Bitcoin Plunges, Shocking Nobody

By now, you’ve probably heard about Bitcoin’s tendency to dramatically fluctuate in price, and this week has been no different for the 10 year-old currency.

Opening at $4,033 on Friday morning, the currency fell to $3,475 by Sunday evening, climbing back up to $3,982 on Monday morning. While some crypto investors let out a sigh of relief on Monday morning’s recovery, analysts say all signs point to further turbulence ahead. Just consider the long-term picture – Bitcoin was valued at a record high of almost $20,000 in December 2017.

In addition to Bitcoin, several other crypto-currencies, including Ether and XRP, experienced precipitous declines. Forbes estimates that overall this year, some $700 billion has been erased from the global cryptocurrency market.

There are a couple of reasons behind the decline. For one, blockchain (check out our 101 on Blockchain here), which is the the underlying technology behind bitcoin, has been slow to scale to the higher volume of trading required by the crypto currency market. Second, regulatory scrutiny on bitcoin has increased across the world, and with Tuesday’s announcement of the opening of a US Justice Department investigation into illegal cryptocurrency trading, risk-averse investors are more likely to sell off their crypto assets.

What’s the big takeaway? Virtual currency is unpredictable, but it’s not going away any time soon. Expect to hear more about crypto volatility in the coming months.

General Motors Closes Oshawa Plant

On Monday Morning, General Motors announced a massive restructuring that includes plans to close five North American plants in an effort to save $6 billion USD by 2020.  Included in these changes is GM’s Oshawa, Ontario plant, which currently employs around 2,500 people.

What will happen to these employees? So far, GM has been tight-lipped with announcements about severance or re-training. However, rumours have circulated about reassigning the facility to build electric and autonomous vehicles that will fit with GM’s new carbon-efficient strategy. Back in 2016, GM announced that they would be creating 1,000 Canadian artificial intelligence related jobs across five years, but its unlikely that any of the laid-off manufacturing employees from Oshawa will have the skills to qualify for these positions.

While remaining GM plants in St. Catharine’s and Ingersoll will not be affected, the city of Oshawa will take a big hit.  The plant has been operating for over 100 years, and according to Unifor, Canada’s largest private sector union, every job at the Oshawa plant accounts for 7 other jobs in the community, including service, parts manufacturing, and dealership jobs.

After the announcement, GM’s stock price shot up 5%, due to an increase in corporate profits that typically occurs after layoffs.

Canadian Housing Simmers Down

Following eight years of rising prices, it appears the Canadian housing market has finally begun to cool down, much to the relief of speculators who warned of a debt and housing bubble only a year ago.

While we’re not completely in the clear, Canada has only experienced a modest adjustment in terms of housing prices after interest rate increases and new mortgage regulations were enacted earlier this year.

Beginning this year, federal guidelines now require financial institutions to vet whether customers getting, renewing, or refinancing their mortgages can afford future interest rate hikes. Known as a “stress test”, the new regulations mean some Canadians will no longer qualify for a mortgage, or will have to settle for less-expensive houses, depending on their bank’s assessment. This depends on things like credit history, down payment size, income, and current debt levels.

While some analysts warned these regulations might cause a swift decline in housing sales, deflating the “housing bubble” and putting the entire economy at risk, it appears the economy has instead arrived at a “best case soft landing”. But don’t get too excited – regulators are still concerned about high levels of Canadian personal debt, and it’ll be some time before homes in city centres like Vancouver and Toronto become even somewhat more affordable.