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APRIL 9, 2024

BULL MARKET PEAK?

Recent data from Glassnode, a respected blockchain analytics firm, reveals that the percentage of Bitcoin that has remained inactive for at least a year has dropped to its lowest level since October 2022. On April 8, around 65.84% of the total circulating supply of 19.67 million BTC had not been moved for over a year, representing a decline from over 70% earlier in the year when several ETFs were launched in the U.S. Similarly, the proportion of Bitcoin untouched for at least two years also decreased, from 57.4% to 54%. This decline indicates that investors may be capitalizing on profits following the significant price surges of Bitcoin, which has surged by 148% since April last year and by 50% since the debut of ETFs, with the current price sitting above the $70,000 mark. Moreover, the decrease in dormant Bitcoin holdings could imply a potential end to the ongoing bull market, as suggested by MacroMicro, nevertheless, historical trends show that bull markets often peak when inactive Bitcoin supply hits a low and begins to rise again.

LESS HOPEFUL

Traders are showing less confidence in the Federal Reserve’s plan to cut interest rates this year despite signs of strength in the U.S. economy as expectations for rate cuts have decreased significantly, with the Fed anticipated to lower rates by 75 basis points in 2024. Expectations for rate cuts have dropped to around 60 basis points for this year, with a first 25 basis point cut in June at a 49% likelihood. This is because investors are concerned about potential inflation, leading to a rise in Treasury yields. Moreover, policymakers are being cautious and are waiting for inflation to meet the Fed’s 2% target before deciding on rate cuts. Furthermore, let’s remember that many policymakers, such as Chair Jerome Powell, are advocating for a careful approach to rate adjustments given the current economic indicators, which contributes further to the uncertainty about what will happen regarding interest rates in the upcoming months.

SET FOR STABILITY

According to Barclays, the US corporate bond market is expected to maintain its current high valuations for the foreseeable future, drawing parallels to the period from 2004 to 2006. The stable macroeconomic environment, strong corporate financial health, and ongoing Federal Reserve higher rates contribute to this outlook. In addition, it is worth noting that despite some market risks, including geopolitical tensions and uncertainties surrounding interest rate changes, the overall demand for corporate bonds remains robust. Factors such as solid corporate earnings and investors seeking higher yields support the stability of the market. Moreover, the favorable conditions in the market may keep the spread between different types of bonds (investment-grade) relatively tight for some time. However, as economic conditions change, there is a chance that these spreads may widen later in the year.

STILL TIME TILL DEADLINE

As the tax deadline approaches, individuals have the opportunity to benefit from a deduction by making a pretax contribution to an Individual Retirement Account (IRA) if they meet the eligibility requirements. In 2023, the IRA contribution limit was $6,500, increasing to $7,000 for 2024 with an additional $1,000 for investors aged 50 and older. Contributions for the 2023 tax year can still be made before April 15 to qualify for a deduction, provided the deposit is designated for that specific year. It is worth noting that eligibility for a pretax IRA deduction is determined by factors such as filing status, modified adjusted gross income, and participation in a workplace retirement plan. Moreover, it is also important to be aware that while contributing to an IRA may offer tax benefits, rules and limitations should also be considered.

INTERNATIONAL NEWS

Corporate loan demand in the euro area significantly decreased in the first quarter due to high borrowing costs, with expectations of interest rate cuts not happening until later in the year, according to the European Central Bank’s latest report. The survey revealed that credit standards for businesses in the 20-nation bloc have become slightly stricter while there was a slight easing in mortgage demand for the first time since late 2021. The decline in loan requests from companies was attributed to higher interest rates, decreased investments, and lower consumer confidence, which contradicted banks’ earlier predictions of stabilization. The ECB is closely monitoring this data to decide on potential interest rate adjustments, with expectations of rate cuts beginning in June as inflation decreases, nonetheless, there is still uncertainty if such expectations will materialize as the euro area has seen minimal growth in the past year.

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