Daily Digest 1/31
Insight on the days top stories.
Stocks Move Higher on Final Day of Tumultuous Month
It is official that if the day closes out as expected the S&P 500 will have closed out its worst month since the covid disaster in March 2020. This month’s correction can be attributed to the fact that interest rates are expected to increase in the coming months. In comparison, Investors believe the pump the stock market took after the march 2020 crash could be attributed to the “near-zero short term interest rates” at the time.
The good news is that even though we have had the worst month performance-wise since then the S&P is still trading at double the price it was when it bottomed after the Covid news. Tech stocks are the ones that investors are worried about the most at the moment because of their already high valuations. That on top of the fact that the parts to make a lot of the technology like computer chips are having major supply chain issues and they are not that easy to get their hands on. This has also of course caused the price of those parts to rise as a result.
“Tech was just very highly valued, very overbought,” said Dustin Thackeray, chief investment officer at Crewe Advisors. “It was certainly due for a pullback.”
Prices are also starting to come back alive in both the stock and crypto markets for the day though as this is a big earnings report week for companies like Meta, AMD, and Google among many more are due in the next couple of days. It seems that for the moment some of the negative sentiment around increasing interest rates has started to weaken for the time being.
Blockchain is just a database without crypto, legal expert says
Blockchain is still an up-and-coming technology that many companies are trying to incorporate into their current day-to-day operations. Companies can use this technology to be able to keep track of many different types of files like medical records and more. They also do not necessarily need a token to facilitate these operations.
While blockchains do not necessarily need a token operating without it does cap their full potential of it. Turkish law expert Elçin Karatay told Cointelegraph that he thinks without a currency on top of it blockchain would just be a glorified database.
Turkey has been exploring their own regulatory framework for cryptocurrencies at the moment. Citizens of the country have been flooding into cryptocurrencies to hedge against inflation in the country which is in the double digits. The effects of inflation can be seen in almost every sector and it only makes sense for countries that are reaching a hyper inflation scenario to start exploring other options. Even in the US, it is getting to a point where wages are not keeping up with rising inflation at the moment but the dollar is still the most used currency around the world so that is saving it for now.
“All the opportunities created by this industry, just like all the risks, manifest themselves in the fields where crypto and blockchain go hand in hand,” said Karatay in regards to a running narrative that ”blockchain is good, crypto is bad”. She also brought up that if you only focus on the risks of the industry you will end up eliminating the possible benefits of that industry. When countries have been faced with a challenge the first move has been to “ban” crypto altogether or make its operations a shell of what they were before.
For the future of cryptocurrency regulation in Turkey Karatay wants them to look at how the EU is handling its legislations as well as finding a way to distinguish different cryptocurrencies by which ones are securities, utility-based, and asset-based tokens. Doing so would be very beneficial to a lot of countries when it comes to regulations because not all cryptocurrencies operate the same way or have the same utility.
After a long month, BTC is starting to make a nice upward trend on the 4-hour chart and it could continue for the moment at least. There has been more positive sentiment in both the crypto and stock markets in the last few days as interest rate hike fears have started to fall off.
As mentioned earlier the S&P 500 is up as well today on the news of many big companies releasing their earnings reports. This will give us a look at how well certain companies are performing and investors may be optimistic about the blue chips. This may be because they are expecting some of those companies to be benefiting from a rise in the prices of certain goods they provide.
For the time being this is good news and a great thing to see especially after one of the craziest months in a while. It remains to be seen how long this will continue though because of the interest rate hike that will happen in the near future. For now, traders get to relax a bit as we are no longer free falling.