Libertex Weekly Financial Markets Review

[Libertex]

Mr. Powell Goes to Washington​

With all the excitement in the equities and crypto market of late, it’s easy to overlook the less glamorous asset classes like traditional currencies. But despite its slower-moving nature, the Forex market is still the world’s biggest and most liquid, turning over a whopping $7.5 trillion every single day. And though the movements are typically small, significant events can still see huge amounts of money change hands due to its high leverage environment. With a key shift in monetary policy direction expected soon from the world’s leading central bank, the US Federal Reserve, there’s strong potential for major ripples across the currency markets. As Fed chair Jerome Powell heads to Washington this Tuesday (09/07) to give his annual testimony to Congress, many investors are watching closely for any signs as to when cuts can be expected.

Meanwhile, political upheaval in Europe amid ongoing geopolitical uncertainty across the continent presents fresh challenges to the already beleaguered euro as the Japanese yen soars ever higher in spite of the BoJ’s best efforts to build faith. Will a newly dovish Fed help turn the tide for these other key majors? And what will be the other main factors driving the global Forex market in the rest of 2024? In this article, we’ll look at where these big three currencies could be headed in the medium term and why.

Thank the Fed

As we touched upon earlier, many are expecting a policy pivot from the Federal Reserve. It’s well known that the dollar’s strength against the world majors post-pandemic has been largely attributable to the monetary policy disparity between the US and much of the rest of the world. The Fed acted swiftly and dramatically to raise rates during the 2021–2023 inflationary surge, increasing its funds rate from near zero to above 5% in the space of just 12 months. Meanwhile, the ECB, BoE, and BoJ were much slower to react, with the latter even failing to raise rates at all until as late as May of this year. Naturally, this helped the greenback strengthen significantly and we even briefly saw USDEUR parity as a result. As Jerome Powell told Congress this week, the US “is no longer an overheated economy” and the argument for rate cuts is becoming increasingly convincing as a way to shift the focus from solely inflation and face up to the “two-sided risks” threatening the US economy. And with the labour market now cooling down to pre-pandemic levels, an injection of cheaper cash could be just what the economy needs to boost productivity. An additional benefit would be that US imports would be more attractive to Europe and beyond. Despite the optimism, Powell declined to give a clear timeline on when he will cut, with some suggesting it could happen after the US presidential election in November.

Flight from fiat

Another key but little analysed factor for currencies as a whole is the unpopularity of fiat money in general. The USD is still somewhat shielded from this phenomenon as the world’s reserve currency, but events such as the Saudi rejection of the petrodollar and loss of trust associated with the weaponisation of the US currency by Washington could weigh on the greenback longer term. However, currencies like the euro and yen are already rapidly losing their draw as a store of value/appreciable asset. The 2021–2023 inflation surge demonstrated to many that their money’s value is far from constant as prices of many household essentials rose by almost 50% during this short period. Owners of euros were particularly hard hit due to the concurrent weakness of the single currency against the USD. In Japan, the effects were even worse, albeit for different reasons. While inflation might have remained nominally within the normal range on account of Tokyo’s long-standing deflationary problems, the yen lost an unfathomable 30% of its value against the US dollar over this period. The reason behind both these phenomena is overly dovish monetary policy. The BoJ, for instance, only entered positive rates territory in Q2 of this year, while the ECB have consistently trailed 1% behind the Fed throughout the inflationary crisis. As both domestic and geopolitical uncertainty grows, investors are increasingly shunning fiat currency as a store of value in favour of gold, using USD or euros more frequently as a medium of exchange only — a trend that will only accelerate with softer monetary policy worldwide.

