WEEKLY ANALYSIS: THE TRUMP SAGA CONTINUES, SO DOES ETHEREUM’S SURGE

Asset	Current Value	Weekly Change
S&P 500	2344	-1.44%
DAX	12064	-0.55%
WTI Crude Oil	48.10	-1.39%
GOLD	1243.50	1.07%
Bitcoin	926	-13.57%
EUR/USD	1.0798	0.56%

5 THINGS TO WATCH NEXT WEEK

1. The Dollar: Will the weakness continue?

The US Dollar has been in trouble since the recent Federal Reserve meeting, despite the fact that the central bank raised its benchmark interest rate. The rate hike, in theory, should help the currency, but this time, the bank’s cautious outlook, together with the preceding rally in the Dollar, the reaction was the exact opposite. A classic “buy the rumor sell the news” situation.

As the Dollar has been pushing higher against most of the major currencies since the election, there is still more room for correction in the reserve currency.

EUR/USD, Daily Chart Analysis

2. The US GDP print and the CB consumer confidence Index: The Fed is watching

Arguably the two most important economic releases of the week could have profound effects on financial markets following the latest Fed meeting, as the rate hike schedule of the bank remains a mystery.

3. Ethereum: New highs ahead?

Ethereum has been the star of the recent period, as it kept on delivering new highs on almost a daily basis. Although the cryptocurrency might be getting overheated, the next week could hold more fireworks for traders. The recent break-out that we correctly anticipated carried Ethereum above the resistance zone that held the currency back all week.

Ethereum on the rise, Daily Chart

4. Oil: An industry in turmoil

Oil producing countries and companies are spooked once again by the movements of crude oil, as a 3-month long consolidation concluded with a bearish break-down two weeks ago. As US shale production is on the rise and the OPEC, especially Saudi Arabia, is cornered by the new market pressures, it’s likely that oil will experience violent moves in the coming days.

5. Trump: Will there be a healthcare deal?

The media covered the Republican Party’s debate regarding a new healthcare bill that supposed to replace “Obamacare”. The new president was forced to retreat at the end of the week, pulling the bill ahead of a risky vote. It’s hard to imagine that Mr. Trump will not try to reach a deal again in the near future. We expect continued focus on the story, although the real impact of the bill on financial markets is questionable.

In Focus: Cryptocurrencies

 

The performance of the main cryptocurrencies in March

March has been a very active month for cryptocurrencies so far, and while Bitcoin had a highly volatile and mixed period, some of the other majors gained significant ground. Ethereum and Dash surged higher more or less in tandem, bagging close to 200% in just three weeks. Monero is also on the rise with a commendable 60% gain.

The recent week was Ethereum’s without a doubt, as Dash and Monero remained below their previous highs and Bitcoin plunged back below 1000 on Friday. Litecoin has been the most stable of the major cryptocurrrencies, although the 8% gain could be interpreted as a positive sign, given the weak performance of Bitcoin.

Monthly trading volumes reflect the price action, as Ethereum has experienced a huge jump in interest and Dash also so significant inflows.

Currency	Weekly Volume	Monthly Volume
Bitcoin	2116	9325
Ethereum	929	3796
Dash	181	919
Monero	69	319
Litecoin	36	180

Key Economic Releases of the Week

Day	Country	Release	Expected	Previous
Monday	EUROZONE	German Ifo Business Climate	111.2	111
Tuesday	US	CB Consumer Confidence	113.9	114.8
Wednesday	US	Pending Home Sales (monthly)	2.30%	-2.80%
Wednesday	US	Crude Oil Inventories		5.0 million
Thursday	GERMANY	Prelim CPI	0.40%	0.60%
Thursday	US	Final GDP	2.00%	1.90%
Thursday	US	Initial Jobless Claims (weekly)	244,000	261,000
Friday	GERMANY	Retail Sales	0.70%	-0.80%
Friday	UK	Current Account	-16.3 bil	-25.5 bil
Friday	UK	Final GDP (quarterly)	0.70%	0.70%
Friday	CANADA	GDP (monthly)	0.30%	0.30%
Friday	US	Chicago PMI	57.2	57.4

