April 16, 2024

La Ronge Northerner

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Bitcoin is still struggling to gain acceptance

Bitcoin is still struggling to gain acceptance

An attendee wears a T-shirt bearing the Bitcoin logo during the Bitcoin 2023 conference, in Miami Beach, Florida, US, May 19, 2023.

Marco Bello Reuters

This report is from today’s CNBC Daily Open, the new newsletter for international markets. CNBC Daily Open keeps investors informed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Disappointing data led to stagnant markets
US markets were closed on Monday for Labor Day. Asia-Pacific markets fell on Tuesday after regional economic data was downbeat. China’s Shanghai Composite Index lost 0.72% as the country’s services sector posted its slowest expansion in eight months, according to a Caixin survey. South Korea’s Kospi index fell 0.13% after the country’s inflation rose 3.4% year-on-year, more than 2.3% in July.

G20 presidential campaign
India’s current G20 President. Normally this role is passive, but under Indian Prime Minister Narendra Modi, the G20 presidency has turned into a sustained campaign to promote India. However, the lack of a joint G20 statement – due to objections from Russia and China – threatens India’s credibility as a major geopolitical player and Modi’s domestic messaging.

Overinvestment in China
China is “investing too much,” said Gitanya Kandhari, managing director and deputy chief investment officer at Morgan Stanley. This means that the country’s economy is burdened with too much debt and an oversupply of goods, as is the beleaguered real estate sector. In contrast, Kandari said, India suffers from a lack of investment, giving its economy and markets investment opportunities.

Chinese electric cars invade Europe
The IAA show in Munich, Germany is one of the most prominent car shows in Europe. But the most notable exhibitors there were Chinese electric car companies looking to expand their presence on the continent. Companies such as Leapmotor, BYD and Xpeng have planned to expand into the eurozone, posing a challenge to incumbents such as BMW, Ford and Mercedes.

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[PRO] Where to invest $50,000 now
September is historically the worst month for stocks. So where should investors put $50,000 this month? CNBC Pro’s Weizhen Tan asked portfolio managers and other investors for their advice — and reached out to the pros who gave their advice in June to find out what part of their investment strategy — if any — they would change.

If charting the course of interest rates in the US economy is like “navigating the stars under an overcast sky,” as Federal Reserve Chairman Jerome Powell said in his Jackson Hole speech, then forecasting the movement of stocks is like doing so when the stars are out. As for predicting the price of Bitcoin? Add a blindfold to the intrepid navigator.

Let’s take a look at two predictions made earlier this year.

On the optimistic end of the spectrum is Jeff Kendrick, head of cryptocurrency research at Standard Chartered, who wrote in an April note that Bitcoin’s value could jump to as much as $100,000 by the end of 2024.

On the other hand, long-time bitcoin supporter Chamath Palihapitiya, who two years ago said bitcoin had replaced gold and would rise to $200,000, has changed his tune. “Cryptocurrencies are dead in America,” Palihapitiya said.

What do the numbers tell us? As of press time, Bitcoin is trading at $25,699. In January. On January 1, its price was $16,606, so Bitcoin is up about 55% this year. This suggests that Bitcoin has legs. But if we look at the long term, the current price of the cryptocurrency is about 62% lower than its all-time high of $68,990 reached in November 2021.

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Adding to the confusion, Bitcoin sometimes tracks the movement of stocks because it is seen as benefiting from a booming economy; Bitcoin is sometimes traded inversely with stocks because some consider it a safe haven in times of uncertainty. The story here then is that Bitcoin is highly volatile, and it is impossible to prove or disprove either prediction, at this point.

However, investors are bullish on Bitcoin because a US court recently sided with Grayscale in a lawsuit against the Securities and Exchange Commission, which rejected the company’s request to convert its Bitcoin fund into an ETF. This means that major Bitcoin ETFs are on the rise, allowing retail investors to trade the cryptocurrency without actually owning it. Bitcoin’s price rose more than 7% when the news broke last Tuesday.

But the SEC also delayed a decision on Bitcoin ETFs, halting Bitcoin’s short-term bullish charges. In August, Bitcoin fell by 10%.

And so it is.