The crypto crash was a shock and many lost huge amounts of money. But as shocking as it was, the one thing we can all do is learn from it. I am a firm believer that education is key to success and if we use this crash to make better-informed decisions next time we invest, we can look to be smarter next time around.
I have always said that cryptos are going nowhere and even as I write this, BlackRock, the world's largest asset manager, with US$10 trillion in assets under management, has partnered with the world's biggest Crypto exchange, Coinbase. This news shows how the markets are beginning to recover and there are big things ahead.
So, here’s what we can learn from the crash and the strategies we can implement for future investments.
How the future of crypto and blockchain might pan out
There will come a period of sudden growth and revitalisation in the markets, and it is worth anticipating incentives such as ‘Bitcoin Halving’ may come into play. Bitcoin halving is the process of imposing synthetic price inflation in the cryptocurrency's network and cutting in half the rate at which new bitcoins are released into circulation. This makes the supply lower therefore the price to purchase is higher.
There are many advantages of cryptocurrencies. For instance, Solana in comparison to Ethereum is faster and easier to utilise but as its bandwidth is overloaded with the number of transactions per second so it can be slower. In addition, investors and traders are taking their crypto investments off the market to the ‘wallets’ which are essential to buy, trade and sell cryptocurrencies. Each trader and investor’s wallet has its own number, code and password to validate and protect the transaction but taking crypto investments off the market can give a warped view of the overall volatility.
Which crypto exchanges are experiencing catastrophe and why this may have been written in the stars?
Some crypto exchanges such as kucoin and Huobi have financial problems therefore it is safer to transfer the shares to the bigger, more credible crypto exchanges such as Kraken and Coinbase. This is really just common sense and I always advise any new traders to stick to the top ten coins as a starting point as they are more stable and less prone to fluctuations.
What you should do if Bitcoin drops to $10k and why
This is not the end of the financial crisis since markets will constantly fluctuate. The dips are expected, and more are expected in the future. An investor can take advantage of this situation by selling the shares short-term. If bitcoin drops to 10K, I suggest that investors should cautiously monitor the market and buy (accumulate) more shares taking into account that there will be periods of growth in the future.
Why being liquid is so vital to your success as a trader/investor
The liquidity allows investors to use the market opportunities, for instance buying or selling the ‘one-off items that are not expected to recur, and which therefore do not constitute part of a trend. In the same regard, the crypto market being liquid enables investors to react quickly to the dips and peaks in the market.
As I said before, this is not the end of crypto, it is only the beginning and I still believe there is a lot of money to be made for savvy investors. When the markets are low, huge opportunities appear to make good profits; buy low, sell high, that’s our motto.
About the author: Renowned stock market and wealth educator, investor, and entrepreneur Marcus de Maria is the Founder and Chairman of Investment Mastery, one of the world’s leading investment and trading education companies.
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Michael Kamerman, CEO of Skilling, shares his opinion on what stock you should watch this week.
ARKK
After years of quiet performances, ARKK rose to prominence just before the Covid-19 pandemic and by the end of 2019, the Ark Innovation ETF had returned 165%, proving to be the best performing fund.
This stellar performance coupled with the trading boom witnessed during the pandemic sent the ARKK ETF soaring throughout 2020, ending with a record high just shy of $160 in February 2021.
Currently, the ETF has fallen to below the pre-pandemic high and is down just over 68% from its height.
Given that ARKK’s business model is to acquire shares in businesses that are ‘disruptive innovators’, the lack of good investment opportunities in a low inflation environment pre-pandemic helped to fuel ARKK’s early success.
The economic market trends we’re witnessing now, including the recent inflation surge and increase in interest rates, have undoubtedly contributed to the downturn in ARKK’s fortunes.
However, with many speculating that we’re going to enter a period of deflation, investors may be hopeful that ARKK will get a much-needed boost, along with other growth stocks. Typically, growth stocks tend to outperform as we move towards the end of a bear market, however, investors should remain wary that we’ve never seen a market as volatile as it is now.
When tech stocks do stage another recovery, the shares of ARKK will likely rise again, but it’s a high-risk option that requires caution and consideration.
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Not investment advice. Past performance does not guarantee or predict future performance.
Michael Kamerman, CEO of Skilling, shares his opinion on what stock you should watch this week.
PayPal
With companies well into earnings season, this week alone will see 152 of the companies in the S&P 500 report their earnings.
