Almost all assets have finished the previous week in the red. The state of the markets remains stable – they are steadily declining. Oil and cryptocurrencies have continued their sharp ascending trend and stock markets has demonstrated some negative dynamics. It is only gold that demonstrates some positive tendency, but its growth is not enough to compensate all those losses investors suffered dealing with other assets.
1. Oil market
The oil price has been declining for seven weeks in a row. As of the end of the week, the January futures of the Brent oil have fallen below USD 59 for the first time since October 2017, reaching the level of USD 58.73 per one barrel. The market closed at level of USD 59.22.
The trigger of this 12% decline was the statement made by the Minister of Energy of Saudi Arabia where he reported about the record oil production amounting to around 10.7 million barrels per day. The oil price decline plays into the hands of the United States of America, where politics are very concerned about pretty high fuel prices. Analysts believe that the oil production growth is a result of the unstated agreement: Mr. Donald Trump has agreed to turn a blind eye to the murder of the American journalist Mr. Jamal Ahmad Khashoggi. Apart from that, Russia has also increased its daily oil production level, being forced to compensate all losses caused by the price decline.
Current week forecast: it is pessimistic. Against the background of the general stagnation in the world economy, the oversupply will continue to put pressure on quotes. It is also confirmed by a technical analysis: last week, the price overcame the support level of 32.2% based on Fibonacci (USD 62.27), on which the investment banks and hedge-funds typically close long positions.
2. Stock market
The stock markets also continued to decline during the previous week. And, if this process is quite natural and drown-out for the US indexes, then the European indexes will hardly be saved by the adopted Brexit agreement, which has already been described as the best solution for London and an optimal one for Europe. At the end of the week, DAX has lost 1.68%.
Current week forecast: it is pessimistic. Analysts predict further medium decline of all stock indexes.
3. Cryptocurrency market
The cryptocurrencies keep rapidly losing their value. The sharp collapse that had begun on November 14 has also continued during this week. Over 5 days, the cryptocurrencies has lost more than BUSD 50 of capitalization, falling down to BUSD 120. The BTC price has also been continuing to decline: the value of the main coin of the market is already lower than 4 000 US dollars. With respect to other coins, BTC loses its values more slowly – over the week its share in the total capitalization has increased by 1% to the level of 54.1%.
Analysts think that the devaluation of ВТС and of the entire cryptocurrency market is unavoidable, but this doesn’t mean that the cryptocurrencies are no longer interesting for investors. The economic development is wavy and such crashes of the “digital gold” had occurred before:
– In the year 2011, ВТС lost its value by 94% during 19 months;
– In the early 2013, the price collapse took 7 months and ВТС lost its value by 83%;
– The longest collapse (more than 3 years), ended with the 87% drawdown in 2015.
The current decline of ВТС is a bit more than 80% from its maximal value in January 2018. Analysts predict that the market will continue to drawdown. ВТС may decline lower than USD 100, but it will again test its historical maximum in three years.
Current week forecast: the market capitalization will overcome BUSD 100; ВТС will fall down lower than 3.5 thousand US dollars.
Investors should adhere to the announced in previous overviews strategy: to stake on short positions of main coins or to earn on a short-term growth of individual “garbage” start-ups (Factom, MobileGo, and Linkey).