Bitcoin experienced a rally of over 14% in the past week, briefly reaching a peak of $35,000 on Tuesday. This marks its highest level since May 2022, before settling at around $34,000. Notably, Bitcoin saw a 30% increase in value over the span of two weeks.
The driving force behind this rally is the hope that the Securities and Exchange Commission (SEC) will approve the first spot Bitcoin exchange-traded funds (ETFs). However, there may be additional factors at play. James Butterfill, the head of research at CoinShares, a digital-asset investment manager, explains that as the broader stock market faced difficulties, Bitcoin has benefited and increased in value. Butterfill acknowledges the optimism surrounding the potential ETF approval but also highlights that Bitcoin’s correlation to traditional stock indices like the S&P 500 and Nasdaq has declined, while its connection to gold prices has strengthened. This suggests that traders are starting to view Bitcoin as a safe haven asset.
When conflict arose in the Middle East, traders turned to gold as a traditional safe haven. While Bitcoin has often been referred to as “digital gold,” it hasn’t always demonstrated the same behavior as a haven asset. However, this may be changing. Butterfill points out that Bitcoin has responded positively to increased geopolitical risk since 2015.
Coinbase Global, a prominent player in the cryptocurrency market, saw a 5% decrease in value during the week amidst a broader tech selloff. Although a spot ETF won’t be traded on Coinbase, it offers custody services and stands to profit from any developments that attract institutions and traders. CoinMarketCap, a data provider, observed a significant increase of almost 200% in Bitcoin trading volumes across exchanges on Wednesday.
Last Week Market Overview
The government bond markets experienced heightened volatility, causing the yield on the 10-year bond to drop below 5%. Despite decent earnings, tech stocks suffered significant losses. The US economy displayed strong growth of 4.9% in the third quarter. After multiple attempts, the GOP finally selected Louisiana Rep. Mike Johnson as the speaker. By the end of the week, the Dow industrials fell by 2.14%, the S&P 500 lost 2.53%, and the Nasdaq Composite declined by 2.62%. As a result, both the S&P 500 and Nasdaq entered correction territory.
China’s announcement of an investigation into Foxconn’s taxes has raised concerns. Terry Gou, the founder of the company and holder of a 12.5% stake, is also running for president of Taiwan. The UAW has reached a tentative deal with Ford, which both Stellantis and General Motors have expressed their intention to match. In a recent report, Reuters revealed that Nvidia is developing PC chips using Arm technology, posing a threat to Intel. Microsoft has outperformed in cloud earnings, while Alphabet has struggled with slowing cloud revenues. Notably, Meta Platforms has more than doubled its profits.
Chevron has made a significant move by acquiring Hess for $53 billion, all in stock. Roche has also announced its acquisition of immunology company Televant Holdings from Roivant Sciences and Pfizer, in a deal worth $7.1 billion. It should be noted that Roivant was founded by GOP presidential candidate Vivek Ramaswamy. Jana Partners has called for the sale of Frontier Communications, while Shipper Textainer Group has accepted a $2.1 billion going-private offer from Stonepeak.
Byron Wien, a respected strategist who has worked at Morgan Stanley, Pequot Capital, and Blackstone, sadly passed away at the age of 90.
The Bureau of Labor Statistics will release the Job Openings and Labor Turnover Survey for September. In August, there were 9.61 million job openings, a decrease from the peak of just over 12 million in March 2022, but still well above historical averages.
The Federal Open Market Committee (FOMC) will announce its monetary-policy decision. It is widely anticipated that the FOMC will leave the federal-funds rate unchanged at 5.25%-5.50%. However, traders are pricing in a one in five chance of a quarter-percentage-point interest rate hike at the FOMC’s last meeting of the year in mid-December.
Apple will be reporting its quarterly results. In the past week, four of the so-called Magnificent Seven big tech companies released earnings and experienced an average decline of 1% in stock value on the following trading day. Consequently, the tech-heavy Nasdaq Composite fell by 2.6% for the week.
The Bureau of Labor Statistics will release the jobs report for October. The consensus estimate is that the economy will have added 175,000 jobs, following an increase of 336,000 in September. The unemployment rate is expected to remain unchanged at a historically low level of 3.8%.