The Latest News - Santa Rally Is Strong This Year
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The latest in financial news: Santa Rally had a big impact on the stock market this year, US forces are helping patrol the Red Sea, Circle gets approved to create stablecoins in France, and Paxos can issue their stablecoin on the Solana ecosystem.
Santa Rally In The Stock Market
What a year the stock market has had. The S&P 500 is up about 24% for the year and December is up about 4%. As seasoned investors know, December is usually a spike in price due to something called the “Santa Rally”. As most humans, we like to find patterns in things that we do that help explain things around us. Why not apply it to the stock market? Older investors noticed that the price of stocks would increase in December, around Christmas. As it would happen year after year, investors started to call it the “Santa Rally”.
It isn’t a big surprise that stock prices would increase in December in the US. With more people spending on food for large family dinners, gas for cars, flights to travel to see families, and then various gifts to give for Christmas. As families spend more the companies make more in profits which drives stock prices. We can see that the US economy is dependent on consumer spending. This has been another pattern that investors have noticed. As more and more Americans spend, the economy grows. Then when Americans aren’t spending as much, the economy shrinks. A good example would be the COVID-19 pandemic in 2020. When Americans were restricted to staying home which limited their spending, the economy fell. That wasn’t the only reason for prices to fall during 2020 but it did have a big impact.
US Forces In The Red Sea
The US and its allies have started to put ships in the Red Sea to help protect commercial ships. This is caused by Houthis from Yemen attacking ships and causing delays or ransom for the ship and crew. While piracy isn’t new to the world, it isn’t as common nowadays. With the rise in attacks and threats, the US DoD has released a statement that they are working to provide security to commercial ships as they travel through the Red Sea. The challenge with this is that there are so many ships that the US Navy has available to help protect the Red Sea compared to the area of the Red Sea. The Red Sea is equivalent to the size of California with hundreds of ships travelling it every year. It will be difficult for the US forces to protect every ship that travels through the Red Sea but it is a good first step to help reduce the piracy that happens.
The Red Sea is one of the most important shipping lanes in the world. It allows for cheaper and faster transportation from Asia to Europe. The threats on the Red Sea, could drive many companies away from the Red Sea and use the Suez Canal. It would cause longer transportation times and costs for goods around the world as companies have to travel around Africa.
Circle Establishes In France
Circle has recently gotten continental registered as a digital asset service in France. Circle is known for its stablecoin, USDC, and its backing of 1 USDC to $1. Circle also issues a Euro stablecoin, EURC. With the recent regulations updates in Europe, it is no surprise that crypto companies are expanding to Europe as they provide clearer regulation and cooperation with regulators. With the US being slow on regulations, many companies are looking to move their operations to other countries that provide clearer regulations.
Paxos To Issue New Solana Stablecoin
Over this week, Paxos got approval from the New York Department of Financial Services to extend their stablecoin offerings to Solana. Paxos already issues and maintains two different stablecoins: Paxos US Dollar (USDP) and Pypal USD (PYUSD). They join other stablecoin issuers (mainly CIrcle and Tether) as all have been expanding supported chains for their stablecoins over the past few years. The stablecoin market is worth over $130 billion and is used by many crypto investors around the world.
This is a big improvement as Solana offers lower and faster transaction speeds compared to Ethereum. The addition of more stablecoins to Solana could drive more developers to Solana compared to Ethereum. Especially now, as more projects have been working to allow cross-chain compatibility. When the ability for chains to communicate and interact with each other becomes as easy as switching money from one bank to another, it will allow developers more options in choosing which chain to build on to better suit their customers.
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