BTC Directly Linked to Emerging MarketsThere are many on this site that are claiming to know where BTC and other cryptos are heading in the short to intermediate term. The only issue? Their analysis is absolute hogwash.
This chart shows the Vanguard Emerging Market index (which shows a diversified performance of equities in many of the emerging markets). Notice the stark similarity.
As you can see, BTC has traded very closely to the emerging markets index fund, and this should be no surprise to anyone because a plethora of reasons, but, I believe, most notably the fact that adoption rates in emerging markets are much higher than that of the United States.
One of the highest BTC adoption rates is in China. Notice when BTC begins to peak - right around the end of December. To refresh your memory, this is the time when everyone around the world started to notice that President Trump was not, as many as stated, bluffing about tough trade talks with China and the rest of the emerging markets. Thus, China and the rest of the emerging market economies being to have fear and uncertainty thrust into their everyday life.
What is the first thing that people want to do when they have uncertainty? Stockpile the one thing that they know will allow them to eat, live, and pay for expenses - cash.
That leads us to the next logical decision of what assets to liquidate to get this security. I feel that many believed that the untested, unproven and uncertain BTC was the first asset on their list.
So I have a theory, what does it all mean?
For one it means that while Technical Analysis can be very helpful in making decisions, the psychological analysis of investor's willingness to buy and sell of security may be a better means of predicting what kind of growth BTC can see. Boom and busts are something that have been heavily studied throughout our financial markets, and it may be a good idea to apply some of the things we have learned about nearly every other financial market to BTC.
My underlying point is that we have to start thinking of BTC as a truly speculative investment. It is something that many who got involved did not do so for the long-term gain, but instead the short-term gain. Will it become a world currency one day? I think so. Should we treat BTC with the same kind of legitimacy that "world currency" demands? Absolutely not.
So, what needs to happen to see another bull run?
1. Emerging Markets need to may a rebound, and fast! For every day that emerging markets and, to an extend, China is down continues to put downward pressure on BTC. No matter what happens, if the primary adopters of BTC don't want to take risks anymore then BTC will continue to consolidate downwards.
2. We need trade certainty. China and the United States and other emerging markets need to take an ambiguous trade situation and at least make clear what the relationships are going to be in the future. Uncertainty will nearly always slaughter everyday investors' appetite for high-risk and speculative investments. As of right now, BTC falls in these categories.
3. There needs to be more adopting and a fight against ignorance in countries that have low adoption rates. The United States is one of the worst adopters of BTC and other alt coins, and it's very hard to see why. Nearly all of the biggest technology companies and technological advances have occurred in the United States. If BTC owners are seriously concerned with bringing awareness and adoption, then maybe some of them should start to open their pocketbooks and liquidate some of their reserves to pay for strong marketing campaigns to convince those who are either on the fence, ignorant, or who have maybe never even heard of BTC to add the investment into their nest egg. Unless this campaign becomes a reality, many citizens will always know BTC as a busted bubble and not a serious investment.
If the above can happen and investor sentiment can turn around, so can BTC. But until these things begin to happen, don't take anyone's TA as gold and expect BTC to magically rise as it did before. Many markets work the same way, and now we are starting to find that BTC is no different.
VWO trade ideas
VWO: Emerging Markets ETF, Equity Weakness Worldwide?Part 3. Three days ago I published Parts 1 and 2 for the-S&P and-IWM. (2,500 stocks total).
I wanted to share with you the emerging markets.
In my opinion they are weak, trend-less with a downward bias, and the risk/ reward ratio is to the down side.
VWO-is an ETF consisting of shares in the following countries:
China 23.23%
Taiwan, Province of China 15.35%
India 12.12%
Brazil 8.57%
South Africa 7.42%
Hong Kong 5.80%
Mexico 4.46%
Malaysia 3.92%
Russian Federation 3.91%
Thailand 2.99%
Kind of looks like the-S&P-500, doesn't it? This is an extremely difficult market in which you will find winning stocks .
You have to be very good to select the end of the draw-down periods and go long in the winners.
The rotation into and out of stock groups has been fast and furious. As for-VWO:
Let's put it this way, your upside gain is 1% to 2%, down-side 10%-15% +. This is not a good risk/ reward ratio.
Here are eleven negatives I see in-VWO, and why I feel this is a sell:
1. Sell Fractal in effect.
2. Alligator jaws NOW OPENING in tandem with sell Fractals. Alligator feeding in new down-trend. THIS IS YOUR DIRECTIONAL COMPASS.
3. Chop indicator (under chart) is ENTERING the shaded area.
4. Forward Ichimoku leading span (lower top indicator) is below the zero line. **
5. 34 day moving average (top indicator)-is bearish .
6. Prices are trading into the Ichimoku Cloud . This is a sell signal.
8. Prices are trading below the Ki jun-Sen baseline of the Ichimoku Cloud . This is a sell signal.
9. Prices are trading below the thick red Ichimoku Cloud conversion line. This is a sell signal.
10. The Ki jun-Sen baseline of the Ichimoku Cloud direction is heading lower. This is a sell signal .
11. The CHOP ZONE indicator (under chart) is red, indicating a down trend.
** The lower top indicator is a forward projection as follows: For an estimation of possible FORWARD TRENDING I use the Ichimoku Cloud Senkou Span A (Leading Span A): (Conversion Line + Base Line)/2)). This is the midpoint between the Conversion Line and the Base Line. The Leading Span A forms one of the two Cloud boundaries. It is referred to as "Leading" because it is plotted 26 periods in the future and forms the faster Cloud boundary. I then make an oscillator out of this and plot the progress up and down around a “zero line”.
I HAVE THE RESULTS OF THESE CALCULATIONS FOR-VWO IN THE TOP LOWER INDICATOR. IT IS VERY NEGATIVE.
I see very soft markets in the United States, Europe, and, emerging markets around the world.
My advice: because of severe rotation, it's hard to follow trend. I recommend long positions only after draw-downs to support levels.
If you do not do this you increase your chances of a loss.
I hope this has been helpful. May all of your trades go well. Don.