When the crypto bull market was still in session, the next big thing for Wall Street was set to be Ethereum futures. Now it seems they're back on the menu.
Futures contracts were originally invented so that farmers and merchants could hedge costs before engaging in a specific venture.
For example, imagine you want to drill oil and you more or less know your production costs but don't want to take the risk that the price will drop by the time you've got the barrels ready for selling. You simply buy a futures contract for oil before embarking on the venture in order to lock in your profits in advance.
As the world goes further towards the tokenization of financial assets, the service of locking in future prices for Bitcoin and Ethereum could become essential for entrepreneurs. So, the CFTC in the United States is now asking the community for help to understand the industry's needs so that they may accommodate them.
For those of you reading who are familiar with the ins and outs, please feel free to submit your comments to them using this link: https://www.cftc.gov/PressRoom/PressReleases/7855-18.
Today's Highlights
Stock Rally in Suspect
Draghi Day
Have we finally found bottom?
Please note: All data, figures & graphs are valid as of December 13th. All trading carries risk. Only risk capital you can afford to lose.
Traditional Markets
Yesterday's global stock rally seems to be stalling today. Indices are in the green today but the excitement may be fading. With all the recent comments from economists about how the cycle might soon come to an end or that we could be heading for another crisis, it's difficult for traders to fully buy into any upward momentum at this time.
Crude oil is also testing the lows at the moment, and if does manage to break below $50 a barrel it could be potentially destabilizing.
European Central Bank Event
By the time you get this, the European Central Bank will probably have concluded their press conference already.
At the moment, expectations are that they will continue to wind down the quantitative easing program or possibly end it all together. Even though interest rates are not expected to rise for another year or more, it seems apparent that the ECB is following in the footsteps of the US Federal Reserve in tightening up monetary policy.
Money has been flowing freely into global markets over the last decade and it's going to be very interesting to see what happens when that money begins to be tightened once more.
Crypto Floor Possible?
With all the progress in the crypto industry lately, it's extremely difficult to understand why prices have fallen over the last month.
Here we can see the massive slide down in bitcoin that's been happening since November 14th. From its all-time high to the new low from last Friday bitcoin has fallen a total of 84%, which is more or less in line with the level of retracements that the asset has seen in previous cycles.
As we have previously discussed when bitcoin broke below the psychological level of $5,000, the current area of support is between $3,000 and $3,500. So we are very much in this area right now.
A breach to the downside could certainly cause further selling and a lower low. However, a strong push upward from these levels could actually serve to shift sentiment and change the trend.
With the high number of short sellers across various exchanges right now, even a small push up could potentially affect a short squeeze in the market. Imagine such a squeeze on the level that would bring us firmly above $5,000. Such a move would very likely be interpreted in hindsight as the capitulation that everyone has been waiting for.
Guess we'll need to wait and see how it plays out.
Have a lovely day!
eToro, Senior Market Analyst
Disclosure: This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation. Past performance is not an indication of future results. All trading carries risk. Only risk capital you're prepared to lose.