Recently, there has been a lot more volatility in the market, as seen even in the major stock indices, where fluctuations of 2-5% a day have become the norm.
In the absence of major news, the market has been reacting strongly on any minor news, making it hard to take short-term trading positions that are technical-driven.
As I mentioned in last week’s video, there is likely to be a rebound, so the best option was to stay out or take short-term long positions.
Now, that the rebound is in progress, the big question is when it will end, and whether it might be the start of a market bottom.
I will be touching on that in this week’s market outlook video, and as well as my strategy to capitalise on that.
Weekly Market Outlook (25 October 2022)
? Next rate hike in about 8 days
? Investors exit China stocks
? Long-term bearish for stocks, crypto, REITs, commods, but short-term sideways
? Long-term bullish for USD
Portfolio Highlights
Weekly Portfolio Update (25 October 2022)
Not much change from last week, since markets have not moved much.
Currently, the yield curve is pricing in a Fed pivot in 1 years time.
Crypto Market Highlights
Recently, Ethereum (ETHUSD) has broke out of the narrow range, and there is no telling whether this is a real or false breakout, so the best options are to:
1. stay out
2. take small long positions on pullbacks on smaller timeframes
Entering the world of cryptocurrencies is like stepping into a new dimension, with products such as stablecoins, NFTs, DeFi, Bitcoin, and many more coming out every single day.
It’s hard to keep up with everything, even for the most experienced traders. That’s why it’s important to know what you’re doing and where you’re headed before jumping in.
One of the most interesting but underrated products on the market today is stablecoins.
For those who don’t know, a stablecoin is a cryptocurrency that is pegged to an asset with a stable value.
The most popular and well-known stablecoin is Tether (USDT).
In this blog post, I’m going to cover the basics of stablecoins, before going in depth on what Tether (USDT) is, how it works, and whether or not it is a good investment.
Table of Contents
What is a Stablecoin?
A stablecoin is simply a digital asset that is pegged to a stable asset, such as the U.S. dollar.
The main advantage of a stablecoin is that it allows traders to avoid the volatility of the crypto markets while still enjoying the benefits of blockchain technology.
Also, with stablecoins, you can be sure that the value of your money will not fluctuate.
Why are Stablecoins Useful?
Stability is one of the essential features of any currency.
If a currency’s value fluctuates too much, it is impossible to use it in everyday life.
Stablecoins are pegged to an asset that is highly stable and unlikely to experience rapid changes in price over short periods.
Their stability makes them useful as a holding currency for saving, investment and transactions.
Now that you are armed with the right information about stablecoins, let’s move on to Tether (USDT).
What is Tether (USDT)?
Tether is a digital currency introduced by Bitfinex, a cryptocurrency exchange platform.
It is a tether-based stablecoin pegged to the U.S. dollar.
In simple words, one USDT is equal to one U.S. Dollar.
This means that if you have one Tether coin, then its value will remain the same, and you can use it as a substitute for USD currency.
The main function of Tether is to provide a stable alternative to traditional cryptocurrencies, which tend to be more volatile.
This helps protect you from market volatility, so if you are worried about the security of your funds, then you can use Tether as a safe haven to hold your funds.
How Does Tether (USDT) Work?
Tether (USDT) works in the same way as other cryptocurrencies do.
You can transfer your Tether coins to another person or use them to purchase goods or services.
You can also store your USDT in a digital wallet, which is similar to a bank account.
As with other cryptocurrencies, all transactions for USDT are recorded on the blockchain and cannot be counterfeited.
Furthermore, the company behind Tether guarantees that every USDT is backed by a U.S. dollar held in reserve.
This means you can always redeem it for the cash value of the currency.
If you want to convert your USDT back into fiat, all you need to do is contact customer support and request a refund.
Reasons for Investing in Tether (USDT)
As we all know, Tether is one of the most popular stablecoins on the market.
It offers investors a secure alternative to volatile cryptocurrency investments while also providing opportunities for arbitrage and hedging.
