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20.04.2021 – Special Report. A small foretaste of the possible destruction by politics: Bitcoin has just corrected by double digits. The reason was – as yet unconfirmed – rumours about money laundering investigations. The first bulls are already jumping in again – buy the dip. But the event should serve as a warning example of what can come.

Heavy E-correction at the weekend

This was a false alarm. Please move on, there is nothing to see here: Bitcoin easily corrected 15 percent over the weekend in Asian trading. Ether was down 18 per cent at one point. The financial blog ZeroHedge reported that long positions worth around 1.7 billion dollars were liquidated in one hour alone. In total, around 10 billion dollars were lost for around 927,000 trader positions, as FX Street explained.

Alleged money laundering investigation

The sell-off began on Sunday night (local time) and the community is still puzzling over the reasons. Presumably we are dealing with a coordinated short attack. The starting point was apparently a tweet according to which the US Treasury Department is allegedly launching a major investigation into money laundering with cryptocurrencies against financial institutions. Specifically, user FXHedge reported this at 4.42am on 18 April: U.S. TREASURY TO CHARGE SEVERAL FINANCIAL INSTITUTIONS FOR MONEY LAUNDERING USING CRYPTOCURRENCIES – SOURCES. Various crypto websites played the issue. But the news agencies Reuters and Bloomberg had no such news ready.

Bitcoin ban in Turkey

Otherwise, energy problems shook the Chinese province of Xinjiang; many miners may have lacked electricity. And finally, Turkey has just struck: the central bank in Ankara banned the use of Bitcoin as a means of payment from 30 April. Because the anonymity behind the digital tokens poses the risk of irretrievable losses. This makes Turkey the first country to ban Bitcoin, which Ankara wants to use to support the weakening lira. But otherwise we have not discovered any reasons for the bitcoin sell-off.

Turbulence at Dogecoin

Dogecoin had previously gone in the other direction: The small cryptocurrency jumped from 6 to 47 cents. Tesla boss Elon Musk had caused the price explosion for the currency, which was introduced as a joke, with a tweet before the weekend. Even experts were scratching their foreheads in the face of these events: “The crypto world is waking up with a bit of a sore head today,” said Antoni Trenchev, co-founder of crypto lender Nexo, in an interview with Bloomberg. The Dogecoin rally was a ‘peak party’. Especially since Bitcoin had set out for new records and Coinbase was about to go public. The market has now paid the price for all the euphoria.

Conciliatory tones from the USA

Fodder for the bulls has also recently come from monetary policy. Last week, Jerome Powell, head of the Federal Reserve, even compared bitcoin with precious metals: BTE “is a little bit like gold” – it is more for speculation and not a means of payment. Which sounded like an all-clear to the ears of many traders – no Bitcoin ban. Meanwhile, there was even quasi-official tailwind from the US: ex-CIA deputy chief Michael Morell denied in an analysis that cryptos are mainly used by criminals. For the lobby group Crypto Council, he wrote that blockchain technology is even highly effective in the fight against gangsters.

Pump and Dump

Our conclusion: it can happen that fast. A little gossip on Twitter and large addresses push the price up or down at will in a nice pump-and-dump scheme. That’s how it is when the market lacks breadth. The weekend’s BTC event also makes it clear that the e-community is very nervous and believes the danger of a state ban is quite likely. If major states ban e-currency trading, prices will plunge to zero in no time. If you are involved in Bitcoin and co. you must always be aware of this. Whereas exactly such events as this weekend bring the volatility for interesting trades. Bernstein Bank continues to keep an eye on the asset for you – we hope you are always right!

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

In today’s review let’s talk a bit about the state of Europe’s financial sector and what’s in store for the euro in the near future. Given that neither the dollar nor US interest rates have risen after the consumer price index increase in March, it can be assumed that the market is entering a new phase of the relationship.

