This Week in Apps: Elon buys Twitter, new App Store rules, gambling ads backlash
Welcome back to This Week in Apps, the weekly TechCrunch series that recaps the latest in mobile OS news, mobile applications and the overall app economy….
Welcome back to This Week in Apps, the weekly TechCrunch series that recaps the latest in mobile OS news, mobile applications and the overall app economy.
Global app spending reached $65 billion in the first half of 2022, up only slightly from the $64.4 billion during the same period in 2021, as hypergrowth fueled by the pandemic has slowed down. But overall, the app economy is continuing to grow, having produced a record number of downloads and consumer spending across both the iOS and Google Play stores combined in 2021, according to the latest year-end reports. Global spending across iOS and Google Play last year was $133 billion, and consumers downloaded 143.6 billion apps.
This Week in Apps offers a way to keep up with this fast-moving industry in one place with the latest from the world of apps, including news, updates, startup fundings, mergers and acquisitions, and much more.
It’s official, Elon Musk now owns Twitter. In typical Musk fashion, the transition has been nothing but chaotic, with the deal closing just ahead of the deadline set by the Delaware Chancery Court — the court where Musk was planning to try to exit the deal by claiming Twitter had misled him about the number of bots on the platform. (He was really looking to get the price down, of course!) In any event, the Telsa and SpaceX exec now has a new toy and everyone is waiting to see what comes next. Earlier, Musk had hinted at layoffs, then later retracted his statements, saying he wouldn’t fire 75% after all. However, he did immediately clear out the C-suite, including CEO Parag Agrawal, CFO Ned Segal, General Counsel Sean Edgett and Head of Legal, Trust and Safety Vijaya Gadde — a sign that he’s planning to fill out Twitter’s top ranks with execs who will do his own bidding and not fight for the Twitter of days past.
Still, Musk’s talk about a Twitter that’s more permissive of “free speech” doesn’t quite align with his message to advertisers posted shortly after the deal’s close: He promised marketers that Twitter can’t turn into a “free-for-all hellscape.” That’s clearly a tacit acknowledgment on Musk’s part that advertisers don’t want to post their content next to hate speech-filled tweets. And despite Musk’s plans to grow Twitter’s subscription business, around 90% of Twitter’s revenue today comes from advertising. Given what he had to pay to own Twitter, Musk probably doesn’t want to have to pay to keep it running, too.
App Store Review Guidelines now give Apple a cut of NFTs, in-app advertising
Image Credits: TechCrunch
Along with the launch of iOS 16.1, Apple also introduced new App Store Review Guidelines. Among the major changes were two new rules designed to give Apple a bigger slice of the NFT market and Meta’s core advertising business.
The company said apps will be allowed to list, mint, transfer and let users view their own NFTs, but clarified that owning an NFT could not be a shortcut to unlocking any more features in an app. In other words, the ownership of an NFT shouldn’t be a way to route around Apple’s in-app purchases. In addition, Apple said NFT apps can’t display external links or other calls-to-action to purchase NFTs — that can only take place through Apple’s own in-app purchases system, as well.
This change is not all that surprising. As the web3 market grows, Apple wanted to find a way to stake its claim on the revenue and transactions that are occuring inside these new apps. Plus, it’s a better consumer experience for NFT marketplace apps to not just function as a showcase for users’ purchases, but as a place where users can actually transact.
The other big rule adjustment, however, is a bit more startling. In a bold move, Apple essentially said it deserves a cut of Meta’s ads business as well as any other social app. The new rule around social media apps now states that purchases of “boosts” have to flow through Apple’s in-app purchase system.
This could impact any app that sells the ability to boost a post to a wider audience, like Meta (Facebook, Instagram), TikTok, Twitter, dating apps and others. Meta, of course, took significant issue with this change, saying that Apple’s policy undercuts others in the digital economy after Apple had previously said it wouldn’t take a share of developer ad revenue. While Meta isn’t exactly a sympathetic player here, it’s concerning that Apple has decided it can now tax advertising inside iOS apps at the same time it runs its own expanding ads business. That seems like a move regulators will need to look into asap.
