A Bitcoin logo on screen in Hong Kong, China, on Tuesday, December 5, 2023.
Paul Young | Bloomberg | Getty Images
The SEC approves
A highly anticipated and controversial decision finally arrived on Wednesday, as the Securities and Exchange Commission allowed the creation of Bitcoin exchange-traded funds in the United States that will give ordinary investors access to the world’s oldest and most popular cryptocurrency. The first funds are scheduled to begin trading on Thursday. However, the price of Bitcoin has fallen by about 2%.
Wall Street closed higher
US stocks ended Wednesday’s trading session higher as investors awaited the start of earnings season later in the week as well as inflation data. The Standard & Poor’s 500 Index closed up 0.57%, while the Dow Jones Industrial Average added 0.45%. The Nasdaq Composite Index rose 0.75%. The jump in shares of Intuitive Surgical and Lennar boosted markets. The European Stoxx 600 index closed lower for the second day in a row, down 0.17%.
Layoffs at Amazon
In a memo sent to employees, Amazon said it would cut jobs at its Prime Video and MGM Studios divisions. The letter sent to employees says the cuts were to “prioritize our investments for the long-term success of our business.” It also arrived on the same day that Amazon’s Twitch streaming unit announced it would cut 500 jobs.
Inflation report awaited
December inflation data, due Thursday, may challenge the market’s perception of when the Fed will start cutting interest rates and by how much. Consumer prices likely rose last month, with Dow Jones forecasts calling for a 0.2% rise in the last month of 2023, and a 3.2% increase for the full year.
(Pro) What are the graphs showing?
Wall Street indices started the year lower and history suggests there may be more volatility as the year continues. After a stunning rally at the end of last year on the back of the Fed’s dovish tone, investors are now concerned that stocks were overbought.
Bitcoin just got its biggest stamp of approval, giving the crypto bros their strongest bragging rights yet.
The SEC’s decision to approve the creation and trading of Bitcoin ETFs will allow for better adoption of the world’s oldest cryptocurrency by mainstream finance.
Grayscale Bitcoin Trust, which owns about $29 billion worth of the cryptocurrency, will likely be converted into an exchange-traded fund after the decision, while Wall Street majors BlackRock and Fidelity will also enter the field.
“Today’s news is likely the biggest for Bitcoin since its launch, but the approval of spot ETFs should not be viewed in isolation, given the timing of the upcoming April halving that reduces Bitcoin’s supply and historically launches a new bull market. Both events combined. “It could send Bitcoin to $100,000 in 2024,” said Anthony Trenchev, co-founder and managing partner of digital asset firm Nexo.
Trenchev also noted that “there is a temptation to say that the approval of spot Bitcoin ETFs is a rumor-buying and news-selling event.”
The decision comes one day after an official SEC social media account falsely announced that a Bitcoin ETF had been approved for trading. The Securities and Exchange Commission confirmed that the account had been hacked.
Later in the day, investors will also shift their focus towards consumer price data which is expected to show inflation rising in the last month of 2023.
This may raise questions about whether markets are getting ahead of themselves in anticipating interest rate cuts by the Fed. There is still a wide gap between what the US central bank has indicated in terms of easing its monetary policy and what the market expects.