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Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.31% of retail investor accounts lose money when trading CFDs with this provider. Tight spreads apply. Please check our spreads on the platform. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Libertex]

Spotlight on China​

With all the excitement surrounding the US presidential election and the much-awaited monetary policy pivot from the Fed, it’s easy to forget about the world’s second biggest economy, China. However, while all of this has been going on, the Asian powerhouse has been gradually seeking to fix its own post-pandemic economic problems. While inflation has remained relatively stable on account of the country’s command-economy model, China has struggled to return to its 2019 level of above-6% GDP growth. According to the latest numbers, the Chinese economy grew 4.7% in Q2 2024, a decent amount short of the 5.1% expansion forecast by Reuters and lower than the 5.3% growth seen in Q1. Retail sales for June also came in lower than expected, growing 2% year on year against projections of 3.3%. As a result, Hong Kong’s Hang Seng declined 1.73%.

However, it’s far from all doom and gloom. China’s big tech stocks are still exceptionally well-priced and the fundamentals for a recovery remain in place. What’s more, the real bugbear of the Chinese economy – the tanking property market – is showing signs of revival in both first- and second-tier cities. If the GDP numbers can be improved by year’s end, the outlook would be extremely positive. So, what does this mean for equities investors and what will be the main factors moving Chinese assets in the rest of 2024?

Value talks

Even taking a step back from the key economic indicators and wider stock market context in China, one thing that would surely catch any equities investor’s eye is the extreme value available in Chinese blue chip stocks right now. E-commerce and cloud computing giant Alibaba, for instance, is currently (18/07) available at a virtually irresistible price of $77.04 – an eight-year low, which represents a P/E ratio of 17.8. Not to mention that it offers an extremely generous 2.6% dividend yield to boot. WeChat owner Tencent’s current price of HK$ 370.40 is only a five-year low by comparison, but its P/E of 25 and 0.92% dividend yield are also nothing to be sniffed at in the context of growth stocks. But it’s Baidu that offers the best value of all. At $91.09, the ADR is at its lowest since 2013 and boasts a P/E ratio of just 12.19. And while it’s always wise to be cautious with value assets, we’re talking about some of the biggest and most successful tech companies in the world’s second-biggest economy. Now the headwinds of tighter regulation and antitrust legislation from the CCP are beginning to subside and these Chinese powerhouses begin to cement their position in developing world markets in both South East Asia and Africa, we could well be in for a boom cycle soon. Indeed, the FTSE China A50 Index currently stands at 12,302.80 – down 40% from its 2021 ATH. This is significantly more than the average -33.38% crash drawdown and more than double the average 1.4 year crash duration, which means we’re overdue for a bull cycle.

It’s the macroeconomy, stupid

Aside from the market conditions mentioned above, there are wider-reaching macroeconomic factors at play in the Chinese stock market. Anyone following China will surely remember the property market crisis of 2021 sparked by the collapse of Evergrande Bank. It was dubbed “China’s 2008” and the result was devastating for both ordinary investors and the country’s capital markets. People were understandably scared of making any kind of investment following such unexpected losses in a traditionally “fool-proof” asset class, and so high-risk instruments like corporate stocks were decidedly off the table for many. However, the latest data from the National Bureau of Statistics suggest a nascent recovery in first- and second-tier cities as sales transactions rise 3.6% from April. Meanwhile, figures from the Global Times reveal that nearly 60 percent of the top 100 developers saw their home sales values increase month-on-month in June. It’s no coincidence that the last ATH on the A50 Index was in 2021, and it’s reasonable that once housing prices recover, we will likely see an influx of newly freed capital into riskier assets like equities. And despite the recent GDP miss, growth is still expected to improve by between 0.1 and 0.3 percentage points this year, with a median GDP growth forecast that is now up to 4.9%. If these expectations are met, it will only encourage more foreign investment, which will be supported by the good value available in Chinese stocks at the moment. Finally, CCP policy is also likely to drive domestic interest in local equities amid active government purchasing of Mainland stocks.