App Store gambling ads backlash
Speaking of Apple’s ads business…The company’s App Store ads platform expanded this week to include new ad slots like the main Today tab and a “You Might Also Like” section at the bottom of individual app listings. The slots are available in all countries as of October 25, except China. The ads have a blue background and an “Ad” label to differentiate them from other listings.
Developers, however, were immediately disturbed by the instant deluge of gambling ads that appeared marketed alongside their own, including against kids’ applications and, in at least one case, a gambling addiction recovery app. This was a poor look for Apple. After all, the gambling category itself is already controversial — many developers would rather not share an app marketplace with these often predatory apps in the first place, much less have them advertised alongside their own.
Apple at least moved quickly to respond to the backlash by “pausing” gambling ads and a few other categories on App Store product pages, but the company didn’t say how long this pause would last or what it planned to do about the situation in the long term.
Spotify accuses Apple of anti-competitive behavior, this time around audiobooks
Just ahead of its Q3 earnings, Spotify published a blog post that again accused Apple of anti-competitive behavior with regard to its launch of audiobooks in the U.S. On an accompanying website, Spotify noted that its app update to include the audiobook expansion was rejected three times without “clear direction” as to what needed to be changed to come into compliance. The site details Spotify’s criticisms of Apple’s platform, explaining how Apple requires audiobook purchases to use Apple’s own in-app purchases — or, if selling elsewhere, prevents Spotify from telling users why, where or how to make those purchases outside of iOS.
Because Spotify wants to avoid the 30% IAP commission, it doesn’t let users buy audiobooks in its app. Instead, users select the book they want to purchase and are emailed a link that points to a website where they can complete the transaction.
“The Audiobooks purchase flow that Apple’s rules force us to provide consumers today is far too complicated and confusing — confusing because they change the rules arbitrarily, making them impossible to interpret,” Spotify’s blog post stated.
The company has regularly battled with Apple over its App Store policies but is sometimes seen as an unsympathetic victim due to its size, revenues and its role in moving the music industry to streaming, which artists say doesn’t pay.
Weekly News
Platforms: Apple
Image Credits: TechCrunch
Apple released iOS 16.1, iPadOS 16.1, macOS Ventura and watchOS 9.1. The updated software delivers new features like iCloud Shared Photo Library, Continuity Camera, Stage Manager for the Mac and iPad, Live Activities, Apple Fitness+ for iPhone and more.
Apple expanded its App Store ads platform to include the main Today tab and a “You Might Also Like” section at the bottom of individual app listings in all countries on October 25, except China. The ads have a blue background and an “Ad” label to differentiate them from other listings.
SKAdNetwork 4.0, which lets advertisers measure ads’ success, became available in iOS 16.1 and iPadOS 16.1 this week.
Apple also released the first betas of macOS Ventura 13.1, iOS 16.2, and iPadOS 16.2 which included the new Freeform app, announced at WWDC. The app is a whiteboard app that lets you create sketches notes, files, documents and more, which can be accessed across devices.
Apple reported its Q4 earnings with iPhone revenue up 9.67% YoY to $42.63 billion, Mac up 25.4% to $11.51 billion, but iPad revenue down 13.06% to $7.17 billion. Wall Street was expecting iPhone revenue of $43.21 billion, sending the stock down in late trading. Other products were $9.65 billion (up 9.95%) and the Services division, which includes the App Store, was up 4.98%.
Platforms: Google
Google filed a brief opposing Epic and Match’s recent motion to amend and expand their antitrust claims in the ongoing antitrust lawsuit against the Android maker. In it, Google disputes that its incentive program for developers to publish to the Play Store would prohibit developers from creating competing app stores, as alleged. It also noted the motion from Epic and Match comes too late, after the December 3, 2021 amendment deadline.
The company also announced updates across three main areas of Jetpack: architecture libraries and guidance, application performance and user interface libraries and guidance. It noted that 90% of the top 1,000 apps use Android Jetpack.
Google introduced a Gradle Bill of Materials (BOM) specifying the stable version of each Compose library. The first BOM release, Compose October 22, contains Material Design 3 components, lazy staggered grids, variable fonts, pull to refresh, snapping in lazy lists, draw text in canvas, URL annotations in text, hyphenation and LookAheadLayout. And it launched the first alpha of Compose for Android TV.
