The Fed Meeting Could Be D-Day for Bitcoin and Other Cryptos | Barron's

The more speculative assets took a beating Monday ahead of a flurry of central bank meetings, as markets began to consider a world of tighter monetary policy.

Bitcoin was included in that, falling below $47,000—more than 30% off its all-time high reached just last month. Retail favorite GameStop slumped 14% and fellow Reddit star AMC Entertainment Holdings plunged 15%. Both those stocks were set for more losses early Tuesday, while Bitcoin stabilized.

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The more speculative assets took a beating Monday ahead of a flurry of central bank meetings, as markets began to consider a world of tighter monetary policy.

Bitcoin was included in that, falling below $47,000—more than 30% off its all-time high reached just last month. Retail favorite GameStop slumped 14% and fellow Reddit star AMC Entertainment Holdings plunged 15%. Both those stocks were set for more losses early Tuesday, while Bitcoin stabilized.

When it comes to cryptocurrency performance during a tightening cycle, there isn’t much recent history to go on. The last time the Federal Reserve embarked on a path of tightening monetary policy, following a period of easing, in 2015, the price of Bitcoin was $465, or about a hundredth of its current price.

Bitcoin hasn’t acted as digital gold of late, most recently as the asset fell sharply in tandem with stocks after Thanksgiving, as the Omicron coronavirus variant spooked markets and Jerome Powell turned hawkish.

The asset doesn’t seem to be a haven for investors in times of risk-off trading, if that is what is to come if the Fed turns more hawkish. In turn, if there is a correlation and global central banks are less hawkish than expected this week, Bitcoin could get a bounce.

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Bitcoin’s place within financial markets has still not been truly defined, but how it reacts in the coming days is likely to tell us much more.

Yet, looking for correlations and trends in cryptocurrencies can quickly become a thankless task. Dogecoin surging 20% Tuesday as Tesla CEO Elon Musk said the company will allow some merchandise to be bought using the asset, is a case in point. Volatility is the only real certainty for now.

—Callum Keown

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The Supreme Court rejected a request by 20 healthcare workers seeking a religious exemption to New York state’s Covid-19 vaccine mandate. The decision comes as some hospital groups, including HCA Healthcare and Tenet Healthcare , drop mandates for employees, The Wall Street Journal reported.

• In Philadelphia, people must prove vaccination or a negative Covid test to dine inside restaurants, visit bars, and attend indoor sporting events starting Jan. 3. New York state’s indoor mask mandate for public indoor spaces that don’t require vaccination proof began Monday.
• White House chief medical advisor Dr. Anthony Fauci told ABC’s This Week that it’s “tough to tell” if more boosters will be recommended, adding he hopes third shots of the Moderna and Pfizer - BioNTech vaccines and second shots of Johnson & Johnson ’s vaccine provide greater “durability of protection.”
• Total confirmed U.S. coronavirus cases have surpassed 50 million, including more than 796,000 deaths, the New York Times reported. The average number of new cases is about 119,000 a day, per Johns Hopkins University.
• At least 34 states are reporting higher weekly averages for new Covid-19 cases than they did before Thanksgiving. U.S. cases and hospitalizations peaked shortly after Christmas 2020, with more than 250,000 daily cases and nearly 26,000 deaths in one week.

What’s Next: U.K. Prime Minister Boris Johnson announced the first Omicron-related death. Officials expect the Omicron variant will overtake the Delta variant “within days, not weeks,” and said at its current rate of infection, it could spread to more than one million cases by the end of the month.

—Janet H. Cho

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could become the first company to reach a

, moving toward that threshold as an estimated 300 million people are expected to upgrade their iPhones to newer models and 1.4 billion non-Apple customers look to switch.

• JPMorgan raised its 2022 price target for Apple shares to $210, up from $180. Analyst Samik Chatterjee named Apple his top pick for 2022, saying its services revenue and iPhone 13 upgrades will fuel further growth.
• Although iPhone 13 sales are strong, Chatterjee estimates that more revenue and earnings growth are still ahead. Apple shares fell 2.1% on Monday, but are up 32% this year, beating the S&P 500’s 24% gain.
• Apple’s release of the $399 5G iPhone SE could attract Android owners looking for a 5G phone. Chatterjee said Apple could sell around 30 million iPhone SE models next year, generating about $10 billion in revenue.
• Wedbush analyst Dan Ives expects Apple to sell more than 40 million iPhones this holiday season despite a global chip shortage. Because 250 million of 975 million iPhones worldwide have not been upgraded in recent years, they are more likely to trade up for the iPhone 12 or 13.