EUR/USD

A lot of worries for investors were added to the steady rise in yields on 10-year US Treasury bonds. This has made quite a few other assets unattractive to buy. If falling yields continue, despite strong US GDP growth and economic indicators, the popularity of risky assets will increase, which will prove to be a bearish signal for the dollar.
There are still problems in the EU that will be difficult to solve in the short term. One is the supply of coronavirus vaccines. AstraZeneca’s failure has set back the European Union’s vaccine supply far, which will literally affect the lifting of restrictions and the recovery process. Procurement of other vaccines in Europe has been very slow. Therefore, there is little hope that Europe will deal with the pandemic quickly.
What will happen to the euro exchange rate in the near future? For the European Central Bank there is no need for an expensive euro right now. It is all about the national debts that have to be serviced. The more expensive the euro, the more expensive it is to pay the debts. The gradual fall in the EUR/USD exchange rate since the start of the year has brought some relief to the current situation.
There is important GDP data coming out at the end of April. Forecasts on this data are disappointing as restrictions are still causing serious damage. Also ahead is the ECB meeting on April 22nd which is unlikely to make any monetary policy adjustments. Most likely this meeting will discuss the impact of the huge US stimulus on the EU economy, such huge injections are affecting the whole world anyway.
For now on the EUR/USD pair, we can assume that the rapid rise from 1.17 to 1.19 is a correction to the downtrend from the beginning of this year, but there is a possibility that the weak dollar will provide further support to the euro’s rise.

01.50 Japan’s overall trade balance for March

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

There was an interesting event on Wednesday that could start a new phase in the development of cryptocurrencies. We are of course talking about the IPO of Coinbase, the second largest cryptocurrency exchange. What is the significance of this moment and why should we look again at cryptocurrencies?

BTC

We all remember well how throughout the formative years of cryptocurrencies, the US Securities and Exchange Commission refused to register Bitcoin instruments on more than one occasion. Now, amid these bans, Coinbase’s entry onto the exchange is a strategic victory. The fact that the SEC has approved the exchange’s application for a listing suggests that the SEC no longer perceives the business as “toxic” and uncontrollable. It is therefore safe to say that cryptocurrencies have been given another good signal to move forward. The introduction of digital currencies into the global financial economy is unavoidable.
Already quite a few “new” and traditional investors are starting to move into the camp of cryptocurrency supporters. Tesla has decided to sell cars for Bitcoins, and the total capitalisation of the major cryptocurrency is already estimated at more than a trillion US dollars.
So what will happen next? Clearly Coinbase going public will give investors the opportunity to invest indirectly in digital assets and further boost interest in cryptocurrencies.
But there are some doubts that many things could go wrong. Firstly, whether the company will be able to realise its long-term goals, namely to restructure the global financial system by widely introducing cryptocurrencies into all areas of business. After all, there will be a large number of regulators standing in their way who are not yet ready for this. Second, the vast majority of exchange revenues are commissions, so the share price will be highly correlated with trading volumes, and prolonged crypto winters can negatively affect a company’s financial health. Third, there are still enough security issues in the cryptocurrency world that it could be a catalyst for a future loss of confidence in the industry.
Coinbase’s IPO has now been compared to Netscape’s listing, which is seen as the beginning of the so-called dot-com boom. The cryptocurrency world and Coinbase still have a long way to go. The exchange itself stresses that growth and future development depends on a large number of factors that are difficult to predict and evaluate.

04.00 Gross domestic product in China YTD
11.00 EU benchmark consumer price index YTD
16.00 University of Michigan Consumer Confidence Index for April

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

No sooner have the passions over the minutes of the US Open Market Committee meeting passed than its representatives make some very interesting new statements which shed light on further QE plans.

