In recent days, the market value of bitcoin has dropped by 7%, in the moment reaching $8989 on the exchange Bitstamp. At some stage in the night of Thursday, June 25, the first cryptocurrency lost 2.6% in less than an hour.
At the time of publication observed a bounce from the daily low. In a few hours BTC gained 2% to $9175.
The fall was accompanied by liquidation of long futures positions on the exchange bitcoin BitMEX derivatives in the amount of $56 million per day. Total trading volume for the session reached $15 billion.
24 Jun research company Glassnode recorded the largest outflow of bitcoins from the wallets of miners on the exchange, reached 2650 BTC ($24.1 million) per day. According to them, with the transaction was mostly large miners who threw out money on Bitfinex.
Yesterday we observed the largest flow of #bitcoin from miners to exchanges in over a year.
This was primarily due to large transfers to miner #Bitfinex, services 2,650 $BTC.
Chart: https://t.co/Erw5cYgIOi pic.twitter.com/ns9NsUScal
— glassnode (@glassnode) June 24, 2020
According to the trader Satoshi Flipper, the fall of bitcoin may continue to the levels of $8000-$7000, then the first cryptocurrency will increase to $14 000. He added that it all depends on securities.
There’s an excellent chance we can dip into the 8k’s, even 7k”s on our way to test 14k … that path doesn’t make me any less bullish than if we went straight up from here.
I still think we’ll test 14k before the end of the year. It really all depends on stocks.
— Satoshi Flipper (@SatoshiFlipper) June 24, 2020
A positive correlation of bitcoin with stock indices has been noted by many analysts. Amid falling bitcoin S&P 500 and the Dow Jones lost of 2.59% and 2,72%, respectively, which speaks in favor of the above opinion.
CNBC presenter Jim Cramer tied the drop in the stock markets with the results of a survey of American citizens, the results of which the candidate in presidents of the United States Joe Biden toured Donald trump in popularity by 14%. In the opinion of Cramer, Biden’s victory in the elections will have a negative impact on the economy.
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The conflict over the financing of corona crisis costs between the EU member states is entering the next round. After the ministers of finance had at least provisionally settled the dispute over short-term aid for the Member States particularly hard-hit by the pandemic at the beginning of April, the heads of state and government are discussing the planned »reconstruction fund« for the period after the crisis in a video slot on Thursday. Apparently the participants learned from past mistakes and this time agreed in advance to forego a common explanation. How difficult it is to demonstrate unity in the face of the diametrically contradictory national interests of the EU countries was finally shown by the weeks-long heated debate about joint bonds in the form of so-called euro or corona bonds or EU credit lines to support the southern countries.
Italy and Co. had asked for little in this debate and received even less. The demand for joint bonds, with which they wanted to improve their position in the financial markets, failed due to the rigorous resistance of Germany and its allies. Further, less market-oriented measures, such as strict regulation of the financial markets regarding lending to countries or direct financing of the EU countries by the European Central Bank (ECB), were not even discussed. Ultimately, it was agreed to reactivate the European Stability Mechanism (ESM). Each Member State should be able to apply for up to two percent of economic output as a low-interest loan. Money that had already been approved when the fund was founded in 2012. There are also guarantees from the European Investment Bank for corporate loans and very modest support from the EU budget for short-time work benefits.
However, there was no agreement with the reconstruction fund. Here it remained vague formulations, the heads of state now want to haggle over. Italy, Spain, France and allies want to take the opportunity to try to borrow funds again. Germany, the Netherlands and other northern states, on the other hand, are trying to keep the instrument as small as possible and to put decisions on the back burner. A “community of debts” is strictly rejected. The video show on Thursday marks the first showdown in this phase of the conflict.
As is evident from papers of the Federal Government that jW In the preliminary negotiations, Italian government officials called for a clear commitment to the urgency and scope of the fund. Accordingly, additional resources of one to 1.5 trillion euros are required, no redeployment of existing funds, no leverage. According to media reports, the Spanish government wants to make a similar proposal among the heads of state and government. The position of the southerners is also shared by the French government, which is said to attach particular importance to ensuring that the Corona aid is designed in such a way that the countries concerned do not face new over-indebtedness. Sweden and Austria, on the other hand, demanded that the fund not be given too much importance and instead emphasized what the EU is already doing. The representatives of the FRG emphasized that long discussions are to be expected, that one should not stir up unrealistic expectations in public.