Given the macro-economic climate, these results should reflect a slowing economy. However, PayPal is one company that has been struggling for the past year, even before these market trends came into play.
In fact, PayPal shares lost over 78% of their value from peak to trough, and when their Q4 2021 earnings report was published in February 2022, their shares went down by 25% on the day – wiping $50 billion in market value.
However, investors should consider the impact of higher inflation, consumer spending and supply chain issues on PayPal’s performance. This was also heightened when competitor eBay launched a payment service, in turn taking eBay sellers away from PayPal.
Despite these factors, PayPal is set on improving its profitability. Last month, it was reported that Elliott Management, a firm known for its tough tactics to improve profitability, had taken a stake in the company.
In turn, PayPal expects to reduce costs by $900 million this year, with annualised benefits from the cuts and other changes set to save the company $1.3 billion in 2023. For investors, this focus on capital efficiency will likely see shares rise, up on the 13% already gained on Tuesday after the company posted stronger than expected second-quarter results.
Overall, investors shouldn’t write off the company completely, especially given PayPal has posted better than expected revenue and user growth for Q1 2022. However, they should remember that consumer spending in the post-pandemic age is extremely difficult to predict.
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Not investment advice. Past performance does not guarantee or predict future performance.
Michael Kamerman, CEO of Skilling, shares his opinion on what stock you should watch this week.
Apple
With a massive earnings week ahead in which 175 companies in the S&P 500 will report their earnings, Apple is perhaps the great unknown in the pack.
Despite shares falling almost 30%, the company managed to recover around half of that drop and now eyes the 200-day moving average in the $158 zone.
However, as with any company regardless of its size – Apple is not immune to the effects of global market trends. One of the current headwinds is inflation, which can decimate purchasing power over time as well as result in a major pullback in consumer spending for households.
Given that Apple’s products are towards the higher end of the pricing bracket, we could see these consumer concerns begin to come to a head.
Whilst this may perhaps concern some investors, they should also consider Apple's innovative approach, exemplified by their focus on health data and the launch of Apple Pay Later, when assessing their investment strategy.
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Not investment advice. Past performance does not guarantee or predict future performance.
What’s the connection between good governance and the Investment Firms Prudential Regime?
IFPR looks to streamline prudential requirements for investment firms, shifting the focus away from the risks a firm faces and towards the potential harm it poses to consumers and markets. It covers a wide range of obligations, including capital requirements, liquidity requirements, governance, remuneration, reporting, and the Internal Capital Adequacy and Risk Assessment (ICARA).
The rule changes require all investment firms to have robust governance arrangements, including:
- clear organisational structure and lines of responsibility;
- effective risk identification and management processes; and
- adequate internal controls, including administration and accounting procedures.
Risk mitigation is at the core of IFPR for which a firm’s management body is ultimately responsible. The management body, and any risk committee that has been established (now mandatory for larger firms), must determine the nature, the amount, the format, and the frequency of the information on risk that they are to receive. Ignorance is not a defence for senior executives overseeing prudential obligations. If senior managers are not receiving sufficient information to discharge their oversight responsibilities then they must demand change.
The good governance models we see employed start with ensuring that everyone in the process understands their role in the identification, management and mitigation of risk. This includes the non-executive directors sitting on the Risk Committee. It is highly unlikely that this would be achieved with off-the-shelf e-learning courses. Every business is different and effective training programmes are tailored to each firm’s business model and the inherent risks that it faces.
What are some of the most common financial crime trends you’re currently noticing?
Phishing scams are on the increase and becoming more sophisticated over time. Phishing is a cybercrime in which a target is contacted by email, telephone or text message by someone posing as a legitimate institution to lure them into providing sensitive data or payment. It can often be difficult to distinguish a phishing email from a legitimate one. However, there are some established red flags that firms can share with employees to mitigate the risk of falling victim to this crime.
Sanctions screening has historically been a relatively consistent aspect of a firm’s anti-money laundering controls. Yet, in recent months there has been a significant uptick in global sanctions targeting Russia and other countries involved in the invasion of Ukraine. This has stretched the resources of financial crime teams as they scramble to identify and respond to frequent sanctions updates. Many firms will have gone years without having a client sanctioned and the internal and external escalation processes would have been untested in those cases. Events like this show the importance of well-documented and up-to-date policies and procedures.
