Traditional Markets
Stocks fell yesterday, again led by Apple, the tech sector and manifesting in the Nasdaq. Today things seem to be bouncing upwards despite uncertainty in the press about the Brexit negotiations.
Conferring with my clients and colleagues in London lately it seems that just about everyone is struggling to keep up with exactly what is going on. So here’s a helpful flowchart that displays just how simple this is.
The complexity, of course, is showing up directly in the price of the Pound Sterling. This whipsaw action on the GBPUSD seems to be intensifying lately and the above news this morning is seeing the Pound capitulate.
Crypto Capitulation
As you may have noticed, the crypto markets took a sizable hit yesterday following the sell-off in the tech sector. Though we’ve seen that Bitcoin is usually fairly disconnected from the stock markets, there have been distinct moments lately where they have moved in tandem, which leads me to believe that there can be some level of spillover.
A wide variety of factors may have contributed to the fall yesterday. I even saw one analyst trying to peg this on Brexit, which somehow just doesn’t seem very likely.
Most of the news in the crypto sector over the last few days has been about the Bitcoin Cash hard fork happening today. The fear is that the hash wars in BCH could end up affecting BTC. To be clear, any miner that switches their BTC hash over to BCH will be paying a very heavy price.
Even in the unlikely event that we see a sizable reduction in Bitcoin’s hashrate, it might temporarily affect transaction costs on Bitcoin but it will probably not have any lasting effect on bitcoin’s price and certainly not its stability.
From everything I’m seeing, the move last night was more technical in nature. The break below $6,000 was quite significant and there has no doubt been a slew of stop losses that have been built up over the last few weeks.
