Eurozone inflation slowed down and we're looking forward to the next ECB meeting, which may provide the markets with a 50bp rate hike. Bitcoin has been trading higher recently, while this week the hot topics this week are Tesla and Microsoft earnings. We asked Michalis Efthymiou, Market Analyst at NAGA, about his view on ECB, the leading crypto and tech companies. Let's find out what Michalis told FXMAG.COM
The EU inflation rate has indeed significantly declined from 10.6% to 9.2% over the space of 2-months. However, it is important not to compare the monetary policy of the UK and the US with the European Central Bank. The US is now predicted to lower the size and pace of their rate hikes for the reason that inflation has declined to 6.5% and the Federal Fund Rate is already at 4.5%. This is 2% higher than the ECB, which is currently lagging behind both the Fed and the Bank of England.
Therefore most economists continue to advise a 50 basis point hike, as the ECB lags behind their competitors in terms of their Main Refinancing Rate and Inflation goals. Currently, EU officials are keeping to their 50 basis point stance, and this has clearly priced into the Euro.
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On a last note, it is also important not to disregard the fact that over a third of the Monetary Policy Board during December’s meeting voted for a 75 basis point hike. In addition, the risks of a recession in the EU have also significantly declined over the past month.
Bitcoin and cryptocurrencies, in general, are volatile, so a strong retracement is not rare and should not be viewed as harsh as other instruments. The demand for the cryptocurrency market is growing, and this can be seen in the overall market capitalization. The market cap has increased to over $1.05 Trillion, which is the highest this year. Bitcoin’s demand had also increased compared to other competitors increasing to 41.4% share.
The price of Bitcoin has been influenced by two main factors. The weakening monetary policy and the lower risk of recession. Overall this can trigger a higher risk appetite and investor confidence. However, traders should be cautious that the FTX bankruptcy has left the sector on shaky grounds. Genesis Global Capital is also currently preparing for bankruptcy which again does not support the industry’s confidence levels.
Lastly, over the past 24 hours, the crypto market value measured only $52 billion, which is 13% lower and triggered a slight decline yesterday. This may be related to the lack of volume on a Sunday, but traders should monitor and ensure this does not develop into a trend.
The price of Tesla has gained over the past week as we approach its earnings release. The price of the stock climbed 12.50% over a 5-day period. For the fourth quarter of 2022, the company’s Earning Per Share is expected to increase slightly compared to the 3rd quarter. The figure is expected to read $1.13 while the revenue is expected to increase from $21.88 billion to $24.42B. So we can see from the figures that the report is expected to show a better quarter compared to October.
However, investors should also be cautious about the latest company sales figures, which show 55,796 cars were sold in December. The figure is the lowest in 5 months and could concern some investors. Microsoft, on the other hand, is generally performing better than Tesla, with higher Earnings Per Share. It should also be noted that Microsoft has only declined by 21% in the past 12 months compared to Tesla’s 60% decline. However, the volatility and price condition over the next three months will largely depend on the next earnings report and the general stock market condition.
