dorsey is a big crypto fan. It might also be helping crypto prices in general. On Friday, following the POBC statement, the market was a sea of red. Now, it’s much more balanced with key tokens back in the green.
That’s the power of social media for you.
Cardona to pump $100m into DeFi
While China has made its stance on decentralised finance abundantly clear, there are others who are convinced it is the future.
Emurgo, the investment wing of the Cardano network, which uses the coin of the same name, has pledged to invest $100m into developing DeFi.
The announcement was made by Emurgo CEO Ken Kodama at the 2021 Cardano Summit – an annual conference dedicated to everything involving the world’s fourth-largest blockchain.
Kodama said this major investment would accelerate the development of the Cardano ecosystem.
We will carry out an investment of 100 million dollars to accelerate the development of the Cardano ecosystem.
Please contact us if you would like to receive investment funds, our network, information and management support.
We will create a dedicated operation from 2022. https://t.co/m0uwiptMOx
— Ken Kodama (@KenKodama_Biz) September 26, 2021
Emurgo’s plan seems to cover all bases, seeking to boost blockchain education, NFT solutions, and pioneer DeFi as a whole.
This isn’t the only thing Emurgo plans to invest in. At Sunday’s Summit, the company announced it also plans to pump more funding into African artificial intelligence, blockchain, and smart technologies firm Adanian Labs.
As well as being a blockchain network, Cardano is also one of the world’s foremost altcoins (i.e., a token that is not Bitcoin). Despite this big announcement, the token was in the red. Cardano had fallen 2.5% in trading on Monday morning.
Bitcoin battered by POBC crypto punch
Bitcoin has taken a major body blow after the latest Chinese crypto crackdown was announced this morning.
People’s Bank of China rules crypto transactions are illegal
Volatility and Bitcoin: name a more iconic duo.
With the token starting the day in the green, traders were hoping to see a reversal to the bearish patterns and price action seen in September so far.
A fresh ruling from the People’s Bank of China put paid to that.
China’s central bank has said that all cryptocurrency transactions in the country are illegal and must be banned. As anti-crypto signals go, they don’t come much tougher than that.
A statement by the POBC said that all cryptocurrencies, including Bitcoin, Tether and Ether, are not fiat currency, thus they should not be circulated on the market.
The ban includes services provided by offshore and international exchanges to domestic Chinese citizens.
China’s crackdown on digital currencies has been rumbling along across the year, but this is the most overt statement yet.
The nation already moved to ban crypto mining earlier in the year. China’s economic planning agency said efforts to completely root mining out are underway, which could pose big problems for the global BTC supply.
Additionally, the POBC is stepping up its monitoring of cryptocurrency transactions, including speculative investing.
“Financial institutions and non-bank payment institutions cannot offer services to activities and operations related to virtual currencies,” the bank said
Bitcoin, as well as other tokens such as Ethereum, have been sent reeling by this news. Associated stocks such as Coinbase and MicroStrategy have also begun to slide on the PBOC’s comments.
BTC had been trading over $45,000 prior to the bank’s proclamation. At the time of writing, it had lost 5% as it spirals back into the red. Bitcoin is now being traded for around $42,500 but will likely slide further as the day progresses.
Some analysts were expecting higher prices towards the weekend with talk of $47,000. Now, it looks like BTC is going to continue to trend downwards into next week.
Looking at crypto boards just shows red. Ethereum is down nearly 10% and so is Litecoin. Polkadot has dropped over 11% while Ripple has also dropped by 8%.
Consternation over another market drop has never been far away from the Bitcoin sector after it tumbled from all-time highs of over $65,000 earlier in the year.
Arcane’s Fear & Greed index, which measures general market attitudes regarding BTC performance, was flashing bearish signals at the start of the week and this has continued.
On a scale of 0-100, with 0 being extreme fear and 100 being extreme greed, BTC registered a 27 rating on Tuesday, suggesting fears the market may bottom out are coming to fruition.
Realistically, this move should have probably been spotted earlier. As mentioned above, China has not exactly been subtle in its government-led distaste for decentralised finance. This is a nation where pretty much everything passes through government control after all.
But just when things were looking good for BTC, it’s down once more. It only goes to show just how volatile cryptocurrency trading is and how susceptible the market is to external pressures.
Perhaps wider global regulation may cause stabilisation across the board, but for now, cryptocurrencies are probably going to continue to pitch on volatile seas.