Bitcoin is up to its old tricks again.
Despite taking a large step toward mainstream acceptance, and a huge leap to fresh all-time highs, the cryptocurrency reminded investors Tuesday that a wild swing lower is never that far away. The price of Bitcoin tumbled below $63,000 after hitting a record high close to $74,000 last week.
While it’s always difficult to assign a value to crypto assets, the bull case for Bitcoin can still be made. The approval of spot exchange-traded funds (ETFs) in January has increased interest among institutional and retail investors. It has also accelerated the move toward mainstream acceptance and ETFs last week posted record inflows.
The so-called halving event, which cuts the rate at which new tokens are issued, is expected next month and historically helps push prices higher.
Appetite for riskier assets in general, such as high-growth technology stocks, also aids digital assets—the tech-heavy Nasdaq Composite is sitting just below its record high.
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But the price correction provides a major test for Bitcoin and its recent resurgence. It’s the asset’s biggest fall in value since spot ETFs began trading.
If surging inflows helped Bitcoin reach new highs, then a mass exodus may well have the opposite effect. On the flip side, if those who have bought into Bitcoin ETFs prove to be unfazed by the price action it could shore up the asset’s recent strength.
The answer to that question won’t be clear for a while but Tuesday did mark record daily net outflows of $326.2 million from U.S. spot Bitcoin ETFs, according to data from BitMEX Research. However, Grayscale’s Bitcoin Trust accounted for $444 million in outflows but it does highlight a lack of buying among other funds.
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Bitcoin is at a crossroads—it’s time for the investors who have joined the crypto party this year to show whether they are in it for the long haul or just to take profits.
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Microsoft Hires 2 Execs for New Consumer AI Arm
has hired artificial intelligence entrepreneur Mustafa Suleyman and Karén Simonyan from Inflection AI, a start-up, to run its new Microsoft AI arm, which will be responsible for the Copilot chatbot and its other generative AI software. The move raises questions about Microsoft’s future plans for OpenAI.
- Suleyman, former CEO and co-founder of Inflection AI and co-founder of the
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-owned AI pioneer lab DeepMind, will report to Microsoft CEO Satya Nadella as CEO of Microsoft AI. Simonyan, Inflection’s chief scientist and co-founder, will become chief scientist at Microsoft AI.
- Nadella said several members of Inflection’s team will join the two executives at Microsoft, including AI engineers, researchers, and builders. Suleyman said in a social media post that Inflection AI would continue its mission, and look to reach more people by being widely available to developers and businesses.
- Suleyman will oversee AI tools for consumer products such as Bing and Windows. Rajesh Jha, who leads Microsoft’s workplace software suite Microsoft 365, will oversee Copilots for that group. Chief Technology Officer Kevin Scott will manage AI research and partnerships with companies such as OpenAI.
- After OpenAI’s board of directors ousted CEO Sam Altman last year, Nadella personally intervened to reinstate him, illustrating how much Microsoft depends on the start-up and a technology it doesn’t exclusively own. Microsoft has also invested in another AI start-up, Mistral AI.
What’s Next: Inflection’s new CEO is Sean White, a board member and previously chief R&D officer at Mozilla. Inflection said it would continue to test and fine-tune its custom generative AI models for commercial customers, and will host its Inflection-2.5 software on Microsoft Azure.
—Janet H. Cho and Eric J. Savitz
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Congress Faces Another Deadline, With Spending Deal in Hand
Lawmakers are racing to finalize a bill to fund the rest of the federal government through September after reaching an agreement on spending for the Department of Homeland Security. President Joe Biden and congressional leaders announced the deal, and Biden urged its swift passage to avoid a partial shutdown.
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- The now-familiar rush will probably come down to the wire. House rules give members 72 hours to review legislation before voting, and the bill, once drafted, has to get through both chambers and be signed by Biden by Friday’s deadline of 11:59 p.m. Eastern time.
- Speaker Mike Johnson set two deadlines to pass 12 spending bills to avoid a shutdown and then extended those deadlines. A package in early March covered funding for about 30% of the government, combining six of the 12 bills. The current deal covers the other six, including Pentagon and State Department funding.
- After an impasse over border spending, Democrats and Republicans reached agreement late Monday. The package is expected to be about $1 trillion. A deal Biden made last year with Johnson’s predecessor, Kevin McCarthy, raised defense spending and kept discretionary spending relatively flat.
