Chapter 1: Why has Bitcoin fallen below $64,000?
Bitcoin hits its lowest price in more than a year. What's driving its fall?
That's the narrative that it's supposed to be this digital gold, that it would perform better than gold. But the reality is that it just has not acted like a hedge against inflation and has underperformed gold.
Plus, big tech companies like Google and Meta plan to spend billions on AI this year. Investors are having mixed feelings.
Chapter 2: What factors are driving the decline in Bitcoin's value?
And the latest batch of Epstein files shakes up U.K. politics and an elite U.S. law firm. It's Thursday, February 5th. I'm Alex Osola for The Wall Street Journal. This is the p.m. edition of What's News, the top headlines and business stories that move the world today. Big tech companies are announcing big AI spending plans.
Meta said last week that it would spend up to $135 billion on capital expenditures this year. And yesterday, Google parent Alphabet said it was planning to spend as much as $185 billion, about double last year. Investors have their doubts. WSJ Heard on the Street columnist Dan Gallagher joins me now with more. Dan, I just laid out these eye-popping numbers for CapEx spending this year.
Is it all going to the building out of AI?
Chapter 3: How are big tech companies planning to invest in AI this year?
Well, most of it is, yes. Especially with Google and what they said on their earnings call is like, yeah, the bulk of it goes to essentially the AI infrastructure. And a lot of it goes to specifically the chips and the servers to power that.
Why do these companies feel the need to do this? What is the competitive pressure here?
They're in a race to build up AI services, get as much market share, getting users really accustomed to their AI platforms. So for Google, you know, they have Gemini. Gemini competes with ChatGPT and Cloud and these other kind of AI models. Google wants as many users as it can using Gemini.
So they're going to build and invest in that because you need the AI infrastructure to power that and to grow the services.
So how are investors responding to the announcements of all this spending? I mean, obviously, there's been some investor concern about AI spending overall over the past few months. But as you said, it could be critical to some of these companies' central functions. So what's the verdict there?
Honestly, it's mixed because it depends on the day you ask that question. We saw last week when Meta announced, they put out this really big CapEx number, this projection, but they also had really strong results. And it was pretty clear AI was helping that business go up. And so you saw the stock go up. with Google, with Alphabet, you're seeing kind of the opposite. The business is still strong.
It's like they showed a similar acceleration in their business and they put out a big CapEx number, but in the market reaction afterwards, everyone's kind of more keen on the CapEx number. The other difference between the two is Metastock was way down before their earnings report because there was some other concerns about them and Google's has been up a lot.
And then you've had this week kind of this general over all worry about AI disruption, what AI could do to all these traditional tech companies, and that feeds into it as well.
That was WSJ Heard on the Street columnist Dan Gallagher. Thanks so much, Dan.
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Chapter 4: What are the investor sentiments regarding AI spending?
Yeah, so Bitcoin has actually been a bear market since late last year. The crypto market has been experiencing same liquidity where there just hasn't been as much demand, whether from individual investors or institutional investors for digital assets. And then coming into the new year, investors have been rotating out of tech stocks.
And in tandem with that, investors are rotating out of Bitcoin. So it has been under further pressure in recent days because of that rotation and macroeconomic and geopolitical uncertainties.
So on a sort of strategic level, how do investors think about Bitcoin? Like, do they think of it like gold and silver, like a safe haven investment, or do they treat it more like a tech stock?
Historically, Bitcoin... has acted like a sort of highly leveraged tech stock. It's been trading like a speculative asset where it's super volatile. The industry has pitched it as a safe haven, a store of value, a hedge against inflation. That's the narrative that it's supposed to be this digital gold that it would perform better than gold.
But the reality is that it just has not acted like a hedge against inflation and has underperformed gold.
Crypto has been on the downswing here. What would it take to turn things around?
So a lot of crypto investors are saying that this is kind of the strangest crypto bear market in the entire history of the industry. Because in the past crypto winters, what happened was that there would be a big scandal, a big hack into an exchange or something. the collapse of a prominent industry company that would usher in this collapse in prices.
However, this time, it seems like a lot of Wall Street institutions are still adopting crypto or integrating crypto into their systems, such as Fidelity introducing their own stablecoin or Wall Street firms are continuing to launch new crypto or digital assets funds for investors to invest in them.
So it seems like some investors believe that as long as this Wall Street adoption continues, eventually the market might bounce back slowly. But it would probably take a year or two years for that to happen.
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