Better regulation and more recognition could be the way forward (Bitcoin)

Fundamental Analysis:

The past week has been quite eventful for the crypto-currency market on both sparking new hopes about the crypto-market as well as new disappointments.

The latest headlines sparking hope for the crypto-market could be that an asset manager and a block-chain company plan to launch a security which will be linked to Bitcoin. The novelty is that, if they succeed, they would have created an investment product which would be traded as easily as stocks. Specifically, Van Eck Associates Corp. and SolidX Partners Inc. filed a request to list a Bitcoin-linked ETP to the US Securities and Exchange Commission on Wednesday. The fund is to be physically backed by holding actual bitcoins and is to be insured against loss or theft of the crypto-currency, as stated by the firms. Should the two firms be successful we could be witnessing the trading of crypto’s in another level, approachable maybe by a wider investor base. Such news could support Bitcoin primarily, as the prementioned investment product will be backed by Bitcoins, but could also serve in a wider recognition of the crypto-market.

In another turn of events in Korea, a District Court ruling not to confiscate Bitcoins because they are in the form of electronic files without physical entities, was repealed by the South Korean Supreme court. In its reasoning the Supreme Court stated that Bitcoin is intangible and comes in the form of digitized files, but it is traded on an exchange and can be used to buy goods. Therefore, receiving Bitcoins is an act of taking profits. The importance of the Supreme Court’s ruling centers around two points:

-It sets a precedent,

-It recognizes that digital assets such as crypto-currencies, do have real world value.

However, there are two sides of the ruling. The one which practically assists further to the adoption of Bitcoin, as a new legal recognition took place and the other that digital assets could be seized by courts.

As last, we reserved some comments made by Bank of England Governor Mark Carney. Specifically on the sidelines of the meeting of the G7 finance ministers in Canada, Carney stated that better protection for investors in crypto-currencies such as bitcoin were required and that it would be on the agenda of the regulators meeting. Also it was mentioned that British regulators were working on a report on regulations for crypto’s and that the report is due later this year. Please be advised that Mr. Carney had previously said that crypto’s are a poor alternative to existing central bank payment systems, however the underlying technologies may have valuable applications.

Summing it all up, as time progresses we might see more and more recognition for the crypto market but at the same time more regulation, which is not necessarily a bad idea considering all the scams which have surfaced overtime in the crypto-market. Bitcoin and other crypto’s may depreciate somewhat in the future but their existence seems more certain than before.

 

Technical Analysis:

Bitcoin seems to be the trend setter for a number of crypto currencies hence we selected it for our technical analysis.

The crypto has been trading in a sideways manner for the past week, with the majority of the prices being between the 7315 support line and the 7690 resistance line. The RSI indicator in the 4 hour chart seems to indicate a rather indecisive market  for the past week, remaining near the reading of 50. Overall, we would not share opinions about the bulls being back in the market currently. We could share the view that the current trend is for a sideways movement between the prementioned boundaries and currently see the case for Bitcoin to continue to trade in that manner for the next few days maybe with some bullish tones.  For our opinion to change we would require a clear breaking of the prementioned levels.

However should the Bulls take the reins we could see the price of Bitcoin breaking the 7690 resistance level and aiming for the 7890 resistance hurdle.

On the other hand should the bears be in the driver’s seat we could see the crypto driving south breaking the 7315 support line and aim for the 7000 support barrier once more.

Cryptocurrencies regulation to support or to tumble prices?

Fundamental Analysis:

Financial market participants and followers associated with Cryptocurrencies, are requesting regulations in order to protect their interests but most importantly to add further transparency to the market.

In Australia and New York State actions have already been taken and now Canada is also getting ready to follow up as the blossoming industry becomes increasingly mainstream. During mid-May, the European Union set an agreement in place for cryptocurrency exchanges to identify users in order to boost bitcoin’s legitimacy and to prevent criminals from taking advantage by moving money around the world. Though, the problem is not resolved as all the continents must synchronize the regulation activities in order to create a global regulation system on Crypto’s. Abusers can choose to use the most appropriate country with low barriers of regulation and carry out criminal or foul activities effortlessly.

Legislation targeting virtual-currency exchanges was introduced back in 2014, though those rules have yet to come into effect. Currently, the issue remains and exchanges that belong to the “money services business” are left unregulated and the people investing money in these industries are seemingly unprotected from many scams and fake websites that are surging the Internet.

