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Author Topic: Forex and Crypto news from Libertex  (Read 8366 times)

Offline Libertex

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Forex and Crypto news from Libertex
« on: November 09, 2023, 12:03:58 PM »
Fed decision helps to buoy US stocks as positive data abounds

Ever since the post-pandemic boom in the US stock market came to an abrupt end in late 2021, it's been an arduous slog for many companies to try and regain some of the ground lost during the slow grind lower of 2022. The start of this new year seemed to offer an olive branch to the battered stock market as major indices gained over 10% in January 2023 alone. However, by the end of July, the wheels had already begun to come off the recovery.

Since then, the country's two biggest indices — the S&P 500 and Nasdaq 100 — have both lost close to 10%, dropping from $4,576 and $15,826 to $4,193 and $14,409, respectively, in the space of just three months. But movements this week would seem to suggest there could be light at the end of the tunnel for tortured stock market investors.

The release of the latest Consumer Confidence numbers saw the S&P 500 rise 0.7% on 31 October, while the Nasdaq managed to move up 0.5%. These gains were then built upon further the next day as the Fed's decision to hold rates steady saw respective jumps of 1.1% and 1.6% for these major indices. The gains might not look like much on the face of it, but they're a sign that equity prices are responding positively to key economic data despite the ongoing (and worsening) geopolitical instability. As the world begins to interpret the Fed's latest decision and post-meeting comments, traders and investors everywhere are wondering what the implications for the stock market will be up to the end of this year and beyond.

Positive data releases surprise market

With the increasing geopolitical instability that has now spread to the Middle East, persistent inflation, and higher costs of borrowing, many would expect key economic indicators to be suffering. However, in the US, at least, the muted impact of these multiple factors has left analysts scratching their heads. While the recent Consumer Confidence figures released this week by the Conference Board were indeed down from a month ago, the decline to 102.6 from 103 in September was much less than the full three-point decline predicted by a Reuters poll of economists.

Meanwhile, the US job market appears completely unfazed by the pervasive uncertainty as it continues to defy all the odds. After adding 336,000 jobs in September, unemployment remains steady at a very healthy 3.8%. The US Labor Department's Job Openings and Labor Turnover Survey (JOLTS) also showed layoffs dropping to a nine-month low, while job openings — a key yardstick of labour demand — were up 56,000 to 9.553 million on the last day of September. Overall, the survey reported that there were 1.5 open jobs for every unemployed person in the US, which is a stark contrast to the pre-pandemic average of 1.2.

While it's not entirely clear why the labour market is performing so well at present, there's no doubt that this is a positive factor for equities that could lead to sustained growth in the near-to-medium term.

Fed feeds confidence in risk assets

In a move welcomed by investors, the US Federal Reserve decided to hold rates steady for a second consecutive month at its meeting on 1 November, similarly opting to maintain the federal funds target rate at 5.25% to 5.5%. This has been interpreted by many to mean that the US regulator is finally finished with its rate hike cycle, which is why the stock market responded so favourably to the news.

However, as is always the case with these FOMC meetings, it's the closing press commentary where we can find some of the biggest pearls of wisdom. In his post-meeting comments, for instance, Powell upgraded his assessment of the economy, saying that "economic activity expanded at a strong pace in the third quarter" compared to the "solid pace" he referred to back in September.

Ironically, it appears that the Fed policymakers think that it is precisely the strong labour market and higher-than-expected GDP growth that is keeping inflation high, with Powell stating that "we will need to see some slower growth and some softening in the labour market to fully restore price stability". Despite the latest hold on interest rates, policymakers don't seem worried about making further rate hikes if needed, even if they elect to keep rates steady for a third time in December. This all but amounts to a tacit commitment by the central bank to a more dovish policy, which is good news for stock market investors. Once the market accepts that the rate-raising cycle is truly over, money will begin to flow freely back into risk assets.

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« Last Edit: November 28, 2023, 05:00:07 PM by Libertex »

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Forex and Crypto news from Libertex
« on: November 09, 2023, 12:03:58 PM »

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Offline Libertex

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Re: Forex news from Libertex
« Reply #1 on: November 13, 2023, 12:46:38 PM »
Has gold lost its glisten?

There's been talk of a commodities super cycle for years now, and yet hard assets continue to disappoint. With the pandemic and then post-COVID hyperinflation, many had reasonably expected an explosion in safe-haven assets, of which gold is perhaps the quintessential. Sadly for gold bugs, it never seemed to come. Following the initial 25% gain in the first half of 2020, the yellow metal has been decidedly flat, and with inflation hitting double digits for much of last year, this actually represents a decline in real terms. Barring natural swings and corrections, gold has been steady in and around its current price of $1976 since September 2020. And now, as the global geopolitical situation grows increasingly tense month after month, precious metals investors are wondering what it will take to finally see some sizable moves to the upside for gold and silver.

The current illogical lull in precious metals is yet another reminder that old models and theories don't always hold true in today's MMT world. The world's biggest economy, the US, is full of contradictions, and a more certain model doesn't appear to be forthcoming just yet. Despite all the conventional wisdom suggesting that haven assets should be booming, metals continue to slide lower, with gold dropping another 0.7% on 7 November. So, what are the causes of the seemingly unstoppable rot in gold and silver, and what can we expect over the coming months and years as the global community faces more and more instability and uncertainty?

Strong dollar overshadows gold's shine

As a dollar-denominated asset, there's no way that gold can escape the influence of the US national currency. Assuming all other factors remain equal, if the dollar loses value, then gold must axiomatically gain in value. It's worth remembering the historic achievement of EUR/USD parity from September to November 2022 and how that left gold prices looking artificially stagnant.

In reality, what had happened was that gold's real-world gains had merely moved in lock step with the greenback's and were thus invisible to the untrained eye. Now, the Fibre did eventually return to a more familiar 1.12 this June but then edged slowly back down to 1.05. Now that we've seen some more encouraging movement to the upside for EUR/USD throughout October, the yellow metal actually managed to gain more than 6% in October, outperforming euro gold by more than one whole percentage point. And though it has now declined by 0.75% since the start of November, this is less than half the drop seen in the euro price per Troy ounce (-1.9%). Silver managed about 75% of the net gains of its more valuable counterpart, recording a 3.26% rise over the last 30 days. With a strong labour market and inflation close to under control, however, we might be wise to expect the dollar's strength to grow given the ECB's more dovish monetary policy compared to the Fed. This could then negatively impact dollar-denominated precious metals' prices.

A lack of interest

The next major factor affecting the prices of precious metals is also connected to central bank policy: rising interest rates. As we've already touched upon, the Fed has been much more hawkish in its rate-rising cycle, and this has finally paid dividends in the form of a return to the semi-normal inflation rate of 3.7% this month. It's still not quite at the 2% target rate, but Fed Governor Lisa Cook believes the central bank's current interest rate of 5.25-5.50% is adequate to get price pressure down to where they want it.

