Market news & insights

Bitcoin has dropped dramatically over the last 24 hours to its lowest level for the year after fears were sparked that major player FTX faced a liquidity crisis. In the last two years cryptocurrency has become available to large institutions and funds which has increased the overall size of the market. However, at the same time it has made it vulnerable to large liquidity events such as the one that is occurring now.

The reason for the large drop-off was the news that exchange FTX was facing serious liquidity issues after a large drop in the price of Bitcoin and other cryptocurrencies this year. Subsequently almost as an act of mercy, Binance the world’s largest cryptocurrency exchange has proposed that it will buy out FTX and its subsidiaries to stabilise the market. In addition, fears over customers’ ability to withdraw their funds from accounts were abounds on Tuesday.

This is not the first-time withdrawal issues have hurt the sector with frozen accounts being an issue when Celsius was facing difficulties. This run has seen the price of Bitcoin fall sharply to its lowest levels since November 2020. The price dumped about USD 2000 as the news hit the market.

The price then bounced of the USD 17,000 level to where it now rests near in the mid USD 18,000’s. The volume sold was the highest level since June 2022. Importantly, the price continues to hold its longer term range indicating some level of strength at the USD 18,000 level.

There is still a fair bit to play out regarding this potential merger. A failed deal or an accelerated acquisition could either help or hinder the price of Bitcoin and other cryptocurrencies.

In recent days and weeks there have been rumours that China is beginning to consider an easing of its Covid restrictions. As virtually the last country with extreme Covid restrictions, a shift in policy from China would be a major catalyst for the global markets and economy. Whilst the CCP has not yet announced any actual easing, there are hopes that they will soon begin to ease off on some of their measures.

Health officials have stated that local governments should not “double down” on restrictions and allow people’s livelihoods and economic activity to remain normal even in the face of increasing covid cases. General activity has shown an increase in flights and covid vaccine uptake across the country which may signal a move towards ending restrictions. Impact on the markets The country is set to have one of its worst years of growth in the last 20 years as it deals with the prolonged restrictions.

The Shanghai Stock Exchange has fallen by more than 17% and the Yuan has depreciated almost 17% against the USD. This is in the wake of global inflation and recessionary pressures. A strong China is a very good thing for the global economy, especially with regards to growth economies.

Once restrictions do ease, it is expected that Chinese stocks will rally heavily. However, it is not just Chinese stocks that will receive a boost. Australian mining companies and the AUD will likely benefit as China is a large importer of Australian resources.

It may also weaken the USD as money flows back into riskier assets and away from the greenback as the general economy begins to accelerate again. Ultimately, regardless of when exactly, China decides to ease its restrictions it would be prudent to be aware of the potential ramifications as it may provide a strong boost to the equities market and on some aspects of the foreign exchange market as well.

BioNTech SE (NASDAQ:BNTX) reported its third quarter financial results on Monday. The German pharmaceutical company beat both revenue and earnings per share (EPS) estimates for the quarter, sending the stock price higher. The company reported revenue of $3.392 billion vs. $2.024 billion expected.

EPS reported at $6.841 per share vs. $3.352 per share estimate. ''Thanks to our strong execution in the third quarter of 2022, we updated our COVID-19 vaccine revenue guidance for the year 2022 to the upper end of the original range. We started shipments of our Omicron-adapted bivalent vaccines early in September and we expect to carry on with our deliveries throughout the fourth quarter of 2022,'' Jens Holstein, CFO of BioNTech commented on the latest results. ''We believe in the potential of our COVID-19 franchise and plan to build on our leading position with ongoing innovations in this field. The power of our scientific innovation combined with our strong financial position allows us to accelerate and expand our diversified clinical pipeline and to create future growth in the interest of all stakeholders,'' Holstein concluded.

The stock was up by around 2% during the session on Monday following the latest results, trading at $155.52 a share. Stock performance 1 month: +16.38% 3 months: -7.00% Year-to-date: -38.93% 1 year: -35.10% BioNTech price targets JPMorgan: $132 Deutsche Bank: $250 HC Wainwright & Co.: $272 SVB Leerink: $224 Morgan Stanley: $194 Goldman Sachs: $206 BioNTech SE is the 411 th largest company in the world with a market cap of $38.46 billion. You can trade BioNTech SE (NASDAQ:BNTX) and many other stocks from the NYSE, NASDAQ, HKEX, ASX, LSE and DE with GO Markets as a Share CFD.

Sources: BioNTech SE, TradingView, Benzinga, CompaniesMarketCap

The US midterm elections are coming up next week on 8 November and have the potential to have a big say on the direction and volatility of the US and global markets. All the 435 seats in the House of representatives will be decided upon. Currently, the makeup of the house includes 220 Democrats, 212 republicans and 3 vacant seats.

The senate is just as intriguing with the senate essentially split 50 – 50, with the Democrats having the support of 2 independents. This means that Vice President, Kamala Harris has the deciding opinion on bills that get put forward. It also means that the Republicans only need one more seat to take control of the senate.

This is crucial because it means if the Republicans take control, then bills put forward by Democrats will face a much tougher road to turn into law. It is also possible that the Republicans could take both the senate and the house of representatives which would make it almost impossible for the Democrats and Joe Biden to pass any legislation. Impact on the Markets When US elections occur, there tends to be a decrease in performance before the election and increase in volatility around the US markets.

