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Market Update: U.S. Stocks Cap Off Stellar Month With Gains

Hi Everyone,

Personally, I don’t keep up with the Kardashians but my wife does, along with hundreds of millions of other people who like to keep abreast of the latest fashion and other trends.

So I was a bit surprised when my wife called me over to show me this post, on Kim Kardashian’s Instagram account.

Apparently, she was gifted 1 BTC from Matthew Roszak while at a charity poker event, a small yet significant step for Bitcoin into the mainstream.

eToro, Senior Market Analyst

Today’s Highlights

  • Morgan Stanley Bearish Call
  • Bank of Japan Steady Hands
  • Crypto Connection

Please note: All data, figures & graphs are valid as of July 31st. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

We saw some very serious “risk off” sentiment enter the markets quite suddenly yesterday and it all started with the tech sector.

Shortly after the opening bell on Wall Street, the Nasdaq began to fall. The selling spread rather quickly and by the end of the day, the three main US indices were at a loss.

In a strange way, this sentiment seemed to drag bitcoin down as well, and the world’s top digital currency dipped briefly below the $8,000 level. However, as we can see, it has since made a full recovery.

This graph shows bitcoin seemingly reacting to the declines from the FAANG (Facebook, Amazon, Apple, Netflix, Google) stocks.

Though bitcoin recovered, some are thinking that whatever happened to the tech stocks yesterday might not be a temporary thing.

Analysts from Morgan Stanley are saying that even though Amazon put up some fantastic numbers, the earnings misses from Facebook and Netflix could be an indication of weak underlying fundamentals.

Bank of Japan

Governor Haruhiko Kuroda of the BoJ walked a very thin line yesterday as he managed to make some policy adjustments and display a steady hand same time.

The market wasn’t quite sure what to make of all this, though and we can see that even though there were some mild swings in the market, the Yen did not find any clear direction from all of this, at least not at first.

By now, it does seem that the Yen is getting slightly weaker in the aftermath.

As we stated previously, it is possible that some traders in Japan may be looking at bitcoin as a hedge against the BoJ’s weak Yen policy.

However, since the announcement was relatively balanced, it didn’t have any noticeable effect in the crypto market. I suppose we’ll need to wait until further action is taken by the BoJ to fully test my theory.

Crypto Connection

Even though bitcoin’s trip below $8,000 was quickly rejected by the market and we hope that support holds at $7,800, we can actually zoom in on the market to gain some valuable insight about the state of cryptos at the moment.

As we can see, aside from the fact that tech stocks were falling, the cryptos rout seemed to originate with EOS, ADA, and XLM, which were down more than 3.5% before the rest of the industry even noticed.

Even though most of the cryptos recovered quickly, these three remained behind.

Zooming out on the chart, it seems that all this short term volatility may be rather insignificant. We’ve already pushed off the lows, showing that the market has resilience and people are viewing prices below $7,000 as cheap.

For now, we’re seeing some consolidation near the highs, just below the 200 day moving average (blue line). If we do see a strong break above the line, it would be a very bullish sign.

However, even if we retreat another $1000 or so, I don’t think it would be an issue. Overall, price stability is strengthening for adoption rates as it increases bitcoin’s use case a store of value.

Let’s have an amazing day ahead!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Best regards,
Mati Greenspan
Senior Market Analyst

Connect with me on….

eToro: @MatiGreenspan | Twitter: @MatiGreenspan | LinkedIn: MatiGreenspan | Facebook:MatiGreenspan

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