Good morning and welcome to the stock market today! Investors are digesting new stories about global reopening plans, tales of a ketchup shortage and robotics SPAC mergers. What else will the stock market do today? Dive in with InvestorPlace below.
To start, the major indices are a bit mixed, coming off of recent highs. The S&P 500 is up 0.13%, while the Dow Jones Industrial Average is down 0.04%. The Nasdaq Composite is also up slightly after the opening bell.
So what else will the stock market do today? Here are the top three stories.
What Will the Stock Market Do Today? Dive Into a Crypto Craze.
Is my mom about to call for help setting up her crypto wallet?
Mainstream interest keeps heating up, and the crypto market is not slowing down. In fact, we wrote yesterday that cryptocurrencies combined hit a new all-time high above $2 trillion. Investors are pouring into altcoins like XRP (CCC:XRP), Stellar (CCC:XLM) and Litecoin (CCC:LTC), chasing gains in tokens they see as the next Bitcoin (CCC:BTC). This comes as the leading crypto holds steady above $58,000, with a market capitalization of its own above $1 trillion.
Right now, there are two big things to watch.
The first is the Grayscale Bitcoin Trust (OTCMKTS:GBTC). Grayscale Investments says that it wants to take GBTC — the largest publicly traded Bitcoin trust in the world — and turn it into an exchange-traded fund. As Evie Liu wrote for Barron’s, this could be the perfect time for such a move. The Grayscale Bitcoin Trust has been trading at a discount to the cryptocurrency, and some investors are worried about its future. Plus, with talk of Bitcoin ETFs from other fund managers, GBTC could lose its edge. Taking advantage of market sentiment and transitioning into an ETF could help Grayscale combine its reputation with a more investor-friendly product.
The second is the so-called kimchi premium. This is the gap between cryptocurrency prices on South Korean exchanges and elsewhere, primarily impacting Bitcoin. According to Investopedia, a lack of high-return investment options can lead the price of BTC on South Korean exchanges higher than BTC on U.S. or other foreign exchanges. Although it is hard to profit from the kimchi premium, the widening gap is stoking investor interest. On Bithumb, BTC is currently trading for nearly $70,000. One way to see is this is that retail investor in cryptocurrencies continues to grow.
XRP Puts $1 in the Rear-View Mirror
Remember that XRP is one of the altcoins leading the entire crypto market higher?
With that in mind, XRP, the token from Ripple, hit $1 for the first time since March 2018. This has stirred up a buzz among the so-called XRP army, with many altcoin bulls cheering on the gain. But what does this mean for investors? And where do XRP price predictions see the crypto heading next?
Importantly, InvestorPlace contributor Chris Macdonald highlighted that experts have a wide range of price predictions on XRP, including several bearish calls. One that investors may be interested in comes from hedge fund manager Will Meade. Looking at several crypto catalysts, Meade has a near-term price target of $3. Other sites like Credible Crypto think XRP could rally as much as 800% from current levels if it can break through resistance. Given the 40% gains we have seen in the last 24 hours, it makes sense why so many investors are bullish on the token.
However, as Omkar Godbole writes for CoinDesk, there is reason for caution. Much of the recent bullish move in XRP follows comments from a judge that appear positive for Ripple. The underlying company is caught up in a lawsuit with the SEC, presenting a very real headwind. Can a devoted band of followers push XRP higher no matter what regulators say?
As the altcoin rally gains steam, be smart with your approach. MacDonald recommends investing in a basket of altcoins to minimize risk.
The Archegos Story Isn’t Over Yet
Before the end of March, many investors likely had never heard of Archegos Capital Management.
Then, the family office of Bill Hwang was the top story on Wall Street. Archegos had massive positions in stocks like Baidu (NASDAQ:BIDU) and ViacomCBS (NASDAQ:VIAC). When it defaulted on margin calls from brokers like Credit Suisse (NYSE:CS) and Nomura (NYSE:NMR), it introduced a massive wave of volatility to the stock market. Those brokers had to exit their positions via block sales, and the stocks affected dropped. The aftermath saw rebound rallies and even a few unlikely short squeezes.
But the story is not over. Today, a second wave of block sales is here, and the so-called Archegos stocks are once again falling. Vipshop (NYSE:VIPS) and Farfetch (NYSE:FTCH) are also in the spotlight. Granted, these sales come in at about $2 billion, making the second wave much smaller.
However, given the impacts on brokers like Credit Suisse, it is a story worth watching. The firm announced it would take a $4.7 billion write-down and replace more than half of its executives in response to the Archegos fallout. Credit Suisse also cut executive bonuses, trimmed its dividend and suspended share buybacks.
So when will this book close? With the latest block sales and an action plan from Credit Suisse, we could see the market move on for good. However, the Archegos fallout has highlighted a loophole with family offices, which face less regulations. This reality has Redditors and MarketWatch contributors sounding the alarm about a potential catalyst for a new financial crisis.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.