The past week has not been favorable for the majority of cryptocurrency assets, with only four specific digital currencies recording gains. This week, ONDO appreciated by 13.2%, TON increased by 11.3%, PENDLE grew by 6%, and LEO saw a slight uptick of 0.5%. Market Update: A Tough Week for Crypto With Few Standouts The landscape […]
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This week’s non-fungible token (NFT) sales have taken another nosedive, intensifying the downtrend that began with a 16.55% decline from March 9 to March 16, 2024. The last seven days have witnessed an even steeper drop, with NFT sales plummeting by 18.57%. Cryptopunk #7,804 Shines in a Week of Falling NFT Sales In line with […]
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Bill Ackman, a well-regarded investor and CEO of Pershing Square Capital Management, outlined a hypothetical scenario that has sparked intense debate among crypto enthusiasts, economists, and environmentalists.
Ackman’s comments touched on several critical issues, including the sustainability of Bitcoin mining, its implications for global energy consumption, and the broader economic consequences of a rising reliance on cryptocurrencies.
He tweeted:
“A scenario: Bitcoin price rise leads to increased mining and greater energy use, driving up the cost of energy, causing inflation to rise and the dollar to decline, driving demand for Bitcoin and increased mining, driving demand for energy and the cycle continues. Bitcoin goes to infinity, energy prices skyrocket, and the economy collapses. Maybe I should buy some Bitcoin.”
He added that this could also work in “reverse.”
Ackman’s “scenario” prompted a spectrum of responses, ranging from defensive retorts to calls for a more nuanced understanding of Bitcoin’s energy use. The debate was further catalyzed by a comment highlighting the considerable energy consumption attributed to Bitcoin mining, likened to that of an entire country’s worth — Greece.
Critics argue that Bitcoin’s energy usage is an undeniable problem with significant environmental implications. In contrast, proponents argue that skeptics need to engage more deeply with the crypto community to understand the complexities of mining and its potential benefits for the energy sector.
Experts in the field, including Michael Saylor, were cited for their views on the energy debate.
Saylor himself added to the debate and argued that Bitcoin mining could actually lead to more efficient energy solutions and drive the adoption of renewable energy sources by creating a demand for cheaper, more sustainable energy.
Alexander Leishman responded by emphasizing the competitive nature of Bitcoin mining, suggesting that the industry’s search for profitability naturally leads to the utilization of cheaper, often renewable, energy sources.
This perspective challenges the notion that Bitcoin mining exacerbates demand for conventional energy resources, arguing instead for its potential role in promoting energy efficiency and sustainability.
Troy Cross argued that increases in Bitcoin’s value do not necessarily lead to higher energy costs, pointing out the sophistication of mining technology and the strategic deployment of mining operations across the globe.
Cross said:
“The cheapest power is power no one else wants, stranded in time or space. Consuming that power is Bitcoin’s destiny. And while it may deviate in a short time frame during outrageous bitcoin price spikes, it will quickly and inevitably return to its rightful place as bottom feeder, not apex predator.”
Meanwhile, Alex Gladstein, known for his environmental advocacy, supported the argument that Bitcoin mining predominantly taps into excess or renewable energy sources. His stance reinforced the idea that the Bitcoin mining sector is contributing to the optimization of the global energy mix rather than detracting from it.
Industry voices like Hunter Horsley and Muneeb Ali projected a future where the Bitcoin network’s energy demand could potentially decrease. They highlighted the blockchain’s halving events and the eventual reliance on transaction fees as mechanisms that will reduce the incentive for energy-intensive mining operations.
A notable argument likened Bitcoin’s ecosystem to a “self-regulating organism” governed by precise mathematical laws that contribute to economic stability. This viewpoint illustrates the inherent predictability and systemic resilience of Bitcoin, contrasting it with traditional financial assets.
By framing Bitcoin and similar technologies as self-regulating organisms, proponents argue for the robustness, adaptability, and innovative potential of these systems. They suggest that, much like living organisms, these systems are capable of evolving and self-correcting in response to challenges, thereby ensuring their survival and relevance in a constantly changing environment.
The S&P 500’s big jump amid last week’s “epic rallies” for stocks and bonds was driven in part by interest-rate-sensitive sectors that broadened the breadth of the index’s gains, putting it on course for a rally into year-end, according to Yardeni Research.
“All 11 sectors gained ground last week, many enjoying their best week in nearly a year,” said Yardeni analysts led by the firm’s president and chief investment strategist Ed Yardeni, in a note Monday. “We think the stock market’s correction is over and that the S&P 500 is back on track to end the year at 4,600.”
U.S. stocks finished higher Monday, with the S&P 500 index
edging up to about 4,366 after last week scoring its biggest weekly percentage gain since November 2022. After a group of seven so-called Big Tech stocks has fueled the S&P 500’s rally so far in 2023, investors are keeping an eye out for any signs of the market gauge’s breadth broadening as it rises.
“The plunge in the bond yield boosted the valuation multiples of technology stocks as well as the more traditional interest-rate sensitive ones,” the Yardeni analysts said of last week’s rally.
Real estate was the S&P 500’s best-performing sector last week, ripping 8.5% higher, while financials and consumer discretionary had the next biggest gains, the firm’s note shows.
| S&P 500 sector | %Performance |
| Real estate | 8.5 |
| Financials | 7.4 |
| Consumer discretionary | 7.2 |
| Information technology | 6.8 |
| Communication services | 6.5 |
| Industrials | 5.3 |
| Utilities | 5.2 |
| Materials | 5.1 |
| Healthcare | 3.5 |
| Consumer staples | 3.2 |
| Energy | 2.3 |
| Source: Yardeni Research note |
Read: Home-builder ETFs surged, exceeding the Dow’s big gains
The U.S. stock market’s broad jump last week led the S&P 500
,
Dow Jones Industrial Average
and Nasdaq Composite
to a strong start to November, after the indexes slumped in the previous three consecutive months.