Cryptocurrency is the talk of the town and global regulators have been quick to identify the potential for it to be used in financial crime as the primary regulatory risk. There have been well-publicised difficulties with UK crypto firms obtaining authorisation from the FCA in recent months. The FCA is reportedly unimpressed with the high number of financial crime red flags missed by crypto firms, whilst representatives of crypto firms said the regulator had been slow to approve applications and was often unresponsive.
How have these changed recently?
The increase in remote working during the COVID-19 pandemic certainly saw a spike in reports of phishing attempts. We can only speculate as to the cause. Perhaps employees who would once turn to each other to discuss an odd email in the office are less likely to from home? Or perhaps fraudsters saw an opportunity for a wider victim pool as people spend more time in front of their screens during global lockdowns? Whatever the reason, it shows little sign of slowing down so firms are looking to enhance their cyber security to defend themselves and their employees from this financial crime.
The increase in global sanctions was directly linked to Russia’s invasion of Ukraine. Some months down the line, we continue to see new names added to global sanctions lists whilst the invasion remains ongoing. It is not just the sanctioned entities that are impacted. We are becoming aware of delays to payment processing whilst compliance checks are carried out on payments. Firms can suffer issues with cash flow and frustration from clients as they continue to navigate the banking system in compliance with global sanctions.
Crypto regulation is still very much in its infancy. In the UK, the FCA recently launched a series of ‘crypto-sprints’. The objective of the events is to seek industry views around the current market and the design of an appropriate regulatory regime. Hopefully, this initiative will foster a productive working relationship between the regulator and practitioners, leading to an effective regulatory framework.
Whereas MiFID II captures investment firms, MiCA seeks to regulate: (i) issuers of crypto assets and stablecoins, (ii) crypto exchanges (think multilateral trading facility (MTF) for Bitcoin and such like); and (iii) wallet providers.
Now we’re on the subject of crypto regulation, what are the key features of the proposed Markets in Crypto assets Regulation (“MiCA”) that practitioners should be aware of?
The MiCA borrows heavily from the second Markets in Financial Instruments Directive (MiFID II). Therefore, practitioners who are familiar with MiFID II will have a head start in navigating the MiCA regime. Whereas MiFID II captures investment firms, MiCA seeks to regulate: (i) issuers of crypto assets and stablecoins, (ii) crypto exchanges (think multilateral trading facility (MTF) for Bitcoin and such like); and (iii) wallet providers.
Like MiFID II investment firms, these crypto actors would be required to meet minimum capital requirements. For example, a crypto MTF would need to be capitalised at a minimum of €150k under the proposals.
As well as striving to enhance financial stability in the crypto assets space, MiCA also introduces conduct of business requirements to offer protection to consumers. Crypto-asset white papers would have to be “fair, clear and not misleading”. Crypto-asset service providers must strive to obtain the “best possible result” when executing orders for crypto assets on behalf of third parties. Issuers of asset-referenced tokens would be required to implement procedures for handling complaints. Again, these selected conduct-related examples illustrate that the influence of MiFID II on the development of MICA has been pervasive. Added to this are requirements for crypto-asset providers to implement systems and controls to detect potential market abuse perpetrated by their clients.
When is MICA likely to enter into force? Is there anything crypto-asset services providers can do now to prepare for its implementation?
It is mooted that MiCA will enter into force in 2024. By reviewing the requirements in MiCA as early as possible, existing entities that could be subject to its authorisation requirements have an opportunity to put themselves in a strong position. Those who are familiar with implementing other major EU regulatory packages such as MIFID II, the European Markets Infrastructure Regulation (EMIR) and the Alternative Investment Fund Managers Directive (AIFMD) appreciate the importance of getting off to a good start in developing regulatory change programmes. The time and resources required should never be underestimated, particularly where achieving compliance is heavily dependent on technology. Furthermore, starting early helps the senior management of a business forward project capital and cost requirements. This is key to avoiding nasty surprises, enabling a crypto-asset business to face the future with confidence.
MiCA is perhaps the most notable regulatory initiative emanating from the EU that will not have been contributed to by UK policymakers. How is the regulatory landscape for crypto assets evolving in the UK in comparison?
In March 2022 the Bank of England’s (BoE) Financial Policy Committee (FPC) published a report entitled “Financial Stability in Focus: Crypto assets and decentralised finance” that provides insights into the possible trajectory of regulatory reform in this area.
