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During trading on Thursday, less than a day after breaking through the $20,000 level, bitcoin reached $23,800. So the momentum, in less than 24 hours, was about 20%.

BTC

Now, instead of discussing when BTC will go below the $20,000 level, most traders have switched to another question. When will bitcoin break through the $25,000 level. The funny thing is that that level might be broken any given night. And we will find out in the fact over our morning coffee.
Let’s get to the bottom of this. Why was the first cryptocurrency standing under the level of $20.000 for so long, but after breaking through it, it rose sharply? The fact is that, as with the sharp rise from $10,000 to $19,000, speculators who played short uncovered helped considerably. They were forced to close positions in order to avoid margin calls. However, according to data from cryptocurrency exchanges, a huge number of margin calls did catch up with particularly stubborn traders. It was thanks to mass shorting that we saw the strongest momentum in BTC movement in the last 24 hours.
We are all expecting BTC to grow over the next 12 months. The problem is that we don’t know exactly when this growth will happen and when corrections will happen. What happens when all traders and investors wait for the same event? That’s right! The markets punish them by moving in the other direction.
So, looking up, you have to be mentally prepared for a strong correction, which even in 1 day can bring the BTC rate below the level of $20.000. Such correction is possible only on mass closing of speculators’ positions, standing in long positions with big leverage. That is a 100% identical situation that contributed to the current rise.
We should all be aware that an exit to absolute price highs is almost always accompanied by increased volatility. And be prepared for any development.

What awaits us today?

04.00 Bank of Japan interest rate decision
07.00 Bank of Japan press conference
14.30 Canadian Retail Sales in October

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.

Bitcoin has finally surpassed the $20,000 per BTC level.

BTC

Throughout the autumn, and throughout the 9k to 20k rally, we have repeatedly drawn the attention of our subscribers to the upside triggers. The interesting thing is that, despite breaking the all-time price high, these triggers have not gone anywhere. In fact, they have become even stronger.
For example, investors and even public companies are buying more and more BTC. And they buy it at the price 2 times more than they did 3-4 months ago. It turns out that this price level no longer seems high to them.
There has been a lot of talk over the past 2 weeks that whales are getting rid of bitcoins en masse, which means we should expect a reversal. However, in this case, it meant the following. There was a BTC spillover from whales, who had previously bought the first cryptocurrency and were now locking in profits, to new big investors who were entering the market for the first time.
What to expect from bitcoin now? Where might it be headed? That’s something no one can know. After breaking through absolute highs, the price very often starts to behave completely irrationally. However, we still don’t expect next year the $100,000-300,000-500,000 per 1 BTC that many people promise.
For 2019, bitcoin has doubled. And for 2020, if the price stays around that level, 3 times. These are the numbers we should be counting on. That is, a conservative estimate of optimists will be $40-60 thousand by the end of next year.
And the pessimistic estimate? We will not announce it, because we always were optimists about BTC, which you can easily understand from our newsletters. Moreover the fate of the pessimists since the first year when BTC saw the light is extremely unenviable. It is a trend that is our friend.

What awaits us today?

01.30 Australian unemployment rate
10.00 Swiss Central Bank press conference
11.00 Bank of England Interest Rate Decision

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.

16.12.2020 – Special Report. Dr. Frankenstein created a monster out of corpse parts, which he patched together and brought to life with lightning pulses. Then the monster ran amok. The parallel to the financial market: the world’s central banks push up share prices with endless amounts of money. And they boost the demand for new shares – the market for IPOs has never been stronger than in this year of the pandemic. The biggest stock market of all time was also created. A monstrous bull – Bank of America called it “Frankenbull”.

Too much euphoria

The bulls have been almost unstoppable lately. No wonder – according to Knowledge Leaders Capital, there has seldom been better fodder on the stock market: three vaccinations against Corona are likely to be available soon, 42 percent of investors believe that a vaccination will positively support the economy from the second quarter, 28 percent even see Q1. So stock market investors have ticked off the recession. In addition, interest rates are at zero, the government is running up debt at full speed and soon Janet Yellen will return as Treasury Secretary with probably even more money.