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Libertex offers CFDs on a wide range of underlying assets, classes ranging from commodities, metals and Forex, through to ETFs, options and, of course, stocks. The Libertex platform gives you the ability to open long or short positions in stock CFDs. In addition to major Western indices like the S&P 500, EURO STOXX 50 and Nasdaq, Libertex also offers two China-focused indices in the A50 and Hang Seng, as well as individual Chinese stocks like Tencent Holdings, Baidu and Alibaba. For more information or to create an account of your own, visit www.libertex.com/signup today


Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.31% of retail investor accounts lose money when trading CFDs with this provider. Tight spreads apply. Please check our spreads on the platform. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Libertex]

CrowdStrike strikes out after global IT outage​

In an ever more connected world, cloud security and critical infrastructure protection are increasingly vital to a range of important industries and sectors. But what happens when the fail-safes fail? Well, the world found that out rather quickly this Friday. A simple glitch in a Falcon content update was enough to cause what has been dubbed "the largest IT outage in history" after critical systems used by airlines, hospitals, emergency services, and others were taken out by a dodgy system file contained in the update initiated by cybersecurity behemoth CrowdStrike. It is estimated that the crash — the effects of which are still being felt by some firms even after the release of a fix this Sunday — has already cost at least $1 billion in damages.

While it is as of yet unclear whether CrowdStrike will be paying for any of these expenses, the impact on the company's share price has been nothing short of devastating. After rising almost 300% between 2023 and 2024, CRWD has now lost over 20% since Friday based on Monday's (22/07) pre-market figures. That said, the ticker is still up more than 200% from its early 2023 levels, even with these recent losses. So, is this the end for CrowdStrike, or is it just a minor blip? And what are the factors that will determine where CRWD ends the year?

Too early to tell

Right now, it's important to note that rash price crashes are a common occurrence following major black swan events like these — and it appears as though this 30% drop in CrowdStrike's share price in a matter of days is likely an overreaction. Nonetheless, the long-term fair price decline is difficult to assess since the full financial implications of the crisis are yet unknown. For instance, it's unclear whether CrowdStrike is financially liable for any of $1 billion+ in damages due to the terms in its licence agreements. However, it may yet decide that it is obliged to shoulder at least some of the costs as a gesture of goodwill, given its central role in the outage.

After all, even if it can avoid paying compensation legally, this will doubtlessly leave a sour taste in many customers' mouths, who might then decide to take their business elsewhere. We would also be wise to take into account the already very high valuation assigned to CRWD thus far. After its meteoric rise over the last twelve months, its P/E ratio currently stands at 573.14, which is extremely high even for a growth stock, not least in light of the fact that CrowdStrike only had revenue of $2.241 billion last year. Considering the likelihood that this crisis will drag on into at least Q4 2024, it's hard to see how CRWD can maintain such a high valuation once the optimism fades.

Outside the box

For every loser, there's a winner, and this event was no different. What has been CrowdStrike's loss has been their better-established competitor, Palo Alto Network's (PANW) gain. As CRWD dropped 30%, Palo Alto was able to make a modest 4% gain. While this isn't anything to write home about, it's a positive sign that the market feels optimistic about PANW's ability to capitalise on this negative episode for CrowdStrike.

PANW is a more stable company with almost three times the revenue and a more attractive P/E ratio of 48.58. That's why it makes sense to balance any risk from holding CRWD by purchasing a modest holding in PANW, at least until the dust settles on this recent debacle. However, what a truly shrewd and well-diversified investor would do is also take this opportunity to purchase CRWD at a discount and dollar cost average their stake over the coming months. That way, if CrowdStrike bounces back quickly, they get a good price now and feel confident continuing to buy a solid asset at regular intervals over time. But if CRWD suffers further losses over Q4 2024 and beyond, they benefit from an even lower average price paid on a good stock operating within an ostensibly future-proof and vital sector. And while it's difficult to predict exactly what the extent of the financial losses for CRWD will be, now that the issue has been largely fixed, one would feel that the 30% from the recent high might be somewhat of an overreaction barring some additional damage coming to light.

