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5 February 2018

Forex Technical analysis

Bitcoin Fundamental Analysis

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A look at the 5 February Bitcoin Fundamental Analysis shows that crypto-assets have tumbled further as equities tank. What does the recent price of Bitcoin suggest? 

5 February, Swissquote – After a rough weekend, the sell-off in crypto-assets has resumed on Monday as the equity market tumbled. The total market capitalization of crypto-assets slid to $380 billion this morning, erasing more than half its value since early January when it reached $830 billion.

It seems that the risk-off sentiment has spread into the equity market. Equity indices are blinking across the screen with European equities following Asian ones in negative territory.

5 February Bitcoin Fundamental Analysis

Bitcoin slid as low as $7,614 during the weekend before stabilizing at around $7,890. Ethereum also tanked as it fell 11% over the last 24h, while ripple extended losses below the $1 threshold. It has been a rough month for Ripple as its price has been divided in almost 5 (from $3.8 to $0.8). The Bitfinex/Tether situation has spread panic selling in the crypto space as investors have been deprived of the main safe-haven crypto asset.

The recent price action of Bitcoin suggests that the $8,000 threshold remains a solid support. Bitcoin price fell more than 45% this year, we believe it is time for a consolidation, at least.

Greenback Slid Again Despite Solid Jobs Report 

Released last Friday, January’s employment figures sent the greenback to higher ends, temporary at least. EUR/USD trades at 1.2453 (-0.43% since Thursday February 1st 2018) and USD/JPY 109.95 (+ 0.50%) while GBP/USD remains at 1.4120 (-1.01%).

January NFPs came in at 200’000 (versus 180’000 expected and 160’000 in December 31st, 2017), while the unemployment rate held steady at 4.1% (confirmed for December 2017 and lowest since September 30th, 2000), both providing strong signs of economic growth. Wage growth rose 2.9%y/y in the last month, the highest rate since 2009m which is of good omen for the inflation outlook. However, it seems that those positive developments have translated into a stronger greenback, yet.

Dollar Index fell By 3.29%

The Dollar Index fell 3.29% since the beginning of the year, its biggest drop in two years! This phenomenon is mostly due to the sharp appreciation of the EUR and JPY that account for 57.60% and 13.60% (71.20% in total) within the DXY composition. As investors anticipate a tighter monetary policy from the ECB, which translates into buying pressures on the single currency.

We remain confident that this uptrend will continue, which could send the pair to 1.28 during the year. Similarly, investors have taken a slightly more hawkish stance regarding the Japanese yen amid Kuroda’s optimistic speech at the WEF, speculating that the BoJ will abandon its extreme monetary policy earlier-than-expected. The yen kept strengthening against USD (USD/JPY 109.98, -2.35% YTD).

We expect that the BoJ will maintain its dovish stance as Japan’s inflation remains at 1% (below 2% target) and Japanese consumer spending stays below expectations (-0.10% as of December 31st, 2017).

Disclaimer

This article 5 February Bitcoin Fundamental Analysis was written by Arnaud Masset & Vincent Mivelaz, analysts at Swissquote. While every effort has been made to ensure that the data quoted and used for the research behind this document is reliable, there is no guarantee that it is correct, and Swissquote Bank and its subsidiaries can accept no liability whatsoever in respect of any errors or omissions, or regarding the accuracy, completeness or reliability of the information contained herein.

This document does not constitute a recommendation to sell and/or buy any financial products and is not to be considered as a solicitation and/or an offer to enter into any transaction. This document is a piece of economic research and is not intended to constitute investment advice, nor to solicit dealing in securities or in any other kind of investments.

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