Android Studio got updates, too, including updated templates for Wear OS. And Google launched a stable Android R emulator system image for Wear OS.
E-commerce & Food Delivery
The FTC sanctioned Uber-owned Drizly, an alcohol delivery service, and its CEO Jason Rellas for data security abuses that saw the personal information of the company’s 2.5 million customers exposed. Drizly will have to implement a security program, destroy unnecessary data, implement new security controls and train employees and cybersecurity.
Amazon began letting select U.S. customers pay with Venmo on its website and in its mobile app, with plans to roll out the support to all U.S. customers by Black Friday.
Blockchain
Twitter began testing a blockchain-agnostic tool that allows users to display their NFTs in tweets in partnership with Dapper Labs, Magic Eden, Rarible and Jump.trade. The feature is only available to select users at this time.
Fintech
PayPal added support for Apple Passkeys on iOS, iPadOS and macOS, with more platforms to come. Passkeys are a new industry standard created by the FIDO Alliance and the World Wide Web Consortium — in partnership with Apple, Google and Microsoft — that are designed to replace passwords.
Social
New analysis indicates India’s homegrown TikTok clones, like Moj and Josh, haven’t been able to replicate TikTok’s success in the country following its ban, leaving Instagram and YouTube to take over the short-form video market locally.
Meta added Reels to Facebook Groups, noting that most Facebook users are members of at least 15 active groups and that there are 100 million-plus group joins every day.
Snap reported its slowest quarterly revenue growth ever in the third quarter. The social app maker missed analyst expectations with $1.13 billion in revenue, versus $1.14 billion expected, leading the stock to drop from $11 to $8 in late trading on the day of the earnings announcement. DAUs, however, were up 19% YoY (up 53 million) to 363 million in Q3. The company said it also plans to close its San Francisco office, which was only lightly used due to remote work policies.
The Snapchat app rolled out Director Mode, a feature offering TikTok-like tools including a green screen, quick edit and camera speed features, as well as a BeReal-like dual camera mode.
Pinterest reported its Q3 revenue was up 8% YoY to $684.6 million, above estimates of $666.7 million. However, global MAUs remained flat YoY at 445 million, above estimates of 437.4 million. The stock jumped 11% on the news.
Meta announced its Q3 earnings with revenue down 4% YoY to $27.7 billion, net income down 52% YoY to $4.4 billion, DAUs across its apps up 4% YoY to 2.93 billion. The stock dropped 25% on the revenue decline as investors voiced concerns about how much Meta is spending on its metaverse ambitions.
Bumble open sourced its AI, Private Detector, which the app uses to detect unsolicited nude images. (Get it?) The app gives the user the choice as to whether or not to open the image when a potentially lewd photo is detected. Now other apps can access the same technology.
Match-owned dating app Hinge will add a profile verification feature in November that will ask users to take a video selfie in the app as part of a crackdown on scammers.
Messaging
Telegram said it plans to auction usernames via the TON blockchain, a move inspired by an auction for wallet usernames that saw some selling for as high as $200,000. Founder Pavel Durov suggested other elements of the Telegram ecosystem could become a part of this marketplace in the future, including channels, stickers or emoji.
Apple raised prices for Apple Music, Apple TV+ and its Apple One bundle in the U.S. Apple TV+, which is getting its first price hike, will increase by $2 monthly and $10 annually. Subscribers will be charged $6.99 per month or $69 per year. Apple Music is getting a price increase of $1 for individual subscribers and $2 for families. The individual plan will now be $10.99 per month and the family plan will be $16.99 per month. And the Apple One bundle will cost $16.95/month, $22.95/month and $32.95/month, respectively, for the individual plan, family plan and Premier plan.
YouTube is raising the rates for its Premium Subscription for families across several countries, including the U.S., U.K., Canada and Argentina, effective November 21. In the U.S., the price is going up from $17.99 to $22.99. The plan allows up to five family members to watch ad-free videos, download videos for offline access and play videos in the background.
Deezer also bumped its monthly premium price to $10.99 in the U.S.
