Stocks in London have begun the week in a positive mood with the FTSE 100 higher by around 20 points as the benchmark attempts to recover after falling to its lowest level since April on Friday. The pound is drifting lower this morning as some of the stellar gains seen last week have been pared ahead of a speech by BoE Governor Carney this afternoon.
Another risk-on start to the week
The price action seen across several markets this morning is reminiscent of that seen last Monday, with risk-assets in demand and perceived safe-havens moving lower. Stocks markets across the continent are joining London in rising whilst Gold has fallen to its lowest level of the month at the start of what could be a pivotal week for the precious metal, with the Fed rate decision on Wednesday likely to drive price going forward. In a similar vein to last Monday, there is no real positive news to support these moves, with the absence of bad news seemingly enough to drive these risk-on flows.
Cryptocurrencies look to recover
Last week saw some large scale selling across cryptocurrencies with Bitcoin falling back to the $3000 level, which represents a 40% drop from its all-time high that was posted just a few of weeks ago. An increasingly hostile stance to the asset class from China alongside damning comments from JP Morgan CEO Jamie Dimon were attributed as the main reasons behind the rapid sell-off which threatens to derail what has so far been arguably the biggest rally of 2017. However, Friday’s trade saw a strong bounce from the $3000 level and the market has subsequently recouped more of the losses with price trading just shy of $4000 in the past couple of hours.
Has the bubble burst?
The question on the lips of all crypto traders now is whether the downside is over for Bitcoin or if the recent gains are simply a pop higher before the selling will resume. The fundamental outlook hasn’t changed that much even in light of China banning ICOs and halting all trading on local exchanges, but the market's confidence has certainly been tested. A failure to gain traction above $4000 would test the mettle of even the most ardent bitcoin bull with the incredible rally seen year-to-date clearly under threat. If there’s another wave of selling in this market in the coming sessions then the calls that the bubble has burst will grow increasingly vociferous and should price drop below last week’s low then a swift flush lower may will occur.