How the cryptos crumble, as equities tankBy Arnaud Masset
The crypto-asset selloff resumed on Monday, as equity markets tumbled. Total market capitalization of crypto-assets slid to US$380 billion this morning, now down from early January’s US$830 billion by more than half! Trading in Bitcoin suggests its $8,000 threshold remains solid. Bitcoin’s price fell more than 45% this year: it is time for a consolidation.
Bitcoin slid as low as $7,614 at the weekend before stabilising at around $7,890. Ethereum also tanked 11% over the last 24 hours, while Ripple extended losses below the $1 threshold. Ripple has had a tough month, as its price has been cut by a factor of 5 (from $3.8 to $0.8). The Bitfinex/Tether situation panicked selling in cryptos, as investors have been deprived of the main safe-haven crypto. The selling seems to be triggered by a risk-off sentiment has across equity markets. Equity indices are blinking red across the screen with European equities following Asian ones in negative territory.
Greenback ignores green employment numbersBy Vincent-Frédéric Mivelaz
US employment figures for January are pushing the dollar higher. USD/EUR trades at 0.8030 (+0.43% since Thursday 1 February), USD/JPY 109.95 (+ 0.50%) while GBP/USD remains at 1.4120 (-1.01%). Non-farm payroll employment added 200’000 new jobs (180’000 expected; 160’000 in December 2017). US unemployment of 4.1% (confirmed for December 2017 and lowest since 30 September 2000) also showed strong economic growth. Wage hikes also boosted the economy by 2.90% over the year, the highest rate since 2009.
Still, the DXY US Dollar Index lost 3.29% since the beginning of the year, its biggest drop in two years! We think this is explained by the strong EUR and JPY (57.60% and 13.60%) weighting of the DXY. When the European Central Bank starts monetary tightening, we think the uptrend will continue and could reach 1.28 dollars per euro. Investors speculate that the Bank of Japan abandon its extremely-loose policy earlier-than-expected, so JPY kept strengthening against USD (USD/JPY 109.98, -2.35% in 2018). However, we expect however the BoJ to stay dovish, as Japan’s inflation remains at 1% (below 2% target) and consumer spending is still below expectations (-0.10% as of 31 December 2017).