Given the competitors’ increases, Spotify’s CEO Daniel Ek noted on the earnings call that the company is considering a price hike as well. Spotify’s revenue in Q3 was up 21% YoY to €3.04 billion, MAUs were up 20% YoY to 456 million, and Premium subscriptions were up 13% YoY to 195 million. But Spotify’s stock dropped 6% after earnings due to a miss on advertising growth.
YouTube’s mobile app on iOS and Android got a makeoverthat includes a new look, precise seeking, new buttons, ambient mode, darker dark mode and a “pinch to zoom” feature to see more details in a video. Later, the company rolled out an update across platforms that separated long-form, Shorts and Live videos into their own tabs on channel pages.
Gaming
Microsoft CEO Satya Nadella said that more than 20 million people have now streamed games through Xbox Cloud Gaming, up from 10 million in April 2022. The gaming subscription service allows consumers to stream games to their phone via a web browser. This year, Microsoft brought the popular game Fortnite to the platform.
TikTok is expanding further into games, according to the FT, which said the app would add a dedicated gaming tab by November 2, which would feature ad-supported mobile games and in-app purchases.
Government & Policy
The U.K.’s Financial Conduct Authority said it plans to investigate Apple, Amazon, Google and Meta’s moves into retail financial services over competition and consumer harm concerns, the FT reported.
Turkey’s competition authority fined Meta 346.72 million lira ($18.6 million) for combining user data across Facebook, WhatsApp and Instagram.
India’s antitrust watchdog, the Competition Commission of India, fined Google $113 million for abusing the dominant position of its Google Play Store. It ordered the company to let app developers use third-party payments for in-app purchases or for purchasing apps and to drop any anti-steering guidelines. Google has three months to comply.
Square parent company Block was reported to be selling access to customers’ email addresses used to receive receipts. While not illegal, privacy experts argue this means of selling marketing information is “walking a fine line,” per Protocol’s report.
Apple patched a bug in iOS 16.1 and macOS Ventura that could have allowed apps with Bluetooth access to record users’ conversations with Siri without requiring microphone access.
TechCrunch’s Zack Whittaker offered an inside look into TheTruthSpy, the stalkerware operation that’s spying on thousands of people worldwide, including in the U.S., via Android apps planted by someone with physical access to a person’s device. Leaked data from the operation includes call logs, texts, location data and other personal info.
Free banking app Crowded raised $6 million in seed funding led by Garage, with participation from Deel co-founder Philippe Bouaziz, Innoventure Partners’ Michael Marks and a group of former bank executives. The app targets member-based nonprofits, like fraternities, sororities and booster clubs.
Onward, an app designed to help co-parents navigate and managed their shared expenses, raised $9.7 million in Series A funding led by Atlanta-based TTV Capital.
Joro, an app that helps people track and reduce their carbon footprints, raised a $10 million Series A led by existing investors Sequoia Capital and Amasia. Also participating were Norrsken, Nest co-founder Matt Rogers’ Incite, Jay-Z’s Arrive and Mike Einziger, the lead guitarist of Incubus.
Downloads
Duolingo Math
Image Credits: Duolingo
Language-learning company Duolingo officially launched its math app to the public this week, following beta trials. The app represents the first expansion beyond language learning and literacy for the company. The app allows users to choose between an elementary version that focuses on basic concepts like multiplication and division and an adult version that’s more optimized for “brain training” exercises that put skills into practice. A future version may even expand into higher-level math, like linear algebra or college-level math. The app is remaining free to use for the time being.
Pixel Pals
With my new Pixel Pals app, you can finally have adorable pets in the new Dynamic Island 24/7, *everywhere*, fully animated and cute as heck. they're freeeeeeeee! pic.twitter.com/3hPL8FaUiY
Apollo developer Christian Selig thought he’d have a little fun with the new iOS 16 feature, Dynamic Island, so he added a feature to his popular Reddit client called “Pixel Pals” that let users collect and care for small, animated pets that run atop the black bar at the top of the screen. The feature took off as people adopted their pixelated pets, fed them and played with them to earn their love.
Taking a cue from users’ interest, Selig launched a standalone app for Pixel Pals, which now allows pet owners to do more with their animated friends, including pinning them to the Home Screen as transparent widgets, adding them to the Lock Screen as animated widgets and enjoying them through iOS 16’s Live Activities, among other things. If anything, the app works to demonstrate iOS 16’s new features in a clever and entertaining way. Users seem to enjoy the new experience, too — as Selig noted this week, the app hit the top 3 in the Graphics & Design category on the App Store.
