Somehow Twitter’s business meltdown wasn’t the biggest financial news last week. The biggest story … perhaps of the year … relates to cryptocurrencies. What started as a buyout of crypto exchange FTX has turned into a story rife with theft, fraud and Ponzi schemes. It led to one of the largest bitcoin crashes in recent memory. The Third Crypto Crash of 2022 This most recent crash — where bitcoin’s value fell more than 25% in a matter of days — started with a balance sheet report for crypto hedge fund, Alameda Research. A second report claimed the owner of FTX … and the crypto hedge fund … may be insolvent. Following that news, Binance, another massive crypto exchange, said it would liquidate its holdings of FTX … causing cryptos to implode: (Click here to view larger image.) As I write, bitcoin is down almost 65% in 2022. From Sunday, November 6, to Wednesday, November 9 — when the reports were issued — bitcoin dropped 25.4%! The turbulent week ended with FTX and Alameda filing for bankruptcy and cryptocurrencies left in turmoil. Click here or scroll on to continue reading. A tiny company has been able to use artificial intelligence to access the largest untapped energy source on Earth. Just one year of pumping this untapped resource in the U.S. alone could provide 5X as much power as the largest oil field on the planet. Hurry, there’s still time to get in early. |
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The Market Response: A Drop That Didn’t Happen Unlike with previous crypto crashes, the stock market had a different answer last week: (Click here to view larger image.) Despite being down more than 15% for the year, the S&P 500 rallied last week on the heels of a Consumer Price Index (CPI) report that showed inflation may be cooling off. It means two things: Investors are looking for any bright news to push stock prices higher. There’s a decoupling of crypto prices and the market. On the first point, weaker-than-expected inflation spurred a massive market rally on Thursday: The S&P 500 rose 5.5% — the largest one-day jump since April 2020. The Nasdaq Composite jumped up 7.4% — its biggest one-day jump since March 2020. Both indexes tacked on additional gains on Friday. To the latter point, you can line up the two charts above and see the S&P 500 and bitcoin dropped at the same time … except for last week. Inflation is driving the price of everything through the roof. Gas, groceries … you name it. But one investment not only combats inflation, it can be a hedge against rising interest rates and market volatility. Billionaires are already pocketing hundreds of millions of dollars from it, but most Main Street investors are missing out. Don’t be one of them! |
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What’s Next for Crypto and the Market Last week’s action was big, but I don’t think it was anything more than another bear market rally. And the market is going to continue tying itself to economic data, such as inflation or jobs data: (Click here to view larger image.) The CPI measures the average change in prices paid by consumers. In October, expectations were that prices would jump 0.6%. Instead, prices only rose 0.4% — leveling from September. This was the good news investors were looking for to push stock prices higher. Bottom line: As for crypto prices, the bankruptcy of one of the industry’s powerhouses — FTX — adds to an industry rife with crises. The good news is that bitcoin has weathered similar storms. The bad news is that crypto’s troubles aren’t over. Bitcoin, as an asset, is oversold and remains overvalued. Previous support levels of $20,000 will now represent resistance. The recent drop may entice you to buy bitcoin, but I would exercise a great deal of caution before doing so. Note: If you’re looking for insights into the crypto world, my colleague and crypto expert Ian King is your guy. Click here to see why. Safe trading, Matt Clark Research Analyst, Money & Markets Suggested Stories: Where to Invest After Tech Stock Bust 2.0 Midterms, Big Bets and the Used Car Market Collapse Privacy Policy The Money & Markets, P.O. Box 8378, Delray Beach, FL 33482. To ensure that you receive future issues of Money & Markets, please add info@mb.moneyandmarkets.com to your address book or whitelist within your spam settings. For customer service questions or issues, please contact us for assistance. The mailbox associated with this email address is not monitored, so please do not reply. Your feedback is very important to us so if you would like to contact us with a question or comment, please click here: https://moneyandmarkets.com/contact-us/ Legal Notice: This work is based on what we've learned as financial journalists. It may contain errors and you should not base investment decisions solely on what you read here. It's your money and your responsibility. Nothing herein should be considered personalized investment advice. Although our employees may answer general customer service questions, they are not licensed to address your particular investment situation. Our track record is based on hypothetical results and may not reflect the same results as actual trades. Likewise, past performance is no guarantee of future returns. Certain investments carry large potential rewards but also large potential risk. Don't trade in these markets with money you can't afford to lose. Money & Markets permits editors of a publication to recommend a security to subscribers that they own themselves. However, in no circumstance may an editor sell a security before our subscribers have a fair opportunity to exit. Any exit after a buy recommendation is made and prior to issuing a sell notification is forbidden. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. (c) 2022 Money & Markets, LLC. All Rights Reserved. Protected by copyright laws of the United States and treaties. This Newsletter may only be used pursuant to the subscription agreement. Any reproduction, copying, or redistribution, (electronic or otherwise) in whole or in part, is strictly prohibited without the express written permission of Money & Markets. P.O. Box 8378, Delray Beach, FL 33482. (TEL: 800-684-8471) Remove your email from this list: Click here to Unsubscribe |
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