The problem gold and silver have with this is that they are non-yielding assets. This means that their holders do not receive any interest for holding them. On the other hand, corporate and even Treasury bonds pay their holders a return in addition to the principle, and these increase as central bank interest rates rise. The US 2-year Treasury note now pays a handsome 4.934%, and many AA/AAA corporate bonds are paying well above 5%. In fact, even vanilla high-yield savings accounts are offering 4.5-5.5% interest at the moment.

This easy availability of above-inflation, highly liquid investment options will make it very hard for gold to remain attractive to its target market of risk-off investors looking for stable returns and protection against inflation. For this reason, gold bugs might be disappointed over the coming months, save for a drastic change in the macroeconomic situation worldwide.

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Re: Forex news from Libertex
« Reply #2 on: November 17, 2023, 03:16:45 PM »
Crypto rally “overdone” or just getting started?

A horrible couple of years for crypto left HODLers covering their eyes and counting their losses. Over a protracted thirteen-month decline, the flagship digital currency, Bitcoin, plummeted almost 75%, and it seemed as if there was no bottom in sight. Thankfully, from the start of this year, things have been looking up. In fact, BTC has managed to post gains of 118% since January, and it would now appear that the bulls could be back on the run at last.

As always, the factors behind this growth are numerous, but an undoubtable driver over recent months has been the buzz surrounding the potential impending approval of a raft of spot Bitcoin ETFs by the US Securities and Exchange Commission. After kicking the can down the road for almost the entirety of its permitted 240-day comment period, the SEC is finally expected to greenlight the first of the 10 ETF applications currently under review by 17 November or, at the very latest, in January 2024.

And while the excitement around spot ETFs has played a huge role in BTC's fortunes this year, the effect of similar products on altcoins has been much more muted. It's worth remembering that ETH has already had its own spot ETF approved, and yet this coin has barely managed half the YTD gains of BTC. This is because altcoin investors are typically more savvy and are led more by functionality than transient positive news factors.

That said, the week starting 13 November did see XRP go through a sharp rise (+10%) and similarly steep correction (-9%) following the circulation of a fake Ripple spot ETF filing purportedly by Blackrock, which was subsequently later outed as a forgery. However, as we head into the final few weeks of 2023, investors and traders everywhere are wondering whether a fresh crypto boom is on the cards.

Slow and steady

The first thing to note about this latest bull market is that it's much more controlled this time around. Instead of an over 500% increase in price over six months like the one seen in 2020/21, this cycle has taken almost double the time to record a 118% gain. And while many love huge returns, the volatility and uncertainty that came with Bitcoin's previous booms and subsequent busts made it a very tricky space to invest in for the long term. The hope is that this more reasonable pace will allow the uptrend to persist much longer, especially in the wider positive market context.

Spot Bitcoin ETFs, for example, are just on the horizon, with approval of up to 10 such products expected in Q1 2024. It's hard to imagine a scenario where this doesn't result in an increase in BTC's price, as the investment firms offering such ETFs will be required to purchase large amounts of Bitcoin to back these instruments. This effect will then be amplified by the subsequent influx of institutional investment via these new, easy-to-use vehicles. If this wasn't enough, we then also have the next BTC halving to look forward to in April next year.

Historically, Bitcoin prices have rallied following previous halvings. Six months after the first halving in 2012, BTC's price shot up to $126 from $12. Then, after the second halving in 2016, it rose from $654 to $1000 within seven months. And following the last one in 2020, Bitcoin's price more than doubled to reach $18,040 from $8,570. With only 2 million coins out of a possible total of 21 million remaining, it's surely going to be a bloodbath on the mining market once the rewards drop their next 50% to 3.125 BTC per block, but this is only good news for the long-term price.

Maybe it's all priced in?

With an asset class like crypto, anchoring is always an issue. It's hard to see Bitcoin's current YTD gains as anything less than the tip of the next bullish iceberg, given the history of price dynamics in this notoriously volatile space. However, despite BTC's fairly recent highs, a gain of almost 120% in less than a year is pretty good going in any situation.

In a research report last week, JPMorgan gave its reasoned rebuttal of the two arguments suggesting significant growth ahead, namely the SEC's spot ETF approvals and impending halving. Firstly, the investment bank's analysts believe that capital will likely just be moved into the newly approved spot ETFs from existing BTC products such as the Grayscale Bitcoin Trust (GBTC), futures ETFs, and listed mining companies, thus not having any meaningful impact on real BTC demand. In short, it believes the crypto rally is "overdone". The lead author of the JPMorgan report, Nikolaos Panigirtzoglou, similarly noted that such ETFs already exist in Canada and Europe and have gained "little interest from investors since their inception".

Another argument is that this decision, coupled with Ripple and Grayscale's recent court victories, will force lawmakers to change their stance. However, Panigirtzoglou deemed this unlikely, given the freshness of the memory of the FTX scandal. He also believes that the halving is already priced in for the most part, citing this as the main reason for the recent upward motion and suggesting that any further growth will require new, organic drivers.

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Re: Forex and Crypto news from Libertex
« Reply #3 on: November 28, 2023, 05:01:16 PM »
Stocks look to end 2023 on a high amid global insecurity

As we head into the final month of 2023, it’s worth noting that this has been a much-improved year for US stocks after two torrid years of ever-lower lows from 2021–2022. Despite huge geopolitical uncertainty across Europe, the Middle East and Asia, above-target inflation, and energy shortfalls, equities have somehow managed to avoid the typical declines associated with global instability. Since January, the US’s Big Three indices – the Nasdaq 100, S&P 500 and Dow Jones Industrial Average have managed to gain 47.54%, 18.9% and 6.08% respectively as at the time of writing (22/11/2023). And this doesn’t even tell the full story since some individual stocks such as Microsoft, Tesla and Nvidia have risen by as much as 57.5%, 118% and 252.2% respectively.

And while these YTD numbers are of course useful, momentum is what investors are interested in for the most part. Well, the good news is that a large bulk of these gains have been made in the last 3–4 months, with little to suggest a slowdown on the horizon. As usual, the main factors remain US monetary policy, the labour market and consumer confidence – all of which are looking fairly conducive to stock market returns at present. With the end of the year in sight, we’ll be looking at how these key fundamentals are likely to evolve in the coming months and the expected effect on US equities.

