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Thoughts of the Day

Bitcoin saw extreme volatility yesterday, hitting new all-time highs around $69,000 before plummeting nearly 15% to $59,000, ending the day down 7%. Despite the plunge, Bitcoin is just back to Monday’s price. This move likely wiped out a lot of leverage traders but the long-term trend remains intact. US Bitcoin ETFs saw net withdrawals of over $125 million (estimated) but this follows days of huge inflows. As the market stabilizes, ETF inflows is likely to drive BTC price higher again.

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Day Ahead

The US ADP Non-Farm Employment Change is expected to show that +145k jobs are being added to the economy compared to +107k in December.

The Bank of Canada is expected to keep interest rates unchanged at 5.00%. The tone of their statement will provide clues as to when interest rate cuts are likely.

Fed Chair Powell is due to testify about the Semi-Annual Monetary Policy Report before the House Financial Services Committee, in Washington DC.

The US JOLTS Job Openings is expected to decline to 8.90M from 9.03M in February.

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What Happened Yesterday

Market Movements as of New York Close 05 Mar 24

The US Treasury Yield curve inversion widened to 0.41% as the US 2-year bond yield fell -0.07% to 4.54% while the 10-year yield slipped -0.09% to 4.13%. Lower US bond yields did not boost market sentiment as investors were spooked by bad news about Apple’s sales in China. 

News of plunging Apple iPhones sales in China (headline 2) weakened risk sentiment. That caused US stock futures to fall through the Asian and London trading sessions with the S&P 500 futures down -0.34% before the New York session began.

The US stock market opened lower from Monday. It then continued to trade lower with Apple which fell -2.84% on the day, leading the way. Extreme volatility in Bitcoin and the cryptocurrency market did not help matters as well. Some weakness may also be attributed to profit taking ahead of important job data releases this week. As a result, the S&P 500 fell -1.02% (high: -0.32%, low: -1.44%), the Dow Jones decreased -1.04% (high: -0.21%, low: -1.36%) while the Nasdaq sank -1.80% (high: -0.71%, low: -2.32%).

Crowdstrike (Nasdaq: CRWD) rose +23.76% in aftermarket trading following strong forecasts as the cybersecurity company forecasted annual results which broke above Wall Street estimates. The strong forecast was due to an expected surge in enterprise spending on cybersecurity this year. Earnings per share: 95 cents vs 82 cents expected. Revenue: $845 million vs $839 million expected. 

Bitcoin had a wild trading day yesterday. 
It first started Asian trading with a rally from around 67,500 to a high of 68.800 (just shy of all-time highs at 69,000) but it couldn’t break that record and quickly fell to 65,000 within hours. It then bounced to 67,500 and traded in the 65.5k-67k range till the start of the NY session
When NY hours started, BTC started grinding higher and spiked to around 69,200, breaking to new ATH. However, that was short-lived, and within minutes it fell to 64.5k, as profit taking by whales at the highs triggered long liquidations. It consolidated around that level for 2 hours, before plunging again to 59.2k. 
It quickly bounced back to 64.5k and has been trading around 63k since. 
The fall from peak to the low of the day was almost 15%, and $1.1 billion worth of derivatives trading positions were liquidated during the past 24 hours. This extreme volatility is stomach-churning but is par for the course in the crypto-market!
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Headlines & Market Impact

AMD reportedly hits U.S. regulatory roadblock for China-tailored chip

Notable Snippet: American semiconductor company Advanced Micro Devices has failed in getting a made-for-China AI chip past U.S. regulators and will need to apply for an export licence, Bloomberg reported Tuesday.

The report said AMD designed the chip to have lower performance than its premium products in order to comply with U.S. export restrictions. But Bloomberg reported the Commerce Department did not clear the chip for sale in China because it was still too advanced.

AMD will now have to obtain a licence from the department’s Bureau of Industry and Security, the report said.

It’s not clear if the company will apply for the licence. AMD and the Commerce’s Bureau of Industry and Security did not immediately respond to CNBC’s requests for comment.

While the U.S. has restricted sales of products containing the nation’s most advanced semiconductor technologies to China, citing national security concerns, American companies have continued to sell mature or less advanced technologies to the massive market without licences.

AMD’s products include chips that can be used to develop and train AI models – something U.S. officials have warned that Beijing could use to gain military advantages.

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Apple iPhone sales plunge 24% in China as Huawei smartphone business resurges, report says

Notable Snippet:  Sales of Apple’s iPhone plunged in China in the first six weeks of 2024, according to a Counterpoint Research report.

The analyst firm said in a note Tuesday that iPhone sales dropped 24% in the period, as Apple faced stiff competition from local smartphone firms like Huawei, Oppo, Vivo and Xiaomi.

Apple came under particular pressure from Chinese tech giant Huawei, whose consumer business is experiencing a resurgence in China after the launch of its Mate 60 smartphone.

Several rival Chinese smartphone companies also logged drops in their unit sales in the six-week period, but the declines were less pronounced than that of Apple.

The best-performing smartphone brands for the first six weeks were Huawei and its spinoff Honor, which branched out of the tech giant in 2020 as a result of U.S. sanctions.

Huawei smartphone unit shipments rose 64% year over year in the first six weeks of 2024, according to Counterpoint Research. Shipments of Honor handsets, meanwhile, added 2%.

Oppo’s smartphone shipments fell 29% year on year, while Vivo and Xiaomi logged declines of 15% and 7%, respectively, according to Counterpoint Research.

Last year, Huawei launched a smartphone called the Mate 60, which had 5G connectivity. That was a major surprise to the world, as the U.S. government hit Huawei with numerous sanctions in 2019 and 2020, cutting it off from key chips and technology required for 5G mobile internet.

Once the world’s largest smartphone player by sales volume, Huawei was really the only major challenger to Apple in China when it came to high-end devices. Customers flocked to iPhones, once Huawei’s phones lost their competitiveness due to the lack of 5G and no cutting-edge semiconductors.

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Bitcoin Tumbles 10% After Hitting Record High; Triggers $1B Crypto Liquidations

Notable Snippet: Bitcoin (BTC) plunged more than 10% from its new all-time high on Tuesday as heavy selling on crypto exchanges capped the price surge beyond $69,000, sending the price below $60,000 at one point.

BTC rose to $69,200 earlier during the day, but the order book on crypto exchange Binance showed large sell orders clustered at higher price levels, with over 300 BTC, worth about $20 million, to be sold at $69,000 and more than 500 BTC for sale at $70,000.

The wild price action triggered a severe leverage wipeout, liquidating over $1.1 billion worth of derivatives trading positions across all digital assets through the past 24 hours, CoinGlass data shows. Some $870 million of the liquidated positions were longs, or bets on rising asset prices, according to CoinGlass.

Tuesday’s action even surpassed last August’s $1 billion leverage flush, when bitcoin suddenly dropped below $25,000 from $28,000. The move marked roughly a local low in prices, though it was several weeks before bitcoin actually began moving again to the upside.

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Phan Vee Leung
CIO & Founder, TrackRecord