A number of factors are behind bitcoin’s New Year rise, according to analysts, including an increased probability of interest rates being lowered and purchases by large buyers known as “whales.”
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Bitcoin has begun 2023 on a positive note, with the price of the world’s largest digital token up roughly 26% since the start of January.
On Saturday, bitcoin’s price rose above $21,000 per coin for the first time since Nov. 7.
It’s still a far cry from the $68,990 record high bitcoin notched in Nov. 2021. But it has given market players cause for some optimism.
Analysts say that a number of factors are behind bitcoin’s New Year rise, including an increased probability of interest rates being lowered, as well as purchases by large buyers known as “whales.”
New Year, new monetary policy?
Inflation is cooling down, and economic indicators suggest slowing U.S. economic activity. That’s made traders optimistic the Federal Reserve could reverse, or at least soften, its rate hiking strategy.
“Bitcoin looks to have recoupled with macro data as investors shrug off the FTX collapse,” James Butterfill, head of research at digital asset management firm CoinShares, told CNBC by email.
“The most important macro data investors are focussing on is the weak services PMI and the trending down of employment and wage data. This coupled with downwards trend in inflation has led to improving confidence, while it comes at a time when valuations for Bitcoin … are close to all time lows. The prospect of looser monetary policy off the back of weaker macro data and low valuations is what has led this rally.”
The Fed lifted borrowing rates seven times in 2022, forcing risky assets such as stocks — and tech stocks, in particular — into a tailspin. In December, the benchmark funds rate increased to 4.25%-4.50%, reaching its highest level since 2007.
Bitcoin has been caught up in the market drama around lending rates, as it is increasingly viewed by investors as a risky asset.
Backers previously talked up bitcoin’s potential as a “hedge” to buy in times of high inflation. But bitcoin failed to achieve that aim in 2022, instead slipping more than 60% as the U.S. and other major economies grappled with higher rates and living costs.
Yuya Hasegawa, crypto market analyst at Japanese crypto exchange Bitbank, said in a Jan. 13 note that this was “brewing a hope amongst market participants that the Fed will further slow down on the pace of rate hikes.”
The Fed is likely to keep interest rates high for the time being. However, some market players are hopeful that central banks will start easing the pace of rate rises, or even slash rates. Some economists predict a Fed rate cut could happen as soon as this year.
That’s as the risk of a recession is also playing on central bankers’ minds.
Some two-thirds of chief economists surveyed by the World Economic Forum believe a global recession is likely in 2023, according to research released by the Davos organizer on Monday.
The U.S. dollar has also sagged, with the greenback down 9% against a basket of currencies used by U.S. trade partners in the last three months. The majority of bitcoin trades against USD, making a weaker dollar better for bitcoin.
“We are seeing the dollar put in a top, inflation easing, interest rate hikes slowing down – all pointing to markets getting more risk-on over the next few months,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC.
‘Whales’ buying BTC
Larger purchasers of digital coins known as “whales” may be leading the latest rally in bitcoin, according to Kaiko.
The crypto data firm said in a series of tweets Monday that trade sizes had climbed from an average of $700 on Jan. 8 to $1,100 today on the crypto exchange Binance, indicating renewed confidence in the market by whales.
Whales are investors who’ve hoarded large piles of bitcoin. Some are individuals, like MicroStrategy CEO Michael Saylor and Silicon Valley investor Tim Draper. Others are entities such as market makers, which act as the middlemen in trades between buyers and sellers.
Skeptics of digital currencies say this makes the market prone to manipulation by a select few investors with large piles of tokens. The wealthiest 97 bitcoin wallet addresses account for 14.15% of the total supply, according to fintech firm River Financial.
In December, Carol Alexander, a professor at the University of Sussex, told CNBC that bitcoin could see a “managed bull market” in 2023 in which bitcoin travels north of $30,000 in the first quarter, and to $50,000 in the second half. Her reasoning was that with trading volumes evaporating, and the level of fear in the market extremely high, whales would then step in to prop up the market.
Bitcoin mining difficulty rising
There are other factors at play, as well.
Several bitcoin miners have been flushed out by the drop in prices. Bitcoin miners, who use power-intensive machines to verify transactions and mint new tokens, have been squeezed by the slump in prices and rising energy costs.
That’s historically a good sign for bitcoin, according to Ayyar.
These actors accumulate massive piles of digital currency, making them some of the biggest sellers in the market. With miners offloading their holdings to pay off debts, that removes much of the remaining selling pressure on bitcoin.
More recently, however, bitcoin’s network “difficulty” has been increasing, meaning more computing power is being deployed to unleash new tokens into circulation.
Mining difficulty reached a record 37.6 trillion on Sunday, according to BTC.com data, meaning that, on average, it would take 37.6 trillion hashes, or attempts, to find a valid bitcoin block and add it to the blockchain.
“Bitcoin mining difficulty is a measure of how difficult it is to create the next block of transactions,” said Marcus Sotiriou, market analyst at digital asset broker GlobalBlock, told CNBC.
“Bitcoin mining difficulty fell 3.6% before the last update, after a winter storm led some miners to shut down. However, now miners appear to have come back online, with new and more efficient machines.”
2024 ‘halving’
Meanwhile, events further down the crypto calendar could give traders cause for some New Year cheer. It is still a year away, but the so-called bitcoin “halving” is an event that often leads to excitement for crypto investors.
The halving, where bitcoin rewards to miners are cut in half, is viewed by some investors as positive for bitcoin’s price as it squeezes supply.
“There are signs this could be the beginning of a new cycle with Bitcoin, as it typically does around 15-18 months before halving,” Ayyar told CNBC.
The next halving is slated to happen sometime between March and May of 2024.
