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MARCH 5, 2024

PRICE VOLATILITY

The cryptocurrency market saw a sharp decline in the value of futures contracts amounting to over $550 million in the past 24 hours, triggered by bitcoin’s volatile price movement from $68,000 to as low as $64,500 before recovering. This prompted profit-taking and led to significant losses for investors who had placed long bets on higher prices and shorts betting on lower prices. Ethereum also experienced a brief surge, reaching $3,700 before facing a market correction. The unexpected plummet in futures values for dogecoin, shiba inu, and pepecoin also contributed to the overall market uncertainty. Traders are closely monitoring liquidation events, as they often indicate potential turning points in market trends. Despite the recent market fluctuations, there remains optimism regarding bitcoin’s potential to surpass its all-time high of $69,000, while the anticipation of the approval of an ether exchange-traded fund in May adds to the optimistic sentiment.

MICROSTRATEGY’S MOVE SHAKE MARKET

MicroStrategy, known for holding the most bitcoins among listed companies, saw its stock drop after revealing a plan to raise capital for buying more bitcoins through convertible notes. The move comes as the cryptocurrency nears its record high and as companies take advantage of high interest rates through such bond deals. With a total of 193,000 bitcoins bought at an average price of $31,544 each, MicroStrategy’s holdings are now worth nearly $13 billion at the current bitcoin value of $66,850. The company’s valuation sits at $22.64 billion, and its strategy of holding onto crypto assets has drawn attention, with analysts speculating on the impact of its debt-fueled investment approach. With other companies also investing in bitcoin, public firms collectively hold around $18.5 billion worth of the cryptocurrency.

GLITTERING GOLD

Gold prices have increased past their highest levels driven by uncertainty related to the Federal Reserve’s policies and increasing geopolitical tensions. As of 8:00 AM CST, spot gold was trading at $2,145.60 per ounce. This surge in gold prices has caught experts off guard, possibly influenced by a combination of market momentum and investors shifting from stocks to gold in anticipation of a potential market downturn. Nonetheless, it is worth noting that although speculation about a rate cut by the Federal Reserve has supported the upward trend in gold prices, some analysts are cautious and predict a slight price dip soon. Yet, gold remains as the safe investment choice emphasized by ongoing global risks, like heightened tensions in the Middle East and economic struggles in China. The precious metal is currently trading higher than silver, platinum, and palladium, which have been displaying mixed performances as silver remains mostly stable, while platinum and palladium are slightly lower in value.

HOLIDAY QUARTER SUCCESS

Target has reported better-than-expected revenue and earnings for the holiday quarter, leading to an 8% rise in premarket trading. However, the company foresees another year of weak sales, with a decline in comparable sales for the third consecutive quarter. Target expects sales to decrease by 3-5% in the current quarter, with adjusted earnings projected between $1.70 and $2.10 per share. Nevertheless, despite facing challenges in discretionary spending, the company saw progress in managing inventory and reducing costs, leading to improved profits. CEO Brian Cornell emphasized the company’s commitment to growth, with plans to introduce a membership program and prioritize same-day delivery, and although sales dropped in stores and online, Target’s margins improved compared to the previous year. The company’s total revenue increased by nearly 2%, driven by an additional week of sales.

INTERNATIONAL NEWS

At a recent meeting of Chinese leaders, Premier Li Keqiang said that the country’s stock market is expected to grow by 5% in 2024, nonetheless this came as a disappointing projection as investors were hoping for a bigger boost to the economy. As a result, there were mixed reactions in the market: Hong Kong stocks went down while stocks in mainland China went up, possibly because the government was buying them. In addition, there were also concerns about policies affecting the struggling real estate sector and tensions between China and other countries. Furthermore, the effects of the meeting were also felt outside of China, with assets like the Australian dollar and commodity prices (including crude oil, copper and iron ore) being impacted. China may need to make monetary policies more relaxed to help the economy grow, but this uncertainty is making investors nervous as they wait to see what the government will do next.

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