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Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.31% of retail investor accounts lose money when trading CFDs with this provider. Tight spreads apply. Please check our spreads on the platform. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Libertex]

Core fuel or just a load of hot air?​

With all the buzz around AI stocks and crypto, oil and gas seem to have fallen off many investors’ radars. If we cast our minds back a couple of years, however, we’ll surely all remember just how expensive these crucial commodities became in the summer of 2022. The flagship US crude, Brent, hit a high of $122.70 per barrel, compared to its current value of $78.12. At the same time, Europe’s heating method of choice, natural gas, also increased significantly. The Dutch TTF Natural Gas Futures chart rose by nearly ten times the amount of its December 2020 level to reach a whopping €290.05 per MWh in late August of last year, while the Henry Hub recorded a zenith of $8.81 in this same month.

What followed could only be described as a seemingly unstoppable race to the bottom. Over the ensuing year, the commodity lost all of its post-pandemic gains and then dropped even further during the first quarter of 2024. The US natural gas spot price now sits at $2.53, but it was wallowing at a low of $1.60 just two months prior. So, what is behind this sudden surge, and does it mean that gas is in for more gains in 2024? In this article, we’ll look at the main driving forces that will determine natural gas’s trajectory this year and beyond.

What goes down must come up

We’ve all heard the famous axiom that what goes up must also come down, but the reverse is often also true, particularly in the essential commodities markets. And there’s no denying that natural gas is still at historically low levels. Even after this latest 55% gain, the Henry Hub is still below its 20-year average. Indeed, from 2001–2010, the average price was more than double its current dollar level. When adjusting for the significant inflation since then, gas is cheaper than ever.

In its June STEO (short-term energy outlook), the EIA projects that the Henry Hub spot price will average $2.46 per million British thermal units (MMBtu) in 2024 and $3.24 per MMBtu in 2025. In its previous May STEO, the EIA projected that the Henry Hub spot price would average $2.18 per MMBtu in 2024 and $3.09 per MMBtu in 2025. After building up huge reserves in 2022–2023, natural gas injections into storage so far this injection season (April–October) are below the five-year average (2019–2023). Furthermore, it is thought that low prices have led to many producers reducing gas-focused drilling and production, which will inevitably lead to higher prices over time.

Supply and demand

Despite the good reason to be bullish short term on gas, we would be wise to remember that there is a longer-term shift in energy policy taking place that will see fossil fuel demand decline. According to the EIA’s Gas 2023 Medium-Term Market Report, global gas demand is currently on course to rise by an average of 1.6% per year between 2022 and 2026, down from an average of 2.5% a year between 2017 and 2021. At the same time, this decrease in demand is tipped to be most pronounced in mature markets, a collection of countries representing nearly 50% of global gas consumption.

The upshot of this is that growth will be mostly concentrated in gas-rich economies in the Middle East and Africa, which can supply their own needs comfortably and in fast-growing Asian markets. China alone is projected to account for close to 50% of the total increase in global natural gas demand between 2022 and 2026 as it pivots to the fuel for a cleaner way to meet its industrial production and power sector demands. China and other regional consumers will almost certainly opt for cheap and proximate Russian gas, which will be in even higher supply following the closure of European pipelines amid ongoing geopolitical turmoil. Consequently, the US Henry Hub will not benefit from the increased demand and may even be pushed down indirectly by the plentiful and easily transportable Russian alternative.

Finally, an increase in the amount of new liquefied natural gas (LNG) capacity coming online in 2025 and 2026 is expected to ensure downward pressure continues to be exerted on prices as global LNG capacity stands to expand by 25% between 2022 and 2026.

Trade oil and gas CFDs with Libertex

As the world remains poised on a knife-edge, where the energy markets are truly headed in the short-to-medium term is anybody’s guess. But whatever happens, Libertex will give you the opportunity to trade energy CFDs on long or short positions. Libertex offers a range of energy CFDs from Brent, WTI and Light Sweet oil to Henry Hub natural gas, as well as a vast array of CFDs on related stocks, including Exxon Mobil and Total. For more information or to create your own account today, visit www.libertex.com/signup


Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.31% of retail investor accounts lose money when trading CFDs with this provider. Tight spreads apply. Please check our spreads on the platform. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Libertex]

Crypto crash with Ethereum worst hit​

After a short absence, cryptocurrencies have been in the spotlight once again. After gains of nearly 100% in the last 12 months for many of the top trending digital assets, it's hardly surprising. From the beginning of the long crypto winter in late 2021, Bitcoin lost over 70% of its value. It then regained all of these losses and then some between 2023 and Q1 2024. It currently sits at what might seem like a very healthy $57,274 (07/08).