Even before the summit, a possible compromise line emerged to finance the reconstruction program through a significantly better-equipped EU budget. Negotiations on the common financial framework starting next year have been stalling for months. The EU Commission proposed principles for the fund on Tuesday, advocating linking it to the international budget. Chancellor Angela Merkel (CDU) had already said on Monday that she could imagine a significant increase in the EU budget. They believe that the budget “must have completely different financial options in the first years after the pandemic.” Bonds that are covered by the common budget are also under discussion – a kind of interim solution that can be called Eurobonds in Italy, but does not have to be called that in the Netherlands.
So far, the federal government has always pushed for the smallest possible EU budget. Merkel’s statements therefore point to a repositioning. The Italian daily newspaper La Repubblica noted on Tuesday that “in Germany, where Eurobonds are still taboo, many previously hard positions are becoming more flexible.” The reason is not a good heart, but the realization “that a collapsing Italy would destabilize the entire Europe of the single currency”. And the ruling class of the FRG definitely wants to avoid that.
ANALYSIS – The clues have been shaken with extreme violence. Investors are trying to imagine the rest.
The markets first veiled their faces when the epidemic broke out in China at the end of 2019. On February 19, the CAC 40 thus rose to more than 6,100 points, a peak unknown since the month of July 2007, while Wall Street flew from record to record. It was when Europe and then the United States were struck by this invisible enemy that they panicked. In less than a month, between February 21 and March 18, the equity markets lost between 30 and 40% of their value. About 25 trillion dollars went up in smoke. Never seen! The speed of the rebound that followed is just as impressive. “Equities have regained almost 25% since the lows in March, wiping out half of the initial losses,” notes Jean-Marie Mercadal, deputy managing director at OFI Asset Management.
Unlike previous crises, those of the internet bubble or subprime, or even that of the debt in the eurozone, “States and central banks acted with extreme rapidity, which largely explains the speed of the rebound”, according to Alexandre Baradez, strategist at IG. Central banks have broken almost all of the locks. And governments around the world have spent nearly $ 8 trillion (about 7.4 trillion euros) to combat this health crisis, as well as the economic impact of the pandemic, according to IMF calculations.
Opinions diverge widely on the end-of-crisis scenarios: in “V”, “U”, in “W” in “L”, which promises some hectic sessions on the stock market. Unaccustomed to optimism, the American bank Goldman Sachs now thinks that the worst is over. It sees the Standard & Poor’s 500 climb to 3,000 points at the end of the year (against around 2,800 points currently), under the effect of lower rates and stimulus plans that will stimulate the economy while the peak of the epidemic will soon be reached. Others believe, on the contrary, that this crisis will have a lasting and marked impact, and that the markets are still far from having fully realized it.
In recent weeks, however, the markets seem to have sided with Goldman Sachs. “Our central scenario remains that of a gradual deconfinement and a slower recovery than initially expected in the second quarter,” said Guillaume Jalenques de Labeau, president of Mansartis. The markets were confronted with a double shock, on supply with the shutdown of production chains, then on demand with the confinement of almost half of the world’s population. “The sectors that remain the most affected are those that were hit first by the interruption of globalized production chains, these include in particular the automobile and aeronautics”, explains Nourane Charraire, director of management at Mansartis. Among the biggest declines since the beginning of the year within the CAC 40, we also find Renault (-60%), Airbus (-55%), Peugeot (-45%) or even the aeronautical equipment supplier Safran. (-40%). “The second wave, that of the shock on demand, then hit the service sector and in particular tourism and hospitality specialists,” added this specialist. In this universe, we find in particular companies like Air France, whose price has dropped by 52% since the beginning of the year, ADP (-50%), Sodexo (-38%) or the hotel specialist Accor (-37%).
The fall in demand has also weighed heavily on oil prices and, in turn, on oil service companies and companies, with values like Total which has dropped 37% since the beginning of the year, CGG ( -65%), Vallourec (-63%) or Technip (-62%). The banking sector is also paying a heavy price, affected at the same time by the low rates which nibble the margins, a deteriorated economic situation and the risk of business failure. At the start of the year, Moody’s was anticipating a corporate default rate of around 2.5% in Europe. The rating agency now estimates that 8% of businesses are at risk of being in great difficulty. Reputedly highly defensive sectors such as pharmacy, telecoms and utilities held up better.
At the time of the recovery, “the stocks that have suffered the most should benefit from a technical rebound, led by banking, automotive or aeronautics,” according to specialists at Mansartis. But “quickly the strong structural trends should take over”, according to Nourane Charraire. Operators should then turn to growth stocks such as luxury and technology specialists. Investors seem to have already anticipated this movement. The Nasdaq 100 has been on the rise again since the start of the year. Even better, the FANG Index, which groups Facebook, Apple, Amazon, Netflix and Alphabet as well as Alibaba, Baidu, the microchip giant Nvidia, Tesla and Twitter, has risen by 20% since the start of the year.
