Asian Market Update – Monday: Bitcoin Rebounds, Asian Stocks Mixed

It was a week of major developments in the cryptocurrency market, as backers of Segwit2x aborted their mission and Bitcoin Cash (BCH) surged to record highs. In conventional markets, stocks and commodities fell amid doubts about President Donald Trump’s ability to revamp the corporate tax code this year.

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Bitcoin Cash Surges After Segwit2x Suspended

Bitcoin Cash (BCH) spiked to record highs this week, adding a whopping 51% after bitcoin’s hard fork via Segwit2x was called off. BCH/USD traded above $1,000 briefly on Friday before consolidating at $932.

The bitcoin offshoot has been riddled in bearish sentiment for the majority if its existence, and had spent the better part of two months below $500. Prices bottomed near $300 in October before demand slowly picked up over the course of the month.

As for bitcoin, prices fell nearly 8% this week on news that the original blockchain would not be forking after all. At the time of writing, BTC/USD was trading at $6,690.

Capital may continue to flow into BCH as investors continue to view bitcoin as a store of value rather than a payment method. The issue of scalability continues to plague the blockchain community, as evidenced by the ditching of Segwit2x.

The total value of the crypto universe is currently $200 billion, give or take. The market peaked at around $210 billion earlier this week.

Global Stocks Slide on Trump Tax Concerns

Wall Street and global stocks slid into negative territory this week after investors learned that the implementation of President Trump’s tax reform could be delayed. Some Senate Republicans are expected to defy the orders of the president by delaying the implementation of a reduced corporate tax rate until 2019.

All the major U.S. indexes finished lower this week. The large-cap S&P 500 Index declined in back-to-back sessions on Thursday and Friday to finish at 2,582.30. The Dow Jones Industrial Average fell half a percent for the week to finish at 23,422.21. Meanwhile, the technology-heavy Nasdaq Composite Index edged down 0.2% for the week to finish at 6,750.94.

A measure of implied volatility known as the CBOE VIX surged this week, reaching its highest level since Oct. 26. The so-called “fear index” added 23.5% over the past five days to settle at 11.29. The VIX trades inversely with the S&P 500 Index about three-quarters of the time.

The MSCI global stock index, which tracks equities in 47 nations, slipped from record levels on Friday, falling 0.2%.

European markets were down across the board, with Friday marking the biggest decline since August. The Stoxx Europe 600 Index fell 0.8% on Friday to 391.23.

Commodity Markets Weaken

Commodity markets saw mixed results this week, with oil futures easing off yearly highs. U.S. West Texas Intermediate (WTI) for December settlement closed at $56.74 a barrel Friday, which was well off the Monday settlement high of $57.35 a barrel. Brent crude, the international futures contract, closed at $63.52 a barrel. Both averages finished higher for the week.

Meanwhile, investors took the axe to precious metals with gold failing to generate bids as a hedge to global risk. December gold futures, the most actively traded contract, fell 1% on Friday to close at $1,274.20. Bullion held on to gains for the week after sliding to three-month lows last Friday.

Comex silver futures posted sharp declines on Thursday and Friday, eventually settling at $16.87 a troy ounce.

Gold’s premium over silver has strengthened in recent weeks after falling to the lowest level in almost two months. The gold/silver ratio used by investors to buy and sell precious metals closed at 75.54.

U.S. Dollar Loses Momentum

The U.S. dollar index (DXY) ended lower against a basket of currencies this week, settling down 0.6% at 94.39. The greenback traded at three-month highs earlier in the week before being hit with a three-day skid.

Dollar bulls have been encouraged by improving economic data and signs that the Federal Reserve will continue raising interest rates gradually. The Federal Open Market Committee (FOMC) is widely expected to raise rates in its final meeting of the year in December.

Central banks from around the world are also beginning to scale back their stimulus programs. The Bank of England (BOE) and European Central Bank (ECB) are the latest bodies to begin the slow process of policy normalization.

The Week Ahead

Global data flows will continue to make headlines next week, with a deluge of market reports scheduled between Monday and Friday. Chief among them are China industrial production, Eurozone and Japan GDPs and U.S. CPI.

The battle of the cryptocurrencies will also continue, with altcoins looking to continue their recent string of gains. Investors will have the opportunity to evaluate a bold claim by BitPico, the person or entity that has vowed to fork the bitcoin blockchain next week.

“We are carrying out the fork regardless as everything is set in motion. Backing down the difficulty right now is a strategy,” the group wrote earlier this week on its cloud address.

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