Right said FED

The impact of monetary policy on stocks is well known and the US regulator is without a doubt the most influential of all central banks. Amid runaway inflation back in 2021–2022, the US Federal Reserve acted decisively to raise interest rates while its counterparts in Europe and the rest of the world were hesitant – though it did take nearly a year of “transitional” hyperinflation to convince them. Despite the initial pain, the Fed’s strategy has proven to be the correct one as price pressure in the US sits at a much healthier 3.24%, while much of the eurozone remains above 5% and some EU nations continue to battle double-digit inflation. There has been much speculation as to whether the US regulator is done with its current rate hike cycle, with Fed Governor Lisa Cook stating that the central bank's current 5.25–5.50% rate is sufficient to bring inflation back to the 2% target. CitiBank analysts stated in a report earlier this week that it believes “Fed officials are most likely done raising rates this cycle”, while the CME Group's FedWatch Tool actually assesses the odds of a rate cut after Q1 at about 57%. Needless to say, stocks' strong performance over the past three months have been driven at least in part by the rapid drops in inflation and anticipation of an end to the Fed’s hawkish policy. If we get confirmation of this, then it can only be good for equities well into 2024.

Lucky numbers

The other major positive factor affecting risk assets like stocks is unsurprisingly the wider macroeconomic context – and this is typically measured by key economic indicators like the labour market, consumer sentiment, and various PMIs. In spite of high inflation and general uncertainty, the US labour market has counterintuitively been at its strongest in years. According to the latest non-farms payrolls reports, unemployment is at a very healthy 3.9%, with 297,000 new jobs added in September and 150,000 in October. What’s more, seasonal employment around the holidays is expected to see even more positions created before the end of the year. And while The University of Michigan consumer sentiment for the US is lowish at 60.4 for November, this is expected to improve as global tensions ease and the market’s strong performance becomes apparent. After all, consumer sentiment is based on the subjective opinions of ordinary people, which often tend to lag behind the market. For a services-based economy like the US, the non-manufacturing PMI is a huge indicator of general economic health and, despite not pulling up any trees, it has stayed solid above 50 for over six months now and is only likely to rise further as the Christmas and New Year celebrations boost demand for both goods and services. Let’s not forget that the market can often trail somewhat behind the key data – that’s why they call them leading indicators. With this in mind, these favourable numbers combined with a more dovish Fed policy could see the equities’ bull market continue into next year.

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Re: Forex and Crypto news from Libertex
« Reply #4 on: December 05, 2023, 10:36:07 AM »
+
« Last Edit: December 05, 2023, 10:38:22 AM by stormgain »

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Re: Forex and Crypto news from Libertex
« Reply #5 on: December 06, 2023, 04:46:18 PM »
What lies ahead for crypto after the historic Binance settlement?

Last week marked a momentous occasion in the history of the cryptocurrency market, but this one wasn't exactly cause for celebration. After an investigation lasting almost six months, a record $4.3 billion pre-court settlement was reached between Binance and the US Securities and Exchange Commission that included the departure of former CEO Changpeng Zhao amid pending money laundering charges. The recent past has been a bit of an eye-opener for crypto investors following the FTX scandal and a number of fines for celebrities backing dubious altcoins.

But it's not all doom and gloom. There's hope that this gargantuan fine will prove a watershed moment for the industry that sees the proper application of AML and KYC regulations and the eventual elevation of cryptocurrencies to an asset class on par with equities and forex.

As we prepare for a raft of spot Bitcoin ETF approvals in early 2024, the original cryptocurrency is currently eyeing a move up to the key level of $40,000 as bears and bulls battle over its next move. With a massive hash rate of over 500 exahash, miners clearly feel confident that the uptrend that has already seen BTC gain almost 130% YTD will continue. But as has already become clear since Bitcoin's institutional adoption, the biggest movements in any crypto bull cycle now tend to come in the altcoin space. With this in mind, we'll be looking at the top three alternative coins to watch in 2024 as we attempt to predict what factors will drive or restrain their growth in the New Year.

Cardano (ADA)

As a recent but revolutionary blockchain platform with a focus on security, scalability, and sustainability, Cardano has been garnering significant attention from crypto aficionados in recent years. With its strong smart contract capabilities, we can expect this altcoin to do well as such technology becomes more widely used in the financial industry. ADA has already gained over 54% since the start of this year, which, while significantly less than Bitcoin, is still impressive and leaves plenty of room for additional growth in 2024. Crypto Capital Ventures founder Dan Gambardello, for instance, predicts ADA's market cap could reach $400 billion by 2025 when it believes its price could rise as high as $11. Despite having an inflationary mechanism, Cardano's PoS Ouroboros protocol makes it a provably secure platform. Coupled with its longstanding commitment to scientific research and peer-reviewed protocols, this is likely to help boost its credibility and adoption in the growing smart contract space. A break above $0.40 will allow it to break into a bullish channel and should pave the way for further growth.

Polkadot (DOT)

As a multi-chain platform enabling different blockchains to interoperate and share information, Polkadot's unique chain-based design has caught the eye of both investors and insiders for its scalability and innovation. Despite only launching in 2020, it's already managed to rise to 15th in CoinMarketCap's rankings, amassing total capital of over $6 billion in its short history. And while it has only gained a comparatively paltry 25% YTD, this only tells half the story. A dip in the middle of the year saw the coin drop to as low as $3.63 in October, and so its current price of $5.38 (as of 29/11) actually represents a nearly 50% gain in the space of one calendar month. As DeFi becomes increasingly popular in 2024 and beyond, we can expect Polkadot's demand to grow steadily on account of its highly functional relay and para chain model coupled with its user-friendly interface. The technical analysis has DOT showing bullish indicators across the board, with Altfins scoring it a "Strong Up (9/10)" for both the short- and medium-term. If DOT can get above $6 in the near term, this will be good for its longer-term prospects.

Solana (SOL)

Solana positively exploded onto the scene back in 2020 and was quickly tipped as an Ethereum killer. This high-performance blockchain platform, which was created for high-speed decentralised applications (dApps), is capable of up to 2,500 transactions per second. With the sixth-largest market cap, SOL is already attracting institutional interest despite its relative youth and firm altcoin status. In fact, in this month alone, Solana has witnessed institutional inflows of over $40 million. This is many times more than any other altcoin and more or less half of what Ethereum has attracted. And they don't call it smart money for nothing. SOL is up a massive 340% YTD, nearly triple the gains achieved by BTC over the same period. With huge potential in DeFi, smart contracts, and dApps, Solana definitely has a bright future. In terms of technical analysis, the Relative Strength Index (RSI) has moved above the neutral line into the bullish zone. What's more, the Moving Average Convergence Divergence (MACD) indicators also show a red bar recession, which would suggest waning bearishness. Longer-term prices are difficult to predict, but many analysts see SOL above $100 by 2025, which still leaves it plenty of room to its ATH of $258.78.

