Can Crypto Lead the Risk-On Rally?

The Daily Breakdown takes a closer look at the crypto market, as it continues to hold up despite rising geopolitical and trade-war tensions.

Before we dive in, let’s make sure you’re set to receive The Daily Breakdown each morning. To keep getting our daily insights, all you need to do is log in to your eToro account.

Wednesday’s TLDR

Smaller crypto is taking charge
JPMorgan looks for support
Delta set to report earnings

What’s Happening?

Despite increasing trade tensions and tariff worries, crypto continues to hold up. More than that, the group is actually performing pretty well. 

Bitcoin is leaning on a potential breakout, but it’s not doing the heavy lifting right now. To some extent, neither is Ethereum. 

Instead, it’s more broad. 

Stellar, Cardano, Aave, Uniswap and others are starting to gain momentum — and we’re still keeping a close eye on Ripple to see if it can complete its breakout attempt. 

There’s no guarantee crypto will continue to hold up. But if it can and if the rally broadens out? Then it could be a solid second half for this asset class. 

Note: For investors who can’t trade or aren’t comfortable trading cryptocurrencies outright, they can consider ETFs for BTC and ETH. On the BTC front, IBIT remains the largest ETF by assets, and it also supports options trading.

Want to receive these insights straight to your inbox?

Sign up here

The Setup — JPMorgan

Last week, JPMorgan shares hit a record high. Over the next two days though, it stumbled almost 5%. The pullback landed it right at its prior all-time high and the rising 21-day moving average. 

For a stock that’s rallied almost 50% off its April lows, a little profit taking was due — particularly as the overall financial sector took a rest yesterday, dipping about 1%. 

Now though, bulls want to know if the stock will find support and bounce from here. 

Active investors might consider a dip-buy in this name if they believe it can rebound from the recent lows. For some, that may make call options an attractive play (more on that below). 

JPMorgan reports earnings next Tuesday. While that may give investors a little optimism ahead of the event, it’s key to remember that the outcome is unknown. Shares could fly higher on good results or sink on a disappointing report. 

For now, bulls are hoping support comes into play and JPM can bounce. But if it breaks below $280, more selling pressure could ensue ahead of earnings. 

Options

One downside to JPM is its share price. Because the stock price is so high, the options prices are incredibly high, too. This can make it difficult for investors to approach these companies with options. 

In that case, many traders may opt to just trade a few shares of the common stock — and that’s fine. However, one alternative is spreads. 

Call spreads and put spreads allow traders to take options trades with a much lower premium than buying the calls outright. In these cases, the maximum risk is the premium paid. 

Options aren’t for everyone — especially in these scenarios — but spreads make them more accessible. For those looking to learn more about options, consider visiting the eToro Academy.

What Wall Street Is Watching

DAL

Delta Air Lines will report earnings on Thursday before the open. Despite some lumpiness in travel trends (as Delta noted last quarter), the stock has done great. Shares are up ~41% since it last reported earnings. Can it continue higher? Check out Delta’s financials. 

UBER

Did someone hail a rally? Uber stock has been on fire, notching another record high on Tuesday. Bulls are hoping for a third straight week of gains, as the stock is already up more than 16% in that stretch. For the year, shares are up more than 60%. Check out the charts for Uber.

Disclaimer:

Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.