Here are some of the smart key reasons why you should invest in Tether:
1. High Stability
Tether is a highly stable coin, so you know what you’re getting in terms of value.
It doesn’t fluctuate much and can be used for a variety of purposes, including as an investment, a store of value, or simply as a means to pay for goods and services online.
This makes it a go-about choice for those who want to protect their wealth from market volatility while still having access to the benefits of blockchain technology.
2. Transparent
Tether is very transparent in its accounts and reserves, and it has audited financials provided by Tether Limited.
No doubt Tether is one of the most transparent cryptocurrencies on the market today.
The company provides an audit report that details how much USDT there is in circulation and where it came from, which means you can rest assured your money isn’t being used for anything unethical.
3. Liquidity
The next most important thing to look for when choosing a stablecoin is liquidity.
When you want to convert USD into Tether, and Tether back into USD, it should be easy and quick.
You don’t want to have to wait days or weeks for your money!
Tether has maintained high levels of liquidity since its inception in 2014, which means you can be confident that you’ll be able to cash out of USDT whenever you need it.
4. Accepted on Many Exchanges
Many exchanges accept Tether, so it’s easy to trade with other cryptocurrencies.
Tether is the most widely accepted stablecoin in the world.
Many exchanges accept Tether as a way to deposit funds, so if you want to buy other cryptocurrencies like Bitcoin or Ethereum, you can deposit USDT into your brokerage account, then use that to buy other cryptocurrencies.
5. Security
Tether is 100% transparent, which means that you can see all of the transactions on their website.
This is paramount because it makes it easy for people to know how much money there is in circulation and how many tethers are being held by each exchange.
6. Reliable
Tether is a reliable cryptocurrency because it’s one of the most stable in the market.
It doesn’t fluctuate like other cryptocurrencies, which makes it great for people who want to make long-term investments or get stable yields via yield-farming, but also want to preserve the capital.
7. Decentralized
Tether is decentralized, which means that there is no central authority controlling its supply or price.
This makes it easier for anyone to use cryptocurrency without having to worry about regulations or restrictions from governments.
8. Quick and Easy
Tether is very easy to use because it can be used just like fiat currency.
Anyone who wants to buy Tether will only need a wallet and an internet connection; this makes it more convenient than other cryptocurrencies that require complicated mining procedures.
Risks of Investing in Tether (USDT)
Just with any stablecoin, there are risk associated with investing in USDT.
One of the main risk for cryptocurrencies is always the risk of getting hacked, but so far Tether (USDT) has been safe in this aspect, with no major hacking incidents related to the blockchain.
The other major risk for stablecoins is the risk of depegging, since the token is pegged to the US Dollar.
If depegging occurs, like what happened to Terra USD (UST), then the token can rapidly spiral to zero.
However, Tether has a healthy reserve to defend the peg, and the price has not deviated significantly from the peg before, so this risk is not too high as well.
How to Buy Tether (USDT)?
To buy Tether, you will need to register an account on an exchange that supports USDT, such as Bitfinex, Binance, or Huobi.
Once you have your exchange account set up and verified, you will be able to purchase Tether with either fiat currency or another cryptocurrency.
For more information about brokerages, you can check out our list of tools & resources.
The Future of Tether (USDT)
Tether, or USDT for short, is issued on the Omni Layer, a blockchain platform that is compatible with multiple cryptocurrencies, including Bitcoin, Litecoin, and Ethereum.
Each USDT unit you go for is backed by one U.S. dollar held in reserve by Tether Limited.
And with its recent expansion into Ethereum and other blockchain platforms, Tether’s future looks bright.
Concluding Thoughts
Tether is currently the go-to option for many people looking to use stablecoins, as it’s an ideal way to store your hard-earned money without having to worry about it losing value.
Furthermore, the fact that it’s backed by USD makes it a more stable option than other cryptocurrencies.
However, if you are looking for higher yields on stablecoins, then there are other stablecoins which offer higher yields, but also come with higher risk.
So in a sense, Tether (USDT) is like the blue-chip of stablecoins in the crypto universe.