From a macroprudential perspective, the FPC observes that there is “limited interconnection” between the UK financial system and crypto assets at present. Nevertheless, the FPC acknowledges that disruptive and traditional finance are likely to become increasingly intertwined. Accordingly, the FPC is keen that gaps do not emerge or widen in the regulatory perimeter that could pose a threat to financial stability. The FPC cites some initiatives that have already been taken by UK authorities to address some of the macro and micro-prudential risks posed by crypto assets. For example, the FCA references the Dear CEO Letter published by the Prudential Regulation Authority (“PRA”) on 24th March 2022 concerning the treatment of crypto-asset exposures by banks and investments firms that fall within its remit. Furthermore, the FPC considers the implications of conduct and financial crime risks in its analysis. For instance, measures taken by UK financial regulators to hinder efforts to use crypto assets as means of circumventing HM Treasury’s Russia sanctions were welcomed by the FPC.
In our view, lawmakers should take care to ensure that crypto-asset regulation in the UK is not comprised of a patchwork quilt of initiatives. Plainly, such a landscape would be difficult for their intended subjects to navigate. Moreover, this is liable to creating exactly the types of gaps that the FPC hopes can be kept to a minimum. At the root of this is an apparent contradiction at the heart of UK policymaking. One month the Chancellor of the Exchequer announces a crackdown on crypto-asset promotion, the next he is extolling the benefits of making the UK a “crypto hub”. Regulation will always lag technological innovation (although it can sometimes encourage it too – Regulation National Market System is often credited with fuelling the growth of high-frequency trading in the US). Still, poorly conceived regulation that merely reacts to present demands or fears is likely to lead to suboptimal outcomes – for both the regulator, the regulated and the consumer. The well-documented difficulties that crypto-asset providers have experienced in seeking anti-money laundering registration with the FCA exemplifies this point. The FCA’s aims are laudable: it is using the tools at its disposal to try and cover a perceived legislative gap to protect consumers from unscrupulous actors. Nonetheless, this approach risks forcing legitimate actors offshore. UK consumers would likely still find these actors. Is this desirable?
So much to ponder! Finally, what can firms do if they are struggling to stay on top of all this change?
Engaging a high-quality consulting firm to assist with regulatory change management can really pay dividends. This is especially the case in crypto assets. Ever greater financialisation has resulted in the most liquid cryptocurrencies becoming underlyings for exchange-traded derivatives and contracts for difference. It has also led to regulatory concepts governing traditional investments gaining influence in disruptive sectors. Consequently, seasoned investment compliance professionals can help crypto-asset firms build an optimal governance and control framework. This will become critical to meeting the challenges posed by the fast-evolving regulatory environment.
As a rule, foreign investments in Brazil must be registered with the Central Bank of Brazil (“BACEN”). Registration of foreign investments may be divided into two main categories: (i) foreign direct investments which are regulated by Law 4,131 of 3 September 1962, as amended, ("Direct Investment" and “Debt Transactions”); and (ii) investments made in the Brazilian financial and capital markets, which requires the use of a local custodian to represent the foreign investor, regulated by CMN Resolution 4,373[1] ("Indirect or Portfolio Investment").
The registration of foreign capital is done at the Electronic Declaratory Registration System (“RDE”), at the Central Bank of Brazil (“BACEN”) information system (“SISBACEN”).
The foreign capitals are registered in specific modules, according to their classification, which are:
- Foreign Direct Investment (“IED”);
- Foreign Debt Transactions, such as loans, long-term imports financing and royalties’ contracts (“ROF”); and
- Indirect or Portfolio Investments.
Direct Investment
According to the BACEN, a direct investment is defined as such by its intention to remain long-term in the country and by its acquisition over-the-counter markets, direct in non-listed companies[2].
Brazilian companies can receive foreign direct investment from both Individuals and Legal Entities that are not resident in Brazil.
Registration of a foreign direct investment must be submitted electronically to the Central Bank by the company receiving the investment (the investee), using the SISBACEN for direct foreign investments (“RDE-IED”).
Debt Transactions
Foreign debt transactions may be made through the exchange of foreign currency (i.e., loans, certificates of deposit, private debentures, etc.) directly between a foreign and a domestic party.
