😎 Bitcoin's back, baby

What’s going on here?

Bitcoin stirred up some serious excitement last week, and hungry investors sent the crypto’s price above $30,000 for the first time since April.

What does this mean?
Deciphering the whys and wherefores of crypto price movements can feel a bit like trying to read tea leaves sometimes. But last week a few key events might have sparked a fresh love affair with the OG cryptocurrency. First off, BlackRock – the world’s biggest investment manager – sought regulators’ approval to launch an exchange-traded fund tracking bitcoin’s current price (as opposed to its future price). And there was another juicy move: the uber-powerful trio of Charles Schwab, investment firm Fidelity, and hedge fund Citadel unveiled a new crypto exchange, designed to serve big institutions rather than everyday retail investors.

Why should I care?

For markets: Bitcoin’s making good on a long-promised boon.

The idea of high-rolling firms embracing bitcoin has always been a key part of its investor appeal. You see, if these heavy-hitters start pouring billions into bitcoin, demand could spike and trigger a price hike for the crypto’s limited supply of 21 million coins. That kind of prospect becomes even more important when you consider recent research showing that bitcoin isn’t really used for day-to-day transactions – which could mean that big firms will play an even greater role in shoring up the market.

The bigger picture: Bidding adieu to anonymity.

Sure, the old guard of finance wading into crypto waters could spur broader adoption and give prices a boost. But remember, these traditional players are bound by tighter rules than many digital newcomers – and that might force them to centralize and strip anonymity from transactions, flying in the face of core crypto beliefs. And with crypto natives Binance and Coinbase in regulators’ crosshairs now, the former financial Wild West could soon seem a whole lot tamer.

What’s going on here?

Data out late last week showed that Europe’s taking a summertime nap, with a dozy downturn in economic activity.

What does this mean?

Every month the folk who manage purchases in manufacturing and services industries tell economists how busy they’ve been – and in June, activity in the eurozone’s manufacturing sector hit a speed bump and shrank. Services activity – which makes up almost three-quarters of the eurozone economy – actually swelled, but even that ultimately fell short of economists’ expectations. So sure, the economy might be on the up overall, but it’s not hitting the high notes that experts thought it would. Europe’s slowdown could be proof that the bloc’s highest interest rates in 20 years are doing what they’re supposed to, cooling things off to help bring down inflation. If so, kudos to the US Federal Reserve, which managed to pull off a similar trick stateside, but with a milder slowdown in June’s activity levels.

Why should I care?

For markets: Euros are out, dollars are in.

If the eurozone economy is hitting the brakes, then the European Central Bank might consider easing off on interest rate hikes. And if those rates don’t keep on climbing, well then, interest on savings in eurozone bank accounts won’t either. That could be why the value of the euro slipped nearly 1% against the US dollar: investors may be attracted to the higher rates on offer in the US, shifting their cash at Europe’s expense. And sure, 1% might not sound like much – but in the delicate world of currencies, that’s a headline-grabber.

The bigger picture: Clues but no cigar.

Surveys like these give investors “soft” data – a sneak peek into an economy’s performance. But that's not a nailed-on account of how the country’s faring, mind you: for that, you need “hard” data – verifiable snapshots of economic growth. Soft and hard data don’t always agree, though, so savvy investors typically don’t bet the farm on the basis of surveys alone.