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Investors are still not sold on bitcoin, according to CNBC Daily Open

A sign is seen in a stand during the Bitcoin Conference 2023, in Miami Beach, Florida, U.S., May 19, 2023. 

Marco Bello | Reuters

This report is from today's CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

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Dip in markets
U.S. markets were closed Monday for the Labor Day holiday. The pan-European Stoxx 600 was flat, but major bourses dipped slightly and ended the day in the red. Germany's DAX lost 0.1% as new data showed the country's July exports dropping 0.9% on the month and 1% year on year, adding to fears about the German economy contracting in the third quarter.

'Sick man of Europe'
Germany is once again the "sick man of Europe," said Hans-Werner Sinn, president emeritus at the Ifo institute. The country's business activity in August contracted sharply, according to the HCOB flash purchasing managers index. Moreover, Germany's plans to be carbon neutral by 2045 poses a risk to its industry, which might cause a "backlash" from the population, Sinn said.

Missing Xi at G20
Premier Li Qiang will lead China's delegation at the G20 summit in New Delhi this weekend, said China's foreign ministry. While the ministry declined to confirm if President Xi Jinping would attend the summit, spokesperson Mao Ning didn't correct reporters who asked if Li's attendance meant Xi would not show up. Another noteworthy absence: Russian President Vladimir Putin.

Negotiating new grain deal
Putin met his Turkish counterpart Recep Tayyip Erdogan in Sochi, Russia on Monday. Putin reportedly said Russia is ready to renew the Black Sea Grain Initiative which allowed Ukraine to export agricultural products — but only if concessions are made to Russia as well.

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The bottom line

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If charting the trajectory of interest rates in the U.S. economy is like "navigating by the stars under cloudy skies," as Federal Reserve Chair Jerome Powell put it in his Jackson Hole speech, then predicting the movement of stocks is like doing so when the stars are snuffed out. As for forecasting the price of bitcoin? Add a blindfold to the intrepid navigator.

Let's look at two predictions made earlier this year.

At the optimistic end of the spectrum is Geoff Kendrick, head of crypto research at Standard Chartered, who wrote in an April note that bitcoin's value could jump to as much as $100,000 by the end of 2024.

On the other hand, longtime bitcoin bull Chamath Palihapitiya, who said two years ago that bitcoin has replaced gold and would rocket to $200,000, changed his tune. "Crypto is dead in America," Palihapitiya said.

What do the numbers tell us? As of publication time, bitcoin is trading at $25,774. On Jan. 1, it was at $16,606, so bitcoin's up around 55% this year. That suggests bitcoin has legs. But if we take a longer-term view, the current price of the digital currency is about 62% lower than its all-time high of $68,990 reached in November 2021.

Adding to the confusion, bitcoin sometimes tracks the movement of stocks because it's seen to benefit from a booming economy; bitcoin sometimes trades inversely with stocks because some consider it a safe haven in times of uncertainty. The story here, then, is that bitcoin is wildly volatile — and it's impossible to prove or dismantle either prediction, at this point.

Still, investors are optimistic about bitcoin because a U.S. court recently sided with Grayscale in a lawsuit against the SEC, which denied the company's application to convert its bitcoin trust into an ETF. That means bitcoin ETFs from major companies are on their way, allowing retail investors to trade the cryptocurrency without actually owning it. The price of bitcoin rallied more than 7% when news broke last Tuesday.

But the SEC has also delayed a decision on bitcoin ETFs, pausing the short-lived bitcoin bull charge. For August, bitcoin fell 10%.

And so it goes.


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