What’s Next: Apple’s augmented-reality headset, expected to be introduced in 2022, could add $20 a share to Apple’s stock value, a “massive market opportunity” for the broader metaverse, Ives wrote.

—Janet H. Cho

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has

• MGM said it expects to net $815 million after taxes and fees from the sale, which is expected to close in the second half of 2022. Under the terms of the deal, MGM Resorts will retain the Mirage name and brand and license it to Hard Rock royalty-free for three years.
• MGM said back in November that it was putting the Mirage in Las Vegas up for sale. The company at the time didn’t disclose any potential buyers.
• The company has been moving into other areas such as sports betting as part of its “asset-light” strategy.
• MGM Resorts shares were rising slightly in premarket trading Tuesday to $40.50. The stock has gained 28% this year.

What’s Next: Hard Rock said it plans to build a guitar-shaped hotel on the site. The property will be renamed Hard Rock Las Vegas.

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—Joe Woelfel

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Shares of meme-stock favorites AMC Entertainment Holdings and GameStop both tumbled on Monday, a possible blow to retail investors who plowed a net $32.5 million and $4.2 million into them last week, respectively, according to Vanda Research.

• AMC shares fell 15%, to its lowest close since May, while GameStop shares fell 14% to its lowest close since March. Both have been under pressure over the past month, falling more than 30% for the period.
• AMC’s CEO and chief financial officer recently sold a combined $10.2 million of stock, adding to the pressure. The Omicron variant has revived fears that new lockdowns could keep moviegoers away from theaters.
• GameStop reported widening losses but higher-than-expected sales for the third quarter, trying to transition to selling digital downloads as it improves its customer service. Management didn’t offer financial targets and wouldn’t answer analysts’ questions.
• Earlier this year, the two stocks became the favorites of a group of retail investors who goaded each other on Reddit, forcing a short-squeeze in several stocks. Even now, AMC’s shares are 10 times higher than at the end of 2020, and GameStop’s shares are nearly seven times higher.

What’s Next: Those investors on the Reddit social media platform said they were cheering the recent declines in price for AMC, GameStop and other meme stocks, buying up more shares after they dropped.

—Janet H. Cho

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Electric-truck maker Rivian is getting ready to report its first earnings as a publicly traded company on Thursday, after a splashy initial public offering in November that saw its market value soar above $100 billion to surpass that of Ford and General Motors .

• Rivian has caught the attention of investors though it only began deliveries of its R1T vehicle in the quarter ended in September. On Monday, the R1T was named Motor Trend’s Truck of the Year for 2022.
• Rivian’s niche is a potentially lucrative trucking segment of the marketplace. About 20% of all vehicles sold in the U.S. each year are pickup trucks. Another 50% are SUVs. Rivian’s second product, after its R1T truck, is an SUV.
• Rivian and Ford said in November they would no longer jointly develop electric vehicles, though Ford is still a Rivian investor, with 100 million shares. Amazon.com , another investor, has an order for 100,000 Rivian electric delivery trucks.
• Tesla is a potential rival for Rivian. CEO Elon Musk, who is also CEO of the private space company SpaceX, was named Time Magazine’s “Person of the Year” on Monday in part for his role in disrupting the electric-vehicle industry.

What’s Next: Rivian isn’t expected to be profitable next year or the year after, but Wedbush estimates $3.5 billion in sales, or about 45,000 vehicles, next year and $8.4 billion of sales in 2023.

—Liz Moyer

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U.K. pest-control services provider Rentokil Initial said Tuesday that it would acquire U.S.-based rival Terminix Global Holdings in a $6.7 billion deal that will boost its expertise in termite and residential services.

• The deal values Terminix at $55 per share, a 47% premium to Monday’s close. Terminix’s shareholders will own 26% of the enlarged group.
• Rentokil shares fell 4% on news of the deal Tuesday, with Terminix up 26% in premarket trading.
• The U.K. company said it expects the deal to generate cost savings of at least $150 million by the third year if the deal closes as expected in the second half of 2022.

What’s Next: The London-listed company said it would list the American depositary receipts on the New York Stock Exchange.

—Pierre Briançon

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—Newsletter edited by Liz Moyer, Camilla Imperiali, Steve Goldstein, Rupert Steiner