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Wednesday, January 26, 2022
Salvadoran President Buys Bitcoin Drop – But Few Others Are
As dizzying as the mayhem on Wall Street has been, aided and abetted by retail investors seemingly missing the heady stock days of GameStop (GME) and AMC (AMC), it actually pales in comparison to what’s happening in the world of cryptocurrencies.
January isn’t even over yet, but crypto is in the throes of a long, cold winter, regardless of the impulses of the bitcoin-loving president of El Salvador.
Over the past few weeks, David Hollerith of Yahoo Finance has been all over the carnage unfolding in the digital coin market, where the bears seem to have the upper hand. And according to an analyst who spoke to Hollerith, an extreme bear case could see bitcoin (BTC-USD) drop as low as $14,000.
Whether this grim scenario will materialize, no one knows. However, one thing is clear: the longer this rout continues, the more likely it is that the forces shaping the debate in Washington will opt for excessive regulation.
The volatility — which has halved bitcoin’s gains since its November all-time high above $67,000 — led American Express CEO Stephen Squeri to take a victory lap in a Yahoo Finance Live interview for being cautious about which payment card company is getting into crypto-based payments. It also prompted the IMF on Tuesday to ask Bukele to withdraw from Salvadoran bitcoin legal tender law.
Jennifer Schonberger of Yahoo Finance has confirmed that the White House is set to take a more assertive role in the conversation about cryptocurrency oversight. Soon-to-be-released guidance from a National Security Council (NSC) memorandum “will direct federal agencies to assess the risks and opportunities posed by crypto and dig into the details of a digital currency of the central bank,” Schonberger reported Tuesday.
Building on news from last week that the Federal Reserve is openly flirting with creating its own digital currency, Schonberger added that the Biden administration’s decision “will also examine the impact of digital assets on financial stability. and standardize crypto regulation with other countries.”
Residents of DC’s political and political establishments — busy as they argue over just about everything — are trying to figure out what rules should govern crypto, an asset class for which Securities and Exchange Commission Chairman Gary Gensler, was not enthusiastic, a status quo it is called “the Wild West”.
The president is right: there has been a noticeable spike in illicit and fraudulent activity in crypto. Recently, Hollerith also reported that various scams and hacks have cost crypto investors tens of billions of dollars; Meanwhile, a new crypto protocol called Tornado Cash is amplifying ethereum (ETH-USD) laundering fears.
Touted as an alternative to risky fiat-based assets, crypto has seen a massive influx of retail investors. While it is certainly true that digital currencies are plagued by the same worries as equities, inflated by years of lavish monetary and fiscal stimulus, one key difference is that equities are a heavily regulated asset class. Crypto is, to steal a phrase from Gensler, a Wild West in its infancy, with few guardrails at this point.
Within Congress, various factions are forming to shape the contours of crypto regulation. While some policymakers are inclined to see the industry flourish, others (like Gensler) prefer to err on the side of investor protection.
Protecting investors from fraud and big losses is apparently what regulators should aim to do. Yet, as the aftermath of the 2008 financial crisis illustrated, it doesn’t take much for Washington to create new laws that end up becoming far more complicated than originally intended. And nothing agitates policymakers more than a volatile market that harms small investors or creates systemic risk that puts big ones on the brink of insolvency.
If the current downtrend continues, the great crypto rout of 2022 is bound to lead to nasty stories of retail buyers in the red, or even larger players finding themselves on the wrong side of the trend.
In the absence of a concrete regulatory infrastructure, calls for regulators to “do something” will grow louder and louder – and that could sway the debate in ways that bitcoin evangelists might not like (some don’t). already do not).
Through Javier E.Davideditor at Yahoo finance. Follow him on @Teflongeek
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What to watch today
7:00 a.m. ET: MBA Mortgage Applications, week ending January 21 (2.3% over the previous week)
8:30 a.m. ET: Advance the trade balance of goods, December (-$96.0 billion expected, -$98.0 billion in November)
8:30 a.m. ET: Wholesale inventories, month-over-month, preliminary data for December (1.3% expected, 1.4% in November)
10:00 a.m. ET: New Home Sales, December (760,000 expected, 744,000 in November)
2:00 p.m. ET: Federal Reserve monetary policy decision
6:00 a.m. ET: Stifel Financial Corp. (SF) expected to report adjusted earnings of 86 cents per share on revenue of $1.43 billion
6:00 a.m. ET: Anthem Inc. (ANTM) expected to report adjusted earnings of $5.12 per share on revenue of $36.58 billion
6:30 a.m. ET: AT&T (J) expected to report adjusted earnings of 75 cents per share on revenue of $40.47 billion
7:00 a.m. ET: General Dynamics Corp. (GD) expected to report adjusted earnings of $3.37 per share on revenue of $10.67 billion
7:00 a.m. ET: Nasdaq Inc. (NDAQ) expected to report adjusted earnings of $1.73 per share on revenue of $867.80 million
7:30 a.m. ET: Kimberly-Clark Corp. (KMB) expected to report adjusted earnings of $1.24 per share on revenue of $4.89 billion
7:30 a.m. ET: Boeing (BA) expected to post adjusted losses of 4 cents per share on revenue of $16.67 billion
7:30 a.m. ET: Abbott Laboratories (ABT) is expected to report adjusted earnings of $1.21 per. share on revenue of $10.73 billion
8:15 a.m. ET: The Progressive Corp. (RPG) expected to report adjusted earnings of 99 cents per share on revenue of $12.09 billion
4:00 p.m. ET: Intel (INTC) expected to report adjusted earnings of 90 cents per share on revenue of $18.38 billion
4:05 p.m. ET: Las Vegas Sands Corp. (LVS) expected to post adjusted losses of 26 cents per share on revenue of $1.05 billion
4:05 p.m. ET: Whirlpool Corp. (WHR) expected to report adjusted earnings of $5.93 per share on revenue of $5.89 billion
4:10 p.m. ET: ServiceNow Inc. (NOW) expected to report adjusted earnings of $1.43 per share on revenue of $1.6 billion
4:10 p.m. ET: Qualtrics International (XM) expected to post adjusted losses of 2 cents per share on revenue of $297.72 million
4:10 p.m. ET: You’re here (TSLA) expected to report adjusted earnings of $2.37 per share on revenue of $16.64 billion
4:20 p.m. ET: Xilinx (XLNX) expected to report adjusted earnings of $1.02 per share on revenue of $949.44 million
President Biden is set to welcome a range of CEOs – from the CEO of General Motors (GM) Mary Barra to the co-CEO of Salesforce (CRM) Marc Benioff — at the White House for a visit at 1 p.m. ET. The topic is Build Back Better legislation as Biden tries to build momentum for his signature proposal – but stalled.
European markets push higher as traders await Fed rate decision [Yahoo Finance UK]
Microsoft beats analysts’ expectations in second quarter as cloud revenue grows 46% [Yahoo Finance]
Mark Zuckerberg’s Stable Coin Ambitions Crash With Diem Sale Talks [Bloomberg]
Robinhood says it is in a “position of strength” to deal with unlikely market events [Reuters]
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