🐺 Will Bitcoin Reach $350,000 in 2024?

🐺 Hi pack-mates,

This is Howling Markets, the experienced mews anchor briefing you about all the latest news in the financial markets!

Today we will be covering:

• What Are the Money Markets? 💸

• Will Bitcoin Reach $350,000 in 2024? 🪙

• How Are Money Market Rates Impacting Asset Managers? 📈

• Equity and Debt Markets Daily Update ⚖️

• And more!

Market Watch 👀

What are the Money Markets? 💸

Money markets are a particular type of debt market that focuses on very liquid short term debt instruments.

Money markets are extremely important because they are the primary space where banks lend and borrow reserves to each other in order to grant new loans, reach the minimum reserve requirement (if in place), and to avoid insolvencies.

Additionally, money markets are used for monetary policy transmission, exchanging currencies, borrowing money in the short term, and many other activities.

Because of this, money markets have the most differentiated participants list among all markets, including the central bank, institutional investors, commercial banks, retail investors, foreign investors, money market funds and large companies.

To better understand what money markets really are, it is often used the distinction between money markets and capital markets. Money markets are defined as those exchanges in which debt instruments with a maturity of less than one year are traded.

On the other hand, capital markets are those exchanges in which long term debt and equity instruments are traded. So, to rephrase it in a simpler manner, capital markets refer to the stock and bond markets.

Bitcoin Predictions: $350,000 in 2024, is it Possible? 🪙

his absurd bombshell of a title is what Micheal Saylor recently claimed during one of his interviews.

Micheal Saylor is the CEO of MicroStrategy, one of the few visionary companies that first introduced the role of AI in the business management processes. Additionally, among other things, they are well-known for their passion towards AI, cryptos, and particularly, Bitcoin.

Because of this, on MicroStrategy’s website there is an entire section dedicated to Bitcoin, where it is described as a “bank in cyberspace, run by incorruptible software, offering a global, affordable, simple, & secure savings account”.

This extremely positive Bitcoin description, paired with the belief that the crypto will play a continuously more important role in both private and public institutions, led MicroStrategy’s CEO to state that the valuation of Bitcoin could reach $350,000 in 2024.

Although this prediction might seem farfetched, there are quite a few other crypto-heads having similar, but not quite as extreme, price forecasts.

For example, both Matrixport and BlockStream, another two financial companies operating in the crypto realm, predict that bitcoin could reach over $100,000 by the end of 2024.

Today’s Howling Question

In this newsletter we have talked a lot about Bitcoin predictions, but would you be able to say by how much did bitcoin price changed between the beginning of the year and today (approximately)?

a)  +50%

b)  +100%

c)  +150%

d) -50%

e) -100%

Try to answer this howling question and then check the correct answer after the daily markets recap!

How Are Money Market Rates Impacting Asset Managers? 📈

As we have talked about in previous newsletters, in our current economic environment money market rates are extremely elevated, drawing investors to the money market and away from stocks and bonds.

This situation has occurred due to the direct relationship between the central bank’s rates and the money market rates. Since the central bank can be considered the “bank of the banks”, when it raises the cost of borrowing for commercial banks, the interest rates will directly increase for everyone else at the same maturities.

Likewise, if instead of borrowing, you are a lender looking to earn an interest rate on your savings, you would be in luck in a similar enviroment. Until recently, some saving accounts offered over 6% on the deposits, representing for savers an alternative way of earning money, in a more stable and less risky manner.

Due to a large portion of savers who preferred a slightly lower rate in exchange for a more stable return, asset managers have been faced with a significant drop in clients over the past months. As a matter of fact, they were no longer only competing against other asset managers, but also against the money market itself!

Now that the interest rates are starting to fall once again, do you expect more people to go back to their asset manager or do you believe that they would still rather keep their money in a savings account?

Equity and Debt Markets Update ⚖️

And now, our weekly markets update!

Today’s markets have just closed, registering a BIG move. Just a few hours ago the Federal Open Market Committee decided that they will not raise interest rates and stated that they see lower borrowing costs in 2024.

Once the decision gets published, we will thoroughly go through it and comment on it in tomorrow’s newsletter so be sure not to miss it!

But for now, how does this decision impact the markets?

Well, after the decision had been announced during the press conference, the stock market skyrocketed and recorded a 1.37% increase on the day, culminating the end of a sideways period on the market that lasted almost an entire month.

Likewise, as expected by the inverse relationship between stocks and bond yields, interest rates plummeted in view of a lower expected interest rate enviroment in 2024, as announced by the Federal Reserve.

More precisely, the interest rate on the 10 year US government bond dropped by 4.21% (first chart), while the 2 year US government bond yield fell by 6.30% (second chart).

As I briefly said before, tomorrow we will go over this extremely important news with a clearer mind and more information on the table, but for now, what do you think of the situation?

The stock market is extremely overextended and is losing momentum, do you believe it can continue to inch higher due to the optimisms regardless of its price?

Answer

The correct answer is c) +150%. 

Considering that the opening price of bitcoin on the first of January 2023 was $16530 and today’s price is currently around $42075, it is safe to say that bitcoin registered a Year-To-Date increase of around 155% with respect to its starting price.

Howl-Worthy Memes 😂

🐺 See you next time!

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