Apr 20 2017 9:42 am

Bitcoin's Future

Have you ever thought about a futures market for bitcoin? It seems the CME Group has.

The idea is the same as the futures for any commodity really. Just as a gold miner or a farmer has a relatively fixed cost but unknown yield, bitcoin miners have the same type of deal. They know how much they're about to spend, but have less of a clue as to how many coins they will produce or how much those coins will be worth in the future.

If the patent passes regulation, this new Bitcoin Future will allow miners to lock in current prices before starting on their venture. Pretty neat huh?

Thanks to @Jaynemesis for posting this on eToro. I love copying you both for the returns you bring but especially for the valuable updates about the cryptocurrencies.

Meanwhile, the overall market cap of all cryptocurrencies has maintained above $29 Billion for the past few days despite some trouble in the industry that we'll describe below.


Today's Highlights

  • Stocks continue declines
  • Bitcoin breakout may be imminent
  • Carney & Mnuchin Tonight

Please note: All data, figures & graphs are valid as of April 20th. All trading carries risk. Only risk capital you're prepared to lose.

Market Overview

Markets are still trying to process the shock delivered by Theresa May on Tuesday. This week was supposed to be all about France but now we've had another huge event thrown into the mix. After gaining overwhelming parliamentary approval yesterday, the UK will be going to the polls on June 8th.

Let's be clear, this is not designed to be an election, more of a power grab ahead of the negotiations with Europe. However, as we outlined yesterday, it's a national election and anything can happen. And, as we've seen twice recently, just because polls indicate one thing doesn't mean that that will be the outcome.

The French elections are still very relevant and are taking place this Sunday. If you haven't seen it yet, please review the video that we made outlining the potential moves in the market.

Watch the Video:

The odds of a La Pen Vs Melenchon run-off are increasing. With Melenchon now trailing the front-runner by just 5%.

The United States indices put on a poor performance after lukewarm earnings reports and a sudden drop in the price of oil.

source: eToro

The USDollar is also taking a bit of a beating so far this morning, though I couldn't say why exactly.

source: eToro

Perhaps this has nothing to do with it...

Opening the Spread

Two of the largest cryptocurrency exchanges have recently run into a bit of trouble. It seems that due to regulatory issues, Bitfinex and Poloniex are no longer able to accept transfers in Fiat currencies and have been restricted to only making deposits and withdrawals in cryptocurrencies.

At the moment, it seems that clients of these exchanges are getting more than a bit scared. Anybody who does have US Dollars sitting in those exchanges is currently exchanging it for digital and getting their money out.

The spread has widened significantly too. On most exchanges bitcoin is trading at around $1215 a coin but on the Bitfinex and Poloniex, the price is more like $1260 per coin as they try to discourage people from cashing out, or at least make a bit of money before they completely crash and burn.

If we look at the chart of bitcoin it does appear that a breakout may be imminent. After receiving strong support at $950 a coin (orange line), the price has managed to maintain a steady incline.

source: eToro

There was a tame retracement over the past week, but support came much sooner than expected at $1150 (blue line). At the moment there's a free pass with no real resistance until the all-time high of $1294 (yellow). If the price forges new territory past $1300, the sky is the limit.

What's next?

Keep your eyes and ears on breaking news. The geopolitical situation remains unstable.

We'll have some light news before the opening bell on Wall Sreet at 13:30 GMT.

Later in the afternoon, we have two speeches from BoE's governor Carney and a speech from US Treasury Secretary Steve Mnuchin.

Also, ProCharts is back. Feel free to play around with the new tool at: https://www.etoro.com/app/procharts.

Let me know if you have any feedback before we remove the beta sign wink

Wishing you an amazing day ahead!

This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation.

Past performance is not an indication of future results. All trading carries risk. Only risk capital you're prepared to lose.

Register Now - It's free!

By clicking on the "Get instant access" button, you agree that you have read, understood, and accepted the Terms & Conditions.