The US Are Resuming Their Nuclear Power Production ☢️

🐺 Hi pack-mates,

This is Howling Markets, , the sustainable energy that helps you navigate the financial markets’ severe weather!

Today we will be covering:

• Education: How Is Nuclear Energy Produced? ⚠️

• FTX Liquidates 20 Million Shares of Grayscale’s Bitcoin ETF 📉

• The US Are Resuming Their Nuclear Power Production ☢️

• Equity and Debt Markets Daily Update ⚖️

• And more!

Market Watch 👀

How Is Nuclear Energy Produced?

During the past years, especially after the start of the conflict between Russia and Ukraine, most countries have started discussing increasing the productivity of nuclear energy.

The pros of this energy source are various:

• Carbon-free: the production of electricity through nuclear power plants does not emit any C02, making it a great alternative to any other green energy source such as wind turbines and solar panels

• High-power output: with a very small land footprint and a relatively low number of nuclear plants it is possible to produce enormous quantities of electricity. It is enough to think that with only three tablespoons of low-enriched uranium it is possible to satisfy the lifetime electricity demand of the average US consumer.

• Vast availability: the world contains a quantity of uranium that experts have estimated could last for over 5 billion years, making it a long-term and sustainable alternative.

Of course, this debate is also full of objections regarding its high up-front costs, the problem of storing and managing nuclear waste and the magnitude of the repercussions in case a nuclear reactor fails.

But how is energy produced from a simple mineral that can be mined right off the earth?

The first step is finding and mining uranium ore, which is then crushed and chemically treated into a yellow powder called “yellowcake”. This powder consists of uranium oxide which contains two uranium isotopes U-238 and U-235.

When it comes to creating energy, we are interested in the U-235 isotope. However, this atom is not sufficiently present in the uranium ore, so the yellowcake must be enriched, meaning that it must be put through a process to increase the quantity of U-235.

Once the uranium has been enriched, the powder is baked into pellets and then stacked to create fuel rods which are then used to generate heat inside a reactor, creating energy.

FTX Liquidates 20 Million Shares of Grayscale’s Bitcoin ETF

Just when you thought the repercussions of FTX’s liquidation had ended, here they come once again!

During the first 10 days since the launch of its ETF, Grayscale has seen an outflow of more than $2 billion worth of shares while many other ETFs have been met by an inflow of resources.

The main reason behind this difference is that Grayscale’s Bitcoin ETF has been created by transforming a preexisting Bitcoin Trust organized as a closed-end mutual fund. Essentially, the company simply reorganized their Bitcoin investment vehicle to make it more accessible to investors by listing it on a stock exchange.

Because of this detail, many large investors seeking exposure to Bitcoin were already holding Grayscale’s shares, including FTX.

Last week, years after the start of FTX’s liquidation procedure, the SEC finally gave the official approval to start liquidating the 20-million-shares position that the former cryptocurrency exchange held, causing an outflow of resources of close to $1 billion.

Now that even this unexpected hurdle has passed, do you believe that Bitcoin’s price will be able to start increasing once again, or do you believe that the “sell the news” phenomenon will continue?

Today’s Howling Question

And now, it is time for our howling question!

We have mentioned how Grayscale’s bitcoin ETF has been hit pretty hard by FTX’s liquidation, but do you know by how much the price of this ETF has fallen since its launch on the 12^th of January?

a)  -2%

b)  -5%

c)  -8%

d) -12%

e)  -17%

Try to answer the question by yourself, and then check the correct answer after the last interesting news!

The US Are Resuming Their Nuclear Power Production

Over the last few years almost every country in Europe and North America has been discussing how to handle the energy production in relation to the bans on Russia’s exports. And it became clear that for most countries the solution was going nuclear.

In 2022, when Russia first invaded Ukraine, the United States banned the imports of oil, liquified natural gas and coal from Russia as a way of limiting the available funds for the war that was starting. However, the US, just like its European allies, did not ban any imports of raw material and services related to nuclear power.

Improving nuclear power production in the United States was one of the main tasks on the government’s agenda up until the Fukushima accident of 2011. On this tragic occasion, a tsunami and an earthquake hit the nuclear plant causing the failure of the operating reactors.

This event sparked fear and mistrust in this relatively new green energy, halting US production and investments in the sector which were booming during the years leading to this cause.

However, the war between Russia and Ukraine helped both the US and the European countries that they were still too reliant on Russian energy, so they have decided to resume investments and increase production once again.

Furthermore, to protect investments, last month the US government has passed a bill to ban Russian imports related to nuclear energy, unless no alternative is available.

Since the start of the war, uranium’s price has surged +145% reaching its 16-year high. Such a move has been mainly fueled by companies stockpiling uranium fearing a cut in the Russian supply and by the decision of the government to move forward with the ban.

Equity and Debt Markets Update ⚖️

And now, our daily markets update!

In yesterday’s newsletter we went over all the signs of weakness that the stock market has been showing over the past month, and just a day later, the S&P 500 is already demonstrating a significant downward pressure.

The SPX opened the day with a gap up and continued to climb higher throughout the first portion of the trading session. However, towards the end, the price reversed and continued to climb down, leaving a long wick up and closing below the opening price.

However, the trading session has still been marked in green as the SPX has managed to add +0.22%.

The debt market, instead, mirrored the performance of the stock market, but with the opposite sign. During the start of the trading session, it moved down, then it reversed leaving a long wick down. The US 10 year government bond yield closed the day -0.41%.

Answer

The correct answer is d) -12%.

Ever since the ETFs were launched, the performance of Bitcoin and all its ETFs have been very poor, averaging around -12%. However, this can also be seen as a healthy correction and consolidation before pushing higher. We’ll see what 2024 will bring to the crypto world!

Howl-Worthy Memes 😂

🐺 See you next time!

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