Meet the Bitcoinetas, a fleet of transformative vehicles on a mission to spread the bitcoin message everywhere they go. From Argentina to South Africa,…
You may have seen that picture of Michael Saylor in a bitcoin-branded van, with a cheerful guy right next to the car door. This one:
Ariel Aguilar and La Bitcoineta European Edition at BTC Prague.
That car is the Bitcoineta European Edition, and the cheerful guy is Ariel Aguilar. Ariel is part of the European Bitcoineta team, and has previously driven another similar car in Argentina. In fact, there are currently five cars around the world that carry the name Bitcoineta (in some cases preceded with the Spanish definite article “La”).
Argentina: the original La Bitcoineta
The story of Bitcoinetas begins with the birth of 'La Bitcoineta' in Argentina, back in 2017. Inspired by the vibrancy of the South American Bitcoin community, the original Bitcoineta was conceived after an annual Latin American Conference (Labitconf), where the visionaries behind it recognized a unique opportunity to promote Bitcoin education in remote areas. Armed with a bright orange Bitcoin-themed exterior and a mission to bridge the gap in financial literacy, La Bitcoineta embarked on a journey to bring awareness of Bitcoin's potential benefits to villages and towns that often remained untouched by mainstream financial education initiatives. Operated by a team of dedicated volunteers, it was more than just a car; it was a symbol of hope and empowerment for those living on the fringes of financial inclusion.
The concept drawing for La Bitcoineta from December 2017.
Ariel was part of that initial Argentinian Bitcoineta team, and spent weeks on the road when the car became a reality. The original dream to bring bitcoin education even to remote areas within Argentina and other South American countries came true, and the La Bitcoineta team took part in dozens of local bitcoin meetups in the subsequent years.
The original La Bitcoineta from Argentina.
One major hiccup came in late 2018, when the car was crashed into while parked in Puerto Madryn. The car was pretty much destroyed, but since the team was possessed by a honey badger spirit, nothing could stop them from keeping true to their mission. It is a testament to the determination and resilience of the Argentinian team that the car was quickly restored and returned on its orange-pilling quest soon after.
Argentinian Bitcoineta after a major accident (no-one got hurt); the car was restored shortly after.
Over the more than 5 years that the Argentinian Bitcoineta has been running, it has traveled more than 80,000 kilometers - and as we’ll see further, it inspired multiple similar initiatives around the world.
In early 2021, the president of El Salvador passed the Bitcoin Law, making bitcoin legal tender in the country. The Labitconf team decided to celebrate this major step forward in bitcoin adoption by hosting the annual conference in San Salvador, the capital city of El Salvador. And correspondingly, the Argentinian Bitcoineta team made plans for a bold 7000-kilometer road trip to visit the Bitcoin country with the iconic Bitcoin car.
However, it proved to be impossible to cross so many borders separating Argentina and Salvador, since many governments were still imposing travel restrictions due to a Covid pandemic. So two weeks before the November event, the Labitconf team decided to fund a second Bitcoineta directly in El Salvador, as part of the Bitcoin Beach circular economy. Thus the second Bitcoineta was born.
Salvadoran’s Bitcoineta operates in the El Zonte region, where the Bitcoin Beach circular economy is located.
The eye-catching Volkswagen minibus has been donated to the Bitcoin Beach team, which uses the car for the needs of its circular economy based in El Zonte.
Late 2021 saw one other major development in terms of grassroots bitcoin adoption. On the other side of the planet, in South Africa, Hermann Vivier initiated the Bitcoin Ekasi project. “Ekasi” is a colloquial term for a township, and a township in the South African context is an underdeveloped urban area with a predominantly black population, a remnant of the segregationist apartheid regime. Bitcoin Ekasi emerged as an attempt to introduce bitcoin into the economy of the JCC Camp township located in Mossel Bay, and has gained a lot of success on that front.
Bitcoin Ekasi was in large part inspired by the success of the Bitcoin Beach circular economy back in El Salvador, and the respect was mutual. The Bitcoin Beach team thus decided to pass on the favor they received from the Argentinian Bitcoineta team, and provided funds to Bitcoin Ekasi for them to build a Bitcoineta of their own.