A foreign debt transaction must be registered with the BACEN before the actual inflow of funds and submitted electronically by the investee using the SISBACEN for foreign debt transactions (“RDE-ROF”). This electronic registration does not require preliminary approval.
Indirect Investments or Portfolio Investments
Investments by foreign investors in Brazilian financial and capital markets are regulated by the National Monetary Council (the "CMN"), the Brazilian Securities and Exchange Commission (the "CVM") and BACEN. The main regulation governing such investments is CMN Resolution 4,373 of 29 September 2014.With certain exceptions, foreign investors may invest in the Brazilian financial and securities markets using the same fixed-income instruments (i.e., notes, certificates of deposit, bonds and debentures), derivative instruments (i.e., swaps, futures, NDF and options), securities, mutual funds, private equity and other investment funds, and other financial instruments available to Brazilian residents.
To invest in the Brazilian financial and securities markets, a foreign investor must:
- appoint an agent in Brazil (which must be a financial institution or an institution authorized by the BACEN);
- register with the CVM; and
- enter into a custody agreement with a financial institution authorised to provide custodian services, in accordance with CVM Instruction 560 of 27 March 2015, as amended[3].
In recent years, several operational measures have been implemented to make operational foreign investment flows simpler and speedier. In this regard, almost all registration, can now be made electronically and is usually centralised in one (or more) financial institutions that provide diverse services (such as legal and tax representatives, custodians and settlement banks for FX contracts). In addition, since 2 May 2022[4], non-resident individuals will no longer be required to register directly with CVM before they can buy registered securities. Instead, his or her representative merely will be required to fill in the information on CVM’s online platform or via the exchange responsible for the market where the securities are traded.
For more information, contact Giovanni at giovannicataldi@hotmail.com and Andrea at asano@efcan.com.br.
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Disclaimer
The content in this article is for informational purposes only and should not be construed as financial advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, or offer by Giovanni Cataldi, Andra Sano Alencar, Finance Monthly or any third-party service provider.
[1] https://www.bcb.gov.br/rex/legce/Ingl/Ftp/Resolution4373.pdf
[2] Note that there are some activities that are not allowed or that there are some restrictions.
[3] ttps://www.b3.com.br/data/files/CC/B5/C0/38/43473610B4199636790D8AA8/ICVM%20560%20-%20english%20version.pdf
[4] CVM Resolution nº 64, of February 7, 2022
You’ve heard of the phrase ‘You have to speculate to accumulate’, which is definitely true in business. When running a business, there are some areas in particular in which you should invest to help you take it to the next level. Below, we take a look at some of these areas and the importance of putting your cash into them for the business.
Important areas of business you should invest in
Although it’s essential to keep your costs down so you can make a decent profit when running your business, there are some key areas that it makes sense not to skimp on. Here are some important parts of your business to invest in:
Marketing
Marketing is one of those areas it’s tempting to neglect if your business is already successful, but it’s indispensable to invest a healthy amount in your marketing. You should be publishing a blog, active on social media and conducting SEO work on your website.
Marketing is essential because it gets the word out about your business. People can’t buy from you if they don’t know you’re out there. Your marketing, thanks to the income-generating asset that is your business website, can also help you earn money while you sleep.
In the form of your content marketing, you’ll be building your brand and strengthening your authority. You stand more of a chance of making a sale if a potential customer is already familiar with who you are and what you do.
Training and coaching for employees
Your employees are the cornerstone of your business and need to feel valued if you want them to perform at peak efficiency. Investing in training and coaching for them places them on the road to success in their own careers, which, in turn, generates success for the company as a whole.
Helping employees develop new skills can reduce turnover because, rather than hiring new employees, you can equip your existing ones with extra skills. This not only builds their confidence in their ability to perform their role but can increase their loyalty as they see that the business appreciates them.
Yourself
If you’re the business owner, you can become so focused on investing in the different aspects of your business that you forget to invest in another important aspect: yourself. Your company is an extension of yourself, your goals and your community and is your livelihood. You can’t afford to stay static, so take some time to study trends, do some courses and build new skills. All of this will enable you to steer the ship even more effectively than you already have been so far.
Cybersecurity
A firm investment in cybersecurity, such as Perimeter 81 SASE solution for businesses, is critical. Failing to do so can come at a high cost. Depending on the size of your company, the losses can run into the millions and the embarrassment can be huge, whereas making this necessary investment can turn out to be the cheaper option.