Furthermore, the digital coin market could be sensitive to negative comments coming from various acclaimed figures within the global financial community as these could be harmful to the perception of the world regarding the credibility of the digital coin industry.  All these established figures do create volatility speaking in public. In our opinion, investors should be able to create their own views on decisions.

May has been a volatile month for cryptocurrencies, but most notable is the overall downward trend in prices though can also be viewed positively as it creates opportunities.

Investors are seen to believe in the power of block chain, the technology behind Bitcoin and other digital assets. In our opinion, investments could increase as numbers confirm that daily volatility on Crypto’s has increased in 2018 and is forecasted to rise even further.  Blockchain allows people to communicate their transactions more efficiently and more countries are now utilizing it.

As a conclusion, we believe Crypto Currencies are undergoing a difficult period with a lot of criticism against them and subsequently entering a sell off. On the other hand, presently, we are seeing many countries opening crypto currency exchanges indicating that people could be interested in the digital market. However, whether crypto-currencies and the technology that powers them will reshape the financial system remains to be seen, but control from regulatory bodies could help stabilize the crypto currencies aggressive movements and negative outlook.

Technical Analysis:

Gold enters new era trading under $1,300 per ounce

Gold prices landed severely lower on Tuesday, trading at a $1,294.60 an ounce, on a seven-month low following economic reports on retail sales and manufacturing released from the US.

Treasury advancement

At the same time the shiny metal was under significant pressure from climbing rates in the Treasury advancement .Yields were boosted on Tuesday as well as the entire Treasury yield curve from 2-year notes to 30-year bonds, but most notable the broadly watched 10-year made a significant move and has broken into a new trend. The 10-year Treasury yield rises back above a key psychologically important level at 3%.Rising government bond yields have the effect of reducing demand for bullion which doesn’t offer a yield.

Furthermore, the U.S. Retail Sales rose for a second consecutive month in April, suggesting the economy is accelerating and boosted further the US dollar. Adding to this, the Empire State manufacturing index rose in May, similarly indicating to an improving economy.

While there are no signs of overheating, investors may be concerned that the Federal Reserve may try to slow down the economy by raising interest rates more aggressively.

Trade wars

One of the most talked about and analyzed pending issues on the global economic interest remain the trade wars. With the US trying to turn the situation to its advantage, the only current progress achieved is a hardened stance from both sides including China but as well as leaving the market on further uncertainty. In our opinion the two sides must settle down and understand each other for world-wide benefit as it is only logical that, if the biggest economies of the world are to collide, the global economic system will be affected an eventually hurt. It also must be noted, that Apple’s CEO Tim Cook has publicly urged Donald Trump to rethink the imposed tariffs as they can backfire on the US affecting also the private sector which is currently seen booming.

Inflation

Fears of higher inflation are also surging within the market as the US government is strengthening economically, as financial data suggests. In normal conditions, higher inflation must be followed by increased wages otherwise economic uncertainty prevails. Uncertainty, is what gold prices need in order to kick start increased volatility and especially on the upward.  Gold has been weakening for some time now and has broken below the 1300 psychological number somewhat indicating a new trading perspective for the precious metal.

Expectations

Surprisingly and according to Thomson Reuters GFMS Gold Survey published on May the 8th it is forecasted that gold could average at $1,360 and peak at $1,500 per ounce. They are basing these expectations on political uncertainty including the Middle East tensions and Brexit. We share the opinion that Gold has not said its last words above $1300.

 

Technical Analysis

After the sideways movement from April 23rd until May 15th, gold’s prices dropped significantly breaking in one day consecutively, the 1303.50 and the 1294.55 support lines. For the time being, prices seem to stabilize below the 1294.55 resistance line and continuously testing it, without finding success in clearly breaking it.

We see the case for gold to continue in a sideways movement for the next couple of days and then start rising again as the US Dollar bullish momentum could start fading away and uncertainty may rise further.

Should the bulls take over the market we could see gold prices breaking the 1294.55 resistance line and explore the 1303.50 resistance hurdle. Should the bears be in the driver’s seat we could see the bullion driving south breaking the 1282.15 support line and aiming for the 1274.50 support zone.