France and four other European countries have decided to extend the ban on short selling, a technique known to accelerate the plummeting of the markets.
The French Financial Markets Authority (AMF) and four other European stock market regulators (Austria, Belgium, Greece and Spain) have decided to extend the ban on short sales, the European financial markets gendarme (Esma) said on Wednesday.
These measures “will be in place until May 18 with the possibility of extending them again,” adds Esma. These provisions “are appropriate and proportionate” in light of current events linked to the coronavirus which constitute “a threat to market confidence and financial stability”, estimates Esma. They could be lifted before maturity if the risks of loss of market confidence have been reduced.
The ban on short positions was imposed last March and they were due to expire in April. These five countries have decided to renew them, “says Esma.
The technique of short selling is to borrow a stock, to sell it on the market hoping to buy it back cheaper before returning it to the original lender. The goal is to pocket the difference between the sale price and the redemption price, at the time the transaction is completed. This is a bet on the fall of a stock.
The ban on short selling is far from unanimous
Since the start of the crisis, the hunt for speculators has been open in almost all of Europe. However, the ban on short sales is far from unanimous. It was widely used in 2008 after the Lehman Brothers bankruptcy, “with little convincing results to stem the fall in prices,” recently explained Dominique Ceolin, president of ABC Arbitrage. According to this professional “short sales participate in the functioning of the market. By banning them, it is depriving it of an influx of liquidity, a commodity that is sorely lacking today. “
In ordinary market conditions, short selling is a useful and legitimate instrument, for its part Stéphane Boujnah, chairman of the board of directors of Euronext NV in an interview with Le Figaro. “They provide liquidity and allow those who wish to protect their portfolios from extreme market movements.” But “in exceptional periods, like the one we are going through, short sales unnecessarily amplify movements in one direction, without improving market liquidity, the financing of the real economy, or the quality of information, nor the price formation ”added Stéphane Boujnah.
DThe signs for the stock market were mixed on Wednesday. Wall Street had a solid presentation on Tuesday and the S & P-500 more than doubled the F.A.Z. index by 3 percent. But in Asian and futures trading, the negative signals intensified in the morning. Warnings of the worst global recession since the 1930s underscored the economic damage the coronavirus outbreak has done to date. China’s lowering of the important medium-term interest rate to a record low also did not give the stock markets the necessary momentum.
The German standard index Dax is now 2.2 percent down at 10,460 points, led by the automotive industry. The stock of the supplier Infineon is down 5.6 percent, the Continental share price falls by 4.6 percent. BMW, Daimler and Volkswagen yield between 3 and 4 percent. Futures trading currently indicates an opening of Wall Street with a drop of 2 percent.
The commodity markets meanwhile price in the difficult and disappointing results of the Opec + and G20 talks on Easter and Easter. The price of Brent North Sea oil has dropped to $ 28.50. Before Easter it was $ 36.
American light oil of the WTI variety costs $ 19.60, which is the lowest price since 2001. But the price should not drop much lower, says Ipek Ozkardeskaya, senior analyst at Swissquote Bank. If the price sinks below it, production would no longer really pay off for most oil producing countries.
The considerations and measures to relax the corona restrictions currently determine the mood on the markets. “The flattening of infection curves and the thought of more stimulus gives everyone a boost,” said Stephen Innes, chief global market strategist at AxiCorp. “However, the picture could be deceptive as a storm is brewing behind the headlines – suggesting that there is still much to be feared.” Even as some US states considered easing restrictions, the death toll increased Landes at least 2,228, a one-day record, according to a Reuters count. All in all, rapid easing might even be counterproductive for the stock exchange in the end, since there is great uncertainty as to whether easing measures are actually already appropriate. If the easing is too early, the pandemic could flare up again.
The numbers of American banks are also depressing sentiment. The loss reserves that financial institutions have to make for bad credit card debt and defaults from the oil industry are estimated to be more than $ 12 trillion. JP Morgan lost 2.7 percent after the largest American bank’s earnings fell significantly as a result of the crisis. Only an expected good trading result had saved the income statement. Wells Fargo had a surprisingly good interest result, which ultimately saved the bank a loss. Still, only $ 653 million remained in the first quarter, down from $ 5.9 billion in the same period last year. Bank of America and Goldman Sachs also announce significant drops in earnings on Wednesday, followed by Morgan Stanley on Thursday.
Fund managers are very pessimistic. According to the latest Bank of America Global Fund Manager Survey, only 15 percent expect a V-shaped recovery, 52 percent a U-shaped and therefore a longer period of weakness that could last for years. A fifth assume a w-shaped recovery, triggered by a second or even third round of infection. 7 percent even expect an “L” – a long depression like in the thirties without real recovery.
