Key Highlights:
- CoreWeave’s $4 billion agreement with OpenAI has boosted stocks related to crypto-adjacent data centers by up to 20%.
- Galaxy Digital’s shares rose by 8% during its Nasdaq debut; Coinbase made a recovery following a data breach and SEC scrutiny.
- Inflation expectations reached their highest level in decades, potentially reducing the chances of Federal Reserve interest rate cuts.
Cryptocurrencies showed a steady performance on Friday, with Bitcoin trading around $104,000. While cryptocurrencies consolidated, stocks in the crypto mining and data center sectors experienced notable gains. Companies such as Cipher Mining, Hive Digital, Hut 8, and TeraWulf saw their shares jump between 10% and 20%, driven by increasing demands for AI computing resources following CoreWeave’s substantial contract with OpenAI, known for developing ChatGPT. These companies are regarded as proxies for investments in AI-related infrastructure.
The positive trend continued with CoreWeave’s shares surging over 26% on the news. Furthermore, Galaxy Digital celebrated an 8% increase in its first session of trading on Nasdaq, marking a significant entry into the U.S. market, having previously been listed only in Toronto. The firm is involved in crypto asset management and trading, alongside its data center operations.
Meanwhile, Coinbase’s shares climbed 9% after a previous decline that was a result of a customer data breach and ongoing investigations by the U.S. Securities and Exchange Commission.
Inflation Concerns
In the broader economic landscape, recent surveys from the University of Michigan indicated public expectations for one-year inflation to escalate to 7.3%, a jump from 6.5%, marking the highest levels observed since the 1980s. According to Louis Navellier, chief investment officer of Navellier, this inflation expectation is unexpectedly high. The survey revealed stark differences in inflation outlooks depending on political affiliation, influencing market reactions as traditional indices showed upward movements toward the end of the trading session.
However, the surging inflation concerns could deter the Fed from implementing rate cuts in the immediate future. “The Fed has shown a keen interest in consumer inflation expectations, and with apprehensions regarding inflation driven by tariffs, they may have additional reasons to hesitate,” Navellier commented.