However, all is not quite as well as it might first appear. Bitcoin has dropped 7.4% in just 5 days. And that's despite a full 13% rally since Monday! The damage has been even worse for smart contract currency Ethereum, which has lost a staggering 17.35% over the same period — again accounting for a double-digit rally beginning early this week. But what is the reason for this sudden decline, and why is Ethereum so much worse affected?

Political uncertainty abounds

The digital currencies market has always had a rather strained relationship with the political establishment. However, crypto has come a long way in terms of regulatory oversight and mainstream appeal in recent years. Indeed, a huge step for the asset class was the landmark approval of spot Bitcoin ETFs by the SEC this January. Yet, there are many who would like much more stringent regulation on both the mining and exchange of cryptocurrencies.

With the US presidential election fast approaching, many crypto investors have been keen to assess the stance of the Democratic ticket, Kamala Harris, and her VP nominee, Tim Walz. As Digital Commonwealth editor Darren Parkin wrote in a recent X post: "Tim Walz hasn't yet nailed his colours to the mast in terms of Bitcoin and crypto in general. However, he's a stickler for regulation. Make of that what you will." The crypto-friendly position of former President Trump and his VP candidate JD Vance are well known. US-based crypto exchange Gemini noted in its 2024 State of Crypto survey that 21% of Americans currently own cryptocurrency, and of these, 73% plan to consider a candidate's stance on cryptocurrencies when they vote for the next president.

The recent dip in crypto could then be viewed as a direct result of the rising popularity of Kamala Harris, whose polling numbers have vastly improved in the last couple of weeks. Should we get a strong statement outlining a favourable stance from the Democratic ticket, this could certainly reverse the rot.

Functionality over hype

The digital asset landscape has changed significantly since the pandemic. As blockchain technology reveals its host of real-life applications, from DeFi and NFTs to smart contracts and dApp technology, investors are increasingly interested in what a coin or token can do, and this has impacted values significantly. In fact, one of the reasons that Ethereum has fared so badly despite being one of the original cryptos is the ground it has lost in terms of functionality against newcomer coins like Solana and Cardano.

For instance, Ethereum has lost just under 30% since the start of August and has only managed to regain a paltry 3.5% from that local low. On the other hand, the faster and more easily exchangeable Cardano is only down 15% over the same period and recovered faster and more dynamically from its local low. And it's an even more impressive performance we've seen from Solana, another coin dubbed an "Ethereum killer". SOL is only down 11% on the week beginning 1 August, and with +10% over the last month, it's one of very few cryptocurrencies showing a net gain on the 30-day chart.

The reality nowadays is that altcoin investors are much more savvy and a self-styled smart contract coin that can only handle 15 transactions per second is just not going to cut it. The one thing that might save Ethereum is its greater decentralisation compared to competitors, provided that the move to a Proof-of-Work mechanism eventually yields huge speed gains as promised.

Trade crypto and more CFDs with Libertex

Libertex offers CFDs on asset classes ranging from forex, ETFs, and equities to commodities, options and, of course, crypto. In addition to legacy coins like BTC and ETH, Libertex also offers CFDs on newer altcoins such as SOL, AVAX, Cardano, and the Grayscale Bitcoin Trust. For more information or to create an account of your own, visit www.libertex.com/signup today.


Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.31% of retail investor accounts lose money when trading CFDs with this provider. Tight spreads apply. Please check our spreads on the platform. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Libertex]

Fed sharpens scissors for September slash​

For Americans — and, indeed, much of the West — the days of near-zero interest rates feel like a distant memory. The post-pandemic period led to precipitous hikes by many of the world's central banks, and we're now pushing on two solid years north of 5%. Despite the established doctrine, the high-rate environment has somewhat counter-intuitively seen the big two US indices, the S&P 500 and Nasdaq 100, gain close to 50% in value since June 2022. Inflation was brought largely under control, and even the job market held up surprisingly well to the higher cost of finance.