However, Ayyar cautioned, “At this point, we’re in overbought territory with Bitcoin and hence could definitely see a dip.” Prices could go for a dip if bitcoin closes below $18,000 in the next few days, he added.
Mario poses at the “SUPER NINTENDO WORLD” welcome celebration at Universal Studios Hollywood on February 16, 2023 in Universal City, California.
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Nintendo on Tuesday cut forecast for Switch sales for its fiscal year ending March 2025 as demand wanes for its ageing console.
The Japanese gaming giant said it now expects to sell 12.5 million units of the Switch over the course of the period. That’s down from a previous forecast of 13.5 million units.
Nintendo has been contending with fading demand for its flagship Switch console, which is now more than seven years old.
Investors are waiting for news surrounding a successor to the Switch, which they hope will re-energize Nintendo’s gaming business. In the past, the company said that the Switch successor will be announced in its current fiscal year, which ends in March 2025.
Nintendo also cut full fiscal year forecasts for sales and operating profit. The company said it now expects sales of 1.28 trillion yen versus a previous forecast of 1.35 trillion yen. The operating profit outlook for the period was slashed from 400 billion yen to 360 billion yen.
Here’s how Nintendo did in its fiscal second quarter ended Sept. 30 versus LSEG estimates:
Revenue: 276.7 billion Japanese yen ($1.8 billion), compared with 273.34 billion yen expected.
Net profit: 27.7 billion yen, versus 48.06 billion yen expected.
Revenue fell 17% year-on-year. Net profit plunged just over 69% versus the same period last year.
Super Mario, Zelda boost fading
The Switch is Nintendo’s second best-selling console in history, behind the Nintendo DS. Despite the recent fall in sales, Nintendo has prolonged the console’s appeal for an extended period of time since its launch in 2017 by relying on its recognizable characters.
In its last fiscal year, Nintendo managed to reinvigorate sales of the Switch thanks to the the success of the “Super Mario Bros. Movie” and the highly anticipated release of the “The Legend of Zelda: Tears of the Kingdom” game, which underscored the appeal of its iconic characters.
But that effect is fading.
On Tuesday, Nintendo noted the boost that the company received in the first half of its last fiscal year, but said “there were no such special factors in the first half of this fiscal year, and with Nintendo Switch now in its eighth year since launch, unit sales of both hardware and software decreased significantly year-on-year.”
Sales of the Switch totaled 4.72 units in the six months ended Sept. 30, compared with 6.84 million units in the same period of last year.
In the face of falling sales, Nintendo has tried to license out its intellectual property for use everywhere, from movies to theme parks. A new Super Mario movie is slated for release in 2026.
Meta’s Mark Zuckerberg plans to visit South Korea, scheduling key meetings during the trip, according to a statement by Meta on Wednesday, which did not provide further details. Reportedly, Zuckerberg is anticipated to meet with Samsung Electronics chairman Jay Y. Lee later this month to discuss AI chip supply and other generative AI issues, as per the South Korean newspaper Seoul Economic Daily, citing unnamed sources familiar with the matter.
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Meta extended its ban on new political ads on Facebook and Instagram past Election Day in the U.S.
The social media giant announced the political ads policy update on Monday, extending its ban on new political ads past Tuesday, the original end date for the restriction period.
Meta did not specify the day it will lift the restriction, saying only that the ad blocking will continue “until later this week.” The company did not say why it extended the political advertising restriction period.
The company announced in August that any political ads that ran at least once before Oct. 29 would still be allowed to run on Meta’s services in the final week before Election Day. Other political ads will not be allowed to run.
Organization with eligible ads will have “limited editing capabilities” while the restriction is still in place, Meta said. Those advertisers will be allowed to make scheduling, budgeting and bidding-related changes to their political ads, Meta said.
Meta enacted the same policy in 2020. The company said the policy is in place because “we recognize there may not be enough time to contest new claims made in ads.”
Google-parent Alphabet announced a similar ad policy update last month, saying it would pause ads relating to U.S. elections from running in the U.S. after the last polls close on Tuesday. Alphabet said it would notify advertisers when it lifts the pause.
Nearly $1 billion has been spent on political ads over the last week, with the bulk of the money spent on down-ballot races throughout the U.S., according to data from advertising analytics firm AdImpact.
Sam Altman, CEO of OpenAI, attends the 54th annual meeting of the World Economic Forum, in Davos, Switzerland, January 18, 2024 (L), and Amazon CEO Jeff Bezos speaks during the UN Climate Change Conference (COP26) in Glasgow, Scotland, Britain, November 2, 2021.
Reuters
Physical Intelligence, a robot startup based in San Francisco, has raised $400 million at a $2.4 billion post-money valuation, the company confirmed Monday to CNBC.
Investors included Amazon founder Jeff Bezos, OpenAI, Thrive Capital and Lux Capital, a Physical Intelligence spokesperson said. Khosla Ventures and Sequoia Capital are also listed as investors on the company’s website.
Physical Intelligence’s new valuation is about six times that of its March seed round, which reportedly came in at $70 million with a $400 million valuation. Its current roster of employees includes alumni of Tesla, Google DeepMind and X.
The startup focuses on “bringing general-purpose AI into the physical world,” per its website, and it aims to do this by developing large-scale artificial intelligence models and algorithms to power robots. The startup spent the past eight months developing a “general-purpose” AI model for robots, the company wrote in a blog post. Physical Intelligence hopes that model will be the first step toward its ultimate goal of developing artificial general intelligence. AGI is a term used to describe AI technology that equals or surpasses human intellect on a wide range of tasks.
Physical Intelligence’s vision is that one day users can “simply ask robots to perform any task they want, just like they can ask large language models (LLMs) and chatbot assistants,” the startup wrote in the blog post. In case studies, Physical Intelligence details how its tech could allow a robot to do laundry, bus tables or assemble a box.