ETH DECLINE AGAINST BTC
The price ratio between Ether (ETH) and Bitcoin (BTC) has been steadily declining, with ETH/BTC hitting a three-year low, and this downward trend has been mainly been driven by a decrease in demand for ether exchange-traded products and ongoing uncertainty surrounding Ethereum’s position in the cryptocurrency market. In addition, the recent approval of bitcoin ETFs in the U.S. has bolstered bitcoin’s reputation as a store of value, while emerging layer-1 competitors like Solana have captured a larger market share, further diminishing Ethereum’s dominance. Moreover, negative sentiment towards Ether, stemming from both within the crypto community and external sources, is also contributing to its decline. Additionally, Ether has recently transitioned from a deflationary to an inflationary supply model, marking a significant shift in its economic fundamentals. Overall, these factors converge to create a challenging environment for Ethereum’s native token, which might cause concerns among investors and analysts about its future trajectory.
SHINING BRIGHT
Silver has emerged as the star performer in the precious metals market this year, overshadowing even gold’s remarkable rally. The white metal has surged by nearly a quarter in 2024, surpassing gold and positioning itself as one of the best-performing commodities of the year. Despite this surge, silver remains relatively affordable, with an 80-to-1 ratio compared to gold, higher than the 20-year average of 68. Thus, while gold has hit record highs driven by central bank purchases and retail interest in China, silver has also experienced a boost. Moreover, despite limited interest in silver-backed exchange-traded funds, physical sales, especially at outlets like Singapore-based dealer Silver Bullion Pte, have been on the rise. The shift in focus towards silver is evident as even traditional gold buyers are considering investing in silver first, waiting for the price ratio between the two metals to rebalance. Silver’s price trajectory is heading towards the $30 mark, a level it briefly surpassed in 2021, and may reach its highest point in over a decade if it breaks $30.1003. Silver’s dual value as a financial asset and an essential component in industrial applications, particularly in clean energy technologies, has been a driving force behind its surge, and with strong growth in the solar energy sector, demand for silver is projected to hit record levels in the coming year. The market for silver is currently in a deficit for the fourth consecutive year, with industrial users seeking to secure supplies from dwindling global inventories. Looking ahead, the supply of silver may tighten further due to increasing industrial demand, potentially leading to supply constraints, and as a result, investors are beginning to show interest in silver.
DEBT SOARING
Keeping up with credit card debt is becoming more challenging for many Americans, as according to the Federal Reserve Bank of New York, the total credit card debt in the U.S. has reached $1.12 trillion, with the average consumer owing $6,218. This represents an 8.5% increase from the previous year. Rising prices and interest rates have squeezed household budgets, particularly affecting young adults who are juggling growing expenses like rent, student loans, and auto payments. As a result, delinquency rates on credit cards have risen, with serious delinquencies reaching levels not seen since 2010. Experts warn that credit cards, with an average interest rate of 20.66%, can be a costly form of borrowing. To avoid falling further into debt, it is recommended to pay more than the minimum amount due, consider transferring balances to interest-free cards, or explore additional income sources to accelerate debt repayment and avoid accumulating excessive interest charges.
LOOSING RELEVANSE
The failure of Silicon Valley Bank in 2023 was a pivotal event that revealed the financial vulnerabilities stemming from increasing interest rates, and experts have highlighted the potential for a significant decline in bank asset values, suggesting a shift towards banks playing a lesser role in the financial system. Post-pandemic, banks face new risks, including those related to commercial real estate loans, particularly affecting midsize banks with substantial exposures, and as tighter regulations loom, there may be a trend towards industry consolidation and a rise in nonbank lending options. Thus, although the banking sector is generally stable, there are concerns about hidden solvency issues similar to those that led to SVB’s collapse. Furthermore, regulators are actively monitoring the situation to prevent further crises, but it is worth noting that some experts predict a future scenario where smaller and midsize banks face contraction, leading to a potential market shift towards debt securities and private credit as alternative sources of lending.
INTERNATIONAL NEWS
In a move to support the struggling Chinese property market, President Xi Jinping’s government has introduced new measures aimed at boosting sales and easing concerns about economic growth. These efforts include relaxing mortgage rules, encouraging local governments to purchase unsold homes, and providing central bank funding for the conversion of excess properties into affordable housing. However, while these steps have initially caused a surge in developer shares, doubts remain about the effectiveness of the plan in addressing the housing crisis. Therefore, although there was a positive market response, analysts question whether the funding provided will be sufficient to address the imbalance in supply and demand. Moreover, as China works to bolster its economy amidst various challenges, including trade tensions and soaring youth unemployment, the success of these latest measures will depend on a careful balance of financial support and policy adjustments.
