Summing Up The Week
Ukraine continues to rebel the Russia invasion and the rest of the world has stepped up with signs of support ranging from governments imposing international sanctions to movie companies pulling all content from Russian theaters and airlines canceling all flights to and from Russia.
Even oil-giant BP pulled out of a Russian oil interest – a move that lost the company $500 million – to demonstrate solidarity with the Ukrainian people.
And, yet, Putin refuses to back down…
Let’s look at the news that moved the markets this week…
Market News
Ukraine remains defiant, ‘not ready to surrender’
On Monday, Ukraine maintained its independence with Foreign Minister Dmytro Kuleba telling reporters, “Ukraine is ready to continue seeking a diplomatic solution, but Ukraine is not ready to surrender or capitulate,” reported CNBC.
While much of the world is unable to support Ukraine with troops, countries have been supplying military equipment, weapons, supplies, and more. Restaurants in the U.S. refused to sell Russian vodka or other Russian products and countries have refused airspace access to Russian airlines.
Russian President Vladimir Putin continues to attempt a false propaganda campaign with his own citizens, attempting to claim that the invasion of Ukraine will somehow protect those living in Russia.
ADP reports 475K new jobs in February, better than expected
On Wednesday, private payroll processor ADP reported companies added 475,000 new jobs in February, better than the Dow Jones estimate for 400,000, reported CNBC.
“Hiring remains robust but capped by reduced labor supply post-pandemic,” said ADP chief economist Nela Richardson. “Last month large companies showed they are well-poised to compete with higher wages and benefit offerings, and posted the strongest reading since the early days of the pandemic recovery.”
The improving jobs figures indicate an economy getting stronger, and, with Federal Reserve Jerome Powell scheduled to speak later the same day, expectations that the Fed will, indeed, raise interest rates later in March remained strong.
Fed: Ukraine ‘highly uncertain’ but rate hikes still coming
On Wednesday, Federal Reserve Chairman Jerome Powell told Congress that while the implications from the Ukrainian conflict are uncertain, the Fed will hike the interest rate 0.25% in March, reported CNBC.
“The implications for the U.S. economy are highly uncertain, and we will be monitoring the situation closely; the near-term effects on the U.S. economy of the invasion of Ukraine, the ongoing war, the sanctions, and of events to come, remain highly uncertain,” Powell said. “Making appropriate monetary policy in this environment requires a recognition that the economy evolves in unexpected ways. We will need to be nimble in responding to incoming data and the evolving outlook.”
Powell’s comments were more-or-less expected by most in the markets, however, some must have priced in the potential of a 0.50% rate hike in March instead of the 0.25% Powell announced as the markets did rise following Powell’s comments before Congress.
February jobs rose 678K vs 440K expected
On Friday, the Labor Department reported nonfarm payrolls increased by 678,000 in February and unemployment dropped to 3.8% versus Wall Street’s expectations for 440,000 and 3.9%, respectively, reported CNBC. While, typically, strong jobs reports are also a sign of a strong economy, when combined with the geopolitical strife, the markets sold off on news that indicates the Fed will most certainly continue tapering and raising the benchmark interest rate to fight inflation.
“The labor market recovery remains very robust across the board as more Americans are returning to work,” said Eric Merlis, managing director of global markets at Citizens Financial Group. “Geopolitical issues and inflation pose ongoing threats to the U.S. economic recovery, but pandemic restrictions are being lifted and we continue to see strong job growth.”
Next Week’s Gameplan
Between the Ukrainian conflict and the whirlwind that is the fight against inflation globally, there are a lot of catalysts on the horizon that can and will move the market in wild ways.
Yet, the gameplan remains steadfast – make a plan for what you will do if your positions go up. Make a plan for what you will do if your positions go down. And, as always, if the markets volatile swings leave you seasick, take a break from watching your portfolio and go do something fun, instead.
I’ll see you all in a week!
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
Important Disclaimer
Get Irked contributors are not professional advisers. Discussions of positions should not be taken as recommendations to buy or sell. All investments carry risk and all readers must accept their own risks. Get Irked recommends anyone interested in investing or trading any asset class consult with a professional investment adviser to determine if an investment idea is suitable to them and their investment goals.
Bitcoin Price (in USD)
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Weekly Change
Bitcoin Price Action
Maybe Bitcoin’s not ‘digital gold,’ but it did prove a use-case
This week, Bitcoin rose not because of it’s relationship to gold, but because of the proof of the use-case that digital cryptocurrency makes it easier to transfer funds out of a country in geopolitical strife. Both Ukrainians and Russians have turned to Bitcoin and other crypto in an effort to take control of their livelihood in a time of global uncertainty.
Bitcoin may not be an analog to gold, but it certainly provides a method for international money transfer that stands against centralized solutions like the international SWIFT system.
Bitcoin bounced off a new weekly low of $37,020.00 set over the weekend, breaking through the Downtrend? line we’ve been following for weeks. However, the crypto failed to break through the monthly high of $45,855.00, setting a new weekly high of resistance at $45,426.45 on Wednesday before reversing and heading back down into the abyss.
From here, Bitcoin needs to shoot through its monthly high to indicate a potential reversal of trend, and the crypto must hold either its weekly low of $37,020.00 or its monthly low of $34,322.00 to prevent further risk to the downside.
The Bullish Case
Bulls believe that Bitcoin’s confirmation of being an easy-to-transfer wealth asset on the international stage will provide the strength necessary to prevent further selloff in the space. Many bullish analysts continue to state that a $100,000 price target is very much in the cards before the end of 2022.
The Bearish Case
Bears continue to maintain the upper-hand given that, despite the bullish rally over the past week, the macro trend is still very much downward. This thesis was further enhanced when, while Bitcoin did break through the Downtrend? line temporarily, the crypto was not able to maintain upward movement before finding significant resistance.
Bitcoin Trade Update
Current Allocation: 5.415% (-0.224% from last update)
Current Per-Coin Price: $41,707.76 (-0.169% from last update)
Current Profit/Loss Status: -1.123% (+4.819% from last update)
My long-time readers probably know the drill by now – whenever Bitcoin pops above my per-coin price, it’s time to take some off the table. This time was no different with a sell order going through on Tuesday at $43,739.04.
The sale reduced my per-coin cost just -0.169% from $41,778.34 to $41,707.76 and reduced my allocation -0.224% from 5.639% to 5.415%.
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:
0.062% @ $35,887
0.093% @ $34,762
0.540% @ $33,927
2.576% @ $31,126
2.928% @ $27,407
5.797% @ $24,047
6.265% @ $21,921
9.739% @ $19,706
3.715% @ $15,525
4.641% @ $12,710
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 April 2021, Bitcoin rallied +51% 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 crashed -52% to a low of $32,933.33.
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.