Now, however, things are changing, and the much-anticipated rate cut seems to be within touching distance at last. Indeed, many are suggesting Powell would have already cut earlier this month if he'd known how the big two macroeconomic reports, the CPI and non-farm payrolls, would turn out. But what has provoked the US Federal Reserve to finally shift to a more welcome monetary policy? And what will be the likely impact on equities in the US and beyond? Find out the answers to these questions and more in this article.

Waited and saw

The Fed's narrative throughout much of the past year and more has been that they're taking a "wait and see" approach to the wider macroeconomic indicators — chiefly inflation and the labour market — and only then will they consider rate cuts. Well, it now appears that the US regulator has seen enough. The first sign came with last week's non-farm payrolls, which showed just 114,000 jobs created in July, as unemployment rose to 4.3% from 4.1% in June. The weaker-than-expected jobs report led to a sharp sell-off on Wall Street, with the S&P 500 and Nasdaq 100 losing an average of 8% between 31 July and 4 August, most of which they have since regained on expectations of an impending rate cut.

What might prove the clincher came on 14 August, when the Consumer Price Index report showed year-over-year inflation had fallen to 2.9%. That was the first time the indicator had dropped below 3% since 2021. As BMO Capital's Scott Anderson noted, "This report shows continued progress towards the Fed's inflation goals." And while he agrees that "nothing in it would keep the Fed from cutting in September", he feels that the "market hopes for a bigger cut still seem like a long shot." For this reason, we should probably expect a 0.25% cut over a full 0.50%, but this is nonetheless a step in the right direction.

Support for stocks?

At least at first glance, it looks like the positive CPI report and less-than-impressive jobs numbers have convinced the markets that a rate cut is basically a foregone conclusion. Up until today, it's been four straight wins for the big two indices in what has been the Nasdaq and S&P 500's best five-day stretch since November 2023. The key indices have now gained 5.09% and 3.86%, respectively, over the past five trading days to regain virtually all their early August losses. Clearly, the fresh gains are at least in part due to a pricing-in of the impending Fed rate cut in September.

The question now is how much of a trim the market has preempted and how many basis points Powell will actually cut. If the FOMC does announce a 50 bps cut at its September meeting, this might well push stocks higher, but not if the markets had been expecting one anyway. If we only get a 25 bps drop, there might even be a sell-off on the markets. Bond traders currently indicate 47% odds that the funds rate will fall to a 4.50%-4.75% target range by the 18 December meeting, which implies three 0.25% cuts from current levels. However, the original consensus early in the year was that we would have "four or five" rate cuts by the end of 2024. With that now all but impossible, the fact that the market hasn't corrected significantly is a good sign of healthy "animal spirits" on Wall Street.

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Libertex provides CFDs on a wide range of underlying asset classes, spanning from forex, metals and crypto to ETFs, indices, and, of course, stocks. With Libertex, you can trade the big US indices, the Nasdaq 100, S&P 500, and Dow Jones Industrial Average, as well as a wide range of international ETFs and individual stocks. For more information, visit www.libertex.com/signup today and create an account of your own if you haven't already done so.


Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.31% of retail investor accounts lose money when trading CFDs with this provider. Tight spreads apply. Please check our spreads on the platform. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

[Libertex]

Crypto crash continues, but is it time to panic?​

This summer season, a time traditionally set aside for relaxing and unwinding by the pool or at the beach, has been anything but a welcome break for many crypto investors. Instead of reaping the rewards of their hard-earned gains, many digital asset holders will be nursing their losses after a string of shock declines in some of the biggest and most established projects. Bitcoin, for one, has dropped nearly 15% since the start of June, while smart-contract forerunner Ethereum has tumbled more than 30% over the same period. And it’s been a similar story across the altcoin space, too, with virtually every coin and token either matching or exceeding Bitcoin’s losses. But before we give in to despair, we would be wise to consider the bigger picture.

