2017 — The rise of Cryptocurrencies
Part 1|Part 2|Part 3|Part 4|Part 5|Part 6|Part 7|Part 8|Part 9|Part 10
Well… 2017 began with the election of Donald Trump, leaving the world aghast at the US decision. The markets were just as shocked as the rest of the world.
After stating that he would end free trade deals with Mexico, Trump’s election caused the Mexican peso to lose 13% against the US dollar. Investors then flocked towards safe-haven assets like Gold and the JPY, while all of the Asian stock markets posted heavy losses.
Moving on from the election. A new era of regulatory oversight in forex was upon us. However, brokers began to buckle under the increasing pressure of the new regulatory environment. Many started to close their doors as regulation constraints and thinning margins began to weigh heavily on their ability to operate.
However, as lots of financial instruments became less accessible, a newer group of financial instruments began to start sparking traders’ interest — cryptocurrencies!
At the beginning of the year Bitcoin’s price grabbed the headlines, yet a blow was dealt by the People’s Bank of China, which tightened its oversight of the country’s Bitcoin exchanges. Not much happened aside from a drop in trading volume because of new trading fees that were imposed. This doesn’t seem like a big issue, but we’ll revisit Bitcoin a little later.
When June came around, the world looked to the UK’s increasingly tense political environment. Prime Minister, Theresa May, had called for snap elections to strengthen her hand in the upcoming Brexit negotiations… Following the announcement of the Snap Elections, the Sterling climbed around 2.3%. However, the snap elections were a disaster for the leader of the Conservative Party, as they lost 13 seats, and had to create a coalition government with the DUP, slapping the Sterling down by 2%!
Around the same time, ESMA again cracked the whip as it announced plans to review European rules of Forex and CFD trading. Rumours stated the rules could include a leverage cap, negative balance protection, stop losses on leveraged CFDs and even advertising limits across the EU.
Turkey then went one step further and banned all accounts and trading with foreign brokers for Turkish residents, having earlier set a maximum leverage of 1:10 and a huge minimum deposit.
While all of the regulatory changes were coming about for Forex and CFDs, brokers began adding Cryptocurrencies to their product portfolios. With Bitcoin leading the way, and as the year progressed, brokers started adding other alt-coins to their already extensive product offering.
As the year began to close, a number of different events started to shape the market for 2018. Bitcoin futures became available on the CBOE. Then, traders began to have a lot more faith in the online trading of cryptocurrency CFDs, with positive public opinion towards cryptocurrencies starting to fire up.
It wasn’t just digital currencies blowing up, though. Geopolitical tensions plagued 2017, with escalating tensions between the US and North Korea as Trump began his Asia tour in November.
Source: Twitter
Just before embarking on his trip, Trump reiterated threats he had been making throughout the year to Pyongyang, promising ‘fire and fury’, being ‘locked and loaded’ and ready to ‘totally destroy’ North Korea… Understandably, this had quite an effect on the market…
At Trump’s intital ‘fire and fury’ comment back in August, safe-haven assets like the Swiss franc, the Japanese yen and Gold saw a massive boost, with Gold rising to its highest levels in two months. The Swiss franc increased by more than 1% against the US dollar and saw its largest one-day gain against the euro in more than two and a half years! The South Korean won dropped by 0.9%.
Currencies weren’t the only markets affected by Trump’s outburst, with 0.6% wiped off the FTSE, 1.3% off the French CAC and 1.1% off Dax. Trump’s Twitter rants would have huge effects on the markets during the whole of 2017 and the following year… But, you’ll have to wait until tomorrow to find out more!
Part 1|Part 2|Part 3|Part 4|Part 5|Part 6|Part 7|Part 8|Part 9|Part 10
