RESILIENT DESPITE DECLINES

The past few days have not been successful for Bitcoin, as the crypto is currently experiencing a price correction fueled by challenging macroeconomic conditions, prompting a 3.3% decline in the indicator of liquid digital assets, CoinDesk 20, which is now trading at 2,125. Nonetheless, despite this, it is worth noting that Bitcoin remains the dominant cryptocurrency, other layer-1 tokens and altcoins have seen greater losses. Tokens like Solana (SOL), Avalanche (AVAX), Cardano (ADA), Filecoin (FIL), Render (RNDR), and Fetch.AI’s FET token have all reported significant declines in the past week. This has led to an increase in Bitcoin dominance, currently standing at 55.19%, reflecting its influence on altcoin trends. Moreover, with the halving event just round the corner, interest in Bitcoin is at an all-time high, surpassing interest in other major cryptocurrencies like Ethereum.

STRENGTH CONTINUES

Based on the latest report from the Labor Department’s Bureau, the number of Americans filing for new unemployment benefits remained unchanged at 212,000 last week, indicating continued strength in the labor market. This figure has stayed within the range of 194,000 to 225,000 throughout the year, defying expectations of a rise. This consistent jobless claims data reflects a strong and resilient labor market, possibly leading to delays in rate cuts as the economy remains stable and labor market conditions tighten. However, although the Beige Book report acknowledged a slight rise in employment, it also highlighted the persistent labor shortages in certain sectors. Moreover, Fed Chair Jerome Powell has refrained from indicating a specific timeline for rate adjustments, and as of now the overall sentiment is uncertain.

BOND MARKET JITTERS

The Treasury market is on the brink of a significant selloff that could send 10-year bond yields soaring back to 5% as experts at Vanguard warn that breaching the critical 4.75% threshold may trigger widespread selling as investors rush to cut losses. Let’s remember that that last year, due to the anticipation of the Federal Reserve cutting interest rates swiftly, investors piled into Treasuries, however, data indicating a strong U.S. economy, as well as a persisten inflation, has caused a reversal in market sentiment. Consequently, sellers are now rushing to limit losses as they unwind their positions, and this situation has led to uncertainty and volatility, with many still holding onto optimistic positions that need to be resolved to avoid a chaotic move towards 5%.

AI EARNINGS BUZZ

As Apple, Microsoft, Nvidia, and other tech giants gear up to release their respective earnings reports, all eyes are on the growth potential driven by generative AI technology. With Nvidia poised for significant market outperformance, the market also closely watches for Apple’s performance amidst challenges in antitrust and sales. Moreover, as the generative AI trend continues to shape Wall Street, investors are looking for tangible results and meaningful contributions to overall revenue and profit margins. It is worth noting that despite high growth numbers of companies such as Nvidia, investors are eager to know if tech giants have the ability to sustain such momentum. Additionally, investors will keep a close eye on Meta and Alphabet’s earnings as these will give insights into the digital advertising market trend, and how successful it has been.

INTERNATIONAL NEWS

The British pound has strengthened in response to the postponement of expected interest rate cuts by the Bank of England (BOE). Recent data showed less decline in wage growth and a slight decrease in consumer price inflation, prompting analysts to push back expectations for a rate cut by the Bank of England. This shift in expectations has led the pound to extend gains as after hitting a five-month low on Tuesday, the pound has increased to $1.24755, marking two consecutive days of positive momentum. Moreover, despite uncertainties surrounding geopolitical tensions and mixed UK data, the pound remains relatively stable against the euro. Furthermore, Bank of England Governor Andrew Bailey’s remarks on declining inflation aligned with the central bank’s targets, although it is worth highlighting that market interpretation may have been exaggerated.