Warning against the “Frankenbull”

Chief Investment Officer Michael Hartnett of Bank of America recently did not mince his words in this context: in his opinion, the central banks are currently creating a real market monster – the “Frankenbull”, drawing a parallel to Frankenstein.

Here are some of the dangerous facts from the BoA: Since March, central banks have bought $1.3 billion in assets – every 60 minutes. The world saw 190 central bank rate cuts this year – four cuts every five trading days. In 2020, $3.4 trillion of US Treasurys were also issued – an all-time record. Global market capitalisation had risen by $39 trillion from the lows. A record $139 billion had flowed into equity funds globally in the past six weeks – surpassing the previous peak set in January 2018. This year, 9,730 IPOs worth around $1.1 trillion have already taken place globally – the best year ever. We think: Many of these companies would never find investors in normal times, as evidenced by the dotcom bubble some 20 years ago.

Central bank money without end

And the moral of the story for Bank of America: “central banks have never been this dovish at this level of asset prices and valuation before”. And further: the masters of money “openly tolerating asset price bubbles (and extreme wealth inequality) so as to ‘bridge’ to stronger growth and lower employment.” In other words: the central banks accept bubbles – and they have no other choice and no other means. All in all, Hartnett does not expect a boom, unlike the rest of the market, but rather an era of “stagflation”, in which the dollar, among other things, will weaken.

Sell signal from asset managers

Bank of America followed up with another, concrete correction warning: The latest Fund Manager Survey for December said that the cash level of investors had fallen below 4 percent – and that this had triggered a sell signal. We ask: Who should still buy when all the cash is gone? 217 money managers with a combined $576 billion AUM (assets under management) were surveyed. The last time this sell signal was triggered was in February 2020 – shortly followed by the crash. And on net, investors are actually underweight in cash this time – the last time this happened was in May 2013.

According to the survey, the most crowded trade is long tech with 52 percent – for the eighth month in a row. The second most popular trade among financial managers is Short US Dollar with 17 percent. And 15 percent of investors surveyed indicated Long Bitcoin. So in the event of a correction, these would be the first three candidates for a reversal.

The biggest stock market of all time

Fittingly, the financial blog ZeroHedge recently put a house number on the euphoria: the global stock market reached the size of 100 trillion dollars for the first time ever last week – 100,000,000,000,000. The whole thing is more dangerous than one thinks – because risks build up slowly, but unfold their danger quickly.

Overall, there are currently three major risks: 1) a debt and banking crisis. If interest rates remain low, the volume of unserviced loans will increase and insolvencies are inevitable. 2) Overlooked inflation: According to Bloomberg Economics, inflation is hitting the poor and middle class harder than the official inflation index indicates. These higher costs of living are hitting housing, insurance, food, education and healthcare in particular – and are socially explosive. The blog stated 3) that there is currently a perverse incentive for investors to pump up bubbles that, when they burst, send shock waves into the real economy. This through higher taxes and weaker purchasing power, as central banks use monetary policy to denuclearise the currency.

We think: Every bubble bursts at some point. And then the monster bull dies raging. Even those who see the trend as their friend should not ignore the warnings of the experts. The 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.

The whole history of capitalism is based on “borrowed interest”. The entrepreneur borrows money at interest from the investor, makes money from the product or service, pays back the loan, and everyone stays happy. Both the entrepreneur and the investor. But something has gone wrong this year.