S&P500

St Louis Fed President James Bullard said that vaccination of 75% of the US population would be a signal that the COVID-19 crisis is coming to an end and it would be a prerequisite for the Central Bank to start considering a reduction in the bond-buying programme and therefore a gradual winding down of the quantitative stimulus programme.
In the USA around 36% of Americans have now received the first dose of vaccine and 22% have already been fully vaccinated. The US government is trying every way to speed up vaccination and with a little forecasting, the 75% level could be reached as soon as this summer, in 2-3 months.
So we can expect some first signals from the Fed to slow down the printing press as soon as this summer. Of course there is still plenty of time and many factors that could change this view, but at least we now know the point where we need to start watching the Fed and their statements.
Let’s now speculate how the Fed will put the brakes on the printing press. From past experience, they will most likely start reducing their purchases of Treasuries by $10 billion each month. Whether they will be able to shut down the printing presses completely is unclear, because the national debt is already over 100% of GDP. Debt service is getting more and more difficult and now the USA can get into a financial trap when it will be impossible to service the national debt without printing money.
The conclusion is that the Fed will stay the course until the end of summer. It is unlikely that there will be any strong bearish movements in the markets. The economy is pumped with money and the markets absorb it. Next, we need to look closely at what will happen with vaccinations and the number of people getting sick. After all, there are no concrete statistics yet on whether and how vaccinated people will get sick.

08.00 Harmonised consumer price index in Germany YTD
14.00 US retail sales for March

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

Last week the Federal Open Market Committee published the minutes of its last meeting in March. From the whole text, some points can be highlighted which will directly influence the gold price in the coming period.

XAUUSD

All members of the committee noted the good economic indicators and became much more optimistic about the future improvement of the US economy. But they also pointed out a very important thing. Despite all the progress, Fed officials consider the current economic situation to be unsatisfactory and quite a few economic indicators are still far from the pre-pandemic level and the Fed’s long-term goals.
With these statements the Fed probably confirms that it is in no hurry to reduce quantitative stimulus and also that it has no plans to raise interest rates for several years. And just as importantly, the US Fed expects inflation to rise even more strongly. That is even more than their projected rate of 2.4% in 2021.
What does all this mean for gold? An increase in the actual rate of inflation combined with dovish Federal Reserve policy could create pressure on interest rates and the US dollar, supporting gold prices. Many market participants will hedge inflation risks by buying gold and other metals anyway.
After a terrible start to the year, the second quarter looks more optimistic for the gold market. A soft Fed policy creates conditions for long-term “weakness” of the US dollar, which will not immediately be reflected in the gold price, but could give a good long momentum after some time, but the decline of US Treasury yields is already giving good support to the yellow metal.

11.00 EU industrial production for February
16.00 Address by ECB President C. Lagarde
18.00 Address by US Federal Reserve Chairman J. Powell

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

13.04.2021 – Special Report. The age-old stock market rule is already part of trader folklore. And it is more relevant than ever: the Federal Reserve wants moderate inflation, and it will get it. By continuing to flood the market with money. At least that’s what Goldman Sachs believes. We shed light on the reasons behind this – and let the bulls have their say today.

The Fed gets what it wants

Brave new dollar world: The Federal Reserve floods the market with vast sums of dollars. Other central banks are also opening the floodgates to eliminate the deflationary shock triggered by the Corona Reactions. And governments everywhere are launching stimulus programmes. Of course, this increases the risk of bubbles forming. And a disastrous explosion of the euphoria bull market. But who knows when that will be.
Fittingly, Goldman Sachs just informed its clients. Analyst David Kostin wrote in his “Weekly Kickstart” that three macroeconomic factors have dominated the market since the beginning of the year: Interest rates, inflation, taxes. The most important is interest rates. The investment bank expects “more of the same”: stable interest rates at zero (according to the Fed until 2024), a rise in real interest rates and roughly a break-even inflation rate – which amounts to a steeper yield curve. And: “what the central bank wants is usually what it gets, sooner or later. “

The inflation target has not yet been reached

Then it gets interesting with a rare admission in the financial market: about a year ago, the Fed sent a signal to companies and fund managers with its powerful intervention that it was willing to provide liquidity under any circumstances. And in doing so, it pulled in a floor in the stock market that was ultimately the star block for the record run of the S&P 500. The translation: the Fed is very much manipulating the stock market. And it will not allow a crash.
And the Fed has not yet reached its goal in terms of moderate inflation, Goldman continued. We think: Stock prices could therefore continue to rise. Kostin noted: “the Fed wants higher inflation. It has rejected pre-emptive tightening and instead under average inflation targeting wants core PCE inflation to average 2% over time. Core PCE averaged 1.45% year/year during the first two months of 2021. Although inflation readings are likely to be elevated during the next few months -peaking in April at 2.3% -it is likely to be transitory, and below 2.0% on a sustainable basis until 2023, according to the forecasts of our economics team.” In plain language: The inflation rate measured in terms of personal consumption expenditures is still below the long-term core rate of 2 percent.

