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Saturday, November 9, 2019

3 Things Under the Radar This Week

© Reuters.  © Reuters.

Investing.com - Here are three things that flew under the radar this week.

1. Local Fed Forecasts See 4Q Growth Struggling

The New York Federal Reserve’s GDP forecast dipped this week, pointing to fourth-quarter 2019 annual growth well below 1%.

The New York Fed’s Nowcast came in at 0.7% Friday, down from its previous measure of 0.8%.

“Negative surprises from lower than expected exports and imports data accounted for most of the decrease,” the Fed said.

Business inventories also had a negative impact, while the Institute of Supply Management’s services measure helped.

Meanwhile, the Atlanta Fed’s GDPNow forecast, also out Friday, had growth coming in at 1%, the same as its previous measure.

2. Whales’ Really Are Behind The Big Moves in Bitcoin, Research Finds

A sea of red washed over bitcoin Friday, sending some into a frenzied search for fundamental reasons for the move. More often than not, a clear reason for price swings has been found to be lacking, leading many to lay the blame at the feet of traders with sizable bitcoin holdings, bitcoin whales, able to move prices in a single swoop.

But the role that the whales play in the crypto market may have been underestimated.

New findings suggest that a single trader was responsible for the surge in bitcoin to nearly $20,000 two years ago.

Finance professors John Griffin and Amin Shams at the University of Texas and Ohio State University claimed that bitcoin’s value between March 2017 and March 2018 was manipulated through large-volume trades.

"This one large player or entity either exhibited clairvoyant market timing or exerted an extremely large price impact on bitcoin that is not observed in aggregate flows from other smaller traders," they wrote in a paper, which was shared with Bloomberg ahead of its publication in the Journal of Finance.

But the professors are not the only ones shinning a light on the whales’ manipulation.

Whale Alert, a site that keeps tables on moves in wallets for cryptocurrencies worth more than $50 million, identified a high number of high-value transactions that could explain the 20% downturn in bitcoin between October 21 and October 22.

Underscoring the impact of whales on the price of bitcoin, Whale Alert co-founder and CEO Frank van Weert highlighted an address, inactive since 2011 and boasting 80,000 in bitcoin, that could “crush the market completely” if they decide to sell.

Against the backdrop of overburdening pressure by the whales, some have suggested that an influx of new investors is needed to level the playing field.

Institutional investors have been long courted by crypto markets, with many believing that Wall Street’s participation is needed for the next major rally.

Products like bitcoin futures were launched to make crypto accessible to Wall Street.

But that has brought in another class of whales, who reportedly were responsible for the reverse in bitcoin from its all-time high.

A letter from the Federal Reserve Bank of San Francisco released in last year in May, suggested the slump in bitcoin from near $20,000 was largely driven by institutional investors following the launch of bitcoin futures.

“The advent of blockchain introduced a new financial instrument, bitcoin, which optimistic investors bid up, until the launch of bitcoin futures allowed pessimists to enter the market, which contributed to the reversal of the bitcoin price dynamics,” the San Francisco Fed said.

3. Disney Promises Transparency on Subscriber Numbers

Walt Disney's (NYSE:DIS) much-anticipated Disney+ streaming service debuts next week and there is some good news for investors looking to value the company’s shares.

The company plans to supply granular information on how the service is performing, including subscriber numbers, a metric that will be very closely watched.

Disney will provide subscriber numbers “on a go-forward” basis, Chief Financial Officer Christine Mary McCarthy said during the company’s post-earnings conference call.

“(W)e intend to be very transparent as it relates to our (direct-to-consumer) business and the sub counts are going to be something we know people will be interested in,” McCarthy said. “So we will be providing by the different platforms subs by those platforms and because we'll be launching domestically, obviously we expect Disney+ domestically to have a head start on any of the international markets.”

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