It could be exciting in the early afternoon when US retail sales in March and an early economic indicator for the Coronavirus region, New York, are released in April. The pandemic is likely to leave deep marks here. “For a third of the world’s population, life is largely still,” said strategist Matt Gertken from BCA Research. As a result, economic activity in the leading industrialized countries collapsed.
DT he decision of the Federal Reserve to support the domestic economy hit hard by the crisis with additional emergency aid worth $ 2.3 trillion has caused a rather quiet (pre-) holiday trade on Maundy Thursday. The new package of measures primarily serves to support municipalities and small to medium-sized companies. On the one hand, loans are to be granted via the banks, and on the other hand bonds are to be acquired from states and large municipalities.
This had caused the markets to move more than the recently announced first jobless claims, which at 6.6 million did not reach a new high, but are still at a record level. Within three weeks, more than 16 million people across the country have lost their jobs.
The market-wide F.A.Z index, which started more than 2 percent in the morning and then gave way quickly, recovered again and is currently 2.4 percent up again at 1919 points. Wall Street, which had already been slightly down in the pre-IPO, opened more firmly. The S&P 500 index is currently up 1.2 percent.
The US dollar quickly depreciated against the euro from $ 1.0806 to $ 1.092, and the yield on the ten-year US government bond rose from 0.712 to 0.744 percent as a result of the renewed easing of US monetary policy. The price of gold, which had already held up well throughout the day, went a step further and has now reached a seven-year high of $ 1678 and is once again starting to scratch the 2012 highs.
There was also a lot of movement on the oil market. The price of Brent North Sea oil rose more than 8 percent from the previous evening to $ 35.79 for the 159-liter barrel. In the markets, it was assumed that the oil producing countries of the “Opec + Group”, who are currently negotiating a cut in production, will decide on a reduction of 10 million barrels a day.
When the funding cut was actually on the table at this level, the market reacted disappointed. the price plummeted, dropping to $ 33.35 last and most of the gains. Worries dominate again that the cut in funding will not be enough to offset the slump in demand. In addition, the decision is likely to be on sound feet because Russia has agreed to cuts, but it requires the United States to make more far-reaching commitments to reduce production than to leave it to market forces. The agreement contains various mines, says Helima Croft, strategist at Bank RBC.
On the one hand, American President Donald Trump rejected this, on the other hand, he said that the market would ensure lower production. The markets again understood this as a signal that the oil price does not have much potential to rise.
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AThe second stage of the crisis has broken out in the financial markets. In the first stage, announcements by central banks and governments to support the economy and the stock exchanges were generally received positively, but described as too halfhearted. In the second stage, such announcements are evidence of helplessness or panic. The American central bank had this experience at the beginning of the week after surprisingly lowering its key interest rate again and also announcing that it would buy larger amounts of bonds.
In an immediate reaction, Donald Trump described these announcements as good news for the stock exchanges. But investors saw it differently: everywhere, share prices fell again very clearly. In Germany, the Dax temporarily fell by more than 10 percent on Monday. Stock trading on the New York Stock Exchange had to be interrupted just a few seconds after it opened. Later, courses recovered somewhat.
In this second stage of the crisis, many investors tend to generally sell investments and park their money in bank accounts, even when there is no interest there. At the beginning of the week, gold was also sold, which, contrary to legend, is of poor quality, and for the first time also bonds with very good credit ratings, including German government bonds. The price losses are sometimes severe, but there is no real panic on the financial markets, unlike after the fall of Lehman Brothers in autumn 2008. The first financial firms are advising to slowly buy shares again. Many investors will not yet dare to do that.
A good plan
Any stabilization of the economy and the financial markets presupposes a successful fight against the virus. Until then, the goal of politics is to keep banks and companies alive by providing liquidity. This is a good plan, but unlike in the financial crisis around ten years ago, joint action by the leading countries is sorely missed. This applies to transatlantic cooperation, but also to the cooperation between Europeans. Even if it may be necessary for medical reasons to make borders less permeable than before, and even if health policy is largely the responsibility of nation states, there are no signals for joint action.
That also depends on Trump, whose attempt to gain sole access to a vaccine under development through the German pharmaceutical company Curevac shows that the American is only interested in himself. But so far the Europeans have not managed to appear closed. The answer cannot be to just hand out money. If the crisis continues, speculation will begin to emerge on the financial markets as to whether all highly indebted European countries will be able to face the virus and rising bond yields in a recession at the same time.
The high levels of government bonds in the books of many European banks are one reason why bank share prices are currently falling so sharply. It would be fatal to trust that the European Central Bank could pull the chestnuts out of the fire again.