Now that you know all about stablecoins and Tether (USDT), do you think they are good investments?
What do you think are some good strategies to profit from stablecoins such as USDT?
https://synapsetrading.com/wp-content/uploads/2022/10/Thumbnail-What-is-Tether-USDT-and-is-it-a-good-investment.png7201280Spencer Lihttps://synapsetrading.com/wp-content/uploads/2019/10/logo.jpgSpencer Li2022-10-22 18:25:092022-12-19 01:22:10What is Tether (USDT) Stablecoin, and is it a Good Investment?
Although there was a short-term bullish rebound in the markets from the UK tax cut reversal, the impact was short-lived, and in fact it provided us a good shorting opportunity to enter at better prices on the rebound.
The long-term trend is still bullish, and as I just shared in the private signals group, until our leading indicator flashes a reversal signal, I won’t be expecting a reversal in the stock market any time soon.
Our current new short positions are already in the money, so we will continue riding and managing these positions for next week as well.
There are some good trading opportunities to sell various currencies against the US dollar, since it is expected that the USD will continue heading up.
At this point in the market, the main drivers of price are the CPI, NFP and FOMC data, so try to focus on these and filter out the noise in the market. Observe these data releases together with price action and chart patterns, and it will give clues to the market direction.
As per usual, I will be posting updates and trading opportunities in our Daily Trading Signals Telegram channel, so do join us if you are an active trader, or looking to time the market better!
Weekly Market Outlook (18 October 2022)
? Next rate hike in about 25 days
? UK reverses tax cuts, short-term bullish for risk assets
? Long-term bearish for stocks, crypto, REITs, commods, etc.
? Long-term bullish for USD, but short-term bearish
Portfolio Highlights
Weekly Portfolio Update (17 October 2022)
Added more T-bills since yields are now about 4%, meaning I can make a risk-free gain for the next 6 months, while conserving my capital for the big crash.
At this point, it is a very defensive portfolio.
Holding small amounts of various short positions, since the prevailing major trend is bearish. Will close and take profits if the market rebounds against those positions.
Forex & Commodities Market Highlights
Weekly Forex Exposure (17 October 2022)
For the past few weeks, I have been mainly rotating between USD and SGD to maximise gains for my portfolio (since my living expenses are in SGD where I live, but if you live elsewhere, then you can rotate it between your local currency).
Since USD has weakened slightly, I have reduced my exposure to it, but I am expecting the USD bull trend to continue at some point, so I am always monitoring to rotate back to a 80% USD exposure.
The AUDNZD has broke down from its trendline, and it is likely to be bearish/sideways. Look for small consolidations to initiate short positions.
Potential bullish reversal for the EURCHF if the inverse H&S pattern completes and price manages to break the neckline.
I have placed a price alert so that we will know the moment it happens.
Bullish H&S continuation pattern on the EURJPY, making it a good opportunity to long on any pullbacks or on smaller timeframes.
The GBPCAD recently broke the bearish trendline, as it turned up from a very oversold position.
Short/medium-term price action is strong, so I will not be surprised if it manages to head up to test the next resistance level.
After a 1-month ABC correction, the USDSGD might start to resume its uptrend. I have rotated more of my SGD into USD to prepare for this.
Stock & Bond Market Highlights
If the NASDAQ 100 (US100) is unable to clear this zone and stay above it, then there is a good chance we will see more downside.
Same for general China stocks (2801), which is down about 60% from all-time highs.
China tech stocks (3067) are still in free fall, after breaking down from a recent bear flag. Currently down about 72% from all-time highs.
Last week, all eyes were on the CPI (Consumer Price Index) data, because if inflation does not slow down, it suggests that the measures taken so far are insufficient, then there is a high chance that the Fed will continue raising rates more aggressively (which is bad for markets).
As markets drifted downwards, we continued to manage our shorts, and take profits on our open positions. I also advised to rotate out of USD to SGD, since there might be a weakening of USD.
