Wells Fargo strategist – Bitcoin and the market are correlated

Wells Fargo strategist - Bitcoin and the market are correlated

Wells Fargo strategist – Bitcoin and the market are correlated

Assessing risk is a good gauge for determining stock market and cryptocurrency movement, says Wells Fargo strategist.
Wells Fargo raises its price target for equities up by 10 percent this year.
Both the market and bitcoin are now beginning to recover from dips earlier this week.

If the bitcoin bubble bursts, the stock market may go down along with it, said Christopher Harvey, head of equity strategy at Wells Fargo, who sees a correlation between the two.

"On Monday what we saw is all risk products sell off," Harvey said Wednesday on CNBC's "Fast Money."

A hit on the market, he said, can cause investors to panic and begin selling bitcoin as well.

"It sometimes adds fuel to the fire," Harvey said.

Risk in the marketplace was at a high earlier this year as the stock market rallied, which led to more interest from investors who saw the potential for big gains in the crypto market.

"Last year what you had was money chasing performance," Harvey said. As volatility shot up, he said, there was a "massive" demand for liquidity.

Then on Monday, the Dow Jones industrial average plunged 1,175 points by the end of the day. Bitcoin also fell to one of its lowest points in two months on Monday, trading at $5,947.40.

Harvey said the best gauge for predicting future market movement and the price of digital currency is simply by assessing the risk.

"We think of it more as what we have to watch out for, what we have to … tell our clients to be careful of," Harvey said. "We don't make a call whether it's going to go up or down but that it's a risk in the marketplace, and it's really far out on the risk spectrum."

Wells Fargo raised its price target for equities, up about 10 percent over the next year. Its 2018 S&P 500 year-end target is 2,950, compared with the earlier target of 2,863. Cryptocurrencies and the market should trade in correlation over the next three to six months, it said.

"If we're right, what we should see is risk product going higher," Harvey said.

"If we're right and risk starts to be bid again, it wouldn't surprise us to see a bid in some of the crypto markets," he said.

All eyes remained on bitcoin Wednesday as the market began to recover. The cryptocurrency was trading above $7,000, even briefly tipping over $8,000 in the evening.

As the crypto market becomes more regulated some of the risk should disappear, Harvey said.

Author Kellie Ell News Associate for CNBC

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Bitcoin âSKYROCKETS’ Cryptocurrency soars 25 per cent in 24 hours as ‘investors celebrate’

Bitcoin âSKYROCKETS' Cryptocurrency soars 25 per cent in 24 hours as 'investors celebrate'

Bitcoin skyrocketed last year that saw the prized currency hit an all-time high of £13991.86

Bitcoin ‘SKYROCKETS’ Cryptocurrency soars 25 per cent in 24 hours as 'investors celebrate'

A BITCOIN resurgence could be underway as the cryptocurrency soared over 24.5 per cent in the last 24 hours that has surely given investors an excuse to celebrate, it has been revealed.

Leading virtual currency tracker Coinbase declared that Bitcoin has seen an 24.5 per cent rise that saw its value climb back up to £5,288.03 ($7,383.45).

Bitcoin skyrocketed last year that saw the prized currency hit an all-time high of £13991.86 ($19,535.70) on December 17.

The increase will surely cause investors to let off a sigh of relief – the cryptocurrency had been plagued with severely declining values since it broke its price record.

As Bitcoin saw sharp declines, so too did other leading currencies Ethereum, Bitcoin Cash, Ripple and Litecoin.

Ethereum is currently valued at £534.31 ($746.04) while Bitcoin Cash sits at £656.88 ($917.17).

Meanwhile, Litecoin is worth £97.29 ($135.84) per coin and Ripple is worth 53p ($0.74).

The dramatic fall in virtual currencies recently could have been caused by increased regulations around the world.

India has been labelled as the next significant nation to outlaw cryptocurrencies, according to a finance ministry official.

New Delhi’s economic affairs secretary, Subhash Chandra Garg, stated that the government is setting up a panel to analyse cryptocurrencies and aims to submit a report on them in the current fiscal year.

He explained: “The government will take steps to make it illegal as a payment system. As well as having a regulator in place.

“We hope now within this financial year the committee will finalise its recommendations… certainly, there will be a regulator.”

Meanwhile, there are fears that China could harness its Great Firewall to block access to virtual markets.

Any and all websites offering services related to cryptocurrencies have been wiped from search engines and social media in the Asian superpower.

Initial coin offerings (ICOs) have already been banned in China.

