Crypto News: Marktupdate February 2024
Recently, a notable development has occurred: there was a record inflow into Bitcoin Exchange-Traded Funds (ETFs) that were approved last month. This milestone reflects the ongoing growing interest from both institutional and retail investors in the digital currency market. Additionally, Bitcoin is once again on its way to an all-time high price, having achieved the largest monthly close in its history. Following this, Callisto Capital had an excellent month with strong returns for our investors. Below is a more detailed overview of the most important developments in the financial markets for February.
February 2: Nonfarm payrolls rise more than expected
In January, the U.S. labor market surprised with a strong increase of 353,000 jobs outside the agricultural sector, significantly exceeding expectations. The unemployment rate remained steady at 3.7%, while wages rose by 0.6%, double the anticipated increase. Broad sector growth, particularly in professional services, healthcare, and retail, indicates a solid start to 2024. These figures, along with a positive revision of employment numbers for December, bolster confidence in the U.S. economy. However, they may raise questions about the timing of potential rate cuts by the Federal Reserve, which currently seems hesitant given the strong growth and inflation data. (Source: CNBC)
February 12: Bitcoin ETFs surpass $10 billion in Assets Under Management (AUM) within a month of approval.
Bitcoin exchange-traded funds (ETFs) have accumulated an impressive $10 billion in Assets Under Management (AUM) just 20 days after their approval. Notably, BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund lead with $4 billion and $3.4 billion in holdings, respectively. The ARK 21Shares Bitcoin ETF also recently surpassed the $1 billion mark on February 10. While Grayscale Bitcoin Trust (GBTC) continues to experience outflows, the pace has slowed. Analysts expect further growth as trading firms complete their evaluations of these investment vehicles. ARK Invest predicts that Bitcoin will replace gold as a safe haven, with continued price increases due to its growing role in financial markets. This news follows the SEC’s approval of Bitcoin ETF applications, marking a significant milestone after more than a decade of proposals, and signals growing institutional acceptance of Bitcoin and a potential shift in investor perception as a store of value. (Source: Yahoo Finance)
Opmerkelijk is dat goud ETFs er twee jaar over deden om dezelfde mijlpaal van $10 miljard in AUM te bereiken.
February 13: CPI data comes in higher than expected
In January, the U.S. Consumer Price Index (CPI) rose by 0.3%, exceeding expectations, primarily due to increasing rental costs. This increase, the largest in four months, did not alter expectations for Federal Reserve rate cuts. Although inflation is decreasing, it appears not to be falling quickly enough to warrant immediate rate reductions. The year-over-year CPI rate is 3.1%, slightly lower than the 3.4% recorded in December. Analysts point out that not all inflation drivers will be reflected in the Personal Consumption Expenditures (PCE) price indices, and caution is advised when interpreting potential inflationary trends. (Source: Reuters)
February 16: PPI data also comes in higher than expected
In January, wholesale prices in the U.S. rose more than expected, with the Producer Price Index (PPI) increasing by 0.3%, the largest gain since August. Core PPI, excluding food and energy, climbed by 0.5%, and even when excluding food, energy, and trade services, PPI jumped by 0.6%, the largest increase since January 2023. This follows a recent Consumer Price Index (CPI) report where inflation remained high despite the Federal Reserve’s expectations for moderation. The markets reacted with falling stock prices and rising government bond yields. Expectations for a rate cut in March have been pushed back to June due to the unexpected persistence of inflation, along with disappointing retail sales in January. (Source: CNBC)
February 28: Q4 2023 economic growth comes in lower than expected
The U.S. Gross Domestic Product (GDP) for the fourth quarter was slightly revised down to 3.2%, but the stronger composition points to a positive outlook. Despite a weak start due to cold weather, the economy is on a solid trajectory thanks to robust consumer spending and investment upgrades. Inflation increased slightly but remains moderate. Financial markets have shifted their expectations for rate cuts to June. Despite some concerns about geopolitical risks, the overall outlook for the U.S. economy remains positive. (Source: Reuters)
February 28: Bitcoin price reaches $60,000 since November 2021, followed by a global outage on cryptocurrency exchange Coinbase
On Wednesday, February 28, Bitcoin reached $60,000 for the first time in over two years, driven by an influx of capital into new U.S. Bitcoin ETFs, which sparked a Bitcoin rally. This month, Bitcoin is on track for its largest monthly gain since December 2020. However, Coinbase experienced technical issues during the Wednesday evening rally, with some users seeing zero values in their digital wallets. This glitch led to rapid price declines within the cryptocurrency market, which were quickly bought back. The recent approval of spot Bitcoin ETFs, such as those from BlackRock and Fidelity, played a crucial role in the rise over the past month. The total market capitalization of the cryptocurrency market surpassed $2 trillion. However, experts are warning of a potential sharp correction of 20% or more, despite optimism about Fed policy and the upcoming Bitcoin “halving” in April. (Source: Reuters; New York Post)
February 29: Core PCE data comes in exactly as expected
In January, the Fed’s key inflation gauge met expectations, with a 0.4% increase from the previous month and a 2.8% rise year-over-year, as anticipated. Personal incomes unexpectedly rose by 1%, while spending declined by 0.1%. The shift towards services over goods reflected the economy’s normalization following disruptions caused by the Covid pandemic. Both core and headline PCE measures remain above the Fed’s 2% inflation target, although the core measure year-over-year was the lowest since February 2021. The recent data suggest that the path to the central bank’s 2% inflation target will be bumpy, and rate cuts are expected later this year. (Source: CNBC)
Conclusion
In this market update, we have discussed several notable developments in the financial markets that occurred in February. From the record inflow into Bitcoin-focused Exchange-Traded Funds (ETFs) to Bitcoin’s rise toward a new all-time high, February saw significant activity. Bitcoin also achieved its largest monthly close in history. While the market remains volatile, it also presents opportunities for both institutional and retail investors. However, there was a major setback in the crypto industry with a global outage on the cryptocurrency exchange Coinbase, occurring just as Bitcoin reached a value above $60,000 for the first time in over two years. Despite this disruption, interest and confidence in cryptocurrencies continue to grow, as evidenced by the record inflows into ETFs.