Surprisingly, even though the CPI was much higher than expected, prices behaved erratically, by first plunging, then recovering and closing up. Thus it is possible that markets have been oversold and much has been priced in.
Now, how should we approach such a market, especially ahead of the rate hikes coming in about 2-3 weeks?
Stayed tuned for my Weekly Market Outlook video in the Daily Trading Signals Telegram channel!
Weekly Market Outlook (10 October 2022)
? More rate hikes coming on 2nd Nov? CPI release on 13 October.
? Long-term bearish for stocks, crypto, REITs, commods, etc. Slightly in the money now, continue to add more short positions on pullbacks.
? Long-term bullish for USD
Portfolio Highlights
Weekly Portfolio Update (11 October 2022)
Reinstated short positions on stocks, crypto, REITs. Bought some short-term fixed income products to generate yield in the short/medium-term while waiting for buying opportunities.
Forex & Commodities Market Highlights
Weekly Forex Exposure (11 October 2022)
Most exposure is in USD, with the rest in SGD, and short positions on EUR.
NZD is weak against the USD, and NZDUSD has formed a bear flag and is continuing to head downwards.
A similar pattern is seen on the AUDUSD, where a bear flag is formed and prices continue to fall. Great for shorting on any pullbacks.
MAS might take steps to strengthen the SGD, which will cause the USDSGD to fall.
Technicals-wise, there is strong resistance at the 1.44 level, with price getting rejected twice at that level.
The RSI is also turning down from an overbought region.
There might be a correction, so I am reducing my USD exposure.
Gold (XAUUSD) continues to be bearish, as the Fed continues to hike rates to push inflation down. Gold is a leading indicator of inflation.
Last week, we saw a sharp rebound in all markets (stocks, bonds, crypto, REITs, etc), which was not unexpected given how oversold most markets were.
That is why we decided to cash out by closing all positions and taking profits. This includes my high 6-figure USD/SGD long positions.
The plan was to wait for the rebound to be over before entering all the same positions again, which happened in the later part of the week.
This week, we have already positioned ourselves for the market, and the major news of the week will be the CPI report coming out on 13 October.
No doubt September was one of our best trading months, with many traders making 10-15% profits on their portfolios, but if the market continues falling, I won’t be surprised if we exceed that record in the next 2 months.
If you want to join us in swing trading the market with 15 minutes a day, join our Daily Trading Signals Telegram channel. See you on the inside!
Weekly Market Outlook (3 October 2022)
? Long-term bearish for stocks, crypto, REITs, commods, etc. Deeply in the money now, but closed all positions as market feels a bit too climatic.
? Credit Suisse and Deutsche Bank may face liquidity issues – will this drag down the bond and stock markets?
? Long-term bullish for USD
Portfolio Highlights
Weekly Portfolio Update (3 October 2022)
Playing defensive this week, and waiting for better trading opportunities. Closed most positions and rotated all USD to SGD.
Forex & Commodities Market Highlights
1.000 parity level has now become a support-turned-resistance level for the EURUSD. Will be expecting it to continue falling when USD resumes the uptrend.
After cashing out on my USD near this cluster of pinbars, I am waiting for USDSGD to fall to the previous support level to re-enter.
I have placed some price alerts near the area, so we will know immediately when that happens. Stay tuned!
*A LARGE INVESTOR THAT DEALS WITH CREDIT SUISSE SAYS THE INVESTMENT BANK IS A DISASTER, CDS TRADING LIKE A 'LEHMAN MOMENT' ABOUT TO HIT – FBN#CreditSuisse ???? pic.twitter.com/UiG0FzRucA
Why are markets so sensitive to data that would normally be regarded as merely an imprecise guide to the economy, to be taken in the context of other reports? Here are three theories:
https://synapsetrading.com/wp-content/uploads/2022/10/Patungan-Cavite-Philippines.jpg15042016Spencer Lihttps://synapsetrading.com/wp-content/uploads/2019/10/logo.jpgSpencer Li2022-10-09 19:30:242022-10-11 12:50:23Weekly Market Wrap: Cashing Out Before the Market Rebound!