Importantly, solid cybersecurity creates trust in your brand. A reliable cybersecurity system is a major selling point. You can’t put a price on being able to guarantee the security of the client’s data and your investment will generate a buzz. Clients will reward you with good reviews via word of mouth, doing the sales and marketing for you, and making additional purchases or investments in your business or offering.
Customer support
The support team is the customer’s first point of contact when they have an issue, so it’s important to have a responsive team that will solve problems as soon as they emerge. If you don’t solve problems quickly, this could do serious damage to your credibility as you could receive bad reviews online.
Investing in some good artificial intelligence could help to ease the burden when it comes to dealing with customer enquiries. Doing so will save you time and also save face, making the investment worth it.
Human resources
When operating a business, you need people who have experience in growing businesses, so you’ll need a solid human resource (HR) team who have the knowledge and skills to hire the right candidates. A good HR team will keep the hiring process fair, take the burden of the hiring process off you and weed out any employees who aren’t right for the business. They may also take care of any dismissals necessary, an unpleasant hazard of management but one which HR professionals will have the experience to do if the manager isn’t up to the task.
Research and development
A research and development department is one last team you should invest in. If you want to break into a new market or even make a general business breakthrough, these are going to be the people to help you do it. These are solution finders for your business.
Naturally, when running a business, you’ll want to keep your costs low, but some areas are worth the extra investment. That investment may seem a lot at the time, but further down the line, it will pay dividends.
Evaluation of market sentiment is an analysis that uses the information to attempt to project the future price performance in the crypto or other kinds of the financial market.
By monitoring the characteristics of a financial market and the people’s general perspective, you may be able to understand the intensity of enthusiasm or perturbation over a particular crypto asset.
This can also guide many investors in making worthwhile decisions in determining the ideal moment to invest or exit their current positions or holdings in the market.
Market Sentiment In Cryptocurrency
Market sentiment refers to the perspective or opinion expressed about the market's current status. It shows the emotional overview of the attitudes and opinions of the investors towards a crypto asset.
It transmits the mass psychology of those who are involved in the trading and development of the digital currency, as revealed through social and trading metrics. Analysis of the market sentiment in digital currencies is essentially a psychological assessment of several factors that hugely impact the assets' price movements.
How investors feel about a certain digital asset can have tangible effects on the market cycles and crypto assets' value. If many traders and investors take action in these thoughts, ideas, and feelings that they convey, whether they are based on factual information or not, it will surely have weighty consequences.
For instance, Elon Musk's tweets on social media have a huge influence on the price of Bitcoin, which in turn created a bullish sentiment.
When traders and investors evaluate the feelings and attitudes of others towards a particular crypto asset, it’s called market sentiment. Sentiment in the financial market doesn’t use systematic and technological evaluation.
Attitudes towards a financial market do not always relate to the quantifiable data but rather convey the collective emotion of the masses.
How Crypto Market Sentiment Is Measured
Psychological factors have a significant impact and influence on any financial market in determining the assets' price value. Doing a thorough analysis and in-depth study of the market mood indicators can greatly help you make informed and smart decisions in your crypto investments.
How crypto investors choose, a crypto exchange can have an effect on the crypto market sentiment. Suppose an exchange encounters hack and crash or collapse issues. In that case, many traders and investors in the crypto industry will lose their trust, and this might psychologically affect their investment decisions, which can also result in negative market sentiment.
That’s why many new and experienced investors turn to bitcoin-profit.app, as their brokers can provide you with top-notch tools that could help you reach your trading goals. If you are curious to learn more, you can visit their terms and conditions page.
Here are some ways how market sentiments are measured:
Bullish Percent Index (BPI)
The bullish percent index gauges the number of equities that show bullish patterns. It is predicated on diagram figures. The market sentiment is considered to be highly enthusiastic if the BPI hits an index level of 80% or more, thus contemplating an asset's price as overvalued.
Any intermediate asset has a positive proportion of around 50%. Meanwhile, when it reaches 20% or lower, the market sentiment is considered unfavourable and shows signs that the marketplace has been overbought.
VIX Index (Volatility Index)
The volatility index (VIX) is also known as the fear index. This is gauged by the price options on the financial market. A surging VIX shows higher demand for insurance within the marketplace, whereas increased volatility shows that traders or investors are feeling the desire to cover themselves against the risk. To better measure whether the index is relatively high or low, moving averages are added to the volatility index.
