Bitcoin Is Still Falling. The Dip-Buyers Are Staying Away.
A ‘Buy Bitcoin Here’ sign at a 7-Eleven store in Los Angeles.
Getty Images
Text size
After more than a week of stock market volatility grabbing the limelight, the cryptoverse said ‘hold my beer’ over the weekend.
U.S. stocks dropped last week as a mixed jobs report rounded off a week dominated by Omicron coronavirus variant concerns and Federal Reserve Chair Jerome Powell’s midweek hawkish pivot.
But when it comes to cryptocurrencies, the fun doesn’t stop on a Friday afternoon, thanks to 24/7 trading. Not to be outdone, Bitcoin dropped like a stone early Saturday, plunging around 20% to $42,000 at one point before recovering to $49,000.
Remember when Bitcoin was supposed to be “digital gold,” acting as a haven asset when things get rough? Well, the weekend slump was another sign that that characterization may be wrong. Where digital assets fit into the financial system is still unclear, but their incredible volatility is certainly not up for debate.
The global crypto market capitalization still sits just below $2.2 trillion, according to Coinmarketcap.com. That is a huge amount of money seemingly susceptible to wild one-day swings.
Admittedly, it was just one day of selling in thin trading conditions. However, Monday looks set to be another down day, with Bitcoin slipping a further 3.5% to $47,500. Ethereum, the world’s second-largest cryptocurrency, was 6% lower.
El Salvador President Nayib Bukele said his country bought the Bitcoin dip on Saturday. Bukele aside, the dip-buying bulls are conspicuously absent so far.
—Callum Keown
*** Join Barron’s senior managing editor Lauren R. Rublin and deputy editor Ben Levisohn today at noon as they discuss the outlook for stocks, interest rates, and companies in the news. Sign up here.
***
Bitcoin Stages Modest Comeback After Volatile Weekend Tumble
Bitcoin tried to stage a modest comeback on Sunday after a weekend tumble, settling back to $49,130.28 by 5:16 p.m. Eastern Time, as tracked by the crypto news website CoinDesk.
- Bitcoin, the largest cryptocurrency by market value, shed 20% on early Saturday before recovering some, in trading that had it losing about $10,000 an hour. Its value has dropped 29% since a Nov. 10 all-time high of $68,990.90.
- Losses appear related to uncertainties over the Omicron variant and Powell’s remarks to Congress last week that the central bank would hasten the wind-down of its Covid-19 pandemic bond-buying program in response to inflation. The stock market also pulled back.
- Saturday’s drop pulled down the total market value of the crypto universe nearly $400 billion to $2 trillion, before recovering to around $2.2 trillion, CoinMarketCap.com said. Ether fell more than 15% before recovering to trade slightly higher. Solana, Dogecoin, and Shiba Inu coins also traded lower.
- In El Salvador, where Bitcoin is a national currency, Bukele announced Saturday that it had “bought the dip,” snapping up 150 coins for an average of $48,670 each. He later wrote El Salvador had missed the bottom “by seven minutes.”
What’s Next: The $1 trillion bipartisan infrastructure law includes new tax-reporting requirements for cryptocurrencies as part of changes expected to raise $28 billion over 10 years. Starting in 2024, crypto transactions of more than $10,000 must be reported the same way as cash transactions.
—Janet H. Cho
***
Omicron-Specific Vaccines Could Be Fast-Tracked, CDC Says
As the Food and Drug Administration considers authorizing Covid-19 vaccine boosters for 16- and 17-year-olds this week, public-health officials were prepared to “move swiftly” to streamline the approval of Omicron-specific vaccines, if needed.
- Centers for Disease Control and Prevention Director Dr. Rochelle Walensky said Sunday the number of Omicron cases is likely to rise after being identified in at least 40 countries and in 16 U.S. states. Officials are hopeful current vaccines can prevent severe disease and hospitalization.
- White House chief medical advisor Dr. Anthony Fauci told CNN that although it is too early to say for sure, Omicron “does not look like there’s a great degree of severity to it.” The Delta variant is still 99.9% of 100,000 daily U.S. cases.
- A small study by the South African Medical Research Council said 70% of people being treated for Covid didn’t require oxygen. A separate study said the Omicron variant appears to include genetic code from another virus that causes the common cold in humans.
-
A
Norwegian Cruise Line
ship docked at New Orleans on Sunday with at least 10 passengers and crew positive for Covid-19 after stops in Belize, Honduras, and Mexico. Norwegian requires passengers and crew to be vaccinated before departure.
