This week’s price movements for Bitcoin (BTC), gold, and our stock pick Facebook.
Bitcoin (BTC) has had its best week in months. Continuing to ride the momentum from last week, BTC finally broke through the $60,000 price point on October 15. After touching $62,000 it hovered around $61,000 until the end of October 17, when it dipped back below $60,000. However, it jumped back up to $62,000, on October 18, then inching up until breaking on to $64,000 by October 20, when it spiked further midday to an all-time high of $67,000. Having achieved this, selling pressure returned, but not before another spike put BTC at $66,000. It is currently trading below $64,000.
The bullish sentiment that swept Bitcoin to its new all-time high can be largely attributed to the Securities and Exchange Commission (SEC) approving the first Bitcoin futures exchange-traded fund (ETF) in the United States last week. The ProShares Bitcoin futures ETF became the second-highest traded fund in history, trading 24 million shares in its debut earlier this week. With this approval the floodgates are opening, and many more are already starting to ensue.
Gold had a moderate week overall. After spiking up to $1,792 by October 14, the price of gold dipped before bumping up to $1,800. However, by October 15, gold tumbled, falling down to $1,770. It fell further on October 18, before jumping up on October 18 to $1,780. By October 20, it had fallen again to $1,770, but then rose sharply, trading around $1,785 going into October 21. It is currently trading around $1,780.
Gold prices dipped due to elevated US Treasury yields, but there was also support from concerns over persistently higher inflation. “Rising yields have been obviously negative for gold, and yet at the same time you have inflationary pressures rising with crude oil (prices) surging, which in turn have raised demand for gold,” said Fawad Razaqzada, analyst with ThinkMarkets. Although gold is often considered an inflation hedge, reduced stimulus and interest rate hikes have pushed government bond yields up, which raises the opportunity cost of holding non-yielding bullion.
Facebook has had a mixed October overall. Coming into the month trading at $334, FB gapped down opening on October 4, falling further to $324. However, by October 5 it had recovered to $334, where it largely traded until October 8, when it started trickling down. Reaching a nadir of $320 on October 12, FB bounced back to $324 the next day, gapping up to $328 on October 14. The opening hour of October 15 reversed this gain, which was reversed again, gapping up to $330 on October 18. It continued growing from there, reaching $340 by October 20 where it is currently trading.
FB’s dramatic moves this past week are due to news the social media giant is launching a pilot for its Novi digital wallet in the United States and Guatemala. With Novi, Facebook hopes to address some of the challenges posed by current international payment systems. Ultimately, the digital wallet intends to help people securely send and receive money abroad instantaneously, without fees. However, a group of Democratic Senators from the US Senate have demanded that Facebook discontinue the Novi wallet pilot project following the announcement. In a letter addressed to CEO Mark Zuckerberg, the group also asked him to commit not to bring its digital currency Diem to market. The Senators felt Facebook was “pursuing digital currency plans on an aggressive timeline,” despite the fact that “these plans are incompatible with the actual financial regulatory landscape.”
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