From : Hacked.com 

Ethereum Rises Stratospherically to New All-Time High

Ethereum is mooning. The currency has risen above $40 in the past 24 hours, with its market cap nearing $4 billion, while overall trading volumes are not far off from bitcoin. At Poloniex, eth has actually surpassed bitcoin’s dollar trading volumes, rising above $10 million.

Eth moons – image cryptowatch

In eth’s main trading public space, r/ethtrader, which yesterday had as good as many online active users as r/bitcoin, a party mood is on. Funny memes, a thread gilded full of reddit gold and then stories like this:

“Finally I have enough money to start my own photography studio.. Well almost enough…. Sort of getting emotional here…. If I sell all of my ether and realize my gains, I get the studio that I wanted for ages…. But I lose my ether. I start from zero. Decisions decisions…. Why is the life so difficult?” Another etherian says:“Um, I’m now a millionaire. Knowing crypto, this may not last, but it’s still an amazing feeling because I was born in a poor country and I’m not even 30 yet.

It’s hard to believe this all started in January 2014 with a comment I saw about Dogecoin in some random reddit thread. Yeah, Dogecoin. That’s what snowballed a few thousand dollars into a million.

Still absorbing this…”

Eth’s price appreciation gained speed yesterday following an attack on Bitcoin Unlimited, increasing by more than $10 in just one day, but what many may find more surprising than any other indication is the number of active users on the sub.

r/ethrader online users almost as many as r/bitcoin’s.

It usually hangs around 100, perhaps 200, but since yesterday it has attracted some 700 users online. It may be a temporary effect due to the price rise, but the community clearly appears to be growing considerably.

The atmosphere there is different from any other digital currency. It is the biggest, after bitcoin, and they appear to be very welcoming while generally in a friendly, happy mood.

While dash’s subreddit censored a CCN story on the currency, there is no known indication of censorship in ethereum’s spaces. Bitcoin’s trading sub is usually very strict on what topics can be discussed, leading to, in many cases, moderated comments. Eth’s trading sub, on the other hand, appears willing to discuss all topics, including other digital currencies.

It has attracted attention from many bitcoiners, especially those on the bigger blocks side, because the currency has plans for as good as unlimited on-chain scalability, but the total market cap for all digital currencies has increased. The pie is getting bigger as currencies attract adoption from outside this space.

Image from Shutterstock.

Why Wells Fargo Tried to Start a Bitcoin Exchange in 2013

Wells Fargo, the $294 billion US bank, engaged in a meeting with major global investment management firm Fortress Investment Group and Xapo CEO Wences Casares to potentially start a bitcoin exchange for their clients.

In his book “Digital Gold,” NY Times finance journalist Nathaniel Popper introduced an anecdote in regard to Wells Fargo and Fortress’ joint bitcoin project, which was discussed in 2013 in the New York headquarters of Fortress.

Prior to the demise of Mt Gox, previously the world’s largest bitcoin exchange, bitcoin price was surging at an exponential rate. The market cap of bitcoin continued to set all-time highs, as its price reached $1,120. Mainstream media outlets and analysts created intense hype around bitcoin, which led multi-billion dollar banks and financial institutions to consider bitcoin as a game-changing technology within the realm of finance.To target younger clients who were interested in investing their money into bitcoin at the time, Wells Fargo and Fortress sat down with prominent investors and finance experts such as Casares to discuss the viability of a business model based on a global bitcoin exchange.

Xapo was yet to be launched during the time executives from Wells Fargo and Fortress were discussing the possibility of launching a bitcoin exchange as a collaborative project. Xapo was launched almost a year later by Casares.

