Mati Greenspan, Senior Market Analyst at FX broker eToro, has provided his daily commentary on traditional and crypto markets for September 9, 2019. The text below is an excerpt and does not contain the full analysis.
Highlights include:
- China’s banks tries its own form of stimulus: China’s reserve ratio will be the lowest level China has seen since before the financial crisis. They’re hedging this move by adding to their gold reserves.
- There’s a new fresh prince of the Minister of Energy: King Salman has appointed a new official to replace Khalid al-Falih, the old oil minister of Saudia Arabia – his brother, making a Prince the Minister of Energy for the first time on the Kingdom’s history.
- Bitcoin’s hashrate becomes hard to ignore: Bitcoin’s hashrate continues to stretch higher to around 6 times stronger than when bitcoin’s price preached its all-time high in December 2017. Regardless, the technical setup on BTC’s chart is somewhat bearish.
Traditional Markets
A lukewarm jobs report from the USA out on Friday has many analysts upping their conviction that the Federal Reserve Bank will once again cut their interest rates when they meet again on September 18th.
Not to be outpaced in the currency war, the People’s Bank of China has now stepped in with its own form of stimulus for China’s banks.
Explanation: In the current financial system known as ‘fractional reserve banking’ each bank is required to hold a certain amount of cash in their reserves for every dollar, or in this case yuan, they lend out.
As of September 16th, that ratio will be the lowest level China has seen since before the financial crisis.
Per the headline above, that means banks will be able to spend about $126 billion in order to bolster the economy.
Almost concurrently, China is also stocking up on gold. I wonder why…
New Prince Oil Minister
Lots of buzz has been generated in the Middle East over the weekend as…
Khalid al-Falih has had a good run but it seems he was not successful enough to satisfy the King in his efforts to boost the price of oil. The purple circle on this graph shows when Khalid assumed the position.
So, King Salman has appointed a new official to replace him. This person is a bit closer to the King’s scepter, his brother. That’s right. For the first time in the Kingdom’s history, a Prince is now the Minister of Energy.
According to people who know him, Prince Abdulaziz is very knowledgeable in the markets and has a very decisive character. However, KSA’s policy regarding oil production is not likely to change much.
Some analysts have pointed out however, that the market reaction is pretty telling of what this move might indicate.
BTC Rising Fundamentals
The crypto markets have been rather stagnant on the surface lately yet it seems that some of the fundamentals have been creeping up on us.
One of the most obvious metrics that many have ignored is bitcoin’s hashrate, which continues to stretch higher and higher into uncharted territory. The amount of computing power securing the bitcoin network is now approximately 6 times stronger than it was when bitcoin’s price reached its all-time high in December of 2017.
As well, and more simultaneously, we can notice a recent spike in the amount of value being transferred using bitcoin’s blockchain. This graph shows bitcoin’s estimated USD transaction volume which is now the highest it’s been since the mid-July.
Still, the technical setup displayed on the chart is a rather bearish one. So it will be interesting to see how this controversy might be reconciled.
Mati Greenspan can be found on LinkedIn, Twitter, or etoro.
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