Moving Averages (MA)
Many investors frequently look at the 50-day and the 200-day moving average, respectively, when studying the nature of the market. Every time the 50-day moving average crosses over the 200-day moving average, it indicates that the movement has changed to an upward direction.
This is commonly known as the "golden cross" that results in strong optimism and confidence in the financial market. However, when the 50-day moving average crosses below the 200-day moving average, it shows that an asset's price is likely to drop, resulting in a pessimistic mood and attitude among traders and investors.
Conclusion
To have a deeper understanding and analysis of the market’s sentiment, an investor or trader must collect the ideas, views, and perceptions of the people in the crypto industry or any other financial market.
Evaluating the market sentiment can be beneficial, but you should not set your entire focus solely on this factor. There are still a lot of things to consider when analysing the assets’ price performance.
Michael Kamerman, CEO of Skilling, shares his opinion on what stock you should watch this week.
Netflix
It’s fair to say that the fortunes of Netflix have taken a turn for the worse over the past few months; from reaching highs just shy of $700 at the end of 2021, Netflix is now trading below $200.
The sharp falls in trading price have followed two most recent poor earnings reports and disappointing guidance from senior executives. For now, the Netflix share price is consolidating in a range between $162 to $205.
However, a glimmer of hope emerged in the closing week of the 15th; Netflix stock achieved its best performance since January this year, rallying a little over 8% and closing at highs.
The most recent problems for Netflix seemed to arrive all at once. Concerns over peak subscriber growth in developed markets, increased competition from a growing number of streaming rivals, and a more discerning consumer feeling from the inflation pinch all adding to existing woes.
On the first quarter drawdown, billionaire Bill Ackman (Pershing) loaded up on Netflix stock, however, after earnings disappointed in the following quarter, Ackman bailed on the position and stated that "..in light of recent events, we have lost confidence in our ability to predict the company's future prospects with a sufficient degree of certainty."
Ackman’s Pershing realised a $400 million loss in the process, and the point stands that Netflix is undergoing a fundamental transformation. One of the major changes is the push for an ad-supported tier to drive an uptick in subscription rate, and markets will certainly be anticipating further details within Tuesday’s earnings report.
The streaming giant has also recently announced a partnership with Microsoft as their global advertising technology partner. On the surface, this is a win-win proposition. Netflix gains expertise and tech support from Microsoft, while Microsoft gains exclusive advertising access to the Netflix audience, which could boost their offering in the advertising industry in an attempt to close the gap between giants still leading the way, such as Google.
There is plenty to focus on following the most recent Netflix earnings report. Netflix had previously forecast the loss of a further two million subscribers in the second quarter of this year. Will this turn out to be the case, and are further subscriber losses likely to be expected?
Just how big the FX hit may be also remains to be seen. Netflix’s steadfast refusal to hedge its FX exposure has cost them over the years. The recent strength of the USD could mean these costs climb to new highs.
So, there remain plenty of questions as Netflix embarks on a new business trajectory. Will introducing an ad-supported tier signal the start of a necessary transition? Or do tougher challenges await?
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Michael Kamerman, CEO of Skilling, shares his opinion on what stock you should watch this week.
Twitter
In case you might have missed the news last week, Elon Musk and his team of lawyers have stated their intention to withdraw Musk’s highly publicised bid to acquire Twitter, with the prospect of a long, drawn-out legal battle now on the cards.
This decision was, however, somewhat anticipated amid speculation that he was significantly over-paying for the social network.
Musk’s original offer was a $43 billion purchase of Twitter at $54.20 per share. At the time, this was a noteworthy 38% premium above the trading price of ~$45.81 per share.
In recent weeks, the trading price has been falling, and after the news broke the price action certainly didn’t inspire confidence, plunging over 10%, trailing below the 20-day moving average, and closing right on the lows of the day at $36.78.
However, this slump in valuation is a pattern that has occurred within most US tech stocks since April. Twitter’s new share price of $33.50, down 9% in early Monday trading last week, is arguably a more accurate reflection of the social network’s prospects.
Generally speaking, Twitter’s sluggish stock performance isn’t solely in response to Elon’s whims. The economy is stalling globally and economic headwinds are becoming more severe.
Twitter is also struggling to grow its user base, and some analysts have suggested that social advertising spending is likely to be cut, which Twitter relies heavily on for a source of revenue, as companies tighten their belts to grapple with the economic environment.
