Bitcoin Gold Correlation, Trader SZ and a Market Overview #12
Market Meditations | September 9, 2020
Get insights into the record highs in Bitcoin gold correlations, a breakdown Ethereum and Bitcoin, early access to our podcast with Trader SZ and much more…
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Today’s Meditations:
Complete Crypto Market Overview
Bitcoin’s Correlation With Gold Hits Record High
European Crypto Exchange Eterbase Hacked, Lost More Than $5 Million From Its ‘Hot’ Wallets
Major Food Delivery Service Just Eat Will Now Allow France Customers to Pay in BTC
Venezuela Blocks Access to Coinbase and Remittance Service MercaDolar
Tiffany Sues LVMH for Backing Out of $16 Billion Deal
AstraZeneca Setback Delivers Reality Check on Vaccine Risks
SoftBank Loses $12 Billion in Value on Concerns Over Its Big U.S. Tech Bets
Trader SZ: Obsession and Mathematics to Dominate the Markets
The Life Cycle Investment Guide
Complete Crypto Market Overview: Bitcoin, Ethereum
BITCOIN / DOLLAR
Three Day
$10400 – Turning Point. Successfully claiming this level will shift my bias to bullish. Until then I expect us to move towards the 0.382 level
$10000 – Psychological support.
$9200 – Key Structural level. I’ve made it no secret that this level is key to maintain our macro bullish structure. Support + 0.382 confluence makes it an ideal spot for me to expect a bounce
ETHEREUM / DOLLAR
Four Hour
$442 – Key Structural Level. It’s a long way away but this is the level we need to reclaim our strong bullish bias
$400 – Key Psychological Level. After $400, I will look to start building a long position again. This is a key psychological level and given Ethereum has been leading the market in 2020, it’s the safest place to bet when we see signs of the market regaining momentum
$370 – Key Resistance. Given the current market conditions, I expect this level to hold act as resistance and potentially provide a short opportunity
$316 – Danger Zone. Below here I expect the downtrend to continue. $250 becomes a reality
Bitcoin’s Correlation With Gold Hits Record High
Increasingly we observe a correlation between gold and BTC. This relationship has been touched on in our ‘pilot’ Market Meditation. Today, there was an interesting article on coindesk that captured the record high in this relationship.
According to Coin Metrics data, the 60 day correlation between the 2 assets is hovering at record highs above 0.5. We have been watching this correlation strengthen sharply since the beginning of July. The beginning of July is relevant because of the story of the strength of the dollar.
From the peak of the C19 crisis to about July we saw a typical distressed market response whereby investors were seeking dollars. Afterall, the dollar is the global reserve currency and in times of uncertainty, investors feel relatively certain that at least the dollar would be among the last currencies to experience a crash or become invaluable. We saw this post 2008.
From about July onwards, however, the U.S. started to take a beating against other major currencies. This is largely on account of the U.S. comparative difficulty in containing the number of C19 cases and deaths. Jerome Powell’s recent announcement of a more relaxed approach at tackling inflation at Jackson Hole did not help matters.
This sell off in the greenback has bode well for scarce assets like bitcoin and gold. Bitcoin defended the $10,000 support for the fifth day straight on Monday, despite losses on Wall Street. This stands to strengthen the cryptocurrencies perception as a haven asset and also its relative insensitivity to movement in risk assets, mainly equities.
Increasingly, we see bitcoins appeal to the cashless internet economy, largely on account of its characteristics that include round the clock pricing transparency, lack of limits, interruptions or third party oversight.
European Crypto Exchange Eterbase Hacked, Lost More Than $5 Million From Its ‘Hot’ Wallets. Lesser known European crypto exchange ETERBASE was hacked Monday night through an attack on its “hot” wallets. In their announcement, ETERBASE said six of its addresses, tied to bitcoin (BTC), ether (ETH)/ ERC-20 tokens, XRP, Tron (TRX), Tezos (XTZ), and Algorand (ALGO), had been compromised. While an amount was not disclosed by the exchange, The Block research wrote that the hack apparently managed to steal more than $5 million. Read more.
Major Food Delivery Service Just Eat Will Now Allow France Customers to Pay in BTC. After Takeaway a few years ago, another major food delivery service Just Eat will now allow customers in France to pay in bitcoin. According to The Block, Just Eat delivers food from over 15,000 restaurants in the country and has a total of ~26.3 million users worldwide. Payments will be processed by popular cryptocurrency payment provider Bitpay. Read more.