What’s Next: Omicron could give the technologies used by
Moderna
and
Pfizer
a chance to show their adaptability. The FDA’s Dr. Peter Marks laid out for Barron’sa possible timeline that could have updated vaccines ready for use in the U.S. by April, if necessary.
—Janet H. Cho
***
Congress Pushing to Pass Legislation in December
Congress is pressing ahead to pass several bills in December, including the nearly $2 trillion social spending and climate change bill—the second half of President Joe Biden’s domestic agenda—before campaigning begins for the 2022 midterm elections.
- This week’s focus is on the $777.9 billion National Defense Authorization Act, held up in the Senate last week over policy issues involving Russia and China. A compromise bill negotiated by leaders in the House and Senate could come up for a House vote this week.
- Congress also faces a deadline to raise the debt limit before Dec. 15, after lawmakers passed a stopgap spending measure that will fund government operations through Feb. 18. Some lawmakers want to lift the debt limit in the NDAA, which House Minority Leader Kevin McCarthy opposes.
- The House passed Biden’s nearly $2 trillion Build Back Better plan in November, and all 50 Democrats must agree to approve it in the Senate. “The president is optimistic” Congress will pass it by Christmas, White House spokeswoman Karine Jean-Pierre told MSNBC on Sunday.
- Senators still need consensus on House-approved measures including: a $4,500 tax credit for electric vehicles made in unionized U.S. factories, an $80,000 limit on federal deductions of state and local tax deductions, and four weeks of paid family and medical leave.
What’s Next: Neither Sen. Joe Manchin (D., W.Va.) nor Sen. Kyrsten Sinema (D., Ariz.) have committed to the latest version of the Build Back Better bill. The Senate parliamentarian hasn’t decided if Democrats can include their immigration or drug-pricing proposals.
—Janet H. Cho
***
Rivian on Deck for Analyst Ratings After Its First ‘Buy’
Electric-truck maker
Rivian
was one of the year’s hottest public stock debuts in early November, and now it’s time for Wall Street analysts to publish their ratings and estimates. Rivian has already gotten a Buy rating, and a $130 price target, which implies the potential for a 25% gain.
- Wedbush analyst Dan Ives calls Rivian a “stalwart” in the making because it is focused on the truck and sport utility market, which is virtually untouched by electric vehicles. Trucks and SUVs are about 60% of passenger vehicle sales.
- Rating the shares a Buy, Ives forecasts $3.6 billion in sales from about 45,000 vehicle deliveries in 2022 and $8.4 billion in sales from about 105,000 deliveries in 2023. Profit isn’t expected in either year.
-
Rivian’s stock rocketed higher after its Nov. 10 initial public offering, reaching a Nov. 16 high of almost $180 each. It fell 6.7% this past week, but its $90 billion market value makes it bigger than
Ford
and -
EV makers
Li Auto
and
XPeng
got analyst Buy ratings after they started trading last year. But after
Tesla
’s
2010 IPO, just one analyst,
Goldman Sachs
’ Patrick Archambault, rated it, giving it a Hold rating. Tesla is now valued at over $1 trillion.
What’s Next: Ives is even more encouraged that
Amazon.com
is an early investor in Rivian and has an order for 100,000 custom-made electric delivery vehicles.
—Liz Moyer
***
Evergrande Acknowledges It May Not Repay Its Debt
China Evergrande Group
lost another fifth of its market value, falling to historic lows Monday, after the group acknowledged in a filing late Friday that it was on the verge of a restructuring of its large debt load.
- The group faces a $82.5 million payment due to offshore creditors Monday, at the expiration of a 30-day grace period that came after it failed making the payment on the due date.
- In a sign that Chinese authorities are taking the situation seriously, the central bank announced Monday that it would cut the banks’ reserve requirements on Dec. 15.
- Evergrande said Friday that it had received demands for a total of $260 million to meet its obligations. In light of its “current liquidity status (…) there is no guarantee that the Group will have sufficient funds to continue to perform its financial obligations,” the company admitted.
- Evergrande shares fell by 19.6% in Hong Kong. The stock is down 87% since the beginning of the year.
What’s Next: The property giant said it now “plans to actively engage with offshore creditors to formulate a viable restructuring plan.”
—Pierre Briançon
***
MarketWatch Wants to Hear From You
How do reverse mortgages work, and what are the potential tax benefits?
A MarketWatch correspondent will answer this question soon. Meanwhile, send any questions you would like answered to thebarronsdaily@barrons.com.
***
—Newsletter edited by Liz Moyer, Camilla Imperiali, Steve Goldstein, Rupert Steiner