But, according to the termination letter, one of the main reasons that Elon is pulling out is not due to Twitter’s recent stock performance, but instead due to the prevalence of bots on the site and doubts over Twitter’s ability to determine how many monetisable daily user accounts (mDAU) the social media network actually has. Twitter, however, insists that fewer than 5% of the stated mDAU are false or spam accounts.
On top of this, Twitter’s recent firing of two high-ranking employees and a third of the talent acquisition team are cited within the termination letter. Under the terms of the merger agreement, the company must “preserve substantially intact the material components of its current business organisation.” Musk’s team claimed that the proper process was not followed.
It’s also possible that Twitter’s valuation was ‘protected’ by Musk’s buyout price, which is important to note. Since the acquisition deal was announced, Twitter is currently trading down by roughly 20%. However, Snap is also facing similar issues, down notably more at around 57%. Investors should therefore take note of wider market movements and tech stock valuations when considering their investment strategy.
Uncertainty around Twitter’s acquisition is likely to continue for the duration of any legal battle, and against the current economic backdrop, we’d expect to see investors exercise more caution, as we await to see whether Twitter’s share price can ride out the storm.
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Not investment advice. Past performance does not guarantee or predict future performance.
But in 1933, the Federal Reserve stopped using gold as a 1:1 pegged standard, and this caused fiat currency to crash. By giving up, the gold 1:1 ratio gave the government and the banking system unlimited money over people since they could always print money. And it went all downhill from there. And it still crashes through the form of inflation. In this article, we talk about the commodity gold and what the next few years are looking like for it.
Why gold is a good investment and will stay a good investment
Although the price of gold can be very volatile and have a lot of movement in the short term, in the long term, it remains strong through times of financial crises and recessions since the supply of gold is finite. There is only a set amount of gold on this planet, and when everything is dug up, there is no more; they can’t make it artificially. Everything that can be made artificially is usually cheap and low in value. Medicine, antibiotics and other metals we can make in a lab develop in other ways than actually discovering it is low in value since that supply is infinite, so we peg less value to it.
So through currency crashes, through times of chaos, gold has been standing tall through all of it. So holding gold on hand or saved away is a way to not only make your money worth more in the long term through the value of the actual gold rising, but it is also an amazing hedge fund against inflation and currency fluctuations.
What can cause the value to fluctuate so much in the short term?
People’s buying power. Literary people have more and more money around than 50 years ago. People are finding new ways to make money, and people have started being more intelligent with their money, which makes access to gold easy and thus drops its value.
External sources of gold. However, this is quite rare, but we have seen meteorites crashing into the earth that contained large amounts of gold, massive amounts. So that drops the value of the gold since before there was this set amount of gold on the earth, but now there is external gold that we got our hands on.
Price prediction on gold
It is difficult to predict the price prediction on gold for the next 50 years. People that study the patterns and movements of the market year in and year out develop a feel for what is to be expected. You should keep this in mind when considering an investment or spending money. Do your own research, educate yourself, learn more etc.
I want to leave you with an interesting article on this topic. It is called: gold price predictions for the next 5 years and published by goldalliance.com; it is worth checking out if you want to learn more about this.
Michael Kamerman, CEO of Skilling, shares his opinion on what stock you should watch this week.
Micron Technology
The link between market trends and supply chain disruptions is inextricable, as demonstrated by Micron’s earnings report last week.
What’s more, the bullwhip effect is in full blast. When demand is strong, retailers over-order from manufacturers, who in turn over-order from their supplies. Ultimately, this leads to inventories that are severely skewed away from actual consumer demand.
Whilst Micron’s earnings report started positively with strong profitability and free cash flow, its stock remained stagnant. Investors should consider the decrease in industry demand, as well as the change in market conditions, before completely writing off Micron as a prospect.
However, research firm Gartner predicts worldwide PC shipments could decline by 9.5% this year. If true, the company’s attempt to clear some of its excess inventory will prove challenging.
Looking ahead, concerns around a recession are likely to see investors exercise more caution. As a company, Micron will have to navigate these concerns, as well as look at how to rebuild its stock price which has nearly halved this year.
Luckily, the strong employment landscape is likely to help cushion the severity of any upcoming recession.
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Not investment advice. Past performance does not guarantee or predict future performance.