EUR/USD

The coronavirus has only spurred the process of uncontrolled money printing by the world’s central banks. This is presented with the idea that “the economy should grow”, but it is not growing anyway, just money going into the financial and stock market, inflating bubbles.
In the last 10 months the major central banks have printed almost 2 dozen trillion dollars of money (converted to US dollars). This has led to a completely absurd situation. Government bonds of many European countries are selling at negative yields. Of particular note is Portugal, which was recently bailed out by the whole of Europe from bankruptcy.
Saved? Of course not, just flooded it with loan money, drastically reducing interest rates. The last point is important. Portugal could not service its debt at 7% per annum, but it is perfectly capable of doing so at 0% or -0.1%. Doesn’t that make the country potentially bankrupt? All it takes is for rates to go back up and that will happen sooner or later and investors won’t be able to get their money back.
So what happens? Experienced investors now lend money not to get a return, as it has worked for centuries, but to end up with negative returns at best? And at worst, to lose money altogether?
We believe this is the breakdown of the global financial system and a whole new reality. Politicians can mind their own business, but it is critical for traders to understand where this could lead.
We propose 2 completely opposite and quite catastrophic scenarios for investors, with a lag of one year. That is, they could be executed by Q4 2021.
In the first case we will see the US dollar fall by 20-30% to a basket of major world currencies. And an even stronger fall, by the same 20-30% against the US dollar, of the currencies of developing countries.
In the second case, we expect a sharp strengthening of the U.S. dollar and a taking of the 1.0 level for the EUR/USD pair.

What awaits us today?

01.30 Reserve Bank of Australia minutes
03.00 China Retail Sales in November
08.00 UK Unemployment Rate for November
15.15 US Industrial Production for November

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.

Today about how Tesla’s new business model will finally kill oil workers’ hopes for a brighter future.

Oil.WTI

The mass adoption of electric cars will happen in a few years, when their price will be comparable to counterparts with an internal combustion engine. People living in their own homes will not need to be persuaded of anything. The car owner comes home from work, plugs his car in and goes to rest.
But what should people living in megalopolises do? Drive around the neighbourhood looking for a free charger? Then wait until the car is charged, then drive around again, looking for a parking space? That’s not much of a case. That’s why oil companies are hoping that the demand for petrol and diesel cars will continue in big cities for a long time to come, increasing the demand for petroleum products.
We think Tesla and Elon Musk personally see the situation differently. The challenge is for the inhabitants of metropolitan areas to give up most personal cars altogether. Nowadays, an average American family spends about $1,500 per month to buy and maintain 2 cars. Thus to inhabitants of megacities the possession of the car creates a lot of problems. It is enough that they have to park when they come to work, and then repeat this quest when they come to their flat.
In about 10 years, unmanned cars will be allowed in cities. And it will be the Tesla cars that will occupy this niche first. The company’s business model will change from selling cars to individuals, to using its cars as taxis.
The cost of delivery from A to B will drop by a further 2-3 times compared to even the low current price of Uber. What will the price be reduced by? No driver, no expensive maintenance, cheaper fuel (electricity), and the ability to operate the vehicle 23 hours a day, 7 days a week. Once or twice a day, Tesla drones will return to their hubs with thousands of charges. And after 30-60 minutes, they will be on the road again.
Such a business model would remove the need to own a car for 1-2 billion inhabitants of megacities. Using an unmanned taxi will be many times more efficient, in terms of economy, than owning your own car. And it will be the last straw, reducing the demand for oil.

What awaits us today?

05.30 Industrial production in Japan for October
11.00 EU industrial production in October

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.

One of the highlights of the week was Thursday’s ECB meeting and Christine Lagarde’s press conference in which she outlined how the ECB will proceed. It is worth noting that this is the last meeting of the year. Investors will be guided by these statements for the next few months.

