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Bitcoin’s Bear Market Hits New Investors Hard

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Bitcoin’s recent plunge has left many newcomers feeling the pinch, especially those who entered the market during its peak. The largest cryptocurrency, which soared past $100,000 just weeks after the 2024 U.S. presidential election, has since entered a bear market. As of now, Bitcoin is trading at around $80,000, down nearly 25% from its January high. This sharp decline comes amid a global stock sell-off and concerns about U.S. economic policies.

Many of the newer investors, especially those who purchased Bitcoin at its peak and used borrowed money, are now experiencing significant losses. Over the past three months, approximately 20 million new Bitcoin addresses have been created, making up about 1.5% of all Bitcoin addresses. However, the spent output profit ratio, which indicates the ratio between the prices at which Bitcoin is bought and sold, has dropped to 0.95, the lowest level in over a year. This suggests that many of the recent buyers are already locking in substantial losses.

Bitcoin reached an all-time high of $109,071 in January 2024, but has since lost most of its gains. Analysts point to factors such as concerns about U.S. tariffs, the health of the global economy, and a tech sell-off as reasons for the market’s decline. Analysts like Kevin Dede from H.C. Wainwright also express surprise at the $80,000 price level, with many anticipating further downturns.

In addition to the drop in Bitcoin’s price, traders with leveraged positions are facing severe pain. Bitfinex analysts report that daily realized losses for this group have exceeded $800 million, with some of the largest losses occurring on February 28 and March 4. Moreover, investment products tracking digital assets have experienced consistent outflows for four consecutive weeks, with total assets under management dropping to $142 billion, their lowest since mid-November 2024.

U.S. spot Bitcoin ETFs also saw a massive outflow of about $1.1 billion on February 25, marking the largest single-day outflow since their launch. While past corrections have led to calmer periods, Bitcoin’s future seems linked to broader market conditions. Volatility is at a high, with Bitcoin’s implied volatility spiking to 69% and Ether’s volatility rising to 90%. These numbers suggest that investors are bracing for more turbulence in the near term.

Some experts predict that this downturn may be temporary, similar to the market corrections seen in late 2018, and that Bitcoin may ultimately reach higher highs in the future.

Why a Major Shift to US Clothing Production is Unlikely

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The push for U.S.-made clothing, fueled by President Donald Trump’s “Made in America” initiative, has led some U.S. retailers to explore domestic manufacturing for items such as T-shirts, suits, and coats. Despite this, industry executives say large-scale reshoring of clothing production is unlikely due to limited capacity and higher costs associated with labor and tariffs on imported materials.

Retail executives like Mitch Gambert, owner of Gambert Shirtmakers, have noted an increase in inquiries from U.S. brands seeking to reshore production, driven by the impact of Trump’s tariffs. Gambert, who manufactures shirts for Nordstrom, indicated that domestic production would be a major positive for his business, but capacity constraints remain a challenge. He also highlighted the increased costs of materials, such as buttons and zippers, due to tariffs on imports from China.

While some companies, such as Reformation, have placed more orders with domestic suppliers to adapt to tariff changes, others like Joe Ferrara of Ferrara Manufacturing, which makes clothing for Ralph Lauren, see a growing demand for small-batch, quick-turnaround products like wool coats and blazers. However, industry experts such as Steve Lamar, president of the American Apparel and Footwear Association, emphasize that the U.S. lacks the labor, skills, materials, and infrastructure to return to large-scale manufacturing.

Despite U.S. consumers’ reliance on cheap imports from China and other low-wage countries, a shift back to domestic production faces challenges. Yao Jin, a supply chain management professor at Miami University, asserts that the high cost of U.S. labor makes it difficult for U.S. companies to compete on price, especially against overseas producers.

At Gambert Shirtmakers, where 90% of workers earn more than the state’s $15.49 hourly minimum wage, the company struggles to keep up with demand due to limited production capacity. Additionally, with U.S. tariffs affecting raw materials such as fabric, businesses like Gambert face increased operational costs.

Alexander Zar, CEO of La La Land Production and Design, a footwear manufacturer in Los Angeles, has seen growing interest from sportswear brands in domestic sneaker production. However, Zar plans to use technology like 3D printing to offset high labor costs, recognizing that U.S.-made products may still be priced higher than those made overseas.

Despite the interest, Adidas has no immediate plans to shift its supply chain and will continue to produce only limited-edition shoes with La La Land.

Kim Glas, president of the National Council of Textile Organizations, supports additional tariffs on Chinese apparel imports but cautions that tariffs on Mexico and Canada hinder the U.S. industry by disrupting the flow of materials needed for production. Glas emphasized the need for certainty in trade policies to encourage long-term investment in domestic manufacturing.

Nvidia Criticizes Biden Administration’s Reported AI Chip Export Restrictions

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Nvidia has expressed concern over a reported plan by the Joe Biden administration to impose new restrictions on AI chip exports, with the company urging the outgoing president not to enact a policy that could harm the U.S. economy and benefit adversaries. Nvidia’s Vice President, Ned Finkle, criticized the potential move, arguing that it could set the U.S. back and play into the hands of international competitors.

The Commerce Department and the White House have not responded to Reuters’ inquiries about the policy. According to exclusive reports, the Commerce Department is planning to approve global AI chip exports while preventing bad actors, particularly China, from accessing these advanced technologies. A Bloomberg News report suggests that new export regulations could be announced soon, with limits on the computing power that can be sent to certain countries, including China.

Finkle warned that the policy, though presented as an anti-China measure, would have broader global consequences, including limiting computing systems for other countries and driving the market toward alternative technologies. The Information Technology Industry Council, representing major tech companies like Amazon, Microsoft, and Meta, also voiced concerns, claiming that the restrictions would impede U.S. companies’ ability to compete globally.

Nvidia’s criticism comes as U.S. President-elect Donald Trump prepares to take office on January 20. Trump previously imposed restrictions on U.S. technology sales to China during his first term, citing national security concerns. Nvidia’s stock saw a decline of more than 1% following the Bloomberg report.