The idea of the Fortress team, which was already looking into potential business models around bitcoin due to the company’s interest in the rapid growth of bitcoin, was to create a regulated bitcoin exchange for US-based customers. With a regulated market, Fortress believed that bitcoin mainstream adoption will spur and the general public will be able to invest in bitcoin with ease, without running in conflict with lawmakers.

An excerpt from Popper’s book read:

“Pete stood up and made his basic pitch to the Wells Fargo team. He explained why the Fortress team was so intrigued by the technology and pointed at the smart people around the table, such as Wences, who had thrown themselves into it. He hinted that Wells Fargo should be keeping up with bitcoin, given the potential for the new network to challenge some of the basic services, like payment networks, that the bank was providing. Pete closed by talking about the lack of an American-based regulated exchange for bitcoin–something that Fortress and wells Fargo could provide together.”

In 2013, the global bitcoin exchange market wasn’t well established and structured. Most traders purchased bitcoin in over-the-counter (OTC) markets or in direct purchases, as regulated bitcoin exchanges weren’t around during the time.

If Wells Fargo and Fotress introduced a fully regulated bitcoin exchange, it would have been the first of its kind. Such infrastructure built by one of the largest banks and financial service providers within the US would have formed a completely different image of bitcoin.

Ultimately, the plan of Wells Fargo and Fotress to introduce a regulated bitcoin exchange fell out, most likely because of the Mt Gox fiasco which crashed the value of bitcoin and led to a long recovery period for bitcoin.

Currently, banks including Wells Fargo are looking into private blockchain technology-based platforms, inspired by Bitcoin. However, blockchain projects are struggling to demonstrate any success or progress. In the future, if blockchain development comes to a halt, there will be a possibility of Wells Fargo pursuing business models around bitcoin.

Image from Shutterstock.

Does the UK Budget Threaten London’s FinTech Scene?

The U.K.’s Chancellor of the Exchequer Philip Hammond delivered his first Spring Budget to Parliament, announcing, among other things, that self-employed people would have to pay increased national insurance contributions (NICs) over the next two years. His announcement puts into question whether the U.K. will remain the best place to start and grow a fintech business.

In a report from the BBC, Hammond said that there had been a ‘dramatic increase’ in the number of people working as self-employed and that the reason a person decided to become self-employed should not be ‘differences in tax treatment.’

He added:

Such dramatically different treatment of two people earning essentially the same undermines the fairness of the tax system.

In April 2018, Class 4 self-employed payments will see NICs increase from 9 percent to 10 percent and then to 11 percent in April 2019 for those earning between £8,060 and £43,000. Class 4 employees contribute 12 percent. Those earning above £43,000 will continue to pay 2 percent and those under £8,060 will pay nothing.

Class 2 payments, which have a lower threshold of £5,965 or more in profits a year, will be abolished.

Taken together, only those self-employed with profits over £16,250 will have to pay, on average, around £240 a year, Hammond stated.

Hammond said:

The combination of the abolition of Class 2 and Class 4 increases I have announced today, raises a net £145m a year for our public services by 2021-22, an average of around 60p a week per self-employed person in this country.

Impact on UK Startups

Yet, the Federation of Small Businesses is reported to have criticized the changes to the rate of NICs for self-employed people.

Mike Cherry, chairman of the federation, said:

This undermines the government’s own mission for the UK to be the best place to start and grow a business, and it drives up the cost of doing business.

Not only that, but with Brexit negotiations causing a stir amongst many, it wouldn’t be surprising if fintech firms decided to establish themselves elsewhere.

With many young fintech firms taking on risks of establishing their own business this news may likely give potential new companies something to think about.

Furthermore, the fact that Hammond has announced a NIC rate increase for the self-employed could impact the U.K.’s fintech scene, potentially stalling new businesses from establishing themselves in the U.K. and helping to grow the sector, which, at present, is the global hub.

Featured image from Shutterstock.