f5c92830f532761be8969fe95a521a8b

Bitcoin drops amid inflation fears but continues to climb above $17k

good morning. Here’s what happens:

the prices: Bitcoin and other cryptocurrency prices are dropping along with other riskier assets amid concerns that the US economy is not slowing enough.

ideas: Is Taiwanese tech manufacturer HTC betting too much on Metaverse’s success? The company is said to be looking forward to releasing its virtual headphone unit to the public in the US

the prices

CoinDesk Market Index (CMI)

867.00

-10.4 1.2%

Bitcoin (BTC)

$17,026

-188.9 1.1%

Ethereum (ETH)

$1,265

-28.1 2.2%

S&P 500 daily close

3,998.84

−72.9 1.8%

He went

$1,787

+19.2 1.1%

Treasury return 10 years

3.6%

0.1

BTC/ETH prices per CoinDesk indices; Gold is the Comex spot price. Prices as of approximately 4 p.m. ET

Bitcoin has a sinking feeling

Written by James Rubin

Cryptocurrency markets did not like the sound of good economic news, which sent prices lower on Monday.

Bitcoin recently traded down 1.1% over the past 24 hours, despite clinging above the $17,000 support in the past six days. The largest cryptocurrency by market capitalization appears to have recovered from the mid-November swoon following the implosion of cryptocurrency exchange FTX, although it remains vulnerable to more minor winds that caused it to drop and surge in larger macro-events.

On Monday, the Institute for Supply Management’s unexpectedly strong services index for November raised concerns that the US economy may require the US central bank to administer a long-term dose of harsh interest rate increases than expected in mid-November when the consumer rate rose. The index decreased. The ISM Services report came just three days after a report on hot jobs raised concerns that the economy is not contracting enough and that inflation will continue to be an issue. In recent months, fears of inflation have often dictated the performance of asset markets.

“Bitcoin’s previous gains evaporated after a heated ISM report came out, boosting bets that the Fed could tighten much more than markets currently determine,” wrote Edward Moya, senior market analyst at foreign exchange market maker Oanda.

Ether recently changed hands above $1,260, down more than 2% from Sunday, at the same time. Other major cryptocurrencies spent much of the day in the red with CRO, the token of the Crypto.com exchange up more than 4% and DOT, the cryptocurrency of the Polkadot blockchain interoperability protocol, sinking more than 3%. AXS, the token of gaming platform Axie Infinity, is up nearly 20% to trade at more than $8.40.

Cryptocurrency prices have largely tracked stock markets, which sank amid interest rate concerns fueled by the ISM report. The tech-heavy Nasdaq and S&P 500, which has a strong technical component, fell 1.9% and 1.8%, respectively. The Wall Street Journal reported that food and beverage giant Pepsi-Cola will lay off hundreds of workers in North America amid the company’s concerns about shrinking volume.

Meanwhile, the recent drop in U.S. consumer savings rates to their second lowest level in 60 years suggests that cryptocurrency markets are likely to remain quiet at least for the near future, CoinDesk analyst Glenn Williams wrote Monday. “With retail investors making up a large portion of cryptocurrency investors, the continued erosion of purchasing power is likely to impact Bitcoin and Ether prices,” Williams wrote. “We are facing a combination of higher interest rates, increased purchasing power and rising debt levels.”

Cautiously optimistic about First Mover on CoinDesk TV, Katie Talati, head of research at crypto investment firm Arca, indicated that cryptocurrency prices may have bottomed out. “I don’t make price forecasts, but I think we may have seen bottom in terms of market prices and sentiment in the last few weeks,” Talti said.

Biggest gainer

Biggest losers

ideas

By Sam Reynolds

Taipei-based technology manufacturer HTC is said to be looking to take its virtual headset business public in the United States, Taiwanese media report, as part of a larger quest to play a leading role in the metaverse.

But in the IPO for its virtual reality business, the company may have made a mistake it made years ago with its electric scooter arm called Gogoro. There are a lot of similarities between the two: What started as a niche product suddenly became more mainstream—and the market just didn’t appreciate it. Fundamental questions also arose about the future of Metaverse.

VR, HTC bright spot

Virtual reality has been a bright spot for HTC, a company that has otherwise seen its balance sheet effectively dissolve over the past decade. At the start of the Obama administration, HTC was a mobile giant, helping pioneer the Android ecosystem, peaking at a 10% market share in 2011 and overtaking Nokia in the market, which at the time benefited from financial backing and a partnership with Microsoft.

But it’s seen a significant decline since then, reaching 2% of smartphone market share in 2015, and now it’s too small for its shipments to be tracked by research houses like IDC and Statcounter.

