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FEBRUARY 22, 2024


Despite hitting multi-month highs earlier in the week, the cryptocurrency market saw a slight decline as Bitcoin dropped to as low as $50,700, while ether fell just under $2,890. The slump also impacted other major cryptocurrencies, such as Polygon’s MATIC, Cardano’s ADA, and XRP, as well as the CoinDesk 20 Index (CD20), which experienced a 1.2% decline. Nevertheless, it is worth noting that despite the setback in the overall crypto market, there was a bounce back to a positive momentum as Bitcoin’s and Ether’s prices were $51,128.78 and $2,942.45, respectively as of 8:00 AM CST. Moreover, it is believed that the recent crypto market turmoil was caused by the anticipated report of Nvidia’s fourth-quarter earnings, which resulted in the liquidation of over $200 million in crypto futures. This was mainly due to long positions, as traders bet on higher prices. However, some traders believe that this sell-off was expected and not indicative of a broader market trend, with market participants cautiously predicting the start of the alt season, based on the belief that Bitcoin’s market share dominance needs to fall for the altcoin season to truly begin.


Nvidia’s stock had risen as a response to its latest earnings report, which did not disappoint. The robust financial results reaffirmed Wall Street’s confidence in the potential of its artificial intelligence technologies. In addition, the chipmaker company also provided guidance that exceeded expectations, driven by increased AI spending at major clients such as Microsoft Corp. and Meta. Notably, Nvidia’s consistent surpassing of high expectations has made its shares more affordable based on their price-to-earnings ratio, as noted by Morgan Stanley analyst Joseph Moore. He emphasized the sustained growth in AI technology, highlighting the remarkable strength of AI demand. Moreover, Nvidia is expected to surpass Meta Platforms Inc.’s historic stock-market session performance, just three weeks after Meta set the record, as the chipmaker’s shares have increased by up to 15%, which means that its market capitalization will potentially increase by nearly $250 billion. This would mark the largest single-session increase in market value in history, overtaking Meta’s previous $197 billion gain.


In mid-February, the number of Americans filing for unemployment benefits decreased to 201,000, the lowest in five weeks, indicating a strong U.S. labor market. This drop in initial jobless claims suggests that fewer individuals are losing their jobs and seeking unemployment benefits. Moreover, while the decline might have been influenced by an unusually large decrease in jobless claims in California, economists had predicted a slightly higher figure. Despite this, the data indicates that the labor market in the U.S. is resilient and shows few signs of weakening even as interest rates rise. In addition, the data reveals that overall unemployment levels are at a remarkably low level from a historical perspective, with initial jobless claims ranging from 189,000 to 227,000, reflecting a robust labor market, and this is expected to support consumer spending and keep the economy growing, possibly preventing a recession until the Federal Reserve adjusts interest rates later this year, as anticipated.


During the Federal Reserve’s recent meeting, most officials expressed concerns about cutting interest rates too soon and risking damage to the economy, rather than keeping rates high for too long. Officials emphasized the need for more evidence that inflation is firmly on track before considering any adjustments, with some worrying that progress could stall. The meeting indicated that borrowing costs are likely to remain high for the foreseeable future, even though officials acknowledged that interest rates may have peaked. Therefore, the exact timing of a potential rate cut remains uncertain, however, it is worth noting that there was growing support among policymakers for slowing the pace at which the Fed reduces its asset portfolio as part of easing policy. While most participants highlighted the risks of acting too quickly to ease policy, only a “couple” of officials pointed to the risks of waiting too long to cut rates. Moreover, let’s remember that economic data has come in stronger than expected since the last meeting, which supports the Fed’s cautious approach and indicates a preference to start cuts later, even if it means accelerating them subsequently.


Chinese stocks have been on a positive streak for the past eight sessions, with the CSI 300 Index closing 0.9% higher than the previous session and the Hang Seng China Enterprises Index experiencing a 2% surge. This notable performance is attributed to the array of measures implemented by Beijing to bolster the struggling $8.7 trillion stock market. To sustain the positive momentum, Beijing has taken a proactive approach by imposing restrictions on equity net sales and has seen preliminary success with foreign funds investing in onshore shares. Furthermore, efforts to draft a law to safeguard the property rights of private companies and entrepreneurs demonstrates a commitment to administering a supportive environment for the market. Nonetheless, despite these encouraging developments, a cautious stance is being observed amidst rising short interest in Chinese and Hong Kong equities, reflecting lingering apprehensions among investors, thus, the long-term trajectory of the market continues to be dependent on underlying fundamentals rather than temporary corrective actions.

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