EUR/USD

The ECB council finally decided to expand the emergency pandemic asset purchase programme by EUR 500 billion and to extend it to March 2021. On one hand, additional injections of funds should weaken the Euro against the Dollar. On the other hand, the Euro is turning into the Japanese Yen when the currency appreciates on additional monetary stimulus.
The growth is still hampered by the Brexit deal that London and Brussels cannot agree on. The final decision is due on December 13. It is still hard to say what decision will be made and how it will affect the European currency.
Taking into account all the current factors we should suppose that EUR/USD will continue to move in the positive direction, although many believe that it is detrimental for the EU economy. However, the central bank does not believe that the high EUR/USD will have much of an impact on economic recovery and inflation growth.
The role of the Euro in the global economy is beginning to change towards a safe haven currency. Any action by the ECB is perceived only positively, which once again pushes the EUR/USD exchange rate upwards.
After the lifting of the veto by Poland and Hungary, the final decision to support the Euro will be a positive decision on a 2.2 trillion Euro bailout from EU leaders to support the EU economy.
Only the very serious consequences of Brexit and possibly another lockdown due to COVID-19 can slow down the growth of the European currency. Already now it can be seen that the European Bank is hardly in a position to fundamentally influence the Euro exchange rate, but only tries to smooth out strong fluctuations.

What awaits us today?

08.00 German consumer price index for November
14.30 PPI Producer Price Index for November in the US
14.30 US Consumer Expectations Index from the University of Michigan for December

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.

For thousands of years gold has been one of the most important means of preserving savings. Up to now, the amount of gold a person has had indicates his or her worth. However, the era of digital technology is beginning to make adjustments to longstanding methods of capital preservation – cryptocurrencies. Will Bitcoin be able to replace gold?

BTC/USD

If you compare gold and bitcoin as assets for capital preservation, there are many similarities. Splitability – if you divide the assets into parts, the price will correspond to the mass of the share. Like bitcoin, gold can be transferred, exchanged, sold and moved. Gold and Bitcoin are limited in quantity and will sooner or later be in short supply.
If you look a little deeper, the digital currency may even have some advantages over precious metal. It is unlikely that you will hide a lot of gold at home. It can be stolen and you will most likely have to use the services of a bank or vault, which will have to pay for the safety of your metal. Bitcoin can lie quietly on your wallet and not require storage fees. The keys to your wallet can simply be hidden and encrypted so that scammers or robbers cannot gain access.
More and more investors are turning their eyes to Bitcoin. A large number of investment funds are already using cryptocurrency to hedge against the fall of the dollar after the huge injections by the US government due to the coronavirus pandemic.
Of course, gold will remain the main means of saving for a long time to come. The leading countries continue to accumulate gold reserves. The US, Russia and China became the leaders of growth in 2020, purchasing more than 208 tonnes of precious metal in total.
Bitcoin is now very much like gold in the 70s of last century, when the price rose sharply by several times and then adjusted by 50% over the years. More and more large companies, such as Paypal, are introducing cryptocurrencies into their business. Billionaires make large investments in bitcoin.
Yes, bitcoin is difficult to touch and admire as gold, but in the current time of remote work and online shopping such an asset does not look as strange as it did 10 years ago.
The world is developing. Even skeptical financial experts are beginning to recognise cryptocurrencies. A new life online requires new digital savings assets.

What awaits us today?

08.00 UK GDP for November
13.45 Statement on ECB Monetary Policy
14.30 Number of initial applications for unemployment benefit in the USA

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.

The second week of December starts with a new wave of investor optimism. Although last week ended with a relatively weak labour market report, it was not followed by a sale of shares. Let us try to understand what awaits the American market and the S&P 500 index in particular in the near future.

S&P500

The conflict in the Senate between Democrats and Republicans is only intensifying. Elections to the US Federal Reserve are in a tense position. Some candidates find it very difficult to get into office. The democrats do not want to give extra points to the outgoing Donald Trump.
Due to the change in Fed membership, management policies are unlikely to change. There will be a forthcoming meeting on 15-16 December to announce further action on asset purchases, but history shows that the Fed has tried not to make abrupt statements in its action plan before Christmas at the end of the year, when market activity is declining and many people are leaving for the Christmas holidays.
Against the backdrop of optimism, the S&P500 index has reached another high. In such a situation, it is worth watching closely how investors will behave and to what extent the risk of buying further is justified.
If there are some sell-offs of risk assets from current positions, it can be said that the markets have reached a certain maximum of their movements. An additional pressure on the index is the increased yield on long-term government bonds, which makes them slightly more attractive to buy.
Of course, the bulls may be stimulated by new stimulus measures that have been effectively pulling up quotations throughout the year.
It is still difficult to determine when buyers will not be left to continue growing. Now there are enough assets that look like they have been bought up. The end of the year is on the nose and it is possible to take profit from investment funds. In the current situation, the risk/profit ratio for buyers does not look very attractive.