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« Last Edit: December 07, 2023, 09:40:20 AM by Libertex »

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Re: Forex and Crypto news from Libertex
« Reply #6 on: December 11, 2023, 11:00:15 AM »
Oil and gas prices back in the spotlight as snow hits Europe hard

Anyone with a car or gas central heating will surely remember the huge price increases these staple fuels experienced back in 2022, just as inflation on all other goods was also running wild. Brent hit a high of $122.70 per barrel last summer. Meanwhile, the decidedly seasonal natural gas also shot up massively, with the Dutch TTF Natural Gas Futures chart rising almost to ten times the amount of its November/December 2020 level to reach a whopping €290.05 per MWh in late August of last year.

After that peak, however, both these energy resources experienced a heavy downward trend, one which is still decidedly in effect for natural gas. Oil's trajectory has been slightly different but with much the same destination. Brent crude dropped more sharply to hit a low in March 2023 that has remained for the most part ever since.

But what investors would like to know just as the heating season got well and truly underway with a bang this week in Europe is this: What can we expect from the prices of these fuels up until the end of winter? Will the OPEC production cuts yield the desired result of higher prices? And will the cold winter ahead be enough to drive up the landed cost of LPG even after Europe and the US have had a full year to plan for this eventuality? Let's find out the answers to all of these questions and more in today's article.

Gas heating up

As we already touched upon briefly, natural gas has been almost in freefall since its huge growth back in the summer of 2022. Now, the critical energy source stands at the lower end of its historical average range, with the Dutch TTF showing €39.60 per MWh and the Henry Hub trading at $2.72 per MMBtu (as of 6 December), which represents an almost 80% average discount on last year's peak prices.

This is not without reason, however. Europe learnt its lesson from last winter and has steadily been increasing reserves to capacity. As a result, inventories are now at record highs, while European gas demand has fallen to 15–20% below its pre-pandemic levels on reduced industrial demand. One would, therefore, expect that everything should be under control for this winter's heating demand peak, right?

Well, perhaps it's not quite that simple. While energy security is in a much better place than it was 12 months ago, we would do well to avoid being overly optimistic. Gas will remain tight in Europe until Q1 2025 at least, with the latest wave of supply projected to hit the market in 2025–2026. If this winter proves to be as harsh as some predict, we might be caught off-guard, particularly if there are any supply disruptions or increased industrial demand in Asia and beyond. After all, inflation appears to be stabilising, and PMI will likely then return to growth territory, even in Europe.

If this happens, the likelihood of gas price rises will increase exponentially, with the Henry Hub even more likely to gain given the relative strength of the US economy and labour market and the Fed already moving away from its hawkish policy and inflation almost stable.

Oil is still a contender despite the green agenda

Crude is another key energy commodity that has fallen from dizzy heights down to more manageable levels within the past year. And despite supply-side issues related to regional geopolitical instability — this time both in Europe and the Middle East — Brent has somehow managed to avoid revisiting the zenith of $120+ per barrel. In reality, there are multiple downward pressures working against oil, but to little avail, it would seem.

First, we have the overwhelming global trend towards greener sources of energy, with electrified vehicles leading the charge. Then, there is the extremely powerful factor of OPEC and its associated oil-producing nations. The cartel, with Russia and Saudi Arabia leading the chase, has already agreed to sustain production cuts.

Back on 5 November, both the KSA and Russian Federation agreed to extend their voluntary output cuts of 1 million bpd and 300,000 bpd, respectively, through the end of the year. In fact, according to Reuters, the two major OPEC players are expected to convene later this month in order to decide on "extending, deepening or increasing" their daily cuts. The knock-on effect of this phenomenon, coupled with rising demand from a resurgent Chinese industrial sector, is expected to drive prices up in the final quarter of 2023.

The US Energy Information Administration predicts that Brent will hit $93 by the end of 2023, with Light Sweet and WTI not far behind. If oil does hit this level by year's end, the probability of continued gains in 2024 can only rise.

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Re: Forex and Crypto news from Libertex
« Reply #6 on: December 11, 2023, 11:00:15 AM »


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Re: Forex and Crypto news from Libertex
« Reply #7 on: December 18, 2023, 08:14:59 AM »
China slips further into deflation as the West breathes a sigh of relief

Many have predicted that the next century will belong to China, and the narrative of a rising star in the East has become stronger and stronger since the turn of the millennium. This is not without its basis in reality. Since 1978, China has averaged 9% annual GDP growth and lifted 800 million people out of poverty. However, the pandemic and particularly the CCCP's zero-COVID policy have predictably thrown somewhat of a spanner into the works. In 2020, Chinese GDP growth fell to just 2% as international trade dried up amid the global shutdown. But then it shot right up above 8% as western economies reopened before crashing straight back down to 2% in response to the party's draconian citywide lockdowns throughout 2022.

Now, after a period of intense global inflation, something both strange and worrying is happening in China: prices are actually falling. That's right. Following November's consumer price index report that showed a 0.5% year-over-year decline, China is officially experiencing deflation. It might seem like a good thing on the surface, but unchecked deflation is actually the worst kind of price pressure since it prompts people to defer consumption in anticipation of lower prices. So, what are the implications of this likely to be on instrument prices both in China and worldwide?

A long time coming…

China's economic woes didn't emerge in a vacuum, nor were they totally unpredictable. Beyond the effects of zero-COVID, a part has also been played by the long-standing property bear market, youth unemployment, and the government's tech crackdown. These factors were then exacerbated by accelerating foreign capital outflows following the pandemic and a strain in relations with the US over Taiwan. For Chinese tech stocks, the effect has been nigh-on catastrophic. Tencent and Baidu, for example, have both lost close to 50% since late 2021. Meanwhile, the global household name Alibaba has tanked by around 65% over the same period. And with prices now positively falling in key sectors, it's understandable that consumers would avoid purchases where possible, which will only hurt these consumer-focused apps even further.

Even international fuel sources like oil and gas are down significantly year-over-year, and yet Chinese industry is unable to take full advantage due to weaker domestic and international demand. Pressure is mounting on Beijing to take decisive action. As such, all eyes will be fixed on this month's upcoming Politburo and Central Economic Work Conference (CEWC) meetings for confirmation of PBC governor Pan Gongsheng's pledge for more "accommodative" monetary policy aimed at boosting domestic demand and banishing deflation. If the expected CCCP support is forthcoming, we could feasibly expect a resumption of growth in these multi-year low Chinese stocks in 2024.

Winners and losers

It's no secret that the West has been suffering economically of late, but here, it's almost a mirror image of China. Inflation has been out of control and still remains significantly above target in both the US and EU, while fuel shortages associated with the geopolitical instability in Eastern Europe have been punishing both industry and ordinary consumers. As a result, the EURO STOXX 50 index has been fairly stagnant, barely gaining 5% over the past two years. Until just a few weeks ago, it was actually down, managing to gain a full 10% in a little over a month. This movement has been reflected almost one-to-one by the S&P 500.

