Bitcoin, the world’s largest cryptocurrency, traded above US$30,000 in Asian markets on Thursday morning despite dipping 0.76% to reach US$30,008 in the 24 hours to 9am in Hong Kong. This upward trend continued in spite of negative comments on Wednesday from billionaire investor Warren Buffet. During an interview with CNBC, Buffet called bitcoin a “gambling token” without intrinsic value. Nonetheless, bitcoin held a weekly gain of 7.26% and has risen by more than 80% since the start of 2023.
The top 10 non-stablecoin cryptocurrencies had a mixed performance on Thursday. Solana continued to lead the winners as investors anticipate its first smartphone launch on the same day. The subsidiary of Solana Labs will release its first smartphone, Saga, which integrates the Solana blockchain and allows users to make on-chain transactions, manage digital assets, and access a variety of decentralized apps. Solana rose 2.49% to reach US$24.01, up by 15.51% for the week.
Ethereum gained 1.10% to reach US$1,910, despite the network’s upgrade on Wednesday. The Shanghai upgrade activated on Wednesday and allows investors to withdraw their staked Ether for the first time. Some analysts expect the upgrade may trigger a withdrawal of nearly US$2.3 billion worth of Ether, about 6% of the total value of staked Ether, according to a Wednesday Bloomberg report. In any event, the upgrade seems to have shrugged off concerns for investors over selling pressure on the Ether token.
The losers in the top 10 included Litecoin which dropped 2.45% to trade at US$92.23, and Ripple (XRP), which fell 2.06% to US$0.5041. XRP is still up 1.08% for the week. The U.S. Securities and Exchange Commission (SEC) filed a letter on Tuesday to support its case against Ripple Labs, which it has accused of offering unregistered securities in the form of XRP.
The total crypto market capitalization dipped 0.52% in the past 24 hours to US$1.23 trillion. Although the total trading volume over the last 24 hours rose 13.33% to US$48.60 billion, the non-fungible token (NFT) market showed a further decline in activity. The Forkast 500 NFT index edged up 0.32% to 3,992.64 in the 24 hours to 9am in Hong Kong but was still down 0.48% for the week.
U.S. equities closed lower on Wednesday, as the Dow Jones Industrial Average dipped 0.11%, the S&P 500 moved 0.41% lower, and the Nasdaq Composite Index dropped 0.85%. This followed the release of Federal Reserve minutes from March that showed officials projecting a recession in the second half of 2023.
The minutes of the Fed’s meeting on March 21 and 22, during which interest rates were raised by 25 basis points, also raised concerns over a potential recession later this year. Some Fed officials considered leaving interest rates unchanged, noting the recent bank failures, but decided to raise rates due to “elevated inflation.” According to data from Trading Economics, U.S. gross domestic product is expected to rise 2.9% in the second quarter of 2023 but drop by 0.3% in the third quarter and 0.1% in the fourth.
The U.S. consumer price index (CPI) in March pointed to a slowing of inflation, with a rise of 5% year-on-year, down from 6% in February and the smallest increase since May 2021, according to U.S. CPI figures. Core CPI, which excludes food and energy, went up 5.6% year-on-year, accelerating from February. Nonetheless, CPI is still well above the Fed’s target rate of around 2%, according to Reuters, and remains a concern for investors.
According to analysts at the CME Group, U.S. interest rates are currently between 4.75% to 5%, the highest since June 2006. They expect a 29.6% chance the Fed will not raise interest rates at its next meeting on May 3, while 70.4% predict a 25-basis-point rate hike, up from 66.9% on Wednesday.
As of 9am in Hong Kong, U.S. stock futures traded flat to lower, with the Dow Jones Industrial Average down by 0.12%, the S&P 500 futures dipping 0.10%, and the Nasdaq Composite Index inching 0.02% lower.
