By Steve Goldstein
Critical information for the U.S. trading day
It is of course an extremely volatile asset, but as this story was being drafted, bitcoin was up an incredible 69% (nice) this year. Gold — analog bitcoin, if you will — has gained 11%, while the S&P 500 has advanced by 7%.
There’s a logical underpinning behind both bitcoin’s, and gold’s, appreciation: the trouble in the traditional banking system, which to date has seen the collapse of SVB Financial, Signature Bank and Silvergate Bank and a systemically important institution, Credit Suisse, being handed over to UBS. The 12% share-price fall in Western Alliance Bancorp (WAL) on Wednesday, after the lender did not disclose deposit outflows, would seem to indicate the crisis has not fully ended.
“For crypto supporters, the U.S. banking crisis exposed the weaknesses of the traditional financial system given banks’ maturity mismatch is susceptible to bank runs,” says Nikolaos Panigirtzoglou, global market strategist at JPMorgan. “Crypto supporters have been arguing for a long time that the crypto ecosystem is superior not least because deposits are held in entities such as stablecoins which as a digital form of money market funds are 100% backed with high quality liquid assets and are thus less susceptible to runs.”
But Panigirtzoglou also notes two other supports, which aren’t as well known. He talks about the launch of bitcoin ordinals, which enable non-fungible tokens, or NFTs, directly on the bitcoin network. “This is because metadata such as text, images can be inscribed on the bitcoin network itself, without relying on smart contracts as seen with other blockchains, where NFTs are created through smart contracts,” he says. If there’s a boom similar to the last NFT bull run, then transaction fees could be driven higher, which would increase miners’ revenue.
And he looks ahead to an event next year — in April 2024, when bitcoin will be halved, as happens once every four years. Like stock splits, it can have a positive impact despite not really changing anything. “While this is some way away ceteris paribus, this would mechanically double bitcoin’s production cost to around $40k, creating a positive psychological effect. This is because bitcoin’s production cost has historically acted as an effective lower bound,” he says.
The previous halving events, in 2016 and 2020, were accompanied by a bullish trajectory afterwards.
The market
U.S. stock futures were mixed, with Dow futures slightly higher while the Nasdaq 100 contract was lower. The yield on the 10-year Treasury was down for a seventh straight session.
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The buzz
Weekly jobless claims are due for release, the last indicator before the nonfarm payrolls report on Friday, when stock markets will be shut for the Good Friday holiday.
A judge denied an attempt to quicken the resolution of a shareholder fight over AMC Entertainment’s (AMC) ability to convert its so-called APE shares into regular shares.
Costco Wholesale (COST) reported its first monthly same-store sales drop in nearly three years.
The U.K. competition regulator said it’s considering whether Amazon.com’s (AMZN) $1.7 billion deal to buy iRobot (IRBT) will lessen competition, a step before commencing a formal investigation.
French President Emmanuel Macron visited China and met Xi Jinping, while at home, protests over his plan to lift the retirement age by two years continued.
Best of the web
Supreme Court justice Clarence Thomas did not disclose luxury vacations paid by a billionaire Republican donor.
What the most deeply inverted part of the yield curve is saying.
Google CEO Sundar Pichai says search will feature chat AI.
Top tickers
Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern.
Ticker Security name TSLA Tesla AMC AMC Entertainment BBBY Bed Bath & Beyond GME GameStop APE AMC Entertainment preferreds BUD Anheuser-Busch InBev NVDA Nvidia AAPL Apple MULN Mullen Automotive NIO Nio
The chart
Friendshoring is a real thing, International Monetary Fund economists conclude. Over the last decade, the share of foreign direct investment flows among geopolitically aligned economies has kept rising, more than the share for countries that are closer geographically, the IMF says. As long-term flows fragment, the IMF estimates a drag to global output of close to 2%.
Random reads
Two New Yorkers tried to leave Brazil with 77 pounds of gold in their luggage.
Look at the deepest fish ever filmed.
NASA’s Mars helicopter broke a speed record (to be fair, a record on Mars).
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-Steve Goldstein
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
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04-06-23 0646ET
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