Tech stocks face trillion-dollar losses as bond yields soar, but their $596 billion cash positions favor alternative hedges, including Bitcoin.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.
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.
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 anThis article is for general information purposes and is not intended to be and should not be taken as legal or investment advice.
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