Money sponges soak up capital

We think: So the Fed wants to force investors to invest. And at the same time prevent the impoverishment of the masses through rising prices. A moderate inflation target of 2 percent would indeed combine both goals. And that would give us more room for cheap money. And rising share prices. And as long as overheating in consumer prices is to be feared, liquidity sponges such as stocks, real estate, precious metals or cryptos are likely to play into the Fed’s hands through rising prices. This means that a ban on gold ownership like in the US during the Great Depression or a Bitcoin ban would not be an option for now.

Healthy rise in bond yields

But what about the rise in US government bond yields that shook the market in between? Max King of Money Week sees it as a natural process: “It was absurd that, at the start of the year, 40% of government bonds and 10% of corporate bonds traded on negative yields. Their subsequent rise to 1.7% for 10-year US Treasuries and 2.4% for 30 years is both as expected, and healthy. “The quite healthy rise in yields fires a warning shot at governments and overconfident central bankers – it destroys the illusion that they can control the market. International demand is still stabilising the dollar, but the Fed is skating on thin ice. Here, too, the bond market is a welcome warning. Otherwise, the author advised to ignore the pessimists and invest in quality stocks.
Our conclusion: Of course, the Fed is unlikely to want hyper-inflation, as some cautioners see coming. If inflation really explodes, the stock market will indeed run into a violent repricing. And of course the bursting of investment bubbles is only a matter of time. But perhaps only in some dark corners of the financial market. Which brings CFD traders short opportunities. Anyway: Keep an eye on the news – Bernstein Bank wishes you successful trades and investments!

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

After breaking through the 4,000 level, the rise in the main US index accelerated. What should traders expect in the short and medium term (with a horizon to the end of this year). Let’s sort it out together.

S&P 500

As usual, before the 4,000 level, there were many traders talking about an imminent reversal, an inflated bubble and the collapse of the US stock market. And we remind our subscribers that individual traders have been waiting for a crash since 2009. Back then they expected a double bottom after the mortgage crisis of 2008-2009. That bottom never materialized.
In 2010, everyone was waiting for a new crisis, after problems started in the Emirates. Further there was a popular idea to short the index from the levels of 1600 and 1700, etc. And the index continues to rise.
Passive investors are slowly making a fortune. And the armageddonians keep losing money. When will it all end? Maybe very soon. Or maybe it will last another 10 years with each new crisis being flooded with new Central Bank money.
Traders must remember the most important thing. The trend is our friend. And that the American market is always rising. Yes, there are drawdowns and even very strong corrections. But they are always followed by new highs. So the easiest strategy is to buy the index on drawdowns. Until the market reverses completely. As a reminder, many have been waiting for such a reversal for 12 years.

What levels might we see this year?

The 4500 level is easily attainable from a TA perspective. Indeed, it is less than 10% away, which is even less than the annual average volatility of the index. Could the move go higher and reach the 5000 level on a Christmas rally?
That is also possible. Three conditions have to coincide:
1. Yields on 10-year US Treasuries will not exceed current levels
2. The pandemic will come to its logical conclusion in the US as a result of vaccination by the end of the summer
3. The VIX volatility index will continue to decline, giving investors the opportunity to leverage even more

11.00 EU retail sales for February

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

We haven’t talked about the currency of the country of the rising sun for a long time. Why not? Nothing interesting happened in the dollar/yen pair last year. However, for the fourth month of this year, the yen is pleasing traders with strong directional moves.

