CCM Blockchain Newsletter - Week of December 16, 2024
Cohen & Company Capital Markets
A full-service, boutique investment bank with differentiated product expertise and bulge bracket DNA
Market Overview
Equities experience a (nearly) market-wide selloff: The S&P 500 and the Dow fell last week, but the NASDAQ hit an all-time high. The S&P 500 closed at 6,051.09 (-0.5%), the Dow closed at 43,828.06 (-1.8%), and the NASDAQ closed at 19,926.72 (+0.5%). The Russell 2000 declined significantly for the second week in a row to 2,346.90 (-3%).
Oil and natural gas prices surge:Oil prices ratcheted up substantially last week, with Brent crude futures rising 4% to $73.90/barrel. The increase comes at a time when the Chinese government has signaled that it plans to loosen monetary policy, leading some to expect that stimulus in China is imminent, which could boost demand for oil in the region. In its latest short-term energy outlook for oil, the EIA said that it expects global oil production to increase by 1.6 million barrels per day in 2025, and that oil will average $74/barrel over the year.Henry Hub also rose significantly last week, jumping up 6.3% to $3.28/MMBtu. The EIA anticipates that natural gas will average $3.00/MMBtu until the end of March and just under $3.00/MMBtu for the whole of 2025, and it also expects inventories to rise 2% above the five year average by the end of March 2025.
Inflation is stubbornly sticky: November’s CPI print of 2.7% was higher than October’s 2.6%, marking the second month in a row of rising inflation (September’s figure was 2.4%). Still, the print was in line with expectations, and the Fed is still expected to cut rates next week.
U.S. Treasury Bonds bounce hard on inflation print: With inflation still above the 2% target, U.S. Treasury notes rose significantly across the board last week. The 10-year increased 25 basis points to 4.45%, and the 5-year rose 22 basis points to 4.25%, and the 2-year increased 15 basis points to 4.25%.
European Central Bank cuts rates: The European Central Bank lowered rates by 25 basis points last week, marking the fourth rate reduction so far this year. “Accordingly, the interest rates on the deposit facility, the main refinancing operations and the marginal lending facility will be decreased to 3.00%, 3.15% and 3.40%,” a press release from the bank reads.
U.S. GDP growth rate declined year-over-year in Q3: According to the most recent estimates, U.S. GDP grew 2.7% in Q3 2024, a 0.5% reduction from Q3 2023. For comparison, China’s GDP growth rate declined 0.3%, while European nations generally saw positive growth rates.
What to look out for this week:
U.S. Census Bureau report on retail sales (Tuesday)
Federal Reserve report on industrial production and capacity utilization (Tuesday)
National Association of Home Builders Housing Market Index (Tuesday)
Federal Reserve press conference following policy meetings (Wednesday)
U.S. Census Bureau report on housing starts (Wednesday)
EIA petroleum report (Wednesday)
U.S. Bureau of Economic Analysis third estimate of Q3 GDP (Thursday)
National Association of Realtors report on existing home sales (Thursday)
U.S. Bureau of Economic Analysis third estimate of Q3 GDP (Thursday)
Weekly unemployment claims from U.S. Department of Labor (Thursday)
U.S. Bureau of Economic analysis Personal Consumption Expenditures Price Index (Friday)
Notable corporate earnings this week:
HEICO (Tuesday)
Micron (Wednesday)
General Mills (Wednesday)
Lennar (Wednesday)
Nike (Thursday)
FedEx (Thursday)
Carnival Corporation (Friday)
Accenture (Friday)
Bitcoin Market Update
Bitcoin continues to impress. After dipping below $100,000 following its historic break above this price point, the world’s leading cryptocurrency surged to yet a new all-time high of $107,700 today. The prospect of another Fed rate cut could be creating some bullish tailwinds for the cryptocurrency. Bullish sentiment is certainly in the air; Fundstrat Managing Partner and Head of Research Tom Lee, for example, provided a target of $250,000 for bitcoin in 2025 as part of his New Year predictions.
MicroStrategy (MSTR) has officially made it into the NASDAQ 100. The exchange announced that it would be adding MSTR to the index on December 23. With a market cap of $97.94 billion, MicroStrategy is up 496% this year and, as of December 9, the company holds 423,650 BTC worth roughly $44 billion.
Interesting Reads and Videos
Why bitcoin surged to $100K US after Trump's election and where it goes now
Activist Starboard Value Takes Stake in Bitcoin-Mining Company Riot
Bitcoin Mining Market News and Trends
Inspired by MicroStrategy, more public bitcoin miners are jumping on the fundraising-to-bitcoin bandwagon. As we covered last week, Hut 8 announced a $500 million at-the-market offering to purchase bitcoin as well as fund its expansion efforts, following MARA, which purchased 11,800 BTC for $1.1 billion. Last week, Riot announced that it had purchased 5,117 BTC for $510 million after a $525 million senior convertible note offering. CleanSpark also announced a convertible senior note offering to the tune of $550 million, but it plans to use this cash for stock buybacks, to pay down a line of credit with Coinbase, and expansion, among other things.
Bitcoin’s mining difficulty hit yet another high last week, increasing 4.4% to 108.52 trillion. The rise in difficulty comes on the heels of Bitcoin’s hashrate hitting an all-time high of 806 EH/s on Sunday (year-over-year, Bitcoin’s hashrate is up 59%). The all-time high for Bitcoin’s difficulty put a dent in hashprice, dropping it from $65.10/PH/day to $61.95/PH/day.
Thank you for reading, and please feel free to reach out with any questions.