ICOs have been previously attacked for being harnessed by scammers in a desperate effort to steal investor funds.

The US could also be targeting “increased federal regulation” for cryptocurrency trading platforms.

By JOSEPH CAREY | UPDATED: 05:41, Wed, Feb 7, 2018

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Bitcoin drops below $6,200 for first time in three months

The virtual currency fell to $6,190 for the first time since mid-November, according to Bloomberg News, and represents the latest hammering for a unit that saw a stratospheric 26-fold rise last year.

Bitcoin plunged 20 per cent to a three-month low today, its latest sharp loss following a series of setbacks for the cryptocurrency that, with a collapse across global mainstream markets adding to the selling.

The virtual currency fell to $6,190 for the first time since mid-November, according to Bloomberg News, and represents the latest hammering for a unit that saw a stratospheric 26-fold rise last year.

Today's collapse comes just six weeks after bitcoin hit a record high of $19,511, fuelled by a flood of speculators looking to make a quick buck, with warnings it could fall another 50 per cent.

Since those heady days the cryptomarket — which includes dozens of other units — has been pounded by news of crackdowns by governments including in China, Russia and South Korea, one of the biggest markets for the sector.

On Thursday, India said it would "take all measures to eliminate" cryptocurrencies' use as part of a payment system and in funding illegitimate activities, while Japanese authorities raided a virtual currency exchange after it lost $530 million to hackers.

Central bank in Europe, Japan and the United States have also flagged concerns about the unit and this week saw several commercial lenders say they would stop allowing their customers to buy bitcoin through their credit cards owing to debt concerns.

Stephen Innes, head of trading for Asia Pacific at Oanda, said "the dynamics behind the moves are regulatory clampdowns and investors losing confidence in crypto".

The sell-off on Tuesday was exacerbated by crushing losses on world stock markets, with the Dow on Wall Street suffering its biggest one-day points loss and wiping out all its 2018 gains.

The global rout comes as panicked investors fret over rising US borrowing costs, leading them to cash in profits after a stellar couple of months that have seen many indexes hit record or all-time highs.

Equities have enjoyed months of surges fuelled by optimism over the US economy, corporate earnings and the global outlook.

But while traders have been piling into equities, pushing many global indexes to record or multi-year highs, there has been growing concern on trading floors about elevated US Treasury bond yields — at four-year highs — and the likelihood of fresh Federal Reserve interest rate hikes.

"The risk-off tone is hitting Bitcoin almost as hard as a global regulator and bank scrutiny," said Greg McKenna, chief market strategist at AxiTrader. "The latest dent to the Cryptospace has been banks saying they are shutting down the ability of clients to buy bitcoin with their cards."

"This could end up a full round trip back into the $1,850/$2,966 region.

Source: Feb 06, 2018 10:39 AM IST | Source: PTI

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Bitcoin Not Giving a Big Enough Hit as âGateway Drug’

Bitcoin Not Giving a Big Enough Hit as ‘Gateway Drug’

Interest in Bitcoin hit its high point leading up to its own high of $20,000 in the middle of December last year. Interest peaked, not only in investing circles, but also in the mainstream as Bitcoin became the buzzword on everyone's lips.

This adoption was championed by Bitcoin as it welcomed millions of users to the cryptocurrency community, as expressed in Coinbase’s figures alone. However, in this fast paced ecosystem, Bitcoin is not enough to hold the attention of this vastly diverse community. So, while it may be the ideal coin to get people hooked on cryptocurrencies, once they are in and settled, there is time to seek out a multitude of other coins that are better suited to their needs or beliefs.

The draw of big growth

Bitcoin’s biggest draw was the incredible returns it was offering as it rallied from 2,000 percent in 12 months. This phenomenal growth continued to increase interest in the currency, and that sparked even further growth in this massive hype cycle. It has been correlated before that searches for on Google for Bitcoin are closely related to its growth – a phenomenon known as the ‘Satoshi Cycle’. In the lead up to December’s high, the Satoshi Cycle was in full effect as Google trends showed some interesting figures.

Nicholas Colas, a pioneering Bitcoin analyst in the world of traditional investments, has taken this correlation very seriously and states that it plays a big part in his predictions. "Going into December, [searches] skyrocketed," Colas said on CNBC’s Fast Money. He added that the total number of Bitcoin Google searches worldwide tripled that month:

"You saw that correlates to the total increased number of wallet growth, which doubled in December from approximately 5 percent to 10 percent as Bitcoin rallied.”

