Bitcoin had a rocky weekend. Blame hash rates and death crosses.
Since Friday, Bitcoin has dropped about $3,000, or almost 9%, to about $32,500. Bitcoin traded below that level on June 9, but it hasn’t closed below $33,000 since January.
China is problem number one. The “hash rate,” which is essentially the amount of computing power being used to mine Bitcoin, is falling as China cracks down on miners. China wants the electricity for other stuff. China accounts for a majority of the world’s Bitcoin hashing.
Less mining, of course, means fewer coins, and fewer coins could be a good thing for pricing in the long run. But for now, the specter of government interference outweighs supply/demand considerations.
Bitcoin’s tumble created a trading pattern on Saturday that market technicians call a “death cross.” That means Bitcoin’s 50-day moving average dropped below the 200-day moving average. A death cross can signal that buying momentum is coming out of a stock, a market, or a cryptocurrency.
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With Monday’s declines, Bitcoin is down about 50% from its April 52-week high of almost $65,000.
What comes next is, frankly, anyone’s guess. Bitcoin is volatile and the lack of fundamentals makes it difficult to predict what comes next.
We won’t even try, except to say buckle up.
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Amazon’s 2021 Prime Day Is Here
Amazon.com’s Prime Day runs today through Tuesday, with 2 million deals for Amazon Prime shoppers in 20 countries, but postponed in Canada and India. It’s the first time the event is held in June. Last year’s Prime Day in October jump-started holiday shopping.
- The annual promotion is usually a nonevent for Amazon investors because the e-commerce giant does not share financial details about the event, just sales milestones.
- Amazon says its second-quarter revenue forecast of $110 billion to $116 billion, up 30% from last year, includes projections for Prime Day. Amazon called last year “the two biggest days ever for third-party sellers,” instead of the largest shopping event in company history, as in the past.
- The microchip shortage might result in fewer markdowns on personal electronics like Sony PS5s, Nintendo Switches, and higher-end computers, retail experts told MarketWatch.
- While retailers overall have seen their sales rebound, Amazon’s $26 billion in pandemic profits were more than its amount from the previous three years combined. Its first quarter profits tripled to $8.1 billion.
What’s Next: The success of Prime Days has led Amazon’s rivals to offer membership-free promotions such as Walmart’s Deals for Days (through Wednesday), Target’s Deal Days (through Tuesday), and Best Buy’s Bigger Deals (through Tuesday).
—Eric J. Savitz and Janet H. Cho
Americans Are 65% Vaccinated
On Sunday, Virginia became the 16th state, plus the District of Columbia and Guam, to reach President Joe Biden’s goal of vaccinating 70% of adults with at least one shot. Overall, 65.4% of American adults are partially vaccinated, per the Centers for Disease Control and Prevention.
- The U.S. has administered more than 300 million shots of vaccine in less than 150 days, Biden announced Friday, a few days after confirming 600,000 U.S. deaths from coronavirus.
- The CDC says 149.6 million Americans are fully vaccinated, or nearly 56% of adults and 77% of people 65 and older.
- Confirmed coronavirus cases are averaging around 12,000 a day, down 95% from 252,000 in early January, according to the CDC. Hospitalizations average about 2,000 daily, and deaths about 286 a day, the lowest since March 27, 2020.
- Brazil’s coronavirus death toll passed 500,000, second only to the U.S., according to Johns Hopkins University. Brazil has fully vaccinated 11% of its population. India, where only 3.6% of the population is fully vaccinated, has reported more than 386,000 deaths, the third highest.
What’s Next: Israel’s Health Ministry on Sunday ordered that all attendees of a performance last week must quarantine for 14 days, even people who are vaccinated or have recovered from Covid-19, after recent outbreaks of the Delta variant there. Israel lifted all its coronavirus restrictions on June 1.
—Janet H. Cho
With FTSE Russell Rebalancing, Meme Stocks Come and Go
FTSE Russell will rebalance its U.S. stock indexes after the market closes this Friday, an annual exercise that affects benchmarks tied to $10.6 trillion of investor assets, according to Bloomberg, and a potential boost to the stocks that caught the attention of retail traders this year.
- Changes in index members were determined based on market values as of May 7. To move into the large-cap Russell 1000 index, an existing Russell 2000 stock needed a market cap exceeding $7.3 billion that day.
- GameStop had a $11.2 billion market cap on ranking day, while AMC Entertainment had $4.3 billion, meaning paths diverge for the two most prominent retail meme stocks.
- On June 28, all the Russell 2000 funds will have to sell GameStop as it leaves the small-cap universe, while Russell 1000 funds will be buying it.
- The Barron’s Future Focus Stock Index rebalanced after the close last Friday. Citigroup, Capital One Financial, Southwest Airlines, and Raytheon Technologies were added while five stocks were removed.
What’s Next: Three times as much money is invested in passive funds tracking the Russell 1000 indexes, which include giant companies like Apple and Microsoft, as those tracking the Russell 2000 indexes. Historically, stocks that moved from the smaller cap 2000 to the large-cap 1000 lag behind their old index over the next year.
Goldman Sachs Expands Into Transaction Banking in the U.K.
Goldman Sachs said Monday it would launch transaction banking activity in Britain, offering cash management and treasury services to business clients, in a bid to grow its presence and diversify its activities in the country.
- The decision comes a year after the bank launched a similar service in the U.S. Its platform TxB has since attracted more than 250 clients, and over $35 billion in deposits, Goldman said.
- The U.S. financial services group launched its Marcus online retail bank in the U.K. in 2018.
- Rival JPMorgan Chase said last week that it had struck a deal to buy U.K. online wealth management platform Nutmeg for £700 million.
What’s Next: Brexit notwithstanding, U.S. investment banking giants seem to think that the U.K. market still offers serious growth opportunities, if only as a base for further European expansion.
British Retailer Morrisons Rebuffs $7.6 Billion U.S. Private Equity Takeover Bid
Shares of British retail group Morrisons shot up more than 30% Monday after the group said it had rejected a bid by U.S. private equity firm Clayton, Dubilier & Rice that would value the company’s equity at £5.52 billion.
- Morrisons, which along with its suitor was forced by U.K. regulations to confirm the bid after media leaks last week, said its board rejected a 230 pence-a-share “highly conditional non-binding proposal” on June 17.
- Morrisons is the fourth-largest retailer in the U.K., with a 100,000 workforce.
- The company’s stock price jumped to nearly 235 pence on Monday, indicating markets expect the U.S. private-equity firm to improve its offer, or another suitor to launch a bidding war.
What’s Next: Morrisons’ management team does not seem hostile in principle to a sale. Under U.K. takeover rules, Clayton, Dubilier Rice now has until July 17 to put forward a firm offer.
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