In an attempt to turn the company around, HTC launched the Vive VR headset in 2016 to mixed reviews. It was still a developing medium, as hardware and software technology lagged behind consumers’ expectations.

Facebook, which acquired the Vive’s rival Oculus in 2014 for $2 billion, has been in a similar dilemma. CNBC said in 2017 that its bet on virtual reality was one of Zuckerberg’s “rare mistakes.” It wasn’t because “no one wants to be social in VR” and there was no compelling game for that.

Meanwhile, HTC’s balance sheet was still sinking, and in 2017 Google bailed out by investing $1.1 billion in HTC’s mobile division so that Google would have a manufacturing partner for its Pixel phones.

Virtual reality continued to weaken over the next few years. Reviewers still saw it as a niche product, with obvious commercial and business applications, but there is no “killer app” for gamers and retail users that would make a headset a must-have.

“The virtual reality revolution is alive and well, it just isn’t ready for you,” Gizmodo’s Sam Rutherford wrote in 2019. [going] It takes a little longer to become mainstream than people first thought. Be patient, your VR dreams are still very much alive and well.”

Portable speakers and the metaverse

VR got its first boost in consumer interest with the release of the standalone Oculus Quest headset in 2019, with analysts citing its low price point and uninhibited nature as consumer interest.

As standalone devices powered by the same chips that went into smartphones, they couldn’t throw out as realistic graphics as a headset tethered to a computer, but it was cheap and fun with gaming finally arriving, which is what consumers wanted.

By mid-2021, there was a small boom in standalone headsets like the Oculus Quest 2 and Vive Focus. HTC was still a money-losing entity, but its balance sheet was improving.

And then came Facebook, which is primarily diving into the metaverse and VR.

Quality concerns about Facebook’s virtual reality and metaverse platforms aside, at first, investors were intrigued.

In Taiwan, HTC stock has become a proxy for the metaverse, gaining nearly 130% during the fourth quarter of 2021. Shipments of VR headsets were growing at a rate not seen since 2016, but HTC faced a competitive market from its competitors.

Even with the metaverse bubble popping, and Meta stocks, along with the major metaverse tokens starting to plummet over the course of the year, HTC hasn’t fared badly.

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While HTC (2498) has underperformed Taiwan’s TAIEX year-to-date, losing 28.6% versus 19%, it managed to better the Meta, which is down 63%, and the Sandbox, which is down 53%.

There’s still plenty of value to the company it has defined the market for, though the wheels are off of all things metaverse.

Gogoro parallels

Motorcycles dominate the road in Taipei, and many put out exhaust with their two-stroke engines.

In 2015, two former HTC executives launched a solution: Gogoro. While electric scooters are not a new technology, a network of battery swap stations is. The company has raised $150 million and is led by HTC founder Cher Wang, incubating some of its early technology in its facilities. But it missed the opportunity to make it a full subsidiary.

While Gogoro had skeptics at first, in the ensuing years it has managed to garner a 9% market share. In April 2022, the company’s IPO went public on the NASDAQ via SPAC but investors weren’t impressed.

(TradingView)

(TradingView)

Year-to-date, the company posted a loss of 62%, compared to 30% for HTC. While Gogoro has strong cash flow, and licensing agreements for its battery swap technology, it’s not profitable, only posting net income during the most recent quarter due to favorable charges on warranties on the books.

Certainly, if the Vive were to make it to an IPO, there would be similar results. We don’t know how much revenue Vive accounts for HTC, since it’s bundled with smartphones and other electronic equipment. But it probably won’t be profitable.

Gogoro was pushed early to an IPO because its backers, like HTC’s Cher Wang, needed a quick buck (HTC is a money-losing entity, after all). Wang probably regrets not buying Gogoro a bigger stake as an investor and bringing it closer to the HTC fold, where it would no doubt be a success story for the company — and an even more potent product than VR.

Despite the advancements of the past four years, virtual reality still needs more time to embrace. The Vive’s stock market performance will be predictable, and it’s only possible to track the Meta’s ups and downs. But HTC needs an infusion of cash, and there’s no clear private buyer available.

The company hopes that the metaverse will find a solid foothold.

important events.

11:30 a.m. Hong Kong time / Singapore time (3:30 UTC) Interest rate decision from the Reserve Bank of Australia

9:30 pm Hong Kong time / Singapore time (13:30 GMT) US Trade Balance of Goods and Services (Oct)

11:00 pm Hong Kong time / Singapore time (15:00 GMT) Canadian Ivey PMI (November)

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