Are Equities and cryptocurrency markets working in cohesion?
Both equities and cryptocurrency markets were bullish last week. Investors will continue to watch for signs of inflation. The trend of rising labor rates because of fear for US Federal Reserve intervening and rising interest rates that will result in a decrease of the money supply.
The 10-year US Treasury yield has been leading global rates, hitting a four-year high last week of 2.93. Yet, for now, it looks like initial concerns have dissipated. The dollar is depreciating against most assets, which seems to be helping equities moving north. All of the major equity markets were positive, with India’s BSE Sensex the weakest performer, up only 0.015%.
Most of Asia closed last Friday due to the Chinese New Year, yet the Hang Seng was able to complete its four-day trading week with a 5.4% increase to end at 31,115.40, in the meantime, Shanghai Composite was up 2.2% to close at 3,199.16.
In Japan, Bank of Japan (BOJ) Governor Haruhiko Kuroda announced he would stay for another term which was viewed positively by the market with Nikkei 225 strengthening at 1.6% for the week to end at 21,720.25.
The S&P 500 advanced for each of the past six days (due for a stall or pullback). That by itself should give investors a pause as the odds are now in favor of a pullback or at least a slow-down in the near-term.
Heading into the new week US financial markets are closed on Monday for a government and bank holiday. This will have an impact on liquidity in global markets heading into the week. Large capitalization cryptocurrencies continued to recover from their lows.
A new beginning for the sector as a whole was the launch of Coinbase Commerce last week, which will make it easier to pay merchants in cryptocurrency, including Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. Coinbase has stated they going to add more cryptocurrencies.
Litecoin led the way for the cryptos rising $64.14 or 39.1% to end at $228.24. A couple of developments seem to be driving the advance, including a planned fork of Litecoin Cash and the announcement that LitePay, a merchant payment processing application for cryptocurrency will launch on February 26.
Mike Waldron, a buy-side equity analyst says,
“Cryptocurrencies provided an alternative to Stock Market but they are now working in cohesion.”
Recent market trends also indicated with the USD dropping a lot of investors liquidated their assets to cryptocurrency assets with the majority choosing alternative coins to Bitcoin.
Ferhan Kastur, a portfolio manager at Boston Roger Financials spoke to AMBCrypto and says,
“The markets have been confusing and the rather volatile crypto markets seem a good place to invest when it dips considering the gains you get within a few hours. Let’s see where the markets head”
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