This Week in Review | Cryptocurrency Volatility, Global Inflation, Real

The economy and markets can feel dizzying and ever changing. That’s where we can help. Fisher Investments’ “This Week in Review” is a weekly segment designed to highlight a few things you may have missed this week, what they could mean for financial markets and why they matter to investors like you.

This week, we’ll be covering:

• Recent volatility in Bitcoin prices
• An update on global inflation data
• What a new commercial real estate trend

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Transcript

Paige Tyson:

Hello, and welcome to This Week in Review. This weekly segment is designed to highlight a few important developments you may have missed this week, what they may mean for markets, and most importantly, the potential impact for investors. To stay up to date with our latest market insights, subscribe to our YouTube channel or visit fisherinvestments.com. Now, let’s review what happened this week.

First up, Bitcoin volatility. The price of Bitcoin tumbled over 30 percent from early October through late November and has remained volatile since. This sharp decline has sparked questions from investors about the world’s most popular cryptocurrency. Are there further drops ahead? What impact, if any, might Bitcoin weakness have on the stock market? Meanwhile, some headlines have hinted that Bitcoin’s slide could signal trouble for equities or the broader economy, but historical data paint a different picture. Since 2013, Bitcoin has had nine drops of over 30 percent or more. However, only two of those drops coincided with global stocks bear markets—once in 2020 and again in 2022. In both instances, we would maintain that equity prices fell for reasons unrelated to Bitcoin, such as the pandemic in 2020. This makes sense given Bitcoin has historically had few ties with the traditional financial system. Bitcoin also doesn’t produce cash flow or earnings, like most stocks or bonds. It isn’t anchored to widespread retail or industrial uses, like gold or other commodities. It isn’t even a widely used medium of exchange, like currencies. So, what appears to drive Bitcoin is the speculation that others want to buy it at a higher price later. Since demand seems mostly driven by pure sentiment, it can change rapidly and independently of other financial assets. Despite its extreme volatility, we don’t believe this latest drop points to a broader market decline or economic warning sign. But that said, we continue to monitor risks related to Bitcoin, though none appear particularly concerning at this time.

Next, global inflation. On Tuesday, the eurozone released preliminary consumer inflation data for November, revealing a slight increase in the annualized inflation rate from 2.1 percent to 2.2 percent. And despite monthly…