It is believed that this sudden uptick could be attributable to China effectively "exporting" its downward price pressure to the West. Indeed, China represents 20% of all of Europe's imports in a trade relationship that is worth $2.5 billion per day. In sentiments that were later echoed by Societe Generale analyst Albert Edwards, Thierry Wizman from Macquarie wrote, "The longer that China fails to show that it can recover, the likelier that inflation expectations will decline in the West, as fears that China can export its deflation to the rest of the world through international trade will gain ground."

If this trend does continue, we could see an organic normalisation of inflation in the US and EU, which would lead central banks to finally normalise monetary policy and year over yearperhaps even adopt a more dovish stance in 2024. This would, of course, be great news for equities across the West.

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Re: Forex and Crypto news from Libertex
« Reply #8 on: December 22, 2023, 08:10:02 AM »
Powell pivot wakes up Wall Street's bears

After more than a year of rate hikes and hawkish monetary policy, not just from the Fed but from central banks the world over, many risk-on investors had all but lost hope. Interest rates increased from historic lows of 0.08% in February 2022 to over 5.3% in July of this year. This policy was essentially mirrored by the Bank of England and the Reserve Bank of New Zealand, with the European Central Bank and the Reserve Bank of Australia lagging only slightly behind at 4.5%. It might not seem like much, but the knock-on effect for anyone with debt — from mortgage holders to people with a car payment — has been nothing short of devastating. For fixed-income investors and those with savings, however, the relatively higher rates were a welcome boon, especially once price pressure had been brought under relative control.

But now that inflation is down near the golden 2% target at 3.1% in the US and 2.4% in the EU (per November's numbers), it looks like the Fed and ECB are finally preparing to pivot. This has led many of Wall Street's most committed bears to admit they may have been a little hasty in their pessimistic prognoses for stocks, which have counter-intuitively been rising steadily throughout this rate hike cycle. So, what does this mean for both equities and risk-off assets like government bonds and precious metals into 2024? In this article, we'll explore the likely implications of a more dovish central bank policy on these key asset classes.

Taking stock(s)

Following a massive crash in the wake of the COVID bubble, US stocks have been steadily gaining ground since the start of 2023. This occurred despite depressing predictions from the likes of Morgan Stanley and Piper Sandler and Co., suggesting that higher rates would push the US economy into a recession. Since the start of the year, the Dow Jones IA, S&P 500, and Nasdaq 100 are up 13%, 24%, and a whopping 54%, respectively. While rates were already up nearly 4% when the bull run began, the pace of the increases slowed significantly during the first half of 2023 and increments were reduced from 0.5% to 0.25%.

It's well known that the stock market tends to lead real economic data, and the 'smart money' likely pre-empted the end of the Fed's rate-hike cycle in July. Now, with Powell last week all but confirming the hikes are over and even hinting at cuts next year, Wall Street strategists have become much more optimistic about stocks for 2024. Major players, including Bank of America, Deutsche Bank AG, and BMO Capital Markets, have all now predicted that the S&P 500 will hit or surpass 5,000. Goldman Sachs has even gone as far as to revise its forecast just one month after setting it, predicting that the S&P 500 will rise another 9% by year's end to hit 5,100.

It seems, then, that it's no longer a question of "if" the stock market will rise but rather "by how much". Investors would do well, however, to keep watching the Fed minutes in the months that follow for any changes in stance from the regulator.

Not-so-fixed income

For around fifteen years now, fixed-income assets like T-bills, debt-based securities, and other cash-like assets have been generating uncharacteristically low returns. The reason for this, of course, has been the ultra-low central bank interest rates introduced following the 2008 Great Financial Crisis. In an unexpected benefit of the recent economic downturn, the series of rapid Fed rate hikes following the collapse of Silicon Valley Bank have seen yields on 3-month and 6-month Treasury bills hold steady above 5% since March of 2023. Quality corporate bonds have also been up around this level for much of the year. And though inflation was 'stealing' much of the real-world gains that investors could make on these kinds of assets, it was hoped that since inflation was creeping back towards its 2% target, there might be an opportunity for more conservative investors to book some actual gains.

Unfortunately, however, recent rhetoric from Powell would suggest that these atypically favourable conditions for fixed-income assets are likely to be short-lived. The US regulator is looking to engineer a soft landing for the economy, but some economists have warned that they could be risking the opposite outcome by pivoting to a dovish stance too soon. Apollo Global Management's Chief Economist Torsten Slok warned in a recent whitepaper that "higher borrowing needs by the US Treasury, the loosening of yield-curve control policy in Japan, and reduced buying and diminished inventory of US debt held by China" could all lead to a need for a return to more hawkish policy next year.

For now, it would seem the best way to play the Federal Reserve's pivot toward monetary easing is to load up on shorter maturity debt (such as 3-month and 6-month notes) that still offers a yield solidly above 4%. Since the situation is still very dynamic, investors will have to remain vigilant.

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Re: Forex and Crypto news from Libertex
« Reply #9 on: January 22, 2024, 11:00:13 AM »
All eyes on altcoins as crypto market kicks of 2024 with a bang

It's been a rough year for much of the world, but you wouldn't know it by looking at the financial markets. Despite the economic uncertainty, geopolitical instability and higher interest rates, many risk assets like stocks and crypto have been performing surprisingly well. Indeed, these typically risk-reducing conditions appear to have even illogically helped drive demand for famously volatile instruments like digital currencies. But as one might expect, some coins have fared much better than others.

The OG, Bitcoin, has gained a more-than-respectable 105% in the last 12 months, while Ethereum has risen around 63.5% over the same period. As impressive as these results might seem, though, they've got nothing on some of the most performant altcoins of 2023. Polkadot and Cardano, for instance, have managed to gain over 100% since October 2023. However, the undeniable top dog — with six-month gains of a whopping 650% — has been Solana. But what's propelling the fortunes of some altcoins, and why are others lagging behind? And what are the factors crypto investors should be watching for the rest of 2024?

What's the use?

In a trend that has been slowly developing since before the pandemic, the success (or lack thereof) of coins and tokens is becoming increasingly tied to their real-world utility over competitors. It's no surprise, then, that the above-mentioned altcoins are all major players in the smart contract, DeFi, and dApp spaces. And the best-performing of them all, Solana, is by far the fastest and cheapest for transactions.

Unlike its closest competitors — Cardano, Ethereum and Polkadot — Solana employs a special Hybrid consensus that merges features from the Proof-of-Work (PoW) and Proof-of-Stake (PoS) algorithms with its own unique Proof-of-History (PoH). This distinctive hybrid protocol enables it to reach speeds of 65,000 transactions per second (TPS), while Cardano and Polkadot average just 1,000 TPS by comparison. The original smart contract blockchain, Ethereum, can only manage a paltry 15-20 TPS, though the project's team has predicted that Ethereum 2.0 will hit 100,000 TPS in the next year.