Already hooked

However, taking this metric into consideration, it could be argued that the new wave of adopters are now starting to disperse and find their way to other coins that are more suited to their individual needs. It makes sense that as people become educated and learn more about options in the crypto community that they begin to diversify and pick out their favourite coins to invest in. This often leads to money moving away from Bitcoin and into Altcoins.

Bitcoin, being the dominant, most adopted and scene-leading coin, will continue to be the ‘gateway drug’ of the community, but it is finding it harder to hang on to total support and dominance.

These sentiments are expressed by Colas, who adds:

"Bitcoin is considered the gateway drug to all cryptos and it has acted exactly that way. Right now [the Google search data] is telling me there's not really that next leg up in Bitcoin because there's not that interest that leads to wallet growth that leads to price appreciation."

Proof?

Colas tries to justify this position by explaining how Ethereum has been the only coin that has fared relatively well in the top echelons of the CoinMarket Cap:

“Some of the movement in Ethereum, which has traded much better [in January], is just money which is being pulled out of Bitcoin."

However, it is important to note that Bitcoin’s price fluctuations and movements are still heavily linked to all other coins. The saying that: ‘the tide moves all boats’ is still true in the cryptocurrency market with Bitcoin essentially being the tide. When Bitcoin is up, most coins follow, and when it is down, the same red graphs appear to follow suit across the board.

Author Darryn Pollock

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Cryptocurrency Markets Move Back Into Green After Substantial Selloff

Cryptocurrency markets are rebounding today, Feb. 3, following yesterday’s multi-month low in Bitcoin's price. Most of the top 50 coins are in green, with 24 hour gains over 20 percent.

In part due to pressure from misleading reporting on regulations in India, the overall cryptocurrency market took a massive nosedive starting Thursday, Feb.1, shedding more than $100 billion in market cap in the 24 hours following the news.

However, after the substantial selloff, the market has spent today bouncing back, with Bitcoin rising back above the $9,000 level. At press time, Bitcoin was trading at an average of $9,095, up 3.54 percent on the day.

Following Bitcoin’s lead, other coins have also rallied substantially. With the except of three coins, every top 50 cryptocurrency has seen gains, with Litecoin (LTC) and Cardano (ADA), and Verge (XVG) leading the pack with gains between 15 and 20 percent.

A quick glance at the Coin360 market snapshot indicates a clear positive turn after the substantial negatives of the week.

Despite the market lows this week, figures such as Litecoin founder Charlie Lee and CNBC’s Cryptotrader host Ran Neuner have made bullish statements recently about Bitcoin. In an interview with Cointelegraph, Lee in particular offered some level-headed perspective on volatility in crypto markets, often lacking in a market crowded with fearful newcomers.

News of the first Canadian Blockchain ETF approval may well have played into today’s rally.

Bitcoin hit a record high of 20,000 in late December, only to crash, along with the rest of the market, just a few days later, Dec. 22, when Bitcoin and altcoins lost 20-30 percent.

Since then, the leading cryptocurrency has yet to fully recover, hovering roughly between $10-$15,000 per coin, until this yesterday’s multi-month lows under $8000.

The entire month of January saw a market sell off, in part due to increased regulatory news from South Korea – and misleading reporting on it – that left many investors fearful.

Author Jon Buck

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Bitcoin is bottoming, expect a 70 percent surge â Trader

Bitcoin is bottoming, expect a 70 percent surge – Trader

The old saying goes, "buy when there's blood in the streets," and that's what I'm doing with the recent bitcoin price action.

Bitcoin traded to a low of $7,700, this level is a loss of 25 percent on the week and 40 percent on the year. That $7,700 low is ironic because it is the same level that it broke above and began a parabolic ascent in mid-November.

I am watching a key level at $8,650 and a continued close above that could signal immediate upside potential. The next level of resistance is $10,000, and a break back above that should bring further buying to the table, suggesting near-term upside to $14,500, a 70 percent jump from its current price.

On the other side of the coin, I believe we are witnessing a market-cap rebalancing. Many disregard bitcoin but most do not disregard blockchain technology.

While I expect bitcoin to recover from this low, I believe that there are cheaper and better technologies within the complex that are positioned for stronger gains. The five that I am focused on are ethereum, NEO, ripple, stellar and last but surely not least, VeChain. The crytpocurrency market cap reached a height above $800 billion, a number that is now cut in half. Bitcoin's piece of the this market cap has slowly shrunk and is now only one third.