- To fast-track it, Johnson would need a two-thirds vote in favor. In the Senate, Majority Leader Chuck Schumer will likely have to navigate proposed changes and other obstacles to advance it to a floor vote.
What’s Next: There’s a chance the voting won’t be complete by Friday’s deadline, which means a partial government shutdown while the process is completed, or a last-minute extension. Both the House and Senate are scheduled to recess for two weeks starting Saturday.
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Wall Street’s Average Bonus Fell for Second Consecutive Year
In a year that had fewer mergers and initial public offerings, greater stock market volatility, regional bank failures, and less generous compensation policies, the size of the average Wall Street bonus dropped to the lowest level since 2019, according to New York State Comptroller Thomas DiNapoli.
- Although Wall Street’s profits rose 1.8% last year, firms paid an average bonus of $176,500 a worker, down 2% and the second consecutive annual drop. The industry’s overall bonus pool was $33.8 billion, flat from 2022 and well below the $42.7 billion boom year in 2021.
- Banks and Wall Street firms are being more conservative with their expenses, and several have announced layoffs, including
Citigroup
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planned 20,000 job cuts through 2026. DiNapoli said more workers continued to join the securities industry and that helped lower the average bonus size.
- The securities industry’s health is a barometer for New York City’s economy. DiNapoli projected that 2023 Wall Street bonuses will generate $4 million less in state income tax revenue, and $2 million less for the city, but noted that both entities had budgeted for larger declines.
- Totals don’t include bonuses paid to employees outside New York City. The comptroller’s estimate is based on personal income tax withholding, and includes cash bonuses for work performed in 2023, and deferred bonuses from prior years, but not stock options.
What’s Next: Since September 2023, Wall Street securities employees are more likely than other New York City employees to be working in the office rather than from home, spending money in the city, and riding the subway, DiNapoli’s office said.
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Jump in Housing Starts Could Bring Prospective Buyers Options
More new-home construction and rising builder confidence mean home buyers could see more options this spring selling season and beyond. If mortgage rates keep falling, National Association of Home Builders Chairman Carl Harris expects more consumers to jump off the sidelines and into the marketplace.
- Housing starts in February rose to a higher-than-expected annual rate of 1.52 million, up 10.7% from January’s revised rate. Building permits for future construction also rose more than anticipated, increasing 1.9% to a 1.52 million annual rate. Numbers are seasonally adjusted.
- Builders began construction on 1.13 million homes in February, the highest rate since April 2022. Single-family starts were 35% higher than one year prior, while multifamily starts were 36% lower than one year prior, at an annual rate of 377,000.
- Mortgage rates took a historic dive below 3% early in the Covid-19 pandemic, but have since risen to just below 7%. A homeowner’s likelihood of selling declines by 18% for every percentage-point that mortgage rates exceed their origination rate, the FHFA said.
- The shortage of previously owned homes for sale contributed to the National Association of Home Builders’ highest level of single-family home builder confidence since July 2023. There were 1.01 million previously owned homes for sale in January, well below the long-term January average of 2 million.
What’s Next: Capital Economics economist Thomas Ryan expects housing construction to take different paths over the next two years. Single family construction is expected to benefit from a dearth of previously owned homes for sale, while multifamily construction is expected to be weaker.
—Shaina Mishkin and Janet H. Cho
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JetBlue Cuts Routes Amid Aircraft Supply Problems
JetBlue Airways is cutting several weaker-performing routes to prioritize its stronger routes when the number of aircraft available is limited. The airline’s new CEO Joanna Geraghty vowed to take “aggressive action” to return it to profitability when she took over last month. She has already announced plans to defer $2.5 billion in aircraft spending and other cost-cutting measures.
- The low-cost carrier said Tuesday it is exiting Bogotá, Colombia; Quito, Ecuador; Lima, Peru and Kansas City, The Wall Street Journal reported. It will also not resume service to Newburgh, N.Y., which was suspended in 2020. Nine routes out of Los Angeles are being discontinued, along with five routes linked to Fort Lauderdale.
- Other airlines have been cutting capacity because of problems engulfing Boeing that have slowed production. JetBlue doesn’t fly any Boeing planes—its fleet was made up of 247 Airbus aircraft and 53 Embraer planes, as of the end of 2023. But the airline is being affected by problems with GTF engines…
Read More: Bitcoin’s Slump Is the First Test for ETF Enthusiasm, What’s Next for Cryptos. And 5 Other
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