Market News | Amana Capital
Special Story: Cryptocurrency Market Cap Falls By a Third After Closure Of a Lending And Exchange Platform
All major cryptocurrencies suffered last week in the wake of a shutdown in the major cryptocurrency lending and exchange platform BitConnect. The pitfall has been on a large scale, dragging the total market cap of cryptocurrencies by around 35% from a height of around USD800 billion on January 6 to around USD520 billion on January 16. While the recovery in other cryptocurrencies was substantial, that in bitcoin was on a modest scale, which led to a fall in the latter’s market capitalization to below 30% for the first time ever.
The three largest cryptocurrencies by market share experienced a rebound in trading across the bourses; trading volumes in Bitcoin futures on both the CME and CBOE also rose significantly, to USD180 million and USD165 million, respectively, nearly reaching highs of USD190 million on December 23, in comparison to its average daily volumes of around USD80 million and USD70 million respectively between these two peaks.
While open interest on the CME remained at around USD80-90 million, those on the CBOE declined significantly to USD20 million as against its average of around USD60 million this year. Further, the fact that CBOE contracts have been used to establish short-term speculative trade positions, implicative of the fact that less than half of the open interest from the January contract was rolled into subsequent contracts.
The last sharp rise in bitcoin price’s intra-day volatility was seen on December 22, when the trade volume was around 26% of the previous day’s closing level. The time also saw a sharp spike in the average transaction fees to around USD60, from USD20 per transaction. On the other hand, on January 16, when the intra-day trading range was similarly around 26% of the previous day’s closing price, average transaction costs saw a decline from around USD29 to around USD22.
The decline in average transaction costs shared space with a slump in the size of the mempool, or the aggregate size of transactions waiting to be confirmed. However, it climbed back to previous levels the following day. In comparison to bitcoin prices, the average transaction fees in Ethereum were just under USD2 per transaction on January 18, down from a height of around USD4 on January 10, while that in Ripple have slid from a few cents in early January to less than a cent on January 18.
The Canada wholesale sales report revealed an overall 0.7% m/m reading for November, as compared to the revised 1.6% m/m reading seen in October (previous was 1.5% m/m), below expectations for +1.0% m/m result.
According to StatsCan, sales were up in 6 of 7 subsectors, led by the food, beverage/tobacco, and the motor vehicle/parts subsectors. Meanwhile, the USD/CAD traded 0.22% lower at 1.2465 by 01:50GMT.
The United Kingdom labour market data for the three months to October featured the unusual combination of declines in both employment and unemployment, as inactivity increased. The single-month LFS data suggests that this was largely noise and, while the three-month averages for September to November could see similar results in terms of levels, markets expect the LFS unemployment rate to hold steady at 4.3%.
On the pay side, there are competing forces, with unfavourable base effects, arising from a short-lived period of strength in regular pay in late-2016 – set to weigh on headline (three-month average of the annual rate) wage growth, but bonuses remaining strong. On balance, markets expect both regular and total pay growth to hold steady at 2.3% and 2.5% respectively in November.
French President Macron said in a BBC interview on Sunday that while UK PM May's position made full access to the EU's single market impossible, something between that and just a trade agreement could be offered.
While we expect a bespoke (customised) deal to indeed be the eventual result, the EU Commission's position at this point is that the UK must choose between a Norway-type or Canada-style trading arrangement (with the latter excluding the UK's large service sector) with the EU. This comment has buoyed sterling today, though GBP/USD is still below Friday's high of 1.3945.
Cryptocurrency Daily Update: Bitcoin, Ethereum, Bitcoin Cash, Litecoin and Ripple
- Major Cryptocurrencies trade a tad lower after witnessing a mild recovery on Friday.
- Bitcoin trades slightly lower at $11,659 mark, Ethereum prices down 1%
- Bitcoin Cash down 4.37% to $1,795 level
- Ripple is back below the physiological level of $1.50 level, down to $1.37
BTC /USD (Bitcoin): Bitcoin trades a tad lower at the start of the new business week after suffering from a huge downfall last week. After plunging to 4 digits on last Wednesday, the most popular cryptocurrency prices rebounded above $11,200. The market capitalization of bitcoin rose to 198.32 billion, up from $193 billion a day before. At 11:20GMT, it was trading 2% lower at $11,659.
ETH/USD (Ethereum): Following bitcoin, the world’s second-largest cryptocurrency in terms of market cap, Ethereum, also moved remained a little weak, but hovered above the physiological level of $1,000 on the Bitfinex exchange after sinking to $770.10 last week. At 11:20GMT, it was trading 1% lower at $1,073.90.
BCH/USD (Bitcoin Cash): All major cryptocurrencies are in the red today. Right now, the Bitcoin cash remained a tad lower, but traded above $1,700 after succumbing to the dip of 1,345.6 last week. However, the entire crypto market is undergoing the tensions from regulatory authorities and that has poisoned investors’ sentiments throughout all bourses. At 11:20GMT, it was trading 4.37% lower at $1,747.9.
LTC/USD (Litecoin): Following the other cryptocurrencies, Litecoin also pushed a little lower, but remained above the $190 mark. At 11:20GMT, it was trading 1.05% lower at $191.53.
XRP/USD (Ripple): The third most popular cryptocurrency, the ripple is back below the physiological level of $1.50 level on Monday after witnessing a parity last week. The digital currency started the week on a softer note. At 11:20GMT, it was trading 0.65% lower at USD1.37606.
BoJ Seen Sticking to Bond Purchase Programme, Keep 10-Year Yield Target Near Zero
The Bank of Japan is scheduled to announce its first monetary policy decision of 2018 on Tuesday, which is expected to be uneventful as the central bank expected to keep its monetary policy setting unchanged. The BoJ will keep its benchmark interest rate at -0.100% and the 10-year yield near zero, along with 80 trillion yen QE until 2% inflation target is achieved.
Investors will look ahead to the central bank’s statement at a time when the economy is witnessing a recovery in growth and inflation. The Japanese yen strengthened as traders become responsive to prospects of a less-dovish BoJ. However, we believe that it is still too early for the Japanese central bank to change its policy framework, but expect the board to start discussing how it can add flexibility to its 10-year JGB yield targeting policy.
According to a recent Reuters survey, a majority of economists said that the BoJ will keep monetary policy setting unchanged in 2018. On the other hand, 2-out-of-five economists/analystS expected a hike in the 10-year yield target, echoing market speculation as the economy continues to gain momentum.
Governor Kuroda in his latest speech said that the CB will maintain QQE with yield curve control for as long as needed to achieve 2% inflation in a stable manner. He added that the Japanese economy is on a moderate expansion and is expected to remain on this path for some time. He said the deflationary mindset will not disappear easily and that there is need to continue with the QQE program.
Looking ahead, we think that a policy change is off the table for the foreseeable future. For the upcoming meeting, the market should focus primarily on Gov Kuroda’s possible comments on an eventual QE exit strategy.