Global Business Week: Why the Market is thinking differently about Bitcoin

The state of Financial markets & Economies, Weekly Charts, Business Trends & Statistics

It was another record-making week for the U.S markets, as both Dow and the S&P 500 set all-time highs on Friday. Actually, it was the fifth time in the last six sessions the S&P 500 reached a record. For the Dow, it was the second time last week. The gains were pretty broad-based, with industrial, retail, and tech stocks all chipping in to push the market higher. To put all these records into perspective, consider this — Research by Bank of America finds that investors put more money into stocks in the past five months than they did in the prior 12 years — a total of $576 billion versus $452 billion.

The biggest buzz right now in stocks is about Coinbase, the largest cryptocurrency exchange in North America, which plans to go public on April 14 via a direct listing. Although records were being set this week, trading was sluggish again, with volume 28% below the average of the past 30 days. Summarizing, The Dow climbed 2% on the week, while the S&P 500 gained 2.7% for its best week since early February, and the Nasdaq jumped 3.1%.

The US Dollar index has tracked movements in the US 10-year Treasury yield closely this week. A rise in yields earlier on Friday drove the DXY from yesterday’s low of 92.00 to an intraday high of 92.40 before yields rotated lower and the DXY fell back, now trading around 92.20. Overall, it was a disappointing week for the benchmark index bulls as they continued to track lower on renewed optimism in Equities.

And finally, to cryptocurrencies — the digital assets have continued to keep up their bullish sentiment. The only difference of late has been the Alt. coins that have taken the lead with Ethereuem posting yet another all-time just shy of $2200. Bitcoin has lagged its contemporaries recently but continues to trend near the $60k price range. If the bullish sentiment persists over the weekend, BTC might take another stab at its previous ATH. Overtaking the cumulative market cap of $2 trillion was another shot in the arm for cryptos this week.

And while we are on the topic of cryptocurrencies, today’s featured infographic (above) is associated with them as well. According to research from Ark Invest, investors are holding onto bitcoin for longer and longer durations. By holding the asset rather than selling, it decreases the supply of coins available on the market at any given moment, which can drive up the price. This suggests that market participants see the long-term value and potential future payoff the asset possesses.

And before we move on to some of the other weekly statistics here are the weekly & YTD numbers for the markets as usual (Figure 1).

Figure 1

Global Average Corporate Tax Rates 2020

U.S President Biden wants to raise the corporate tax rate to 28% to help pay for the jobs and infrastructure plans. Treasury Secretary Yellen says she is working with other G-20 countries to agree on a minimum tax plan. The conservative Tax Foundation found the average corporate tax rate among the G-20 was 27% in 2020, with most countries’ tax rates falling between 20 and 30% (Figure 2).

Figure 2

The Ballooning Valuations In Private Equity Deals

Private equity is getting increasingly expensive. As a result, the pricing of an average deal today, by the EV/EBITDA metric, is expected to be at a premium relative to the last decade. Overall, EV/EBITDA shows the relationship between a company’s total value and its earnings and is often seen as the price-to-earnings ratio’s sophisticated sibling, used to view companies the way acquirers would. The chart below highlights (Figure 3) ballooning valuations in Private equity deals, over the last decade.

Figure 3

Top 10 DeFi Assets — Mar. 2021

Decentralized finance has been on a rip with the latest figure on total value locked (TVL) in such assets crossing the $50 billion mark. Have said that the latest Defi monthly report by Nyctale (Figure 4) shows relatively slower growth in the month of March — signified by slight increases with a pullback in investment/usage.

Figure 4

493 New Billionaires added in 2020

According to the Forbesannual World’s Billionaires list, a record 493 newcomers were added in its 35th edition released yesterday — one new billionaire minted every 17 hours, including 210 from China and Hong Kong and 98 from the U.S. The newbies include China’s first vaping billionaire Chen Zhiping, Carvana founder Ernest Garcia III and Moderna CEO Stéphane Bancel. Together the 2,755 billionaires on the list are worth $13.1 trillion, up from the total $8 trillion of the 2020 list (Figure 5).

Figure 5

Best Paying Jobs in the U.S

Data collated from the U.S. Bureau of Labor Statistics reflects the jobs with the highest median annual salary in every state of America (Figure 6). Dentists in Massachusetts and pediatricians in Pennsylvania boast the highest median salaries anywhere in the country, with both making $208K per year. A lot of occupations in medicine rank as the highest paid, including anesthesiologists, dentists & physicians. The highest-paid professionals in each state usually earn at least $200K, with only 4 states or territories falling below $200,000.

Figure 6

Latest Global Economic Outlook

The latest World Economic Outlook by the International Monetary Fund (IMF) sounds an optimistic tone on the global economic recovery. Upgrading the January forecast, the latest projections are forecast to be 6% in 2021 (0.5 percentage point upgrade) and 4.4% in 2022 (0.2 percentage point upgrade), after an estimated historic contraction of -3.3 % in 2020 (Figure 7).

Figure 7

Coinbase’s Massive Growth

A week before its initial public offering (IPO), America’s largest crypto exchange Coinbase, reported significant user growth for the first quarter of 2021 — cryptocurrency exchange claimed to have an estimated 56 million verified customers in Q1 2021 — that’s an additional 13 million since Q4 2020 (Figure 8). The company offers a variety of products, such as an advanced trading platform, crypto wallets for retail investors, savings accounts for institutions, and even its own stable coin that’s backed by the U.S. dollar.

Figure 8

Beijing Displaces New York as The Billionaire Capital

For the first time in seven years, New York City has lost its title as the world’s billionaire capital. In 2020, the Big Apple was displaced by Beijing which recorded a net gain of 33 billionaires (Figure 9). Beijing is now in the top spot with 100 individuals worth a billion dollars or more, narrowly ahead of New York’s 99. The findings come from the 2021 Forbes World’s Billionaires list which shows that a quarter of its 2,755 members live in just 10 cities with more than 10 percent resident in just four Chinese metropolises.

Figure 9

Market Humor: Sweeter Days for Europe Ahead?

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