Nevertheless, Solana Labs' value proposition goes well beyond mere transaction speeds. It's clearly headed by a forward-thinking team with big ambitions. The upcoming release of its much-hyped Beta Gameshift product, which promises to unite blockchain with the immersive experience of Web2 gameplay in the form of a user-ready API, is proof of exactly that. In fact, if anticipation around Gameshift can bring about a full-on bull run, Analytics Insights predicts that SOL could hit $200 by the year's end.

Whale watching

With legacy coins such as Bitcoin and Ethereum, the risk of large coinholders moving the market significantly in a short period of time is much lower now than in the early days of crypto. However, for up-and-coming projects like Solana, whales can still have a huge impact on price movements. And while we've already mentioned Solana's more than six-fold price increase over as many months, it has actually fallen nearly 30% since December. Some analysts have posited that this could be due to a 'pump and dump' routine by the leading figures of a major firm whose integrity has already been called into question once.

It's well known that FTX owns over 55 million SOL, which is worth almost $5.5 billion right now. And as Solana's value has risen over this year, so, too, have the number of bankruptcy claims being made against Sam Bankman Fried's ill-fated exchange. Now, luckily for Solana holders everywhere, around three-quarters of FTX's tokens are locked up. But this won't be the case forever.

Back in November, FTX unstaked 1.6 million tokens in a move that rocked the market. With so many people owed large sums by the FTX estate and debt claims soaring, there will continue to be a huge spectre hanging over SOL until FTX has sold its massive holding. This is likely to be a factor that will restrain growth in the medium term. Ethereum, on the other hand, doesn't have anywhere near the same susceptibility to thrashing whales overturning its boat. And if the promises of Ethereum 2.0 in terms of transaction speeds prove true, 2024 could be a good year for Ether, too.

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Re: Forex and Crypto news from Libertex
« Reply #10 on: January 31, 2024, 10:20:12 AM »
Time to stock up on equities?

Following a fairly severe bear market in 2021-2022, US stocks enjoyed an overwhelmingly positive 2023 – and this despite us seeing some of the highest interest rates in recent memory. Even with the Fed hiking its effective funds rate from 0.33% to over 5% in the space of just 12 months, equities were able to start and end 2023 on a high. The S&P 500, Nasdaq 100 and Dow Jones Institutional Average gained over 30%, 40% and 10%, respectively. And it wasn't just high interest that should've spooked investors. There was a sharp uptick in geopolitical unrest and significant economic uncertainty around the globe. The appetite for risk, however, remained unsated, and the charts continued to rise well into 2024.

And now that the erstwhile-runaway inflation is finally moving closer to the fabled 2% target, the Fed is rumoured to be preparing to announce rate cuts for later this year. The question many traders and investors are asking themselves is: Will this traditionally positive signal for stocks translate into an extension of the bull market, or will the contradictions continue in 2024? In this piece, we'll be looking at some of the key factors for equities this year and beyond as we try to work out the market's likely movements over the coming months while seeking to explain some of the unconventional behaviour we've seen of late.

The price is right!

It's a well-known and oft-parroted theory that the stock market generally moves well in advance of the real-world conditions that would ordinarily explain its behaviour, with much of the effect of any identified future factors being already "priced in". Despite sounding somewhat cliché, in this case, the seemingly asymmetrical increases in the major share indices alongside high (and even rising) interest rates can be explained by this phenomenon.

While interest rates were indeed over 5% when equities began their upward trend in January 2023, the pace of the Fed's hikes had fallen from 0.75% monthly to just 0.25%. What's more, inflation had fallen over 3% in the previous six months, while Powell had intimated that the US regulator would be ready to switch to a more dovish policy eventually if this positive trend continued. In something of a self-fulfilling prophecy, inflation continued to drop to 3% in the next six months without any significant rate increases from the Fed.

Judging from the persistent stock gains since then, it would appear that some small rate cuts may already be priced in for now, but if the FOMC elects to slash down to pre-pandemic levels, we could see equities make even sharper upside movements in coming months. Conversely, the Fed's failure to take rates back below 5% would probably cause stock gains to falter later in the year.

Nowhere else to go

One major factor that many fail to consider is that there simply aren't many alternatives to stocks and indices for today's investors. Whether the market situation and context would typically be conducive to risk or not is largely irrelevant. They have modest spare income to invest, and stocks offer the best balance of risk to reward. Crypto is too volatile, fixed-income assets are offering below-inflation returns, and real estate is beyond their budget. Another important point to note is that savings interest may well have risen, but it is still barely keeping pace with inflation.

Short-term Treasury bonds have offered much more attractive yields than in recent years, yet for many investors, one per cent above inflation simply won't cut it, given the more moderate capital sums available to them. In such a context, there are very few vehicles that can compete with stocks — indices and ETFs even more so — when it comes to potential returns versus capital risk. If we take the S&P 500, for instance, and look at it over the past five years (2018-2023), we see that it has returned over 70%, and this despite the COVID crash and 2022 bear market. Of course, those who invested everything at the peak in 2021 wouldn't have fared anywhere near as well, but they would at least not have lost anything compared with today's levels. This only emphasises the importance of dollar cost averaging, a strategy that potentially gives investors the best chance of success over time.

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Re: Forex and Crypto news from Libertex
« Reply #11 on: February 07, 2024, 10:03:36 AM »
Oil on the up again as tensions rise

After the Covid crisis, post-pandemic inflation, and volatile markets, many had high hopes for 2024 and expected a long-overdue normalisation. Unfortunately, it increasingly looks like we're in for more uncertainty ahead as geopolitical tensions rise both in Europe and the Middle East.

While things are indeed looking up for stock and crypto investors, commodities have been rather stagnant since their huge gains in the summer of 2022. Oil famously reached a heady height north of $120 a barrel, while the Natural Gas EU Dutch TTF topped EUR 330/MWh – more than ten times its current level. Even the more volatility-insulated Henry Hub Natural Gas Spot Price was down around 80%.

However, after much sideways movement, prices on energy resources are making significant moves to the upside. Brent is up around 5% to $81 per barrel over the past month, while Light Sweet and WTI are both up closer to 10% over the same period. The key natural gas indices have also seen a notable uptick, and this despite the end of the heating season soon approaching. But what are the reasons behind this sudden resurgence, and how can we expect the situation to develop over the rest of the year?

Dangerous times

It's no coincidence that the latest oil price rises have followed virtually exactly in line with increasing instability in the oil-rich region of the Middle East. The latest flashpoint between major producers Iran and the US has been a particularly powerful catalyst. Despite all the talk about electrification and green energy, oil is still the lifeblood of the world's economy, and any potential threat to supply is immediately counterbalanced by price increases on the spot markets.

