Commbank to Legitimize Cryptocurrency in Australia

Dale Gillham, Chief Analyst and Head Trainer of Wealth Within

By Dale Gillham |

An increasing number of Australians are entering the world of cryptocurrencies in the hope of chasing high returns, yet many are blissfully unaware of the inherent risks involved. Recent research suggests that one in five Australians are now either investing or intend investing in cryptocurrencies in the near future.

Commbank to provide easy access to crypto trading

Interestingly, the Commonwealth Bank announced last week that it would launch a new service that allows customers to buy and sell crypto assets. This follows ASIC’s announcement in July that it is looking to regulate cryptocurrencies and crypto assets, as outlined in the paper titled “Senate Select Committee on Australia as a Technology and Financial Centre”.

Until recently, trading cryptocurrencies was considered very high risk, as it was largely unregulated, which encouraged dodgy practices by some providers. However, the news this week by CBA and the intentions of ASIC to regulate this market does add some respectability, which I believe will reduce some of the risks Australians have been subjected too when trading cryptocurrencies.

That said, many investors fail to learn from the mistakes of the past and cryptocurrencies are just the latest vehicle investors are jumping into in the hope of making some quick gains.

In the last few decades, investors have chased futures, options, foreign exchange, contracts for difference and tech stocks together with a number of dubious schemes. Yet the vast majority of investors who purchased these products with little to no research or education because of the lure of huge gains failed to achieve the speculator profits they were hoping for.

The number one rule to long term success in any market is to understand the vehicle you are investing in and to manage the risks of that investment and the crypto market is no different.

What were the best and worst performing sectors last week?

The best performing sectors included Communication Services up 4.64 per cent followed by Healthcare up 3.93 per cent and Consumer Staples up 3.76 per cent. The worst performing sectors included Energy down 1.90 per cent followed by Materials up 0.30 per cent and Financials up 0.58 per cent.

The best performers in the S&P/ASX top 100 stocks included Charter Hall Group up 11.25 per cent followed by ASX up 10.42 per cent and REA Group up 10.41 per cent. The worst performing stocks included Virgin Money down 13.70 per cent followed by Domino’s Pizza down 13.67 per cent and Westpac down 12.15 per cent.

What's next for the Australian share market?

The Australian stock market traded up last week in its strongest move since early August closing at its highest level since early September. The market also closed high on Friday indicating that the sentiment is bullish, at least in the short term, which may finally signal an end to the constant indecision we have been experiencing over the last few months. That said, over the past two years we have experienced many surprises where the market did not respond as we would normally expect.

In stark contrast to the previous week where 18 of the top 20 stocks ended the week in the red, only seven ended in negative territory last week. This is a good sign, as these stocks really need to drive the market for it to be bullish because more recently it has been driven by the midcap and small cap stocks and last week was no different.

Despite the All Ordinaries Index ending the week up 1.8 per cent both the Financial and Materials sectors were relatively flat, which is concerning because if both these sectors move down, they will take the market with it.

The Financial sector is the largest sector in our market, as it represents over 30 per cent of the market and this year it has been the best performing sector up over 25 per cent, while Materials is the second largest sector and is down over 5 per cent. History shows that the best performing sector one year is generally not the best sector the following year, so Financials are unlikely to perform as well in 2022.

While I indicated in my previous report that the market could have fallen last week, the fact it has risen is a good sign because if it continues to rise this week, I am confident it will trade up past the all-time high before the end of the year.

For now, good luck and good trading.

Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of the award winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good book stores and online.

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