As buyers step back in I believe this trend will continue and I'm watching for these five to gain further ground.

Author: Bill Baruch

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Bitcoin Price Technical Analysis for 2nd Feb â Another Nearby Support

Bitcoin Price Technical Analysis for 02/02/2018 â Another Nearby Support

Bitcoin Price Technical Analysis for 02/02/2018 – Another Nearby Support

Bitcoin Price Key Highlights

Bitcoin price went on another leg lower after breaking below a short-term triangle consolidation pattern.
Price is now testing another potential support at the bottom of its falling wedge pattern visible on the 4-hour time frame.
Price could bounce off this area and make another test of the wedge resistance around the $10,000 area of interest.

Bitcoin price can’t quite catch a break as it suffered another selloff to the $9,000 handle.

Technical Indicators Signals

The 100 SMA is still below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the selloff is more likely to continue than to reverse.

In addition, the gap between the moving averages is widening to reflect stronger selling pressure, possibly leading to a wedge breakdown. Note that this chart pattern spans $9,000 to $19,000 so the resulting breakout could be of the same height.

Stochastic is indicating oversold conditions, though, which means that bears are tired and could let bulls take over bitcoin price action. RSI is also ready to pull up from the oversold level to signal a pickup in buying momentum.

Market Factors

Not even dollar weakness was enough to keep a lid on BTCUSD losses recently as negative sentiment for the cryptocurrency industry is prevailing. The lack of any positive updates is convincing more and more investors to liquidate their holdings, thereby exacerbating the selloff.

Analyst say that the increased scrutiny from regulators is still to blame for the tumble, especially since the CFTC announced plans to beef up its bitcoin futures review process. According to Chairman Giancarlo:

“The CFTC’s current product self-certification framework is consistent with public policy that encourages market-driven innovation that has made America’s listed futures markets the envy of the world. Whatever the market impact of bitcoin futures, I hope it is not to compromise the product self-certification process that has served so well for so long”.

This could involve setting “exchange large trader reporting thresholds at five bitcoins or less” and entering into “information sharing agreements with spot market platforms to allow access to trade and trader data.”

Author SARAH JENN • FEB 2, 2018 • 05:02

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Bitcoin, Ripple, And Litecoin Sell-off – What’s Different This Time Around

Bitcoin, Ripple, And Litecoin Sell-off - What's Different This Time Around

Bitcoin, Ripple, And Litecoin Sell-off – What's Different This Time Around

The current sell-off in Bitcoin, Ripple, Litecoin, and other cryptocurrencies may have a long way to go before it’s over. For a “technical” reason: it’s broad, extending from major currencies to the smaller ones.

When Bitcoin dropped close to 40% back in the middle of December, Ripple rallied, quadrupling in value in just a few days. The rally quickly spread to Ethereum, Litecoin, NEM, Siacoin and Bytecoin, and other cryptocurrencies.

Then, as Ripple and other cryptocurrencies sold off a couple of weeks later, Bitcoin rallied.

There’s a good explanation behind the rotation among cryptocurrencies. Some cryptocurrency exchanges require Bitcoins to pay for coin transactions. So investors who already owned Bitcoins had to sell them to pay for those transactions.

Rotation from one coin to another isn’t new to investing. It has been applied on Wall Street for years, where investors rotate funds between “defensive” and “cyclical stocks,” at times when interest rates, i.e. the “opportunity cost” of money, remain low.

That’s bullish for stocks, because it confirms that money is staying within this asset class rather than moving back into money market investments.

And that was a bullish sign for cryptocurrencies back then, too.

But that’s not what is happening this time around. With the exception of Ethereum, all major cryptocurrencies are down simultaneously. In the last seven days, Bitcoin is down 10.10%, Ripple is down 17.23%, and Litecoin is down 10.40%; and all are 50% or more below their all-time high back in December.

Table 1

Seven-Day Price Change For Major Cryptocurrencies

Source:Coinmarketcap.com 1/31/18 at 1.30pm

Worse, the sell-off has been extending across the entire cryptocurrency list—see table.

Table 2

Source: Coinmarketcap.com1/31/18 at 1.30pm

This means that money getting out of major cryptocurrencies isn’t being plowed back into other cryptocurrencies. It is leaving the entire asset class.

That’s bearish for all cryptocurrencies.

And that’s what’s different with the sell-off in major cryptocurrencies this time around.

Panos Mourdoukoutas , CONTRIBUTOR

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