Bitcoin Ekasi’s Bitcoineta as seen at the Adopting Bitcoin Cape Town conference.Bitcoin Ekasi’s Bitcoineta as seen at the Adopting Bitcoin Cape Town conference. Hermann Vivier is seen in the background. South African Bitcoineta serves the needs of Bitcoin Ekasi, a local bitcoin circular economy in the JCC Camp township.
Bitcoin Ekasi emerged as a sister organization of Surfer Kids, a non-profit organization with a mission to empower marginalized youths through surfing. The Ekasi Bitcoineta thus partially serves as a means to get the kids to visit various surfer competitions in South Africa. A major highlight in this regard was when the kids got to meet Jordy Smith, one of the most successful South African surfers worldwide.
Coincidentally, South African surfers present an intriguing demographic for understanding Bitcoin due to their unique circumstances and needs. To make it as a professional surfer, the athletes need to attend competitions abroad; but since South Africa has tight currency controls in place, it is often a headache to send money abroad for travel and competition expenses. The borderless nature of Bitcoin offers a solution to these constraints, providing surfers with an alternative means of moving funds across borders without any obstacles.
Photo taken at the South African Junior Surfing Championships 2023. Back row, left to right:
Mbasa, Chuma, Jordy Smith, Sandiso. Front, left to right: Owethu, Sibulele.
To find out more about Bitcoineta South Africa and the non-profit endeavors it serves, watch Lekker Feeling, a documentary by Aubrey Strobel:
The European Bitcoineta started its journey in early 2023, with Ariel Aguilar being one of the main catalysts behind the idea. Unlike its predecessors in El Salvador and South Africa, the European Bitcoineta was not funded by a previous team but instead secured support from individual donors, reflecting a grassroots approach to spreading financial literacy.
European Bitcoineta sports a hard-to-overlook bitcoin logo along with the message “Bitcoin is Work. Bitcoin is Time. Bitcoin is Hope.”
The European Bitcoineta is a Mercedes box van adorned with a prominent Bitcoin logo and inspiring messages, and serves as a mobile hub for education and discussion at numerous European Bitcoin conferences and local meetups. Inside its spacious interior, both notable bitcoiners and bitcoin plebs share their insights on the walls, fostering a sense of camaraderie and collaboration.
Inside the European Bitcoineta, one can find the wall of fame, where visitors can read messages from prominent bitcoiners such as Michael Saylor, Uncle Rockstar, Javier Bastardo, Hodlonaut, and many others.On the “pleb wall”, any bitcoiner can share their message (as long as space permits).
Introduced in December 2023 at the Africa Bitcoin Conference in Ghana, the fifth Bitcoineta was donated to the Ghanaian Bitcoin Cowries educational initiative as part of the Trezor Academy program.
Bitcoineta West Africa was launched in December 2023 at the Africa Bitcoin Conference. Among its elements, it bears the motto of the Trezor Academy initiative: Bitcoin. Education. Freedom.
Bitcoineta West Africa was funded by the proceeds from the bitcoin-only limited edition Trezor device, which was sold out within one day of its launch at the Bitcoin Amsterdam conference.
With plans for an extensive tour spanning Ghana, Togo, Benin, Nigeria, and potentially other countries within the ECOWAS political and economic union, Bitcoineta West Africa embodies the spirit of collaboration and solidarity in driving Bitcoin adoption and financial inclusion throughout the Global South.
Bitcoineta West Africa surrounded by a group of enthusiastic bitcoiners at the Black Star Square, Accra, Ghana.
All the Bitcoineta cars around the world share one overarching mission: to empower their local communities through bitcoin education, and thus improve the lives of common people that might have a strong need for bitcoin without being currently aware of such need. As they continue to traverse borders and break down barriers, Bitcoinetas serve as a reminder of the power of grassroots initiatives and the importance of financial education in shaping a more inclusive future. The tradition of Bitcoinetas will continue to flourish, and in the years to come we will hopefully encounter a brazenly decorated bitcoin car everywhere we go.
