'Whales' Drive Bitcoin Higher; Retail Sales Surge, Wages Rise

CryptoCorner

Bitcoin, buffeted by the conflicting views of a U.S. senator and a major investment bank, rose Monday as major investors expanded their holdings at good prices.

Senator Cynthia Lummis, a Wyoming Republican and cattle rancher, said she owns Bitcoin and urged others to consider adding the crypto to their retirement accounts.

Sen. Cynthia Loomis Wyoming
"So whether you're an employee that has a retirement fund, I'd like to see those retirement funds invested in Bitcoin and other cryptocurrencies that are good stores of value," Sen. Cynthia Lummis (R-Wyoming) said at the CNBC Financial Advisor Summit, which was livestreamed on June 30. loomis.senate.gov

"So whether you're an employee that has a retirement fund, I'd like to see those retirement funds invested in Bitcoin and other cryptocurrencies that are good stores of value," Lummis said at the CNBC Financial Advisor Summit, which was livestreamed on June 30.

"But I'd also like to see individuals be able to use Bitcoin and cryptocurrencies of their preference that are safe," she said, "that have met the hurdles of anti-money laundering and Bank Secrecy Act, but that allow people to use their cell phones to send stores of value, Bitcoin, to each other."

Lummis said she bought her first coin in 2013 at about $330 and now holds five. At today's price, her investment is worth about $170,065.

But UBS, an investment bank based in Zurich, Switzerland with an office in New York, said increased regulatory crackdowns could undercut the Bitcoin market.

"Regulators have demonstrated they can and will crack down on crypto," UBS said in a research note. "So we suggest investors stay clear, and build their portfolio around less risky assets."

UBS said the use of borrowed money in trading "appears fundamentally at odds with mainstream finance regulation."

Last month, Bitcoin fell below $30,000 for the first time since January. However, major investors, including MicroStrategy, bought the dip and drove Bitcoin's price higher. Bargain hunters are still active.

GlobalBlock logo
"Wealthy investors look to be making a comeback into the Bitcoin market as the number of Bitcoin whales increased to a three-week high on Saturday and the number of coins held by whales rose by over 80,000 to 4.216 million Bitcoin on Friday, hitting the highest level since May," Alexandra Clark, a trader at London-based GlobalBlock, told Newsweek. globalblock.co.uk

"Wealthy investors look to be making a comeback into the Bitcoin market as the number of Bitcoin whales increased to a three-week high on Saturday and the number of coins held by whales rose by over 80,000 to 4.216 million Bitcoin on Friday, hitting the highest level since May," Alexandra Clark, a trader at London-based GlobalBlock, told Newsweek. "Whales played a significant role in driving Bitcoin higher from $10,000 to almost $60,000 during the five months to February 2021 so this is excellent news for the market."

Grayscale Investments, a New York-based digital currency asset manager with about $30.4 billion in assets, said it had rebalanced its portfolio to include 67.47% in Bitcoin, 25.39%, in Ethereum, 4.26%, in Cardano, 1.03% in Bitcoin Cash, 0.99% in Litecoin and 0.86% in Chainlink.

"Digital currencies represent a unique opportunity for investors to diversify their portfolios," Edward McGee, Grayscale's Vice President of Finance, said in a news release announcing the action.

Clark said cryptocurrencies are a good hedge against inflation.

"As Central Banks continue to print more money, people are growing disillusioned with existing financial systems and there is a sense that money isn't working hard enough for us anymore," she said. "In contrast, Bitcoin has a finite supply of 21 million, meaning that the ability for governments to fund themselves through the manipulation of money disappears. Not only that, but the yields offered by Bitcoin and other crypto assets are attractive in this zero-rate environment and offset the cost of holding the assets."

China has closed Bitcoin mining operations as part of a continuing clampdown on cryptos. However, the market has adjusted as miners seek to relocate in friendly countries with low energy costs.

"Bitcoin recorded its biggest mining difficulty drop of nearly 28% on July 3 in response to the ongoing miner migration out of China and the subsequent loss of hash rate, so the effects are still being felt," Clark said. "Although, for miners still in operation, the decrease in difficulty has brought a profit boost as competition and the power required decline."

