Summing Up The Week

While no stocks were safe this week (except maybe energy), NASDAQ and its tech sector got hit the hardest as the 10-year treasury yield climbed to levels not seen before the pandemic started. 

To add more fuel to the fire, rhetoric between the U.S. and Russia over a possible Ukraine invasion continued to rise and geopolitical concerns are never good for the markets.

Let’s look at the news that moved the markets this week…

Market News

10-Year Yield hits 1.86%, highest since pandemic started

On Monday, the yield of the 10-year treasury bond hit 1.86%, its highest point since before the pandemic started, and caused a panic across the stock market, reported CNBC. The yield on bonds move opposite to price – in other words, as the price of bonds sell off, the interest rate – or yield – rises.

A rising interest rate on the 10-year U.S. treasury bond, considered the safest investment as it’s backed by the U.S. government, indicates investors are selling the bonds and going to cash, a sign that there’s less faith in the upward gains in stock market equities.

Accordingly, when interest rates rise on treasury bonds, the stock market sells off as investors fear bond owners know something about where the global economy could be heading, potentially down, in this case.

Putin expected to order invasion of Ukraine

On Wednesday, President Joe Biden said in a press conference that he expects Russian President Vladimir Putin to order an invasion of Ukraine, warning that “a disaster” awaits Russia if this happens, reported CNBC.

During the confrence, reporters grilled Biden about the 100,000+ Russian troops assembled along Ukraine’s border and also pressured the President for answers about the rising inflation pressures.

War is not good for anyone or anything, particularly the stock market. Should Putin order an invasion of Ukraine, expect a market-wide selloff in every sector except oil, which always performs to the upside during wartime as many of the world’s biggest oil-producing countries also happen to be those most likely to be involved in conflict.

Next Week’s Gameplan

We are definitely deep in the throes of Buying Season right now, and, as is always the case, we have no idea when the selling is going to end.

That’s fine, though.

This is why I create my Buying Plan in advance and add slowly using small quantities. I always like picking up my stocks on sale, but I also always make sure I have dry powder on the sidelines in case this selloff is “The One” that all the doomsayers have been claiming is on the way.

This Week in Play

Stay tuned for this week’s episodes of my two portfolios Investments in Play and Speculation in Play coming online later this weekend!

Crytpo Corner

Bitcoin Price Action

Downward ‘ho!

Bitcoin remained rangebound for the majority of this week, trading between the $39,600.00 low and $44,453.22 high set in the last few weeks… until Thursday. Shortly after the stock market close, the crypto market decided it was done keeping up the fight and collapsed deep into the $30K range before finding support, perhaps briefly, at $37,704.42.

The Bullish Case

The Bullish thesis pointing to the $40K level as being the key support has been broken. From here, it’s hard for the Bulls to argue that institutional buying will continue preventing selloffs in the crypto space.

The Bearish Case

Bears continue to maintain the upper-hand as the macro environment shows Bitcoin in a downtrend on all of the longer timeframes. Now that Bitcoin and the rest of the crypto sector have started to collapse, the Bears can press their advantage.

Bitcoin Trade Update

Current Allocation: 4.159% (+0.573% from last update)
Current Per-Coin Price: $47,105.88 (-3.525% from last update)
Current Profit/Loss Status: -17.972% (-5.980% from last update)

The buying kicked in again this week when Bitcoin lost $40K as support with a buy order that filled on Thursday at $39,261.00. The order lowered my per-coin cost -3.525% from $48,826.91 to $47,105.88 and increased my allocation +0.573% from 3.586% to 4.159%.

Bitcoin Buying Targets

Using Moving Averages and supporting trend-lines as guides, here is my plan for my next ten (10) buying quantities and prices:

2.163% @ $35,259
4.739% @ $30,084
3.600% @ $26,572
4.541% @ $24,550
10.74% @ $21,176
2.121% @ $19,003
3.207% @ $14,966
3.207% @ $12,372
3.207% @ $10,467
4.596% @ $9,191

No price target is unrealistic in the cryptocurrency space – Bullish or Bearish.

While traditional stock market investors and traders may think the price targets in the cryptocurrency space are outlandish due to the incredible spread (sometimes a drop of near -90% or a gain of up to +1000% or more), Bitcoin has demonstrated that, more than any speculative asset, its price is capable of doing anything.

Here are some of Bitcoin’s price movements over the past couple of years:

• In 2017, Bitcoin rose +2,707% from its January low of $734.64 to make an all-time high of $19,891.99 in December.
• Then, Bitcoin crashed nearly -85% from its high to a December 2018 low of $3128.89.
  In the first half of 2019, Bitcoin rallied +343% to $13,868.44.
• From June 2019, Bitcoin crashed -54% to a low of $6430.00 in December 2019.
• From December 2019’s low, Bitcoin rallied +64% to $10,522.51 in February 2020.
• In March 2020, Bitcoin crashed nearly -63% to a low of $3858.00, mostly in 24 hours.
• Then, Bitcoin rallied +988% to a new all-time high of $41,986.37 in January 2021.
• Later in January, Bitcoin dropped -32% to a low of $28,732.00.
• In February 2021, Bitcoin rallied +103% to a new all-time high of $58,367.00.
• Later in February, Bitcoin dropped -26% to a low of $43,016.00.
• In March 2021, Bitcoin rallied +44% to a new all-time high of $61,788.45.
• Later in March, Bitcoin dropped -19% to a low of $50,305.00.
• In April 2021, Bitcoin rallied +29% to a new all-time high of $64,896.75.
• In June 2021, Bitcoin crashed -56% to a low of $28,800.00.
• In November 2021, Bitcoin rallied +140% to a new all-time high of $69,000.00.
• In January 2022, Bitcoin dropped -45% to a low of $37,704.42.

Where will Bitcoin go from here? Truly, anything is possible…

What if Bitcoin’s headed to zero?

The only reason I speculate in the cryptocurrency space is I truly believe Bitcoin isn’t headed to zero.

I am prepared for that possibility, however, by knowing I could potentially lose all of the capital I’ve allocated to this speculative investment. Professional advisers recommend speculating with no more than 5% of an investor’s overall assets. Personally, I’ve allocated less than that to speculating in crypto.

I feel that anyone who doesn’t fully believe in the long-term viability of cryptocurrency would be better served not speculating in the space.

On a good day, this asset class isn’t suitable for those with weak stomachs. On volatile days, the sector can induce nausea in the most iron-willed speculator. If a speculator isn’t confident in the space, the moves will cause mistakes to be made.

DISCLAIMER: Anyone considering speculating in the crypto sector should only do so with funds they are prepared to lose completely. All interested individuals should consult a professional financial adviser to see if speculation is right for them. No Get Irked contributor is a financial professional of any kind.