Mati Greenspan, Senior Market Analyst at FX broker eToro, has provided his daily commentary on traditional and crypto markets for November 8, 2019. The text below is an excerpt and does not contain the full analysis.
Earlier this week, the tech pioneer Microsoft, under the leadership of Satya Nadela, announced the astonishing results of a rather unique pilot program.
You may have noticed already, many employers tend to look at all the wrong metrics, oftentimes focusing on the number of work hours rather than what was achieved during that time.
There’s no doubt that quantity and quality of work are of far greater importance than the time the work took, but too many managers forget this simple fact when sending their reports up the corporate chain.
It’s like this in trading and investing as well. I’ve seen many a trader claiming a high number of trades per week as if it’s some sort of accomplishment. In fact, the opposite. Just like the weary worker, the less you trade, the fewer mistakes you will make and the more consistent your analysis is likely to be.
- Bakkt Future Volumes Enter a New Level: Volumes across crypto exchanges and CME futures have seen a noticeable retracement since the the Xi pump. Meanwhile, Bakkt volumes have remained remarkably consistent by maintaining daily volumes well above $5 million.
- Markets Might Not be in a State of Risk Appetite: Gold is down and stocks are up, but currency markets are telling a different narrative. As far as the Forex market is concerned, the Dollar is king right now. This is not the kind of attitude that usually aligns with appetite for risk.
- The Art of Gold Fundamental Analysis: Due to the rise of negative-yielding rates that are just starting to hit those who are hoarding large stockpiles of cash in the bank, some of that money will turn to a steady store of value for refuge.
- High Input Doesn’t Always Equal High Output: Microsoft’s experiment with a shorter workweek is comparable to trading: sometimes, the fewer trades you make, the more consistent your analysis will be.
Please note: All data, figures & graphs are valid as of November 8th. All trading carries risk. Only risk capital you can afford to lose.
Markets are pretty happy today on the optimism that the US-China trade war seems to be cooling down somewhat. For what I believe is the first time, President Trump has agreed to roll back some of the tariffs recently imposed on China in what he calls “phase one” of the negotiations.
Exactly which tariffs will be dropped in return for what is still being negotiated and the two Presidents were apparently looking forward to signing a deal in about a week from now on Sunday the 17th in Santiago. However, due to unrest in Chile at the moment, this has been serendipitously delayed.
Markets might seem to be in a state of risk appetite but for some reason, I don’t fully buy that narrative. Yes, stocks are cracking new highs while gold has come down some. The currency markets hower are telling a completely different story.
The picture above tells us that as far as the Forex market is concerned the Dollar is king right now. It’s not the kind of attitude that usually aligns with a full-on raging appetite for risk. So likely there’s something else at play here.
Wanted to focus on this one because as some of you may have noticed, gold and silver are a significant part of my portfolio at the moment.
The trade for me is more of a fundamental play. Due to the rise of negative-yielding rates that are just starting to hit those who are hoarding large stockpiles of cash in the bank, my assumption is that some of that money will turn to a steady store of value for refuge.
The rising triangle we were tracking on the charts however, did end up breaking to the downside yesterday.
For me, that meant a stop loss triggered on a high leverage position but now the question is how much lower can it go and should I move to extend my other stops. Not a great place to be, but every trader has been here at some point.
The scary part is that in these cases we often get stop losses piling up just under the current price. When stops bunch up like that it can a) be a target for market makers to run the stobs and/or b) cause liquidations to shove the price further down.
Luckily, technical analysis is more of an art than a science and I’m still fairly certain of my fundamental conviction, so let’s redraw the bottom line shall we?
There… that looks a lot better. Now instead of a busted triangle, it looks like a bullish flag. Glad we fixed that one. *phew*
Rising Bakkt Volumes
Wanted to update on my trip to Malta this week. However, as I’ve just landed a few hours ago and I’m still trying to digest it all. Was certainly exciting and I’ll try to have something a bit more in-depth for Monday.
In the meantime, I wanted to highlight what might be an interesting trend for crypto derivatives and definitely something to keep an eye on.
It seems the volumes on Bakkt’s new bitcoin futures have entered a new level. After a languid start, things are really starting to pick up. If we look closely at this image we can see that the first big spike came on October 23rd, the day that bitcoin dramatically broke below $7,500.
The next big spike and the current all-time record came two days later when bitcoin rose more than 30% on October 25th, commonly referred to as the ‘Xi pump’.
Since then, Bakkt volumes have remained remarkably consistent and maintaining daily volumes well above $5 million.
The same cannot be said for the volumes across crypto exchanges and certainly not for the CME futures, who since the Xi Pump have seen a noticeable retracement.
The fun part is seeing how the activity on the bitcoin blockchain has acted since the Xi pump. There was a remarkable dip in price before the event but since then (red) we can see a phenomenal recovery.
Now, it’s probably too early to be making any conclusions but what I’d like to explore further is if the volumes at Bakkt are simply increasing over time as more institutional investors get familiar with it, or are they mirroring actual transaction activity?
Would love to hear your theories on this so feel free to reply directly to this email or hit me up on social media.
Have a fantastic weekend!!
Mati Greenspan can be found on LinkedIn, Twitter, or etoro.
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