Bitcoin Nears All-Time High as Investors Eye US Inflation Report; UK Mortgage Approvals Surge

Bitcoin Nears All-Time High as Investors Eye US Inflation Report; UK Mortgage Approvals Surge

Bitcoin is approaching its record high of nearly $69,000, as investors flock to the cryptocurrency amid expectations of a rise in US inflation. The US core personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred measure of inflation, is due to be released later on Thursday. Analysts forecast a 0.3% monthly increase and a 1.4% annual increase for January. The Fed has a 2% inflation target, but has indicated that it will tolerate a temporary overshoot as the economy recovers from the pandemic.

The PCE data could have a significant impact on the bond market, which has been rattled by rising inflation expectations and fears of tighter monetary policy. The yield on the 10-year Treasury note, which moves inversely to prices, climbed to 1.47% on Thursday, after falling four basis points on Wednesday. The yield on the two-year note, which is more sensitive to rate changes, rose to 0.14%, after dropping six basis points on Wednesday.

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The bond market turmoil has also weighed on equity valuations, especially for high-growth sectors such as technology. The Nasdaq 100, which is dominated by tech giants, fell 0.9% on Wednesday, while the S&P 500 lost 0.4%. The Dow Jones Industrial Average, which has more exposure to cyclical sectors, gained 0.3%.

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In contrast to the stock and bond markets, the cryptocurrency market was in a bullish mood, as bitcoin surged to a new all-time high of $63,729 on Thursday, according to CoinDesk. The rally came ahead of the listing of Coinbase, the largest US cryptocurrency exchange, on the Nasdaq on Wednesday. The listing is seen as a milestone for the mainstream acceptance of digital assets.

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Bitcoin has more than doubled in value this year, driven by increased demand from institutional and retail investors, as well as speculation that it could become a global reserve currency. However, the cryptocurrency remains highly volatile and faces regulatory and environmental challenges.

In other news, UK mortgage approvals hit the highest level since October 2022, as buyers rushed to take advantage of the stamp duty holiday. According to the Bank of England, there were 99,000 mortgage approvals in January, up from 96,000 in December and well above the average of 67,000 in the six months to February 2020, before the pandemic.
The stamp duty holiday, which was introduced in July 2020 and is due to end in March 2024, has boosted the housing market, as buyers seek to save up to £15,000 in tax. However, some analysts warn that the market could cool down after the deadline, as the economic impact of the pandemic and Brexit becomes more apparent.

Meanwhile, the Wall Street Journal reported that the US Securities and Exchange Commission (SEC) is investigating whether investors in OpenAI, a leading artificial intelligence research company, were misled about its financial performance and prospects.

The SEC is also looking into whether OpenAI violated any securities laws by raising funds through a complex legal structure that gives investors a stake in its future profits, rather than in its equity.
OpenAI, which was co-founded by Tesla CEO Elon Musk and other tech luminaries, aims to create artificial intelligence that can benefit humanity without causing harm or being influenced by corporate or political agendas.

The company has developed some of the most advanced AI systems in the world, such as GPT-4, a natural language processing model that can generate text on any topic.

OpenAI declined to comment on the SEC probe, but said in a statement that it is committed to transparency and accountability, and that it regularly updates its investors on its progress and challenges.

Source : THE GUARDIAN

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