Global equity markets are struggling to find any significant direction or momentum as we approach Christmas, with low volumes and little news to move markets. Even the US tax reform bill passing its last major hurdle in the US Senate, and a foregone conclusion to be passed in the House later today, had been so priced in that the muted reaction was not a surprise. The US tax reform bill has been a buy signal every step of the way for US equities, on anticipation of reform; on the initial detail; on the final detail; leaving little room for more enthusiasm.
Digital cryptocurrencies have been the major story in town over the past three months, with more column inches dedicated to these ‘assets’ than any other story and Google searches for Bitcoin outweighing Trump. Companies who have never been involved in this area, but have suddenly become crypto focused have seen their share price immediately double and more. Stories of students investing their student loans in digital currencies are commonplace and people that have never been interested in investing before have suddenly been bitten by the Bitcoin bug. The key question is whether we have reached saturation point, or if this is just the start of the story?
A 15% correction in the Bitcoin price since Monday’s high may simply be normal volatility for the currency, but it may be that alternative digital options are becoming more attractive to investors and that Bitcoin is overvalued. The next few days will be highly significant in establishing whether this dip acts as an attractive buying opportunity or if the Bitcoin bubble is deflating as investor focus turns to less expensive cryptocurrencies.
This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.