Top 5 Performers of 2017

A review of Bitcoin, EUR/USD, Ethereum, Gold and Crude Oil

2017 has come to a close, and it has been an extremely interesting year. We would like to look at five of the most interesting – and volatile – financial instruments of the past year, as an indication as to which assets are worth paying especially close attention to in 2018.
 

#5 – Crude Oil

   
The two primary benchmarks for global crude oil prices are Brent crude and WTI (West Texas Intermediate) crude. When a price of oil per barrel is quoted, it is generally referring to one of these two oils, and the prices of Brent and WTI tend to be fairly close to one another. As is true with most commodities, the price of crude oil is heavily affected by supply and demand. When oil producing countries cut back on oil production, the supply generally drops, while the global need for crude remains the same, thus driving the demand – and the prices – higher. The more oil that is being produced around the world, the lower the prices tend to be. Unlike most other commodities, geopolitics plays a far more direct role in that supply and demand, and in turn, on the price of crude oil.

While the overall increase in the price of crude from the beginning of 2017 until December 1 was just barely $2/barrel, the underwhelming numbers are misleading. On December 1, the price of crude was $58.29, which is only slightly below the high point of the year, which was $58.88 on November 24. More significantly, during the first half of the year, the price was on a steady downtrend, hitting the 2017 low of $43.79 on June 21. From that date until December 1, crude rose very steadily by over 33% to reach its current price.

If the volatility of the last six months is any indication, crude could very well be on the move. The six-month drop in 2017, followed by the 5-month rise has made crude a very popular financial asset at Fortrade, where over 13% of the positions opened this year were on crude oil. This will certainly be one of the instruments to watch carefully in the coming year.
 

#4 – Gold (USD)

   
Unlike oil, gold production is not at the mercy of particular countries, or bodies that determine whether or not to mine gold, and how much. Rather, gold tends to be seen as the safe fallback when global currencies, particularly the U.S. dollar, are struggling. As a result, gold will occasionally fluctuate greatly in a short period of time. For example, if the United States Federal Reserve Board raises the interest rates, many investors will see that as an indication that the greenback is strong, and the price of gold often drops at such times. Alternately, a quarter, or year, in which unemployment is up and consumer confidence is down, could drive more investors to buy gold as protection from a potentially falling dollar, thus driving the price of gold higher.

Similar to crude, gold was very volatile in 2017, and on December 1, the price of gold was $1,279.40 per ounce, which was 9% higher than the $1,173 that gold opened the year. However, as late as early September, the price peaked for the year at $1,353.80, which means that in just the last two months, the price dropped 5.5%. Some analysts believe that this drop reflects a growing lack of confidence in the U.S. dollar, and we are likely to see a good deal of movement in the price of gold well into the coming year, and it is no surprise that this year, more than 10.5% of the positions opened by traders at Fortrade were on gold.
 

#3 – Ethereum (ETH/USD)

   
There has been a great deal of (understandable) excitement this past year over several cryptocurrencies which have grown exponentially more valuable in 2017. At the very top of this list is Bitcoin (see Asset #1 below), but a second – and only slightly less exciting – digital currency worth watching carefully is Ethereum.

Ethereum uses a blockchain technology, which is a public ledger of every transaction executed within the system. This makes Ethereum (and other virtual currencies) completely transparent – every single transaction can be seen by anyone at any time. And, Ethereum is not regulated by any governmental agency, and while lack of regulation may be a “red light” for some, as of yet, no hackers have successfully broken into the blockchain technology, so cryptocurrencies seem to be quite safe from that perspective.

Unlike Bitcoin, Ethereum is not just a cryptocurrency in and of itself. Rather, the blockchain technology is being used to create things like contracts and distributed applications. Within the Ethereum network is the cryptocurrency Ether, which can be used as an alternative to actual money. However, the primary use of Ether is to enable users to navigate the Ethereum platform, and pay for the applications.

While Ethereum was not one of the more heavily traded instruments on Fortrade this year, we believe it is one that is worth keeping a very close eye on for 2018. After opening 2017 at $8.05, the price of Ethereum had skyrocketed to $461.58 by December 1. For the sake of perspective, that is more than 5 times the increase Bitcoin enjoyed in that same period.

So Ethereum is one to watch, in our opinion. As many global currencies are going through periods of instability and uncertainty, it may very well be that these digital currencies are the cash of the future.
 

#2 – EUR/USD

   
2017 was an especially interesting year for the world’s most commonly traded currency pair, the EUR/USD. The very stormy Trump presidency in the United States has left many investors wary of the strength of the U.S. economy, and the British exit (Brexit) from the European Union has created much uncertainty as to how the EU economy in general, and the euro in particular, will weather the change.

Overall, the euro has strengthened significantly so far against its American counterpart in 2017. It opened the year at 1.0527, and by December 1 had gained 13%, jumping to 1.898, after peaking in early September at 1.2029.

Despite – or perhaps, because of – the uncertainty surrounding both the euro and the greenback, it was one of the most traded instruments in 2017, accounting for nearly 22% of the positions opened on Fortrade.com. And while much of the speculation regarding both currencies is likely to keep analysts and pundits arguing in the coming year, it seems very clear that the pair will continue to be a heavily traded instrument for forex and CFD traders alike.
 

#1 – Bitcoin (BTC/USD)

   
Bitcoin, the world’s first (and largest) cryptocurrency was not the most traded instrument in 2017, but it was certainly one of the most volatile, and early indications point to that volatility continuing well into 2018.Last year, analysts and investors were so excited when the price of Bitcoin rose from $433.49 on January 1, 2016 to $995.44 at the end of the year. The internet was all abuzz at the prospect of the first digital currency poised to break through the $1,000 barrier. It turns out that was only the tip of the proverbial iceberg.By December 1, 2017, that price had risen meteorically to $10,861.47, a whopping increase of more than 991%. What’s more, in the first week of December, Bitcoin jumped an additional 44% to $14,275.26.

This type of volatility bodes well for forex and CFD traders. Whether the price continues to rise, or the bubble bursts and the price plummets, there are sure to be plenty of trading opportunities.

And for those who are considering purchasing Bitcoins, even though the price of a single unit is growing increasingly prohibitive, it is possible to purchase fractions of coins while staying within your financial means.

For example, if Bitcoin costs $10,000, and you purchase $150 of it, you would then own 1.5% of a coin, or 0.015 Bitcoins. If the price of Bitcoin rises to $15,000, then your 0.015 Bitcoin is worth $225, and you have earned $75 on your investment. Of course, as with any investment, there is no guarantee that the price will continue to rise, so any purchase of Bitcoin should not be undertaken without properly understanding the market trends, and all of the inherent risks.

In any event, the future is shaping up to be very exciting for Bitcoin, thus making the BTC/USD our pick for the most important financial instrument to watch in 2018.