USD/JPY

What have we written about repeatedly in the past year? The dollar/yen pair has been in a tight corridor for a long time. The bears tried to break through the 100 level. But they did not succeed.
With the start of 2021 the American dollar began to rise sharply against other currencies. Added to this was the rise in stock markets. And the expectation that the coronavirus epidemic will soon be over.
When does the Japanese yen rise? Only when investors sell off assets and go into shelter currencies. Right now the situation is exactly the opposite. Against that background the Yen has fallen 9-figures against the USD, breaking through the strong resistance of 110. Naturally, the big players took off their stops behind this level.
There was no one to buy the pair further and it has been showing weak dynamics for 5 trading sessions in a row. Now comes the moment of truth for the Japanese currency. And it depends on the US stock market.
If it enters a correction phase, traders will exploit the following simple trading idea. Short from the current level with a close stop above 110 Yen per $1. The risk/reward ratio in this case is huge.
And what if stock markets around the world continue to rise? We advise our traders to open a monthly chart of the dollar/yen pair. On the large timeframe we can see that the price is ready to break through the downward corridor that has been forming since 2016. After a strong upward exit, the yen could fall quite quickly to the US$115 level.
One thing is certain. The Japanese currency is showing high volatility this year. Once again it becomes interesting for both medium and short-term traders.

08.00 German factory orders for February
14.30 Initial jobless claims in the US

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

When does an asset that everyone has long forgotten about start to grow? That’s right! A little later than when the last active trader forgot about it. We wrote about such a forgotten asset recently. Of course, we are talking about gold!

XAUUSD

Above is the same chart as a week ago. In last week’s article, we noted that the gold metal broke through the upper boundary of the falling channel. And we advised to pay close attention to this asset.
What changed this week? The bears made another attempt to sell the gold down and bring it back to the descending channel boundaries. As you can see, this attempt failed. The gold pushed back and rallied up again. Moreover, it rose again. A double bottom appeared on the chart. From the technical point of view, all this looks like an emergence of a new rising trend.
There is also a fundamental side of the question. It consists in the fact that inflation begins to accelerate all over the world. Gold metal almost always rises on its rise, as investors try to save money from depreciation.

Are there risks for gold?

From a technical and fundamental point of view, gold metal has a way to go up. What could prevent this development from happening? The biggest danger is a rapid rise in US dollar interest rates.
By itself, in view of rising inflation, this is unlikely to push gold to new lows this year. The risk lies elsewhere. A rise in rates could cause the stock market to fall sharply. In that case, the yellow metal would also be hit, on the back of selling any assets, to hold shoulder positions.

10.00 EU manufacturing activity index for March
14.30 US Trade Balance for February
20.00 US Federal Open Market Committee meeting minutes

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

In yesterday’s newsletter we stated that Bitcoin was the beneficiary of what happened to Archegos Capital Management’s hedge fund.

BTC

There has been a margin call of tens of billions of dollars in open positions in the fund. And we are talking about a fund run by a man previously convicted of insider trading. And this man was being lent tens of billions of dollars by the world’s leading investment banks. And not only did they lend, but their personal bank risk management departments didn’t actually do their direct job.
Looking at all this makes investors very sad. They immediately remember the events of 2000 (the dot-com crash) and 2008 (the mortgage crisis). Both of these events were accompanied by a huge amount of bank fraud and false accounting. Risk management departments slept through huge losses. And the regulators, who are supposed to look after the interests of investors, also slept through it all.
After every crisis like this, everyone beats their chests and says it won’t happen again. Laws will be changed, stricter reporting and auditing requirements will be imposed, etc. etc. However, in fact, we see that absolutely nothing changes.

And what are the big investors to do with all this?

It’s simple! Go out and buy bitcoin. Can its reporting be falsified? No, it can’t. Everyone can personally verify how many BTC are in the system and how many are in each particular wallet. Is it possible to increase Bitcoin issuance? No, you can’t, a strict algorithm shows exactly when the remaining 2.5 million BTCs will be created. Can Bitcoin be banned, confiscated, account frozen (conducting an investigation)? No you can’t. If an investor has a seed phrase, then only he owns BTC. And so on and so forth.
Every week and month, this reaches more and more traders, speculators, investors. And it is this that is the powerful fuel that drives up the price of the first cryptocurrency.

02.30 Australian retail sales for February
08.00 German retail sales for February
16.00 US ISM manufacturing index for March

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.