Venezuela Blocks Access to Coinbase and Remittance Service MercaDolar. A digital rights advocacy group in Venezuela called Venezuela Inteligente alerted that their government has blocked access to two currency exchange platforms Coinbase and Mercadolar. Venezuela has a history of blocking exchanges but these restrictions were lifted until recently. Apparently, the government also blocked access to two major virtual private networks (VPN) that could be used to circumvent the restrictions of the government. Venezuela has been suffering from hyperinflation and banning these services is a way to control the capital that is fleeing out of the country. Read more
Tiffany Sues LVMH for Backing Out of $16 Billion Deal. In recent global news, the luxury industry’s biggest takeover is unraveling as LVMH moved to call off a $16bn purchase of Tiffany & Co. The response by Tiffany was a lawsuit to try to keep the deal on track. The Louis Vuitton owner cited delays related to a U.S-France trade dispute. The jeweler doesn’t buy it, claiming the owner is actually just trying to leverage the protests against police brutality and the C19 pandemic to seek a lower price. As a result of the developments, Tiffany shares plunged as much as 11% in New York, while LVMH gave up gains to trade 0.3% lower in Paris. “It’s a great way out for LVMH… they had paid a top of the market price ahead of the pandemic for Tiffany. It’s not surprising, their efforts to wriggle out of it” – Keith Temperton, trader at Forte Securities. An analyst at Mizuho Financial Group Inc. estimated that Tiffany’s shares could fall to $89.32 without the LVMH deal, 27% below Tuesday’s close. Read more.
AstraZeneca Setback Delivers Reality Check on Vaccine Risks. Increasingly it seems as though volatility in the global markets is driven less by announcements around monetary and fiscal policy and more in response to news of a C19 vaccine (be that from Russia or elsewhere). The markets are very quick to respond with extreme optimism or pessimism, somewhat ignoring the lengthy and long road to success with regards to the validation and mass production of any type of vaccine. In the latest news, one of the most promising C19 vaccines has stumbled: AstraZeneca Plc paused tests of its experimental shot after one patient began seriously ill. The setback comes as a reminder that vaccines can fail, or worse, they can sometimes deliver more harm than good. So take with a pinch of salt the promises from the politicians and governments that a C19 fix is around the corner. Read more.
SoftBank Loses $12 Billion in Value on Concerns Over Its Big U.S. Tech Bets. Shares of SoftBank fell another 3% by Wednesday’s close, extending losses from earlier in the week. This left SoftBank with a market cap of 11.9 trillion yen ($112.1 billion). That was down sharply from the roughly 13.2 trillion yen ($124.4 billion) SoftBank was worth just three sessions earlier. The company reportedly bought billions of dollars in call options in major tech names like Tesla and Amazon. SoftBank is being nicknamed the ‘Nasdaq whale’ for buying billions of dollars in call options – which bet on stocks rising. Last week, tech saw a major reversal amid fears that valuations had reached unsustainable levels. These tech bets came as a surprise to investors, highlighting a shift in strategy similar to a hedge fund. Read more.
Trader SZ: Obession and Mathematics to Dominate the Markets
Saeed has been successfully trading for 8 years. He’s a mentor to many and a well-known figure in our space. I’ve met a lot of traders, few have the unapologetic and genuine passion that Saeed has for this art.
Saeed also is as transparent as they come, he doesn’t glorify trading he shares the good and the bad. Join us as we discuss his mindsets, strategies and habits that have allowed him to keep trading for 8 years.
Market Meditations readers can have early access here.
The Life Cycle Investment Guide
In a previous Market Meditation, I urged you to consider your risk tolerance. Hopefully you will recall the purpose of this was twofold: to improve your mental comfortability with your portfolio of choice and to ensure that you are allowing yourself to enter trades in which you will be most successful.
Today we add another layer to your risk appetite: the life cycle investment guide. Another feature of A Random Walk Down Wall Street, which again, I would recommend to all traders at whatever point in their journeys. As a guide to junior traders and a refresher to mature traders.
A long time ago, investors would say to divide one’s wealth into 3 parts: a third in land, a third in merchandise (business) and a third ready at hand (in liquid form). Such an asset allocation is hardly unreasonable (added bonus of being quite catchy) but we can improve on this ancient advice because we have more refined instruments and a greater appreciation of the considerations that make different asset allocations appropriate for different people.
The general idea is that age is an important factor in your portfolio make-up. For those in their twenties, a more aggressive investment portfolio is recommended. Alongside your risk appetite, consider as a secondary factor that there is lots of time to ride out the peaks and valleys of investment cycles, and you have a lifetime of employment/income ahead of you. There is scope for significantly riskier stocks.
As investors age, they may want to consider cutting back on riskier assets and starting to increase the proportion of the portfolio committed to lower risk items such as bonds and bond substitutes such as dividend growth stocks. Another ancient wisdom was that the proportion of bonds in one’s portfolio should equal one’s age. It is never so black and white, however, and it is enough to simply consider alongside your risk appetite the merits of holding some lower risk assets.
Combining this with the risk sentiment article: a risk averse individual may want to consider the merits of taking some more risk earlier on in life and a risk seeking individual might benefit from considering whether to hold less risky assets a bit later on in life.
The exercise of building a portfolio requires a great understanding not only of oneself but also one’s life cycle. Bring the two together and you will have a portfolio that is suitable and ensures the highest quality of life.
