After a lackluster start to the week, stocks are struggling for gains, though beaten-down technology names have perked up.
While the Nasdaq Composite
COMP,
has lost 4% this month, tied to inflation worries, it has been even more brutal for some cryptocurrencies, such as bitcoin
BTCUSD,
down 20% this month. Bitcoin has sunk 30% below an all-time high of $64,829 reached in April, after Tesla
TSLA,
Chief Executive Elon Musk said the electric-car maker would no longer accept bitcoin payments, over environmental concerns.
Monday’s crypto session in particular was brutal, wiping out over half a trillion dollars across the asset space.
The faithful need to hang in there, says our call of the day from former Goldman Sachs hedge-fund manager and cryptocurrency bull Raoul Pal. Not only does he see a big bitcoin catalyst coming this year, he is also sticking to a bullish price target.
“I think BTC goes well above $250,000 in the next 12 months and ETH [ethereum] well above $20,000,” the chief executive officer of Global Macro Investor and co-founder of Real Vision financial and Crypto TV, told MarketWatch.
The second most popular cryptocurrency behind bitcoin, ethereum
ETHUSD,
is nearly 20% below an all-time high of $4,382 seen last week.
Investors should remember that corrections come with the cryptocurrency territory, said Pal. “If you understand bitcoin, you understand its volatility, you understand that 35% pullbacks are normal,” he said, pointing to a chart he retweeted on Monday.
“[Bitcoin] is still currently producing 200% annualized returns, which is the highest return of any asset ever recorded in history,” Pal said.
And while that return is likely to cool over time, “the adoption rate of the entire cryptocurrency market is still growing at 113% a year, which is double that of the internet from 1990 to 2000. So this is the fastest pace of adoption of any technology in history.”
Another reason for believers to hang on is that Pal sees “rocket fuel” for digital assets via a long-awaited U.S. exchange-traded fund that he expects to be announced by September. Once that happens, “the whole crypto market will lift as prices go higher due to new sources of demand from RIA’s [registered investment advisers] and asset managers,” he said.
“So the issue for regular investors is there is no way for them to access cryptocurrencies without setting up a new wallet and accounts on an exchange that they’re not familiar with. And most registered investment advisers don’t have a mandate to buy crypto,” said Pal.
Current choices are slim, including crypto platform Coinbase
COIN,
or the Grayscale Bitcoin Investment Trust
GBTC,
which is currently trading at a discount. “Meanwhile in Canada, they’ve launched ETFs and they’re incredibly successful,” said Pal.
Elsewhere, Mike Novogratz, chief executive of digital merchant bank Galaxy Digital and a big cryptocurrency investor, told Bloomberg TV on Monday that weeks of consolidation lie ahead for bitcoin, keeping the crypto stuck between $40,000 and $50,000. He also believes, though, the “next catalyst is the ETF.”
Read: Is a new ‘crypto’ fund the long-awaited bitcoin ETF in disguise
And: This new ETF gets you access to the backbone of the crypto world
Blowout retailer results and a ‘big short’
Fresh data showed housing starts, or new residential construction projects, falling short of expectations thought building permits edged up. Following that, stocks are flat
DJIA,
SPX,
outside of a 0.7% gain for the Nasdaq Composite
COMP,
Asia had a strong session, with Taiwanese
Y9999,
stocks up 5% as investors pushed past COVID-19 concerns. European stocks
SXXP,
are clinging to gains, with oil
CL00,
copper
HG00,
and silver
SI00,
also climbing.
In the retail space, shares of Walmart
WMT,
Macy’s
M,
and Home Depot
HD,
are all climbing on forecast-beating results. Earnings from Chinese search engine Baidu
BIDU,
and games publisher Take-Two Interactive
TTWO,
are due after the market close.
The investment firm behind Michael Burry, famous for predicting the mortgage crisis, has made a bearish bet against Tesla. Meanwhile, California’s Department of Motor Vehicles has put the electric-car company’s fully autonomous driving option under review.
E-commerce giant Amazon
AMZN,
is reportedly in talks to buy MGM, the studio behind the “James Bond” films.
Warren Buffett’s Berkshire Hathaway
BRK.A,
BRKB,
conglomerate took a stake in insurance broker Aon
AON,
and cut holdings in bank Wells Fargo and oil group Chevron
CVX,
according to a first-quarter 13-F filing.
The chart
Bank of America’s monthly fund manager survey shows many think the bullish bitcoin call is very crowded.
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