If the inspiring stories of Bitcoinetas have ignited a passion within you to make a difference in your community, we encourage you to take action! Reach out to one of the existing Bitcoineta teams for guidance, support, and inspiration on how to start your own initiative. Whether you're interested in spreading Bitcoin education, promoting financial literacy, or fostering empowerment in underserved areas, the Bitcoineta community is here to help you every step of the way. Together, we will orange pill the world!
This is a guest post by Josef Tetek. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Over the last few years, digital currencies and gold have become decent barometers of speculative investor appetite. Such isn’t surprising given the evolution…
Over the last few years, digital currencies and gold have become decent barometers of speculative investor appetite. Such isn’t surprising given the evolution of the market into a “casino” following the pandemic, where retail traders have increased their speculative appetites.
“Such is unsurprising, given that retail investors often fall victim to the psychological behavior of the “fear of missing out.” The chart below shows the “dumb money index” versus the S&P 500. Once again, retail investors are very long equities relative to the institutional players ascribed to being the “smart money.””
“The difference between “smart” and “dumb money” investors shows that, more often than not, the “dumb money” invests near market tops and sells near market bottoms.”
That enthusiasm has increased sharply since last November as stocks surged in hopes that the Federal Reserve would cut interest rates. As noted by Sentiment Trader:
“Over the past 18 weeks, the straight-up rally has moved us to an interesting juncture in the Sentiment Cycle. For the past few weeks, the S&P 500 has demonstrated a high positive correlation to the ‘Enthusiasm’ part of the cycle and a highly negative correlation to the ‘Panic’ phase.”
That frenzy to chase the markets, driven by the psychological bias of the “fear of missing out,” has permeated the entirety of the market. As noted in “This Is Nuts:”
“Since then, the entire market has surged higher following last week’s earnings report from Nvidia (NVDA). The reason I say “this is nuts” is the assumption that all companies were going to grow earnings and revenue at Nvidia’s rate. There is little doubt about Nvidia’s earnings and revenue growth rates. However, to maintain that growth pace indefinitely, particularly at 32x price-to-sales, means others like AMD and Intel must lose market share.”
Of course, it is not just a speculative frenzy in the markets for stocks, specifically anything related to “artificial intelligence,” but that exuberance has spilled over into gold and cryptocurrencies.
Birds Of A Feather
There are a couple of ways to measure exuberance in the assets. While sentiment measures examine the broad market, technical indicators can reflect exuberance on individual asset levels. However, before we get to our charts, we need a brief explanation of statistics, specifically, standard deviation.
“Like a rubber band that has been stretched too far – it must be relaxed in order to be stretched again. This is exactly the same for stock prices that are anchored to their moving averages. Trends that get overextended in one direction, or another, always return to their long-term average. Even during a strong uptrend or strong downtrend, prices often move back (revert) to a long-term moving average.”
The idea of “stretching the rubber band” can be measured in several ways, but I will limit our discussion this week to Standard Deviation and measuring deviation with “Bollinger Bands.”
“Standard Deviation” is defined as:
“A measure of the dispersion of a set of data from its mean. The more spread apart the data, the higher the deviation. Standard deviation is calculated as the square root of the variance.”
In plain English,this meansthat the further away from the average that an event occurs, the more unlikely it becomes. As shown below, out of 1000 occurrences, only three will fall outside the area of 3 standard deviations. 95.4% of the time, events will occur within two standard deviations.
A second measure of “exuberance” is “relative strength.”
“In technical analysis, the relative strength index (RSI) is a momentum indicator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a stock or other asset. The RSI is displayed as an oscillator (a line graph that moves between two extremes) and can read from 0 to 100.
Traditional interpretation and usage of the RSI are that values of 70 or above indicate that a security is becoming overbought or overvalued and may be primed for a trend reversal or corrective pullback in price. An RSI reading of 30 or below indicates an oversold or undervalued condition.” – Investopedia
With those two measures, let’s look at Nvidia (NVDA), the poster child of speculative momentum trading in the markets. Nvidia trades more than 3 standard deviations above its moving average, and its RSI is 81. The last time this occurred was in July of 2023 when Nvidia consolidated and corrected prices through November.
