Crypto Breaking News posted: "The mega-cap tech stocks, which saw a robust start in 2023, are now grappling with massive trillion-dollar losses, leaving their shareholders concerned. Wall Street's unease over surging bond yields and higher interest rates has cast a shadow on these com" Crypto Breaking News
The mega-cap tech stocks, which saw a robust start in 2023, are now grappling with massive trillion-dollar losses, leaving their shareholders concerned. Wall Street's unease over surging bond yields and higher interest rates has cast a shadow on these companies. Traders are now pondering the potential impact on Bitcoin (BTC) if the S&P 500 downtrend continues.
Consequently, investors must investigate the correlation between Bitcoin and the S&P 500 and consider whether cryptocurrencies can thrive in an environment of high-interest rates.
Bloomberg Magnificent 7 index vs. S&P 500 equal weight index. Source: Bloomberg
The seven largest tech companies, including Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla, collectively constitute a staggering 29% of the S&P 500, marking the highest concentration ever recorded in this stock market index. However, since the end of July, these tech giants have witnessed a substantial erosion in their market value, with a staggering $1.2 trillion loss.
Real Money's James DePorre notes that "73% of stocks in the market are more than 20% below their highs," which technically defines a bear market. This underscores growing worries in the broader economy apart from the top-7 stocks.
In its endeavor to regain credibility in combating inflation, the Federal Reserve has indicated its intention to maintain higher interest rates for an extended period. Crescat Capital warns that a significant decline in the S&P 500, coupled with a widening of corporate credit spreads, could elevate the likelihood of an economic downturn.
Higher interest rates impact stocks and commodities
Crescat Capital has also raised concerns about the wave of corporate and sovereign debt maturing in 2024, which will necessitate refinancing at substantially higher interest rates. They recommend exposure to commodities due to their historical resilience during inflationary periods, exacerbated by the challenge faced by commodity producers in investing in fixed assets.
Despite the vast difference in market capitalization, totaling $10.5 trillion for Apple, Microsoft, Google, Meta, Nvidia, and Tesla, compared to cryptocurrencies (excluding stablecoins), which fall short by over 9 times, there are some intriguing parallels.
First, both markets exhibit a scarcity quality that correlates with the monetary base. In essence, both react similarly to the actions of the U.S. Federal Reserve, where increased circulation benefits scarce assets, while a restrictive policy with high interest rates favors fixed-income investments.
Additionally, the trend toward digitalization has transformed the way people use apps and mobile services, particularly in financial services. Given the limited adaptability of traditional providers, often due to regulatory constraints, it's not surprising that the public is embracing cryptocurrencies, even in the form of stablecoins. The growing demand for fully digital services is a secular trend that positively influences both the crypto and tech sectors.
Decoupling of the S&P 500 and cryptocurrencies
The performance of the top seven S&P 500 stocks can decouple from cryptocurrencies regardless of the time frame. Currently, Bitcoin is trading approximately 50% below its all-time high, while Apple and Microsoft are down 13% and 7% from their peaks, respectively. This discrepancy is partly due to investor concerns about a looming recession or a preference for companies with substantial reserves, whereas cryptocurrencies, excluding stablecoins, lack cash flow or earnings.
Historical 30-day correlation between Bitcoin/USD and S&P 500 futures. Source: TradingView
From an investment standpoint, stocks and cryptocurrencies inhabit different realms, but this contrast underscores how Bitcoin can grow independently of retail adoption and spot exchange-traded funds (ETFs), as evident by Microstrategy's $5.4 billion direct investment in the cryptocurrency.
The top seven tech companies hold a combined $596 billion in cash and equivalents, enough to purchase the entire circulating supply of Bitcoin, assuming 3.7 million coins are lost forever. Furthermore, these companies are projected to generate $650 billion in earnings within the next five years. So, even if those companies continue to decline, their cash position could eventually shift to commodities including Bitcoin.
Meanwhile, the U.S. housing market, another pinnacle of savings for the economy, is facing problems of its own due to record high mortgage rates. Sales of previously owned homes in September dropped to the slowest pace since October 2010, according to the National Association of Realtors.
Ultimately, a downturn in the S&P 500, whether driven by mega-cap tech stocks or other factors, may not necessarily spell doom for cryptocurrencies. Investors often seek diversification to mitigate risk, and Bitcoin's low correlation with traditional markets, along with early signs of trouble in the real estate sector, offers an attractive condition for alternative hedges, as signaled by legendary investor Stanley Druckenmiller.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author's alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
admin posted: "A new contract deployed on Oct. 29 by Unibot, a popular Telegram bot used to snipe trades on the decentralized exchange Uniswap, was reportedly exploited for roughly $560,000 in various memecoins from users.On Oct. 31, blockchain security firm Scopescan a" Crypto Timeless
A new contract deployed on Oct. 29 by Unibot, a popular Telegram bot used to snipe trades on the decentralized exchange Uniswap, was reportedly exploited for roughly $560,000 in various memecoins from users.
On Oct. 31, blockchain security firm Scopescan alerted Unibot users about an ongoing hack on Unibot that went undetected. An exploit on a newly deployed contract by Unibot drained the crypto holdings of several users.
.@TeamUnibot seems exploited, the exploiter transfers memecooins from #unibot users and is exchanging them for the $ETH right now.
Unibot later confirmed the hack by revealing initial details:
"We experienced a token approval exploit from our new router and have paused our router to contain the issue."
Amid ongoing investigations from Unibot and blockchain investigators, Scopescan advised users to revoke the approvals for the exploited contract (0x126c9FbaB3A2FCA24eDfd17322E71a5e36E91865) and move the funds to a new wallet.
Unibot hacker moving funds. Source: 0xscope.com
The hacker is in the process of converting the stolen memecoins into Ether (ETH), blockchain data from Scopescan shows.
Unibot 1-day price chart showing a sharp decline in price following the hack. Source: CoinGecko
As seen above, the market reacted negatively to the development as the UNIBOT token witnessed an immediate 42.7% drop in its price in one hour — from $57.56 to $32.94. However, the token's price is making a recovery attempt at the time of writing.
We experienced a token approval exploit from our new router and have paused our router to contain the issue.
Any funds lost due to the bug on our new router will be compensated. Your keys and wallets are safe.
We will release a detailed response after investigations conclude.
Unibot committed to compensating all users who lost funds due to the contract exploit. Weekly transaction data shows that cryptocurrencies such as Joe (JOE), UNIBOT and BeerusCat (BCAT) represented a major part of the loot.
Cointelegraph also learned from Scopescan that the address 0x835B, which is identical to the exploited address, was deployed and is being used to receive tokens from unsuspecting victims.
Unibot has not yet responded to Cointelegraph's request for comment.
In the following days, Maestrobots paid a total of 610 ETH from its own revenue to cover all the user losses while citing a lack of liquidity to buy back the lost tokens:
"So we compensated affected users with the ETH equivalent of their tokens, and boosted that amount by 20% because you deserve it. These refunds cost 334 ETH."
Blockchain security firm CertiK confirmed to Cointelegraph that it has been able to detect the transactions showing the 334 ETH compensation paid out to users from Maestro.