Following a relatively brief post-pandemic crash, the entire cryptocurrency market has been in a veritable boom since January 2023. Even taking into account the recent corrections, Bitcoin has still more than tripled from $16,529 on 31 December 2022 to floating around the $60,000 mark as of 22 August 2024. Meanwhile, Ethereum has more than doubled from $1,195 to about $2,600. In fact, the six-month Bitcoin chart actually shows a more than modest gain of 14.5%! So, is this just a small blip ahead of more upside to come or a harbinger of the latest crypto bear market? What will be the main trends to watch during the rest of 2024 and beyond?

Catalysts galore

While it’s easy to get worked up when the red days start racking up, we have to remember that no market can rise indefinitely, and corrections are totally normal. It’s understandable that the big swings associated with crypto can be particularly unnerving, but we have to stay logical and look at the fundamentals, which are undeniably positive. After a period of stagnation, the US stock market sprang to life this month, which means an increase in appetite for risk assets. Even better, the July CPI index showed inflation down below 3% for the first time in three years, while the latest job report has revealed a significant cool-down in the labour market.

When taken together, these two developments have all but assured a Fed rate cut of at least 25 bps in September. As always, this is brilliant news for risk assets, of which cryptocurrencies are notoriously the riskiest. If we couple this with the already widespread and growing adoption of major digital currencies by big financial institutions and pension funds following the approval of spot Bitcoin and Ethereum ETFs by the SEC, everything is in place for further gains in the two big legacy coins in Q4 2024. In fact, the latest batch of 13F filings revealed 1,924 institutional holders of spot BTC ETFs, according to ETF Store President Nate Geraci, up from 1,479 in Q1. The fact that this adoption accelerated during a period of declining prices is a great sign of growth to come in fairer conditions.

Ctrl+Alt

Bitcoin and Ethereum are all well and good, but as established instruments, their potential for huge upside is now somewhat limited. For the really big potential gains, would-be investors will have to look to the altcoin space. Luckily for them, some of the best deals around can be found precisely here. One of the most prospective altcoins in 2024 is the famous “Ethereum-killer”, Solana, whose much faster transaction speeds make it an ideal choice for DeFi, NFTs and smart contracts.

Over the past few months, active Solana users have been rewarded with significant airdrops from multiple projects built on its platform. For example, users of Jito and Jupiter Exchange received airdrops worth upwards of $10,000. This added value and potential for returns have been and will continue to be key to drawing in capital and further energising the ecosystem. At its current level of $141.36, SOL is still well below its November 2021 ATH of $259.96. In the next bull cycle, it’s hard to envisage a scenario where Solana fails to set a new maximum, which makes its current pricing very attractive.

Another altcoin that could be set for large increases in the next bull cycle — albeit for very different reasons — is the quintessential memecoin, DOGE. Despite the downturn in the wider crypto market, Dogecoin managed to register a single-day 5% gain following the publication of a topical meme by patron Elon Musk. This is a sign of how susceptible to external influence this canine coin can be, and bull cycles are exactly the time that we see plenty of hype. Getting technical, DOGE is forecasted to encounter resistance at $0.188, aligning with the 50% Fibonacci retracement level. This leaves a solid 80% potential gain based on its current price of $0.10, which makes it worth at least a small speculative allocation.

Trade Bitcoin and more CFDs with Libertex

Libertex offers a wide range of CFDs in a variety of underlying asset classes, from traditional currencies, indices, and individual equities to precious metals, energy, and, of course, cryptocurrencies. In addition to quintessential coins like BTC and ETH and crypto derivatives like the Grayscale Bitcoin Trust, Libertex also provides CFDs in exciting altcoins like SOL, AVAX and Dogecoin. For more information or to create an account of your own, visit www.libertex.com/signup today.


Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.31% of retail investor accounts lose money when trading CFDs with this provider. Tight spreads apply. Please check our spreads on the platform. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.