Markets

Yesterday, the stock market experienced a significant decline, resulting in the Dow's worst performance since October. This downturn coincided with Nvidia's previously relentless surge in value coming to a halt. In contrast, bitcoin achieved yet another milestone by reaching $70,000 for the first time, although this volatile cryptocurrency later experienced a retreat.

Cryptocurrency

Bitcoin to the moon?

Why did bitcoin reach a record high this week? Supporters of the world's largest cryptocurrency attribute it to fundamental principles of supply and demand. Similar to traditional commodities like gold, oil, or soybeans, the price of bitcoin reacts to shifts in demand. The launch of U.S. exchange-traded funds (ETFs) for spot bitcoin in January fueled a surge in demand, leading investors to inject billions of dollars into these ETFs. Consequently, these funds had to acquire bitcoin to fulfill the demand, driving up its price.

What distinguishes bitcoin from most other commodities is its tightly limited supply. Governed by computer code, bitcoin has a strict cap of 21 million coins, with over 90% of them already in existence. The creation of new coins, through a process known as "mining," is limited to about 900 bitcoins per day. This rate is expected to decrease further following an event called the halving, which occurs periodically. Bitcoin's supply growth is slated to cease entirely once the final coin is mined, projected to happen around the year 2140.

Alex Thorn, head of research at Galaxy Digital, encapsulates this uniqueness by stating, "Bitcoin is one of the scarcest assets in the world, and it is becoming scarcer every day."

Politics

Biden states his differences with The GOP

In a spirited State of the Union address on Thursday, President Biden directly challenged congressional Republicans, aiming to persuade Americans that his policies have strengthened the economy while cautioning that their freedoms could be jeopardized. Biden repeatedly contrasted his approach with that of former President Donald Trump, setting the stage for what promises to be an intense election year.

Delivered before a joint session of Congress, Biden's speech was heavily focused on his case for reelection. This came shortly after Trump solidified his position as the presumptive Republican nominee by winning in nearly all of the Super Tuesday states, paving the way for an uncommon rematch between two former occupants of the Oval Office.

As a Democrat, Biden emphasized the importance of embracing freedom and democracy, drawing on the core values that he believes define America: honesty, decency, dignity, and equality. In an implicit critique of Trump, he stated, "Some people of my generation see a different narrative: an American story characterized by resentment, revenge, and retribution. That's not my vision."

Media

White House supports TikTok ban

President Biden announced on Friday his intention to sign into law a bill that would effectively prohibit the operation of the video app TikTok or mandate its sale, intensifying lawmakers' latest efforts to prevent its Chinese owners from conducting business in the United States.

Lawmakers in the U.S. are making their most concerted effort yet to address the perceived national security threats posed by the popular app, advancing a bill that has garnered more political support than previous endeavors. Despite TikTok's attempt this week to thwart the measure by urging users to contact their representatives, it seemingly backfired, as lawmakers reported that the influx of phone calls only solidified their stances.

Expected to pass easily in the House on Wednesday, the bill may face challenges in the Senate. When asked by reporters on Friday if he would endorse the TikTok bill should it reach his desk, President Biden stated, "If they pass it, I'll sign it." As lawmakers prepared to deliberate on the legislation, TikTok users received notifications on Thursday encouraging them to voice their opposition to their House representatives regarding the bill. The app facilitated direct calls to representatives with just a few button presses. TikTok's campaign quickly overwhelmed some congressional offices' phone lines, leading to hang-ups and inquiries. This incident highlighted TikTok's ability to mobilize a large group of individuals and gather data to influence user behavior—a concern cited by some lawmakers who oppose the company's ties to China.

Economy

Will the economy rally?

The current stock market rally in 2024 faces a significant test with the upcoming release of key data that could indicate whether inflationary pressures are resurfacing.

While jobs and consumer price index data are always closely monitored by the markets, their significance is heightened this time around. Previous releases surprised investors by revealing unexpectedly strong demand for labor alongside indications of increasing inflation.

These reports disrupted a period of optimism fueled by months of positive data, which had suggested a gradual cooling of the labor market and a more rapid decline in inflation than anticipated. This optimism had led to widespread belief that the Federal Reserve could successfully combat inflation without triggering a recession, resulting in record-high stock prices.

The economic data for February introduced some turbulence to the market. However, investors largely dismissed these reports as anomalies, particularly since they pertained to January, a month that some economists argue is particularly prone to seasonal distortions.

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