By definition, a market analyst is a ‘person that assesses the conditions that affect a marketplace’. Through thorough research and analysis, they are supposed to predict the unpredictable, giving us insight into the future of the stock market.
With predictions from a market analyst, we hope to make the next profitable bet on the market.
Yet, XTB’s chief market analyst David Cheetham does not see himself as the wizard of analytics. On the contrary – hard work, constant research and a close eye on the news still leave him facing the unexpected on a daily basis.
“Crypto surprised me a lot. I was amazed by how quickly it rallied and how far it went up in 2017,” he told Cointext.
However, Cheetham was not shocked to see Bitcoin’s subsequent fall either because it had evidently gone parabolic and turned into a big bubble.
But the resilience of Bitcoin and the crypto industry in general has been curiously followed by Cheetham.
The analyst thinks of it as a nice market to trade because of its volatility.
He said: “Volatility can be a downside because it’s easy to lose money that way. But, with volatility you always have the opportunity to make money.”
There is nothing worse for a trader than a flat market. Granted you can’t really be wrong when there’s hardly any ups or downs, but you also can’t really be right.
For crypto to grow there needs to be wide-spread adoption, Cheetham thinks.
“The only way we could see a major, major rally in crypto, for it to take its share of the global forex market, crypto needs to become a transactional currency.”
From crypto’s losses in the past to the present growth
Today, with the key question being; will there be a wide adoption of cryptocurrency across the world? The digital currency market is still in a speculative, grey area.
Primarily, people still want to invest in crypto, but are in it for the long term.
As an analyst, Cheetham looks for correlations across different markets and tries to see the bigger picture.
“Sometimes you’ll see nice correlations. For instance, in 2017, the stock markets were rallying – so were cryptocurrencies, everyone basically being ready to take on more risk. What we’ve seen a little bit more recently, in the past year, is an inverse relationship. When stocks start to fall, we see crypto currencies rising. For some people crypto appears to be some sort of safe haven, an asset they turn to when things are going bad.”
Essentially, institutional money needs to start moving in on a larger scale for crypto to grow even bigger in the business.
Any comment can change the market
“So with markets, you always try and look at the fundamentals behind them, what’s actually moving them,” said Cheetham.
With the less well-developed crypto market this can be difficult. A lot of people find out about news that caused move in the market often two or three days too late- leaving them no time to trade off the back of it.
Just recently, after US Federal reserve chair Jay Powell publicly addressed concerns about Facebook’s Libra currency, Bitcoin suffered an immediate loss, dropping 15% across the days that followed.
Essentially, successful trading takes patience and requires your constant attention. So don’t take your eye off the ball (or the news) if you’re looking to succeed in the game of trading.
Cheetham’s advise: “If you’re looking trade with crypto, I’d say try and keep abreast of the news, try and follow what’s going on as frequently as you can.”
At XTB, the market analyst is running a WhatsApp group service for his clients, sharing the latest updates from the markets as they come in and answering any pressing questions they might have.
A look into the future
If Facebook can get Libra off the ground without running into regulatory problems and if more big online retailers start to accept cryptocurrencies, a boost to the market would not be as hard to predict.
Yet in the absence of those things, a push as high as Bitcoin enjoyed in 2017 is not to be expected across the board.
While the first ever cryptocurrency on the market still leads the way with a recent 66% surge, altcoins, too, raised their profile a little bit but not quite to the same extent.
XTB’s expert predicts: “I think we’re probably going to see a bit of a pullback in the markets towards the end of the year. But you never know. That’s the good thing with cryptocurrencies. I’m sure there will be plenty of opportunities in the future, both short- and long term.”
So, this one prediction seems to be a safe one to make: the crypto market will always be good for a surprise.
For more information about XTB go visit: www.xtb.com