Tuesday's Markets Update (December 19, 2023)

19 Dec 2023 by rate3

On Tuesday, housing starts rose unexpectedly but stocks edged up with the Nasdaq 100 reaching an all-time high record of 16,766. Top sectors were materials, communications, consumer discretionary and real estate. Meanwhile, BTC and ETH continue to fluctuate up and down on technicals as traders await catalysts and assess Fed policy. The double top formation is now more prominent on some altcoins' daily graphs.

Details

Building permits decreased by 2.5% to a rate of 1.460 million in Nov '23, below expectations. Permits for large buildings dropped 9.6% while single-family permits rose 0.7%. There were regional declines in the Northeast and South, but increases in the Midwest and West.

Crypto

Bitcoin digital art sales hit $449M in 30 days, topping Ethereum NFTs. Bitcoin now struggles with network congestion and higher fees from the popularity of Bitcoin-based digital collectibles.

Comment: Ordinals - the Future of BTC?

FYI: Bitcoin ordinals, also known as ordinal NFTs, are a protocol that allows individual satoshis (the smallest unit of Bitcoin) in the Bitcoin blockchain to be assigned a unique identifier. This unique identifier is called an "ordinal" and is based on the order in which the satoshi was mined. Ordinals enable the attachment of data such as images, videos, and more to an individual satoshi on the base Bitcoin blockchain.

The rise of Bitcoin-based digital collectibles known as Ordinals has sparked a debate in the Bitcoin community. Most of the first generation Bitcoiners criticize Ordinals as inefficient, arguing Bitcoin should focus on its original purpose of enabling peer-to-peer payments.

They have a point. While Ethereum was built for NFTs, Bitcoin wasn't. Over the past year, average Bitcoin transaction fees have surged over 25 times. The network is facing record congestion in its mempool, where unconfirmed transactions are stored.

But Ordinals supporters counter that the digital art is good for Bitcoin. Transaction fees fund miners and secure the network as less and less BTCs are mined. BTC must demonstrate its usefulness to the larger crowd to justify these costs.

I believe Ordinals represent the future. They will bring a new generation of users oriented around NFTs to Bitcoin, though not necessarily technologically savvy. Ordinals can introduce Bitcoin to mainstream audiences in an accessible way and drive adoption of cryptocurrency.
World Economics

The Bank of Japan (BoJ) kept rates unchanged and policy loose. It pledged patience amid uncertainties. Policymakers will respond to achieve 2% inflation and wage rises. The BoJ won't hesitate to ease more. The governor, Kazuo Ueda, said inflation may not sustain without wage increases, which have lagged price rises.

Commodities

Crude oil held at $73/barrel on supply fears. Yemen's Houthis attacked ships, diverting tankers. BP, Frontline avoided the Red Sea. Iran's oil minister blamed Israel for hacking gas stations. The US will push disclosures on Russian oil to enforce sanctions.