Finimize - 💥 Bitcoin’s about to boom

Hi Reader, here's what you need to know for October 18th in 3:07 minutes.

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Today's big stories

Bitcoin’s price is near a record high thanks to a hotly anticipated exchange-traded fund
If ever there was a time to use Goldman’s go-to earnings season strategy, it’s now – Read Now
Goldman Sachs brought down the curtain on US banks’ third-quarter results in spectacular fashion

Doctor’s Orders

What’s Going On Here?

The price of bitcoin hit its highest level in five months on Friday, as the butt-numbing wait for a bitcoin exchange-traded fund (ETF) finally looks like it’s come to an end.

What Does This Mean?

There aren’t any US bitcoin ETFs to speak of right now, but that’s not for lack of trying: they’ve just always been rejected by the country’s financial regulator. But at least one looks likely to hit the market this week, and there are a couple of reasons why it’s finally happened (tweet this). For one thing, the ETF will hold bitcoin futures – that is, derivatives contracts that speculate on its price at a later date – rather than bitcoin itself. And for another, it was filed under mutual fund rules that the regulator says gives investors “significant protections” that previous hopefuls lacked.

This could be a big deal. Certain investors and institutions have, after all, been uncomfortable with the concurrent risks of buying a volatile asset and relying on crypto-specialist platforms. But regulatory sign-off could be the assurance they need to take the plunge and send demand for bitcoin even higher. That might be why the OG cryptocurrency’s price hit $59,920 on Friday – a stone’s throw from its all-time high of $64,000.

Why Should I Care?

For markets: All for one.
This news is almost universally positive for bitcoin trading platforms and mining firms, given the boost it’ll give crypto access and investor interest alike. That revelation wasn’t lost on investors: both crypto exchange Coinbase and bitcoin miner Bit Digital saw their share prices jump on Friday.

For you personally: We’re all bitcoin investors.
Fresh analysis from MSCI showed that at least 52 companies worth a combined $7 trillion are exposed to crypto, whether directly – Coinbase, say – or indirectly, like bitcoin-holder Tesla. In other words, you might’ve benefited from its ascent without even realizing it – if accidentally endorsed its problematic environmental impact too.

You might also like: This tried-and-tested model says bitcoin could be worth $83,000. Is it too good to be true?

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Analyst Take

Now’s The Perfect Moment For Goldman’s Earnings Season Strategy

Carl Hazeley, Analyst

What’s Going On Here?

Goldman Sachs has always had a penchant for one particular strategy around earnings time.

But this time around is a little different, because apparently we’ve found ourselves in a unique situation where the strategy should be especially effective.

For one thing, investors are nervous right now. That means even modestly better-than-expected updates could drive a relief rally in the stock market.

For another, Goldman analysts are predicting a 14% average upside to US stocks right now, versus an eight-year average of just 9%. They haven’t been this bullish since 2019.

So that’s today’s Insight: how Goldman’s strategy works, and why now’s the perfect moment to take advantage.

Read or listen to the Insight here

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Well Done

What’s Going On Here?

Goldman Sachs posted seriously tasty third-quarter earnings on Friday, making its rivals’ previously strong results look like an amuse-bouche to the main course.

What Does This Mean?

Goldman Sachs has a knack for helping other companies with fundraising and dealmaking, and it was certainly on top form last quarter: its investment banking segment saw revenue rise an expectation- and rival-beating 88% compared to the same time last year. Better still, the investment bank’s stock trading business brought in $3 billion, which both topped that of its competitors and helped its overall sales and trading results beat forecasts too. Put those all together, and Goldman grew its total revenue and profit by 26% and 63% versus the same time last year. That might be why investors initially sent its stock up 3% on Friday.

Why Should I Care?

The bigger picture: Banks are steeling themselves.
Goldman and other banks are expecting the big bucks to keep coming in the next few months. Mergers and acquisitions (M&A) have had a record year so far, after all, and that momentum isn’t likely to slow down anytime soon – not while private equity firms have a record $3.3 trillion to spend. And since investment banks make tidy fees for every deal they advise on, they’re making sure their teams are ready: Citigroup, for one, is beefing up its ranks, while JPMorgan’s planning to up its staff’s pay packets.

For markets: Retail investors might be losing interest.
Hargreaves Lansdown isn’t quite as lucky as Goldman, which primarily makes its money from companies and governments: the UK investment firm – which relies much more heavily on retail investors – revealed on Friday that revenue was down last quarter. That makes sense, with customers spending less time looking at screens now that lockdowns have loosened up. And since that’s the new normal (here’s hoping), investors were quick to send its stock down 2%.

You might also like: Why less retail investor interest in stock markets might be a good thing.

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– Henry Kissinger (an American politician, diplomat, and geopolitical consultant)

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Finimize - 💥 Bitcoin’s about to boom

Today's big stories

Doctor’s Orders

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Now’s The Perfect Moment For Goldman’s Earnings Season Strategy

What’s Going On Here?

Treat yourself to better health

Well Done

What’s Going On Here?

What Does This Mean?

Why Should I Care?

📝 [Insert your company’s name here]

🤖 Forget about the future

Older messages

💀 Traditional portfolios are done for

💰 JPMorgan finds 2 billion bucks

🍸 Bond breaks records

🇺🇸 Goldman’s hopes aren’t high

🤔 Your move, Fed

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