The existing crisis in Eastern Europe and associated measures had already curtailed the supply of crude significantly, and this additional factor simply added fuel to the fire. Meanwhile, demand has actually increased as China's industrial sector continues to recover. At the same time, Yemeni actions have forced ships delivering goods to Europe to travel around the Horn of Africa as opposed to cutting through the Suez Canal, translating to significantly higher fuel consumption.

These natural factors are, of course, naturally limited in time, but there's always a risk that they could get worse before they get better, and their unpredictable nature makes them hard to guard against. Looking back at the start of the Syrian war in 2010, we see that prices didn't reach a peak for at least 18 months and remained high until as late as 2014, which would suggest that we may be in for a protracted bull market.

Don't forget OPEC

It's all well and good discussing the natural factors at play, but when it comes to oil, there's a pretty huge elephant in the room: OPEC+. While supply may be reduced and demand increased, we have to remember that the world's oil-producing cartel has a significant artificial impact on real supply. We will all surely remember that Saudi Arabia and Russia agreed to maintain voluntary production cuts amounting to 1.3 million barrels per day for much of last year, and just as the agreement was about to expire, the two OPEC behemoths agreed to extend it into the first quarter of 2024.

In fact, they have also convinced the other members of the group to add additional cuts of 900,000 bpd. This means that the total voluntary production cuts implemented by OPEC+, which accounts for around 40% of the world's total supply, now amount to 2.2 million bpd. With an average global production of 94 million bpd, it's clear that any change to this voluntary shortfall could easily affect prices significantly.

Another important factor is the potential for grey market fuel supplies to help alleviate any supply-side problems that may arise as a result of a worsening of the geopolitical situation. Russian, Iranian, and Venezuelan crude has been subject to international sanctions and price caps for some time, and yet countries such as India frequently import it at favourable prices and then refine it into value-added products that can then be freely sold on the open market, thus bypassing economic restrictions. In theory, therefore, runaway prices should be held in check by strategic supply increases in response to demand spikes. However, it's also important to bear in mind that high prices suit OPEC+ members just fine, so the likelihood of near-term price increases remains high.

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Re: Forex and Crypto news from Libertex
« Reply #12 on: February 13, 2024, 03:41:08 PM »
Currency markets hotting up as dollar remains mixed

Since 2020, it's been a period of perpetual uncertainty for the entire globe. Once the coronavirus crisis came to an end, the world was plagued by runaway inflation, forcing central banks to take severe action to raise interest rates. No regulator was swifter or more aggressively hawkish than the US Federal Reserve. That fast action appeared to pay dividends in the form of a rapid reduction in inflation to near-target levels without compromising the labour or stock markets. This naturally caused a rapid strengthening of the dollar in 2022, even bringing the greenback to historic parity with the euro and multi-year highs against all of its closest competitors, from the Aussie dollar to the British pound.

Now, just 18 months later, the US national currency is losing ground against virtually all of the world majors at an alarming rate. Treasury bond yields are at their lowest level in two years, and it seems as if a normalisation on the forex market is close at hand. But what are the factors driving these moves and the implications for currency investors, and where are the major pairs likely to be headed during the rest of 2024?

It's all political

After a string of rate hikes to deal with inflation, the Fed has been holding steady for several months now. With inflation now stable, rumours have been circulating about a Fed rate cut. Although Fed Chairman Jerome Powell has stated that we shouldn't expect this to come in March, the CME Group's FedWatch Tool estimates the probability of a cut by May at 96%.

It's important to note, however, that the US regulator was much more aggressive when it came to rate increases back in 2021-2022. Even now, US interest rates are almost a full percentage point higher than in the eurozone. Nonetheless, the psychological effect of a pivot from raising to reducing rates will always exaggerate the impact on national currencies. That said, the EUR/USD pair has still gained almost 3% in the last month, showing that markets recognise the dollar's overall better health compared to the euro.

Meanwhile, the tone of the Bank of England, which famously followed the Fed's lead and hiked aggressively, remains hawkish. There is no firm commitment from the BoE to cut its current interest rate of 5.25-5.5%, and this has been reflected in the Cable, which has gained almost 5% since November 2023. The RBA, like the ECB, on the other hand, only hiked its rate to 4.35% before moving to a wait-and-see approach. It seems that this has harmed the Aussie's progress against its US counterpart, with the AUDUSD slipping 5% to 0.65 YTD. If a rate cut does come before May, we should see a normalisation of these pairs to the pre-pandemic averages.

Beyond the banks

In addition to the impact of the major central banks' monetary policy, movements in much of the rest of the world are driven by other factors that are often overlooked. Huge economies such as China and India, for instance, are highly sensitive to domestic factors, developments in the commodities market, and global industrial sentiment. The rupee, for example, has managed to make modest gains against the US dollar of late amid the announcement of a favourable national budget that sets lower-than-expected fiscal deficit and gross borrowing targets for the financial year starting April 1. The industrial PMIs of both India and China have been rising for the past two months to reach 56.90 and 49.20, respectively, which has naturally helped to maintain the strength of the countries' national currencies. China's renminbi has also received a separate boost in the form of wider adoption as a trading currency in the rest of the world, where it is fast taking market share away from the dollar. In the past two years, the yuan's share of Russia's exports has increased from 0.4% to 34.5%, and efforts to expand BRICS further could lead to additional increases in RMB's appeal.

Meanwhile, a traditional haven currency, the Japanese yen, has had a torrid time over the past two years. Having failed to increase rates sufficiently, the BoJ has overseen a nearly 25% reduction in the yen's value since January 2022. Following a more hawkish post-meeting speech by Governor Kazuo Ueda in January and a second consecutive month's growth in the Manufacturing and Services PMIs, the JPY/USD pair looks like it could be reaching a turning point after testing the 50-day SMA. As always, it would make sense for forex investors to diversify in order to maximise their protection from volatility in individual currency pairs.

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Re: Forex and Crypto news from Libertex
« Reply #13 on: February 16, 2024, 10:57:08 AM »
Farmer protests puts spotlight back on commodities

Many of us thought things would get back to normal after the end of the pandemic. Oh, how wrong we were! Since then, we've had to contend with hyperinflation, rising energy prices, geopolitical instability, international conflicts, and more, with no end to the drama in sight. This time round, it's European farmers who are up in arms once again, with the latest round of protests closing several major capitals, including Brussels and Paris, as well as a host of key border crossings throughout the Old Continent.

This is a crisis that has been long in the making, but it seems the big catalyst for these latest actions was the EU's so-called Green Deal, which would see subsidies slashed, especially on agricultural diesel. For farmers, it's a simple economic calculation: costs are rising and set to rise further, yet prices for their produce are falling amid tariff waivers on low-cost Ukrainian grain imports.