In mid-day trading Tuesday, Bitcoin changed hands at $34,013.47, up 0.86% in the last 24 hours and up 17.09% for the year. The 24-hour range is $33,158.66 to $35,106.83 The all-time high is $64,829.14. The current market cap is $647.71 billion, CoinDesk reported.

MarketPulse

Workers at the lower end of the pay scale are benefiting as lockdown restrictions ease and cash registers ring up strong sales at stores, restaurants and hotels.

U.S. companies hired 850,000 new employees in June—the largest gain since August 2020—and wages rose, underscoring strong demand for workers as more people get out of the house and spend.

Retailers added 67,000 jobs in June while restaurants and others in the hospitality sector added a seasonally adjusted 343,000 jobs last month, the U.S. Labor Department reported.

The leisure and hospitality sector has accounted for about 50% of the 3.3 million jobs added in the first six months of the year. Average hourly pay for retail workers rose 8.6% in June from February 2020, the month before the COVID-19 pandemic slammed the economy.

Pay for hospitality workers gained 7.9% in that period. Gains in both sectors outpaced overall wage growth of 6.6%, the Labor Department said.

Hospitality workers earned an average of $18.23 an hour in June while retail employees averaged $21.92. Overall, private sector workers averaged $30.40 an hour, the Labor Department said.

Employers added 583,000 jobs in May and 269,000 in April as vaccination rates climbed and the economy restarted.

The unemployment rate edged up to 5.9% in June from 5.8% in May. However, the statistical quirk underscores the strength of the economic rebound because more people got off the couch and began looking for work, increasing the size of the labor pool.

Twenty-six states have ended participation in a federal program to increase unemployment benefits, a policy criticized by many economists as a disincentive to return to work.

Judges in Indiana and Maryland have ordered their states to continue paying the higher pandemic unemployment benefit. Jobless workers have also filed a lawsuit in Texas, but the case hasn't been resolved.

The federal program adding $300 per week in jobless benefits is scheduled to expire September 6.

Wages are also rising in service jobs and many employers offer bonuses to attract new workers.

Many jobs posted on ZipRecruiter, an online job site, offer bonuses to attract and retain new employees, including movers, groundskeepers, welders, chicken processors, mechanics, forklift drivers, pest control operators and housekeepers.

According to press reports, a Burger King in Latrobe, Pennsylvania is offering a $1,500 bonus for new employees.

In May, Amazon announced plans to hire 75,000 more workers in the U.S. The online retailer offered bonuses in some locations plus an additional $100 for proof of COVID-19 vaccination.

For employers, a cash signing bonus is a one-time cost and doesn't require a long-term increase in wages or benefits such as health or vacation time. For workers, the bonuses provide cash up front.

C.R. England, a long-distance trucking company based in Salt Lake City, said new pay rates and other increases since 2018 have boosted pay for drivers about 50%. So far, wage increases have out-paced inflation.

Consumer prices rose in May 5% from a year earlier, the biggest jump in prices since August 2008. That year the recession caused by the collapse of the subprime housing market sent the economy into its worst downturn since the Great Depression of the 1930s.

The Federal Reserve, the nation's central bank, plans to keep its short-term borrowing rate at 0-0.25% despite rising inflation. But the Fed increased its near-term inflation estimate to 3.4%, one percentage point higher than its March projection.

Federal Reserve Chairman Jerome Powell believes the inflation uptick is "transitory," and price increases will abate as kinks in the supply chain are resolved and the economy returns to pre-pandemic levels.

Lumber prices fell about 40% in June, but are still about double last year's level. This drives up the price of new houses.

The price of West Texas Intermediate Crude, the benchmark for U.S. oil prices, averaged $39.17 a barrel in 2020, down from $56.99 in 2019, a decline of 31.27%.

"The increase in economic activity and easing of the COVID-19 pandemic have contributed to rising energy use," the U.S. Energy Information Agency said in a report.

The U.S. price recently hit $73.70 a barrel. The increase means distribution costs will rise and consumers pay more for gasoline at the pump.