Tonight: The bitcoin bros are growing their ranks. Plus: We're all still kind of freaking out about the whole door-falling-off-the-plane thing, right? Let's get into it. By Allison Morrow |
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| | Last updated January 11 at 6:59 PM ET | |
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Tevarak/iStockphoto/Getty Images |
After a security breach created a kind of twisted game of red-light-green-light this week, Team Crypto on Wednesday finally got the all-clear from regulators to launch bitcoin exchange-traded funds. Yay? Boo? Where are we? Whether this is good news or bad depends on your feelings toward crypto. And let me tell you, people have strong feelings. The folks popping the Champagne: The entire trillion-dollar crypto industry, naturally. In anticipation of the ETF approval, investors have pushed the price of bitcoin up 12% over the past month. On the other side: SEC chair Gary Gensler, who gave this approval grudgingly after a court ruled against the regulator last year. And lots of other critics, including Dennis Kelleher, the CEO of the investor watchdog group Better Markets, who had this 🔥 reaction: With the flagrantly lawless crypto industry crashing and burning due to a mountain of arrests, criminal convictions, bankruptcies, lawsuits, scandals, massive losses, and millions of investor and customer victims, who would have thought that the SEC would come to its rescue by approving a trusted and familiar investment vehicle that will enable the mass marketing of a known worthless, volatile, and fraud-filled financial product to Main Street Americans. With that all said, most people just want to know if it makes sense to put a little money into it to diversify their portfolios. As my colleague Jeanne Sahadi notes, there's a lot to consider. Know your asset - Bitcoin is not tethered to anything tangible like the goods of a company or a natural resource. It is essentially computer code, with only vague connections to the material world.
- Cryptocurrency is also not, despite its name, legal tender. It will not buy you a sandwich at the bodega.
- In the eyes of crypto advocates — and, increasingly, in the view of traditional money managers like BlackRock and Fidelity — it is a bet that bitcoin will hold its value over time more than any other cryptocurrency because it is finite by design. There will only ever be 21 million bitcoin in circulation.
New wrapper, many of the same risks - Buying bitcoin directly is kind of a pain and carries lots of risk (lose your password to your digital wallet and you can kiss that money goodbye forever.)
- But an ETF of any kind, bitcoin included, comes with some security. You can house it at a registered broker-dealer that is a member of the nonprofit Securities Investor Protection Corporation and is therefore SIPC-insured. That means you will receive up to $500,000 of protection should your brokerage ever go bankrupt.
- But make no mistake, the price of a bitcoin will be just as volatile whether you invest in it directly yourself or through an ETF. Over the past five years, bitcoin volatility has been four times that of the stock market, said Bryan Armour, director of passive strategies research at Morningstar. "The exposure is the same. … It's still bitcoin."
Bottom line: Your financial goals, risk tolerance and time horizon will be key factors in assessing whether it is worth it for you to put money in a bitcoin ETF. In general, you need an iron stomach for a speculative bet like crypto. "There is no way to fundamentally value where it should be priced at. It's at the whim of supply and demand," Armour said. |
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US consumer prices rose 3.4% annually to close out 2023, capping a year of substantial progress reining in inflation. The Consumer Price Index, which measures the average price changes for commonly purchased goods and services, rose 0.3% in December from the month before, matching expectations, according to Bureau of Labor Statistics. The monthly and annual numbers for December were higher than those seen in November, when tumbling gas prices drove the overall index lower. Despite the slight acceleration last month, we're still down considerably from December 2022, when the annual rate was 6.5%. |
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It's been nearly a week since the the incident that I've taken to calling the holy-crap-the-plane-has-a-big-hole-in-it disaster. We still don't know what caused the chunk of the Boeing 737 Max 9's fuselage to just, like, detach itself midair. But aviation experts are scrutinizing the plane's design, and some are left scratching their heads. Here's what we know about the technical stuff: - The chunk of plane that decoupled itself from the fuselage on an Alaska Airlines flight last Friday is known as a "door plug."
- It's exactly what it sounds like — a section of the plane's body that's installed to cover an emergency exit. (In short: The more seats you have, the more emergency exit doors are required by law. Some airlines cram fewer seats in, so they plug up the door. From the inside, it looks seamless, a row like any other non-emergency row.)
- The door plug is typically held in place by stop fittings, and it has a set of bolts that prevent it from moving.
The problem with Alaska Airlines Flight 1282, according to some experts my colleague Curtis Devine spoke with, may have been the way it was installed. If the plug is larger than the opening it covers and installed from the inside of the plane, the force of the pressurized air in the passenger cabin would force the plug against the plane's interior frame, making it virtually impossible for it to blow out the way it did last week. "It doesn't make sense to me why they would ... not have it installed from the inside, where it literally cannot come out unless there is a structural failure in the airframe," said David Soucie, a former FAA safety inspector and CNN analyst. "Historically, since we have had pressurized airplanes, emergency exits are designed to come inward… so why would they have not done the same thing with this plug?" The design of the door plug on the Max 9 may provide some advantages, such as making the plane more readily accessible for maintenance. And installing a larger plug from the inside could have added costs, some experts noted. Even still, the Max 9 plug's design should have been adequate so long as proper installation and quality controls were in place, said John Goglia, a former member of the National Transportation Safety Board. "If it was installed properly, we wouldn't be talking about it," Goglia said. "There really is not a big issue with having this door in there, if it was secured right." A Boeing spokesperson declined to comment on the door-plug design, citing an active investigation by the NTSB. In a staff-wide meeting Tuesday, Boeing's CEO attributed the incident to a "mistake," which he did not elaborate on. A company source told CNN that Boeing believes "the mistake in question" was introduced in the aircraft's manufacturing supply chain. Boeing CEO David Calhoun told CNBC Wednesday that he is "confident" in the Federal Aviation Administration's work with airlines to "inspect each and every one of the airplanes" and make "certain that they're in conformance with our design, which is a proven design." |
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Last updated January 11 at 4:00 PM ET | |
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