It’s What Could Propel Growth
This milestone could help push growth assets in 2024, a year that I had previously thought would favor less growth-oriented companies.
On November 30, 2022, ChatGPT was launched. After its launch, it became a race for some of the largest companies in the world to develop their own AI tools.
The stock prices of these companies rose, even if their AI tools hadn’t been fully developed.
This was a tailwind for growth assets.
It's a technical phenomenon when growth comes into favor due to great potential for growth in a certain space. This also happens with value companies.
AI sparked growth in companies' stock prices.
On January 10, 2024, the SEC approved the spot Bitcoin ETF. While few companies have a direct connection to Bitcoin itself, Bitcoin is considered a risk and growth asset.
This chart is a bit more complicated, but it explains what I am talking about.
At the top, we have a ratio between the price of Bitcoin and the Nasdaq 100, which means that at any point on that line, you are looking at Bitcoin/Nasdaq 100. When it’s moving higher, Bitcoin is outperforming; when it’s moving down, the Nasdaq 100 is outperforming; and when it’s flat, they are moving together. However, it's important to recognize that the direction does not fully explain price movements up or down, just the relative performance to one another. This chart will show the relationship between risk and growth assets as they come into favor.
On the bottom, you will see the quarterly performance numbers for the two assets.
Bitcoin is a much more volatile asset, but what we're looking at here is the direction.
Notice how, most of the time over the last five years, the assets move in the same direction.
The approval of an ETF that can trade spot Bitcoin, regardless of your opinion about it, is a huge moment for the asset itself. It’s a milestone that is undoubtedly material.
I shouldn't and won't speculate on how Bitcoin’s price will move from here, but this milestone could help push growth assets in 2024, a year that I had previously thought would favor less growth-oriented companies.
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