Interestingly, gold also trades well into 3 standard deviation territory with an RSI reading of 75. Given that gold is supposed to be a “safe haven” or “risk off” asset, it is instead getting swept up in the current market exuberance.
The same is seen with digital currencies. Given the recent approval of spot, Bitcoin exchange-traded funds (ETFs), the panic bid to buy Bitcoin has pushed the price well into 3 standard deviation territory with an RSI of 73.
In other words, the stock market frenzy to “buy anything that is going up” has spread from just a handful of stocks related to artificial intelligence to gold and digital currencies.
It’s All Relative
We can see the correlation between stock market exuberance and gold and digital currency, which has risen since 2015 but accelerated following the post-pandemic, stimulus-fueled market frenzy. Since the market, gold and cryptocurrencies, or Bitcoin for our purposes, have disparate prices, we have rebased the performance to 100 in 2015.
Gold was supposed to be an inflation hedge. Yet, in 2022, gold prices fell as the market declined and inflation surged to 9%. However, as inflation has fallen and the stock market surged, so has gold. Notably, since 2015, gold and the market have moved in a more correlated pattern, which has reduced the hedging effect of gold in portfolios. In other words, during the subsequent market decline, gold will likely track stocks lower, failing to provide its “wealth preservation” status for investors.
The same goes for cryptocurrencies. Bitcoin is substantially more volatile than gold and tends to ebb and flow with the overall market. As sentiment surges in the S&P 500, Bitcoin and other cryptocurrencies follow suit as speculative appetites increase. Unfortunately, for individuals once again piling into Bitcoin to chase rising prices, if, or when, the market corrects, the decline in cryptocurrencies will likely substantially outpace the decline in market-based equities. This is particularly the case as Wall Street can now short the spot-Bitcoin ETFs, creating additional selling pressure on Bitcoin.
Just for added measure, here is Bitcoin versus gold.
Not A Recommendation
There are many narratives surrounding the markets, digital currency, and gold. However, in today’s market, more than in previous years, all assets are getting swept up into the investor-feeding frenzy.
Sure, this time could be different. I am only making an observation and not an investment recommendation.
However, from a portfolio management perspective, it will likely pay to remain attentive to the correlated risk between asset classes. If some event causes a reversal in bullish exuberance, cash and bonds may be the only place to hide.
BUFFALO, NY- March 11, 2024 – Impact Journals publishes scholarly journals in the biomedical sciences with a focus on all areas of cancer and aging research. Aging is one of the most prominent journals published by Impact Journals.
Credit: Impact Journals
BUFFALO, NY- March 11, 2024 – Impact Journals publishes scholarly journals in the biomedical sciences with a focus on all areas of cancer and aging research. Aging is one of the most prominent journals published by Impact Journals.
Impact Journals will be participating as an exhibitor at the American Association for Cancer Research (AACR) Annual Meeting 2024 from April 5-10 at the San Diego Convention Center in San Diego, California. This year, the AACR meeting theme is “Inspiring Science • Fueling Progress • Revolutionizing Care.”
Visit booth #4159 at the AACR Annual Meeting 2024 to connect with members of the Agingteam.
About Aging-US:
Agingpublishes research papers in all fields of aging research including but not limited, aging from yeast to mammals, cellular senescence, age-related diseases such as cancer and Alzheimer’s diseases and their prevention and treatment, anti-aging strategies and drug development and especially the role of signal transduction pathways such as mTOR in aging and potential approaches to modulate these signaling pathways to extend lifespan. The journal aims to promote treatment of age-related diseases by slowing down aging, validation of anti-aging drugs by treating age-related diseases, prevention of cancer by inhibiting aging. Cancer and COVID-19 are age-related diseases.
Agingis indexed and archived byPubMed/Medline (abbreviated as “Aging (Albany NY)”), PubMed Central, Web of Science: Science Citation Index Expanded (abbreviated as “Aging‐US” and listed in the Cell Biology and Geriatrics & Gerontology categories), Scopus (abbreviated as “Aging” and listed in the Cell Biology and Aging categories), Biological Abstracts, BIOSIS Previews, EMBASE, META (Chan Zuckerberg Initiative) (2018-2022), and Dimensions (Digital Science).
Please visit our website at www.Aging-US.com and connect with us:
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