I think bitcoin’s new low merely reflects the movement of funds to other areas like AI, aerospace and resilience areas such as healthcare. There is no reason to put money in bitcoin and other cryptocurrencies when in the near term there are clear stocks that can almost guarantee good returns for the next 1-2 years.
With the US market being resilient, I think market fears rate hikes which would impact tech and AI stocks. Market has pulled back slightly on Friday in a knee jerk reaction. Market taking a breather now is also expected as the rise this year has already cause many of the indices to hit 52 week highs.
I think the market has mostly priced in the oil prices and potential of inflation being sticky but market always reacts to the potential for rate hikes. As long as there is no stagflation, market has priced it in. A stagflation is the real killer but maybe avoided if AI can truly lead to structural changes in the economy with increase productivity and job generation.
Market Crashes, Price in Rate Hikes? When to Start Picking up Chips?
US chip companies lost roughly $1.3 trillion in market cap in one day.
The crash is essentially "crowded AI hardware trade + interest rate repricing + overstretched semiconductor expectations." Friday's non-farm payrolls delivered another blow: 172,000 new jobs added in May, clearly beating expectations, unemployment rate holding at 4.3%, hourly wages up 3.4%yoy. Rate-cut expectations back down. On top of this, the SpaceX IPO will siphon off hundreds of billions in liquidity. With this crash, will you panic and head for the exit, or treat it as a chance to get on board?
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