What awaits us today?

08.00 German trade balance for October
16.00 Number of open positions on the job market JOLTS in USA
16.30 US crude oil reserves

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.

08.12.2020 – Special Report. Resting after the summit storm: BTC has recently reached an all-time high. And has since then been stuck just below the high. Is there more to come? Or is that it now? A legitimate question. Especially since the Swiss central bank, with a successful test of digital money, has shot just about to the high Bitcoin.

High of 2017 cracked

According to CoinDesk, BTC reached an intraday high of around $19,835 last Monday. The previous high was 19,783 dollars on 18 December 2017. After BTC had plunged to $3,867 in March, a nice catch-up. What do we notice? First of all it’s December again – apparently the Millenials are shopping just before Christmas.

Retail purchases at Christmas

The “Wall Street Journal” also noted that young retail customers, who as digital natives are not afraid of e-cash, are probably behind the recent increase: to date, there have been 11.9 million transfers to personal e-wallets with a value of less than 1,000 dollars this year. According to Chainanalysis, a software company that specialises in cryptocurrency transactions, in 2017 there were around 9.1 million transfers. According to this, there are more participants in the rally. So if we have only seen a kind of Christmas shopping frenzy by retail traders with small wallets, then a correction is imminent.

Even the professionals get in

However, Smart Money has also recently bought money. Guggenheim Partners, for example, pumped around $5.3 billion into the Macro Opportunities Fund to get it involved with the Grayscale Bitcoin Trust – and the latter buys Bitcoin exclusively. Legendary investors such as Paul Tudor Jones and Stan Druckenmiller also committed themselves to the e-foreign currency. And Square – the other company of Twitter boss Jack Dorsey – announced in October the purchase of 4,709 Bitcoins with a value of around 50 million dollars. Incidentally, Dorsey already speculated two years ago that Bitcoin would become the world’s only currency within a decade.

Mega bull MicroStrategy

And then there is the software company MicroStrategy, which shocked the market back in August when it announced the purchase of Bitcoin worth $250 million as a hedge against inflation. On Friday the company followed suit and announced the further purchase of BTC for $50 million. After months of rallying, MicroStrategy is now sitting on just over 41,000 BTC worth $475 million.

Push through the fear of inflation

Indeed, the argument of inflation is currently the main driver for BTC. New global corona stimuli are on the horizon, plus endless quantitative easing from central banks. And that would already be the biggest bullish factor for the e-foreign currency – investors rightly fear a devaluation of the dollar, euro, rouble, yuan and co. and move their money into the safe haven of Bitcoin. However, this could ultimately be the end for cyber-warfare. Because whoever controls the currency controls the economy and the labour market: the masters of money pump capital into the economy through low interest rates and quantitative easing. And thus boost the real estate and construction sectors, for example. The flight into uncontrollable parallel currencies disrupts these mechanisms.

Kiss of Death at an all-time high

Almost exactly at the Bitcoin high, we received a message from the Bank for International Settlements (BIS) in Basel last week: According to this message, all major central banks in the world are currently investigating digital money and its function. The BIS is the “bank of central banks”, it reported on a first successful attempt in Switzerland to use digital central bank money to settle securities transactions between banks. In a telephone conference, former ECB Director Benoît Cœuré – who heads the BIS innovation centre responsible for e-foreign currencies – spoke of a breakthrough. He said that this was an attempt at interbank transactions, not digital money for consumers. Digital central bank money in securities trading and settlement is technically and legally feasible, according to the BIS and the Swiss National Bank. The Swiss National Bank has not yet decided whether it will actually issue digital central bank money.