It would seem that the action by agricultural producers is reversing this trend, however. Over the past month alone, wheat rose a full 10% to break through the key support of $600 a bushel and is tipped to jump further as protests continue. Given prices of around $1200 in May 2022, there's plenty of room for further rises. And with oil prices increasing simultaneously on separate geopolitical factors, investors would certainly be wise to consider their weighting of agricultural and energy commodities in the coming months. In this article, we'll take a look at some of the key drivers of price action in these markets as we try to predict where they could be headed during the rest of the year.

Politics make the world go round

Despite accounting for only 4% of the European workforce, farmers represent a vital cog in the machine, without whom Europe lacks food security. This is increasingly important as global tensions rise, and Brussels would do well to recognise this fact. There's a lot of buzz in political circles surrounding the European Net-Zero Industry Act (NZIA) and Green Deal, but many farmers worry that the requirements are impractical and unlikely to bear fruit. Targets, such as halving pesticides, cutting fertiliser use by 20%, devoting more land to non-agricultural use, and doubling organic production to 25% of all EU farmland — all by 2023 — are viewed as totally unrealistic by producers.

What's more, the €55 billion-a-year subsidy known as the common agricultural policy (CAP) has encouraged the consolidation of farms and favoured larger holdings. In fact, the CAP has seen the number of farms in the EU fall by more than a third since 2005, leading to a concentration of large, overleveraged landholdings whose low margins force them to maximise output, a decidedly un-green business model. With the NZIA now making it a legal obligation to comply with these net-zero targets, it's hard to see how EU agricultural producers can survive without prices of staple products like wheat going through the roof. The band-aid solution of allowing cheap imports from Ukraine and beyond is ultimately self-defeating and leaves Europe vulnerable in a conflict scenario.

A double whammy

As we touched upon earlier, increased hostility and the threat of global war should be bringing issues of food security into the foreground. However, another important effect of world conflict has been rising energy prices, an additional straw on the proverbial camel's back for farmers. Oil, electricity and gas have all risen sharply in the past few weeks, with Brent and Light Sweet up 10% and 9%, respectively, and OPEC+ extending its voluntary production cuts for yet another quarter. Henry Hub Natural Gas futures may be trending down, but they're still significantly above pre-pandemic levels, and a secure, reliable supply for Europe is still far from assured. Now, diesel costs are famously subsidised for European agricultural workers, but it's a drop in the ocean when many countries enjoy at-the-pump prices of around 30% of the average European price per litre.

With the European Union set to gradually withdraw its subsidy support for "dirty" fuels like diesel, something will have to give. In the absence of any other factors, the only possible result would be higher prices for agricultural products produced in the EU. This, of course, doesn't take into account the possibility that Brussels will continue to permit the tariff-free sale of lower-quality imports from third countries. However, it would be a tough ask politically, given the environmental impact of the production process in such countries and the seemingly pointless detriment to EU-based producers. In this context, it appears as though there's a reason for both wheat and oil prices to increase in the short term and stay elevated.

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Re: Forex and Crypto news from Libertex
« Reply #14 on: February 26, 2024, 11:53:35 AM »
Bitcoin bulls out in force as Monero falters on Binance delisting

There’s never a dull moment in the cryptocurrency market, is there? After Bitcoin lost 70% of its value in just one year from November 2021 to December 2022, the BTC bears were out in force as talk of a long crypto winter abounded. But what happened next sent the cynics fleeing with their tails well and truly between their legs. From the start of 2023, it’s been a seemingly endless bull run for Bitcoin as the original digital currency has smashed key resistance after key resistance to finally break above the major psychological level of $50,000. And it doesn’t look like it plans to stop anytime soon. With huge positive factors, such as the upcoming halving and increased institutional adoption following the approval of spot Bitcoin ETFs last month, the sky really is the limit.

As they say, a rising tide lifts all ships, and this is especially true of Bitcoin and the wider cryptocurrency market. Consequently, many other major coins and tokens have also enjoyed a positive trend of late. With one notable exception: Monero. Shooting to fame as a reliable, cheap and fast privacy coin, XMR took the crypto market by storm to match Bitcoin’s gains in the last bull run of 2021. But since Binance’s delisting and talks of tighter regulation, it’s been in virtual freefall. In this piece, we’ll take a closer look at the reasons behind these two polar opposite coins differing fortunes and their possible future movements.

It’s all coming up Bitcoin

It truly has been a whirlwind year of growth for the OG crypto coin. Since January 2023, Bitcoin has risen from $16,529 to $51,097 as of the time of writing (on 21 February 2024) to record a highly respectable 210% increase. But even more importantly, this time round, the growth was steady and, crucially, based on solid fundamental factors. It wasn’t like the 5x in 5-month bubble cycles of 2020 and 2017. These gains were steady and explainable using traditional analysis methods.

First, we had the long-anticipated approval of numerous spot ETF applications by the SEC, which drove the BTC price throughout the whole of last year. There were also other key regulatory milestones, such as the EU’s adoption of comprehensive and innovative regulation on markets in crypto assets (MiCA) in June 2023 and high-level discussions in all major crypto focus areas in over 40 countries worldwide, including the Bahamas and Japan.

All of the above helped to push digital currency adoption in 2023 as more and more institutions added Bitcoin to their portfolios. In fact, we saw over $1 billion worth of BTC inflows from institutional investors last year, bringing Bitcoin’s market capitalisation to more than $1 trillion for the first time in its history. This is clearly a good sign for HODLERs and those looking for stable returns from crypto and has even helped to drive the prices of most other major currencies like Ethereum, Solana, and Avalanche, though there have been some notable exceptions, as we’ll discover.

Everyone’s (not) a winner

As we’ve touched upon already, not all popular digital currencies were able to ride the coattails of Bitcoin this past year. Perhaps the biggest newsmaker amongst these was Monero, the true privacy coin for those who wish to maintain full anonymity in the cryptosphere. Monero uses a unique transaction mixing approach with the help of “ring signatures” and creates one-time addresses to ensure fund transfers are untraceable. It also has super-fast transaction speeds and very low fees. This has made it a darling of darknet merchants, which has understandably drawn the attention of regulators across the world. Countries including Japan, Australia, and the UAE have long been discussing the need to outlaw such anonymous coins precisely for this reason. It all came to a head on 6 January 2024 when Binance announced that it would be delisting XMR, sending its liquidity down to an all-time low of $1.8 million. Having reached a high of north of $170 in December 2023, it suddenly crashed to $105 in the weeks following the news. This was clearly against the grain for the market as a whole.

But what’s particularly interesting is what happened next. The actual delisting took place this week, and far from dipping further as many expected, Monero has shocked the pundits in its reaction to the move. It’s now up 10% in the space of just a few days and looks set to recoup its losses in the coming weeks. Whether regulators like it or not, Monero certainly has utility, and there’s every reason for us to expect further XMR gains as legacy coins like BTC diverge further and further from the “original vision” of cryptocurrencies.

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