Bitcoin breaks through $60,000, AI drives tech stocks soaring, and the recovery of U.S. manufacturing raises inflation concerns.

The U.S. manufacturing sector has shown signs of recovery for two consecutive months, raising concerns about a resurgence of inflation. Meanwhile, significant breakthroughs have been made in the field of artificial intelligence, with new video generation technologies sparking widespread discussion. The Crypto Assets market performed strongly during the Spring Festival, with Bitcoin prices briefly surpassing the $61,000 mark.

In early February, the U.S. Department of Labor released remarkable employment data: non-farm payrolls increased by 353,000 in January, marking the highest increase since January 2023, far exceeding the expected 185,000. This data immediately triggered concerns in the market about potential inflation rising.

The subsequently released inflation data further confirmed this concern. The January CPI increased by 3.1% year-on-year and 0.3% month-on-month, both exceeding expectations. The core CPI rose by 3.9% year-on-year and 0.4% month-on-month, also surpassing expectations. The market reacted strongly to this, with the Nasdaq dropping 1.8% on the same day, while the yield on the ten-year U.S. Treasury bonds rose sharply.

In fact, U.S. Treasury yields have been slowly rising since the end of January, which is closely related to the economic data performance at the end of last year and the beginning of this year. The market generally expects that the Federal Reserve may not start cutting interest rates until June, and Goldman Sachs has also adjusted its expectations, believing that there may only be four rate cuts this year, instead of the previously expected five.

The performance of the U.S. economy is closely related to the manufacturing cycle. The latest published Markit Manufacturing PMI preliminary value is 51.5, higher than expected and the previous value, marking the first time since September 2022 that U.S. manufacturing has remained above the expansion line for two consecutive months. The number of manufacturing orders has also reached a new high since June 2022, indicating a strong recovery in manufacturing, which may signal that the U.S. is entering a new round of inventory cycles, subsequently driving employment and inflation upward.

Nevertheless, the market generally believes that the possibility of the Federal Reserve continuing to raise interest rates is low. According to FedWatch data, while the probability of rate cuts has decreased, the probability of rate hikes has remained at a low level. Currently, the development of the U.S. economy is accompanied by a certain degree of inflation, but from the performance of asset prices, this inflation has not hindered the rise of stocks and Crypto Assets, and the market remains optimistic about future rate cuts.

In the tech field, the release of a new type of text-to-video tool has sparked widespread attention. The one-minute videos generated by this tool spread rapidly online, with video quality, smoothness, and logical coherence comparable to those made by humans. It is widely believed in the industry that the emergence of this technology heralds an impending industry transformation, especially in the content creation and media sectors, as it will completely change traditional video production methods, improve creation efficiency, and reduce production costs.

The breakthrough speed of this technology far exceeds expectations. When language models similar to ChatGPT first emerged, it was anticipated that video generation AI might take 5 to 10 years to be realized. However, just over a year later, this technology has already demonstrated astonishing results. Although there are still some flaws in detail handling, these issues are expected to be gradually resolved through technological iterations.

At the same time, the latest financial report data from a well-known chip company also confirms the rapid momentum of AI development. The company's revenue in the fourth quarter reached 22.1 billion USD, a year-on-year increase of 265%, with net profit surging 769% compared to the same period last year, and multiple financial indicators exceeding market expectations. Stimulated by this positive news, the company's stock price rose significantly, briefly making it the third largest company by market value in the US stock market, behind Microsoft and Apple.

It is worth mentioning that the investment preferences of the younger generation are changing. Data shows that American teenagers (ages 13-19) prefer high-growth stocks represented by tech giants. This trend indicates that, driven by AI technology, tech stocks and even Crypto Assets, as "emerging assets," may be increasingly accepted by more people and become mainstream investment varieties for the long term in the future.

In the Crypto Assets market, Bitcoin performed strongly during the Spring Festival. Starting from February 8, the price of Bitcoin quickly rose from around 43000 USD, with an increase of 23.3% within a week, reaching a peak of over 53000 USD. As of February 28, the price of Bitcoin further climbed, reaching a high of around 61000 USD.

The increase during the Spring Festival seems to have become a "new tradition". Statistics show that over the past 9 years, if one buys Bitcoin in the 3 days before the Lunar New Year and sells it in the 10 days after the New Year, it has yielded varying degrees of profit. The increase in 2021 was the most significant, reaching 24.3%, and even in the poorest-performing year of 2019, the increase was about 3%.

The main driving forces behind this wave of Bitcoin's rise come from two aspects: first, the reduction of selling pressure from a large holding institution, and second, the continuous inflow of funds into Bitcoin spot ETFs. Data shows that although this institution's holdings are still decreasing, the rate of reduction is gradually shrinking. At the same time, the large-scale inflow of ETF funds coincidentally occurred around the Spring Festival, providing strong support for Bitcoin's price.

As of February 26, 11 ETFs have a cumulative net inflow of $6.15 billion, with the market value of the coins held accounting for 3.81% of the total market value of Bitcoin, surpassing the amount of Bitcoin held by a certain large exchange wallet address. Among them, a certain ETF's single-day transaction volume on the 26th exceeded $1.3 billion, which industry analysts referred to as "a crazy number for a newly listed ETF."

Apart from ETFs, a certain software company is also an important source of capital inflow in the Bitcoin market. The company purchased 3,000 Bitcoins between February 15 and 25, at an average purchase price of $51,813. Currently, the company holds a total of 193,000 Bitcoins, with an average holding cost of approximately $31,544.

The approval of the Bitcoin spot ETF has injected great confidence into the market, and the focus has now shifted to the approval process of the Ethereum spot ETF. Currently, several institutions have submitted revised documents and new analytical explanations for their Ethereum ETFs. Industry insiders believe that if the Ethereum ETF is approved, it will mark another significant victory for the crypto market, potentially attracting more traditional investors to participate.

It is worth noting that the market value of Bitcoin ETFs in the United States has surpassed that of silver, making it the second largest ETF asset class in the U.S. However, many analysts believe this is not the end for Bitcoin. There are views that Bitcoin is competing with asset classes such as gold, real estate, and even the S&P index, and the advantages of Bitcoin as an asset may further increase its market value.

Finally, the discussion on the scalability of the Bitcoin network has also attracted market attention. Recently, the market has been exploring how to enhance the functionality of Bitcoin through technologies like Layer 2 and inscriptions. In order to balance scalability and value attributes, the industry has released Bitcoin L2 standards, which require Bitcoin to be treated as a native asset, ensuring that users can trace back to the control of the underlying asset, and emphasizing the reliance on the Bitcoin system. These standards aim to ensure Bitcoin's dominant position in the scaling network, while clarifying that Bitcoin remains the ultimate settlement tool, thereby maintaining its core value attributes.

Despite a rebound in inflation, the market has still reached new highs, driven strongly by innovations in AI technology. Currently, the focus of the market has shifted from interest rate hikes to the timing of the first rate cut. It is noteworthy that inflation has not suppressed the rise in asset prices. As the selling pressure from certain institutions eases, the market is watching to see if Bitcoin can break through its historical high of $69,000.