by Brian Shilhavy, Health Impact News:
We are seeing the collapse of the U.S. financial system drawing closer and closer each day.
Last year, the only thing that supported the U.S. financial system and stopped it from completely collapsing, was investment into AI and the 7 technology stocks, referred to as the “Magnificent 7”.
Today, as we head into the last couple of weeks of the First Quarter in 2024, many of those “Magnificent 7” stocks are beginning to fall back from the AI bubble created in 2023, and there is now really only one of these stocks that has been basically stopping a full stock market crash, Nvidia, the leading manufacturer for the power-hungry computer processors needed to run AI.
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Nvidia is now worth more than all of these companies combined: AT&T, Boeing, Coca-Cola, Disney, FedEx, General Motors, IBM, McDonald’s, Nike, Starbucks, UPS, and Walmart. (Source.)
Nvidia recently reached a $2 trillion market value and has easily beat the previous most valued Big Tech company, Apple. Apple’s valuation continues to decline, along with other Big Tech companies like Tesla, partly because of their dependence on the China market. See:
Apple iPhone sales slump 24% in China to start the year, report says
And many investors are wise enough to see that Nvidia’s current valuation is also a huge bubble that is going to burst.
Nvidia’s $2 trillion market cap looks bubbly
AI chipmaker Nvidia topped $2 trillion in market cap on Friday less than nine months after crossing the $1 trillion threshold.
Why it matters: AI-drunk investors have bid up Nvidia, whose advanced chips power AI systems, to bubble-like levels. The company’s stock chart parties like it’s 1999 — and we all remember what happened to the dotcom era darlings a year later.
- AI is no fad, but neither was the internet. That didn’t stop dotcom stocks from collapsing.
Driving the news: The company gained $277 billion in value Thursday — Wall Street’s biggest single-day gain ever, per Reuters — after its quarterly earnings, reported Wednesday, suggested the AI boom has legs.
- Nvidia’s wild ride is propelled by demand for its graphics processors, which have turned out to be ideal not only for Bitcoin mining — which drove a previous wave of Nvidia mania — but also for the kind of number-crunching that ChatGPT and similar AI programs demand.
Yes, but: That demand is probably at its peak right now.
- Both the moment’s AI mania and global shortages of the most advanced processors have placed a premium on Nvidia’s products. That premium is a lot more likely to erode than hold.
- You can’t ramp up a chip powerhouse overnight, but over time Nvidia will face a rising wave of competitors.
- New research breakthroughs could radically alter the technical needs of AI systems, reducing reliance on Nvidia’s super-chips.
The stock market, in other words, is doing the opposite of what it’s supposed to — it’s responding to the present moment’s obsessions rather than predicting future profit growth. (Full article.)
Besides Nvidia, the other “product” that is holding up the financial system right now is the new Bitcoin ETF that the SEC approved recently.
For those who are unfamiliar with what ETF funds are, they are basically gambling funds where you bet on what is going to happen in the future, without actually owning anything.
So if you invest in the new Bitcoin ETF, you don’t actually own Bitcoins. You own a share in an ETF fund that increases or decreases in value based on the price of the actual Bitcoins.
There are even “Inverse ETFs” that one can invest in, where you basically bet that a certain stock or commodity is going to DECREASE in market value, and the more it decreases, the more you earn in Inverse ETFs.
I suspect that an Inverse ETF will soon be approved for Bitcoin as well, where you can make money when the price of Bitcoin decreases.
This is what the financial system, our debt-based financial system where nobody really owns anything as it is all leveraged against debt, has become. It is one huge Ponzi scheme, controlled by the Central Bankers.
Some are even asking if a Central Bank is now hoarding Crypto assets in order to stay liquid.
Judging from the price action last week, the everything rally remains resilient to the effects of monetary tightening. Have we sprung a monetary leak somewhere that is providing mysterious liquidity into markets? Or is this all just a huge lag effect as the Covid-era torrents of easy money continue to wash through the economy and the US deficit remains close to 6.5% of GDP?
Whatever the case, some of the moves are very interesting. News has emerged of a crypto whale dubbed ‘Mr 100’ who has been quietly accumulating a $3.1bn stash of Bitcoin. Decrypt.co reports that the mysterious whale is unlikely to be US-domiciled, and unlikely to be one of the new Bitcoin ETF operators since those have already disclosed their blockchain addresses. Could a central bank somewhere be buying crypto assets? (Source.)
One investor has stated that Bitcoin will “live and die” by the new ETF fund:
Bitcoin also surged back above $60,000 after the SEC approved bitcoin ETFs.
Peter thinks Bitcoin’s revival this week is the last gasp of breath before the asset blows up completely:
“These ETFs are really the tail that is wagging the Bitcoin dog. I think it’s all now about the ETFs, and of course, Bitcoin lives by the ETFs, it’s going to die by the ETFs and [it’s] probably not going to be a very long life.”
Full article. (Note: this person is biased toward gold investments.)
The success of Bitcoin, and all cryptocurrencies, of course depends on two things that power cryptocurrencies: electricity and the Internet. If you lose access to either of these life-bloods that allow cryptocurrencies to exist, your cryptocurrencies are dead and worthless.
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