“From August through October, investors were spooked by the jump in the 10-year U.S. Treasury bond yield from 3.96% on July 31 to 5.00% a week ago,” the Yardeni analysts said.
U.S. stock prices broadly climbed last week as Treasury bond yields fell, with the rate on the 10-year Treasury note seeing its biggest weekly decline since March to finish Friday at 4.557% based on 3 p.m. Eastern Time levels, according to Dow Jones Market Data.
Last week’s “epic” bond-market rally carried the 10-year Treasury note yield “down to a more comfortable distance from 5.00%,” the Yardeni analysts wrote. They said the move was “fueled by modestly bullish economic news that seems to have triggered a massive short-covering rally by the bears and a buying panic by the bulls.”
The 10-year Treasury yield
rose Monday to 4.662%, according to Dow Jones Market Data. Bond yields and prices move in opposite directions.
Meanwhile, “the stock market seems to be following the classic seasonal year-end script of weakness in September and October setting the stage for a Santa Claus rally,” the Yardeni analysts said.
See: Dow scores best week since October 2022 as stocks rise after soft jobs report
The S&P 500 rallied 5.9% last week, with its real estate
,
financials
,
consumer-discretionary
,
tech
and communication-services
sectors all beating the broader index over the same period.
Meanwhile, the S&P 500’s best-performing sectors so far in 2023 are communication services, tech and consumer discretionary, each with huge double-digit gains.
Big Tech stocks, which include seven giant companies that fall across all three of those sectors, have a heavy weighting in the S&P 500 index.
Chip maker Nvidia Corp.
NVDA
has by far the biggest gains among Big Tech stocks in 2023. Shares of the tech company, with a market valuation of more than $1 trillion, have skyrocketed 213% so far this year through Monday, according to FactSet data.
The next biggest 2023 stock gains in the Big Tech group are from Facebook parent Meta Platforms Inc.,
META
which has soared about 162%, followed by Tesla Inc.
TSLA,
whose shares have surged 78%, and then Amazon.com Inc.’s
AMZN
jump of around 66%, according to FactSet.
But real estate and financials, the S&P 500’s top two sectors in last week’s rally, remain down so far in 2023, with each sector falling Monday. By contrast, the S&P 500 has risen 13.7% this year.
The latest data from CoinMarketCap has indicated an unsettling calm in BTC/USD trading over the weekend, with the market experiencing an 11% decline in a span of just seven days.
Bitcoin (BTC) remains perched above the $26,000 mark, creating an air of uncertainty in the crypto market which has been recording a broad-based selloff in the past week. BTC’s price fell below $26,000 on Friday afternoon, following a brief rise above $27,000 that served to mitigate some of the steep losses seen earlier in the past week.
Market observers, still shaken by the recent price drop, remained cautious about the future trajectory of Bitcoin’s price. Keith Alan, the co-founder of Material Indicators, a monitoring resource outfit, maintained a relatively conservative outlook amidst the uncertainty.
Alan expressed his thoughts on the X platform, predicting that Bitcoin’s price will eventually fall below $25,000 and retest support near the 2017 Bull Market Top, which was just under $20,000. However, Alan did not foresee a linear path to this outcome, explaining:
“I’m looking for a retest of $25,000 support to potentially create a double bottom and lay the groundwork for another upward rally. If this setup comes to fruition, a realistic range of $28,000 to $29,000 could be achieved.”
Alan also mentioned that if and when the retest of the $25,000 level occurs, his focus would then shift to the possibility of a series of lower lows.
Many shared the sentiment that if Bitcoin fails to find support at $25,000, then the $20,000 range would once again become a focal point for market participants. A well-known pseudonymous trader Skew commented on the potential scenario, noting:
“A break below $25,300 might signal a move towards $24,000 – $23,000, which could initiate a stronger buyback response. Alternatively, continued downward momentum could lead to a further drop to $20,000. In the most extreme case, Bitcoin might even dip below $20,000, presenting an opportunity for swing trading.”
Despite the prevalent pessimism, Skew predicted a short-term rally in intraday Bitcoin price movement around the weekly close, perhaps sending the price toward $28,500 if purchasing pressure becomes more pronounced.
The crypto market’s landscape remains uncertain and volatile, with traders and investors grappling with the ramifications of the recent price decline. Optimistic expectations have been tempered by the absence of positive developments stemming from the Grayscale vs the US Securities and Exchange Commission (SEC) court battle, which had the potential to influence Bitcoin’s price trajectory.
The legal tussle revolves around Grayscale’s desire to convert its $12 billion GBTC Bitcoin Trust into a spot Bitcoin Exchange-Traded Fund (ETF), a move that could significantly enhance its attractiveness to investors. Despite the attention, the regulator had previously rejected Grayscale’s application, prompting the investment manager to take legal action in an attempt to overturn the decision.
As Bitcoin’s price continues to experience fluctuations and market participants wait for clarity on the Grayscale vs SEC case, the broader crypto community remains vigilant, well aware of the potential implications of such legal battles on the market’s future.
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Benjamin Godfrey is a blockchain enthusiast and journalist who relishes writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain media and sites.