After the election there is usually a period of growth for equities. The issue at the forefront of all American’s minds is still inflation and the new government will deal with it. A major impact on the economy may be the government’s ability to deal with issues surrounding the economy such as inflation, a recession, or other fiscal matters.

For instance, a gridlocked congress will restrict the President’s ability come up with policies that the Republicans will ok. The president may have to resort to using Executive orders which are more limited in scope and done without support of congress. More responsibility might be taken by the Federal Reserve to loosen monetary policy to fight a potential recession without fiscal support.

This bodes well for the equities market and dampen some of the strength of the US dollar. From a more ideological perspective, Biden’s push for environmental and sustainability reform. Biden and the democrats have pushed forward policies that have supported these developments.

Therefore, money flow away from these sectors if that support gets pushed away. Ultimately, the midterm elections will likely have some effect on both the direction and volatility of the market. A swing towards the Republicans may see a shift in volatility and sentiment across the economy.

Bitcoin, the currency of tomorrow, a new age currency, has seen some severe ups and downs over the last few years. From reaching highs of nearly 70,000 dollars to dropping to lows of 17,000 the volatility and action around the cryptocurrency has been startling. Even compared to other traditional currencies the range and volatility of the price has been far more aggressive.

In fact, when compared to other more volatile tradable assets such as indices and equities, Bitcoin still stacks up with how volatile it is. For traders this is an important aspect to consider when deciding what to trade. Recent Chronology Early on, there was a thought that Bitcoin would become a hedge against inflation, or an alternative to Gold or Oil.

With the recent wave of record high inflation that has swept up much of the world the leading cryptocurrency failed this test, and this proved to be wishful thinking. In fact, Bitcoin showed itself to be quite the oppositive of a hedge and was rather much more aligned with growth assets such as the Nasdaq and the technology sector. Prior to May 2022, the Nasdaq and Bitcoin has a correlation of 0.82 out of 1.

In addition, with still so much unknown about how governments and Central Banks will come to treat the cryptocurrency and what regulations may be implemented there is a lot of uncertainty about how market regulation will affect the supply and demand. The chart indicates just how correlated the Nasdaq and Bitcoin were, sharing similar peaks in mid-November 2021 and following very similar price action until July 2022. However, after July there has been a shift in the correlation.

Today, Bitcoin is neither correlated strongly with either Gold or the NASDAQ and has carved out a niche for itself. Whilst the Nasdaq has continued to fall, Bitcoin has seemingly found its bottom. The price of Bitcoin has reclaimed its 50-day moving average which is its short-term support, and the price looks like it may continue to move up.

The range of Bitcoin has also become much tighter indicates, that the overall volatility has reduced and that the price has reached some level of equilibrium showing that neither the buy nor sell side has been able to gain any ascendancy. Due to how vicious the selling has been this may very well indicate the last of the selling. Importantly, even with the increased liquidity that has flowed into the asset from institutions and ETF’s, the price has still been able to find support and not fall int a liquidity vacuum.

Where it fits in? The recent price action brings up a more existential question which is where does Bitcoin fit in on the spectrum of safe to risky assets? Based on the information presented above there is no way that Bitcoin should at this stage be considered as a haven asset.

The price is still too volatile to be considered a safe asset. In addition, there is still so much unknown with how the price might react in the future, specifically regarding future regulations. On the other hand, Bitcoin has exhibited some characteristics of a safer asset, mainly, in recent times, its increasing resistance to high volatility and wild price fluctuations.

This may indicate that it is maturing as an asset. Therefore, at this stage of its life it may be best to classify Bitcoin in its own quasi- growth basket. When analysing Bitcoin for potential trading or investing opportunities it is important keep in mind that it does not act like a traditional asset.

Another day, another hike. On Wednesday, the US Federal Reserve announced its latest policy decision to raise its interest rates from 3.25% to 4%, to its highest level since January 2008. On Thursday, it was the Bank of England's turn to announce its decision.

As expected, the central bank raised its interest rates by 0.75% to 4%. It was the highest single increase since 1989. Inflation Bank of England highlighted that its biggest job is to bring inflation back to its 2% target.

The bank expects inflation to rise in Q4 but start falling from early next year. ''Inflation is too high. It is well above our 2% target. High energy, food and other bills are hitting people hard,'' the bank said in a statement. ''It’s our job to make sure that inflation returns to our 2% target.

This month we have raised our interest rate to 3%. In total, since December 2021, we have increased our interest rate from 0.1% to 3%.'' ''What will happen to interest rates will depend on what happens in the economy. At the moment, we expect inflation to fall sharply from the middle of next year.'' Economic outlook As for the economy, the central bank did not have the most positive outlook for the near future.

It now expects the recession to last for a prolonged period. ''There has been a material tightening in financial conditions, including the elevated path of market interest rates. In addition, high energy prices continue to weigh on spending, despite an assumption of some fiscal support for household energy bills over the next two years. As a result, the UK economy is expected to remain in recession throughout 2023 and 2024 H1, and GDP is expected to recover only gradually thereafter.'' Market reaction The Pound was weaker against all major currencies on Thursday, falling the most vs. the US Dollar.

Cable was down by around 1.93%, trading at 1.11771 level. The next Bank of England rate decision will be on 15th December.