GB Market Commentary 8/02/2022
by Marcus Sotiriou
Bitcoin continued its impressive bounce yesterday as it reached $45,500 approximately, which is almost a 40% move from the lows. We have seen in the past few days Bitcoin break the correlation with the stock market, as the S&P 500 was down 0.37% yesterday.
Improved sentiment could be due to the increase in institutions who are entering the crypto space. Yesterday, KPMG in Canada announced that they are investing in Bitcoin and Ethereum for their corporate treasury which is remarkable. KPMG are the 4th largest accountancy company in the world with 40,000 employees and a market capitalisation of over $30 billion.
They are the second-biggest company by market capitalisation ($30 billion) to add Bitcoin to their balance sheet behind Tesla. However, the fact KPMG are financial services company means that their investment arguably carries more weight. KPMG said, “This investment reflects our belief that institutional adoption of crypto assets and blockchain technology will continue to grow and become a regular part of the asset mix.” The inclusion of Ethereum gives confirmation that institutions are not just looking at Bitcoin as a long-term investment. This move may also put pressure on other accounting firms like Deloitte, PwC and EY to follow suit.
Despite the buzz around crypto with the astounding rally and KPMG news, macro-economic factors have not changed. U.S. CPI data getting released on Thursday, which is expected to give a year over year reading of 7.3% (a 40 year high) will give us a clearer picture of how things stand currently. A higher-than-expected reading will likely mean global markets suffer more pain, yet a lower than expected may mean February continues to be a green month. Cryptocurrencies’ correlation with the stock market has dissipated recently, yet it may return if we endure fear in global markets, as crypto is definitely still a risk-on asset at this early stage.