A Bitcoin logo on a screen in Hong Kong, China, on Tuesday, Dec. 5, 2023.
Paul Yeung | Bloomberg | Getty Images
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What you need to know today
SEC approves
A highly anticipated and controversial decision finally arrived Wednesday, with the Securities and Exchange Commission allowing the creation of bitcoin exchange-traded funds in the U.S. that will give regular investors access to the world’s oldest and most popular cryptocurrency. The first funds are set to start trading on Thursday. The price of bitcoin, however, shed about 2%.
Wall Street ends higher
U.S. stocks ended Wednesday’s trading session higher as investors awaited the start of earnings season later in the week and also inflation data. The S&P 500 closed 0.57% higher, while the Dow Jones industrial Average added 0.45%. The Nasdaq Composite gained 0.75%. Jump in shares of Intuitive Surgical and Lennar boosted markets. Europe’s Stoxx 600 closed lower for the second straight day, down 0.17%.
Amazon layoffs
In a memo sent to employees, Amazon said it will be cutting jobs across its Prime Video and MGM Studios divisions. The letter sent to employees say the cuts were to “prioritize our investments for the long-term success of our business.” It also arrived the same day Amazon’s Twitch livestreaming unit said it be slashing 500 jobs.
Inflation report awaited
December inflation data, set to be released on Thursday, could very well challenge the market’s perception of how soon the Federal Reserve will start cutting interest rates and by how much. Consumer prices would’ve likely edged higher last month, with expectations by Dow Jones pointing to a 0.2% rise in the final month of 2023, and 3.2% increase for the full year.
[PRO] What are the charts showing?
Wall Street’s indexes have started the year lower and history suggests there could be more volatility going further into the year. After a spectacular rally at the end of last year on the back of the Federal Reserve’s dovish tone, investors now worry that stocks were overbought.
The bottom line
Bitcoin just received its biggest stamp of approval, giving crypto bros their most powerful bragging rights yet.
The decision by the SEC 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, that holds about $29 billion of the cryptocurrency, will likely be converted into an ETF following the decision, while big Wall Street’s BlackRock and Fidelity will also enter the playing field.
“Today’s news is possibly Bitcoin’s biggest since its launch but the approval of spot ETFs shouldn’t be viewed in isolation, given the timing of the upcoming halving in April which cuts the BTC supply and historically kickstarts the new bull market. Both these events combined could well send Bitcoin to $100,000 in 2024,” said Antoni Trenchev, co-founder and managing partner of the digital asset firm Nexo.
Trenchev also noted that “there is a temptation to say the approval of spot Bitcoin ETFs is a buy-the-rumour, sell-the-news event.”
The decision comes a day after an official SEC social media account falsely said bitcoin ETF trading had been approved. The SEC confirmed that the account had been compromised.
Later in the day, investors will also shift focus towards consumer price data which is expected to show inflation edged higher in the last month of 2023.
This could potentially bring into question whether markets are getting ahead of themselves in anticipating rate cuts by the Fed. There still remains a wide gap between what the U.S. central bank has indicated in terms loosening its monetary policy and what the market is expecting.