Headwind for Libra

Soon things will get serious in the cybercurrencies market. The BIS, SNB as well as the European Central Bank and other central banks are responding to Bitcoin, but also to Facebook’s Libra project, with their field tests. And the resistance of the money empire is having an effect, as the “Frankfurter Allgemeine Zeitung” noted: In the meantime, the Libra had to be slimmed down so much that it was renamed “Diem”. According to its own statements, Facebook had to deal with the concerns of central banks and supervisory authorities around the world, who feared for their state monopoly on money.
And that is exactly what BTC may one day flourish: the end of monetary policy. Please do not ignore this fact: Those who invest in Bitcoin and suddenly the central banks ban competing e-foreign currencies will have to expect heavy losses. We keep an eye on the matter – and wish 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.

07.12.2020 – Special Report. Applause, applause: US indices set new records last week. They will think we are spoilsports, but we must once again send out a warning: Please remain cautious. Because if some experts have their way, a sell-out is now inevitable.

The 100% chance of correction

The Citibank recently put the matter in a nutshell: the in-house panic euphoria indicator has reached its highest level since the peak in the dotcom bubble, according to chief strategist Tobias Levkovich. The index measures, for example, the indebtedness in securities trading, i.e. margin loans; options trading; or bullishness in newsletters. And then the analyst concluded: “Current euphoric readings signal a 100% probability of losing money in the coming 12 months if we study historical patterns – indeed, we saw such levels back in early September as well right before a selloff in stocks.

Code Red from Bank of America

ZeroHedge noted that a record $115 billion has been channelled into equities in the past four weeks. And at the same time a record $9 billion out of gold. So risk is in high demand on the stock market. Chief Investment Officer Michael Hartnett of Bank of America assisted, there have been several “Greatest Of All Time” (GOAT) events in the past ten months: Pandemic/crash/lockdown/recession. The biggest bear market of all time. The biggest Wall Street rally of all time.

Now the BoA sent out a “Code Red” level alarm. All important internal indicators gave a sell signal: the in-house Bull & Bear Indicator jumped from a high 4.7 to an extreme 5.8. The cash balance of investors is now only 4.1 percent. The flow rule, which measures the inflow of capital, only shows a four-week inflow of 1.5 percent of all assets under management. In other words: the supply of capital is apparently drying up. The low market breadth also triggered a sell signal.

Politicians set their sights on Big Tech

Speaking of market breadth: Big Tech is obviously about to come under pressure. According to a report on CNBC, Facebook must be prepared for a monopoly lawsuit from 40 states. If this ends in a smashup, the shockwaves are likely to shake up the other big tech titles as well. Especially since the “Wall Street Journal” also reported that Google and Facebook are being bombarded with antitrust lawsuits by both states and the central government. But let’s wait and see: It is not for nothing that the oligarchs from Silicon Valley have been busy donating to Joe Biden.>

Overbought market

Michael Wilson of Morgan Stanley also repeated his warning of a correction on Bloomberg TV. The stock market was simply overbought, the man who is considered the most accurate analyst on Wall Street said. One factor that many investors overlooked was the fact that Treasury yields continued to rise. In other words: smart money is saying goodbye to government bonds. And rising interest rates are a danger especially for high-tech stocks. In concrete terms: “The market is overbought and the market is probably a little bit overvalued quite frankly because interest rates are finally now starting to catch up.”

Chart gap in the Dow

We complement: The chart technique also sends out a warning signal. In the Dow Jones, there is a gap between around 29,500 and just under 29,000. Such gaps are normally closed. Our conclusion: On the one hand, it says “The trend is your friend. On the other hand, warnings are currently accumulating at an alarming rate. You should not ignore this. We wish you successful trades and investments!

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