CRYPTO CLUSH

Early this morning, the cryptocurrency market has been witnessing downfalls as Bitcoin and other cryptocurrencies experienced notable declines. For instance, Bitcoin dropped in the past 24 hours, settling at below the $65,500 mark as of 8:00 AM CST. This decline is influenced by several macroeconomic factors, including high bond yields and a stronger dollar, which dampen expectations for interest rate cuts from the Federal Reserve. The DXY dollar index remains steady at around 105, close to its highest level this year, adding pressure on the crypto market. In addition, J.P. Morgan analysts have noted in a research report that Bitcoin’s annualized price volatility decreased to 29% in the first half of the month from 51% in May, indicating a shift in market dynamics. Moreover, Ether, which is the second-largest crypto, also fell and it is trading just below the $4,000 mark. Nonetheless, it is worth remarking that Ether remains up 10% over the past month, showing some resilience. Meanwhile, smaller cryptocurrencies, altcoins, also faced steeper drops, with Solana falling 7%, Cardano declining 7.4%, and Dogecoin dropping 8.7%.

POSSIBLE EARLY DEBUT

According to Bloomberg ETF experts, spot Ethereum exchange-traded funds are now expected to start trading a few days earlier than initially predicted, with July 2 being the most likely day. Bloomberg experts revealed this revised timeline after discussions between ETF issuers and the Securities and Exchange Commission (SEC). It has been noted that SEC had given only minor feedback on the S-1 registration statements and requested responses within a week, indicating that approval could be finalized just before the July 4 holiday. This follows SEC Chair Gary Gensler’s recent statement to U.S. senators that the approval might come this summer. This is considered as a positive sign and although Ether has been experiencing losses in the past 12 days, the ProShares Ether Strategy ETF (EETH), which seeks to mirror ether’s performance through futures contracts, was up by almost 4% earlier today.

AI FRENZY

The excitement surrounding artificial intelligence (AI) continues to electrify Wall Street as recently, experts have been upgrading their S&P 500 forecasts, attributing this optimism to how investments in generative AI are driving earnings growth for major tech companies. Some experts have raised their year-end target from 4,750 to 6,000, asserting that the AI revolution is just beginning. In addition, Goldman Sachs also increased their target from 5,200 to 5,600, citing improved earnings expectations for tech giants like Alphabet, Microsoft, Amazon, Meta, and Nvidia. Citi similarly adjusted their target from 5,100 to 5,600, crediting the outsized performance of large-cap tech stocks. Moreover, it is impressive to highlight that more than two-thirds of the S&P 500’s 15% gain this year is due to seven prominent stocks: Tesla, Apple, Alphabet, Microsoft, Amazon, Meta, and Nvidia; and if this momentum persists, Goldman Sachs predicts the S&P 500 could reach 6,300 by year-end. Nevertheless, not all believe this as experts from JPMorgan maintain a bearish stance with a target of 4,200, citing high stock valuations. However, other experts point out that such high valuations can be sustained, which might translate into further market gains.

RISING GOLD RESERVES

Based on a report by the World Gold Council, central banks around the globe are expected to increase their gold reserves over the next year due to growing skepticism toward the U.S. dollar. More than 80% of reserve managers plan to boost their gold holdings, with nearly 30% of central banks, including those from advanced economies, aiming to add to their reserves. Both emerging markets and advanced economies view gold favorably, driven by the need to mitigate risks amidst global political and economic uncertainty. Thus, despite recent high gold prices, central banks continue to see it as a strategic asset, with significant purchases recorded over the past two years.

SKYROCKET PRICES

Oil prices have jumped close to $2 a barrel, hitting their highest levels in over a month as investors became more optimistic about future demand. U.S. West Texas Intermediate crude climbed by $1.88, or 2.4%, to finish at $80.33 a barrel, while global benchmark Brent crude rose by $1.63, or 2%, to settle at $84.25 a barrel. This upward trend comes after encouraging reports from OPEC+, the International Energy Agency, and the U.S. Energy Information Administration, which boosted confidence in stronger oil demand for the latter half of the year. OPEC+’s signals that they might adjust or pause supply increases based on market conditions also supported the price rise. In addition, strong manufacturing investment in China, growing by 9.6% in the first five months of the year, further fueled anticipation of higher oil demand, and this optimism led investors to buy back petroleum, reinforcing the price gains. Furthermore, heightened geopolitical risks, particularly fears of escalating conflict in the Middle East after increased hostilities between Israel and Lebanon’s Hezbollah, added a premium to oil prices.