Saxo Bank: „Ethereum seems to be one of the assets with real-world utility”

Saxo Bank, the online multi-asset trading and investment specialist, has published its quarterly outlook for global markets and key trading ideas for Q1 2018 with focus turning to bubbles: how they form and how to spot them.

In the wake of an astonishingly calm 2017, Saxo Bank’s strategy team sees a market full of potential hazards as we head into the first quarter of 2018 and beyond. From central bank policy normalisation to rising inflation expectations, from fiscal deficit expansions to cross-asset correlations, the signs are all there.

Saxo’s Q1 Outlook covers the bank’s main asset classes: FX, equities, commodities, bonds as well as a range of central macro themes.
Commenting on this quarter’s outlook, Steen Jakobsen, Chief Economist and CIO, Saxo Bank, said: “The chase for yield continues while central bank policymakers, supported by politicians’ continued inability to pass real reforms, close their eyes and hope for the best. As we move into 2018’s first quarter, the world is again full of hope and precious little reality.”
“The crypto bubble may be the most visible due to the high volatility and performance seen in 2017 but don’t be fooled into believing that other assets are not in bubble territory as well. In fact, the length and extent of some bull markets may conceal just how far from fundamentals these assets have drifted.”
“We do not claim to know when the current bubbles will burst. We can, however, identify where they exist and in our view there are a great many bubbles afoot right now. We see them in the bond market, in equities, in private equity, venture capital, real estate and certainly in cryptocurrencies. (Interestingly enough, we see no bubbles whatsoever in commodities.”

Will the speculative mania around cryptocurrency continue?
2018 will be a make-or-break year for the burgeoning crypto asset market. The optimists are looking for the market cap to top $1 trillion while pessimists foresee increased regulation and even the outright banning of cryptocurrencies as monetary authorities decide that the space is out of control.

Jacob Pouncey, Cryptocurrency Analyst, said: “Crypto assets are behaving like the dot-com stocks of the late 1990s. We expect more companies to announce blockchain pivots before this speculative phase is over. Q1’18 will see more projects hitting the market, each touting itself as the next crypto revolution in its particular sector. This, again, will only drive further speculation in this nascent market.”

“If the crypto space is to see a new leader; Ethereum seems to be one of the assets with real-world utility that goes beyond its standard function. It is now processing over 1.25 million transactions/day and tens of billions of dollars in volume.”

Source: Saxo Bank