Summing Up The Week
Ukrainian officials plead with Congress for more assistance against Russia’s insurgence while the Federal Reserve raised the benchmark interest rate for the first time since 2018.
It was a busy week!
Let’s take a look at the news that moved the markets this week…
Market News
Wholesale inflation increases less than expected
On Tuesday, the Producer Price Index (PPI) showed an increase of 0.8% in February versus the 0.9% expected by Dow Jones economists, reported CNBC. While pundits tried to claim this result as good news – inflation is not increasing as much as was expected, I argue that no news is good news as long as we’re seeing an increase in the rate of inflation.
In fact, the widespread thought that inflation is slowing still isn’t good news. Even if the CPI and PPI make it to 0%, that doesn’t mean the economy will see a rollback in the 40-year record high price increases we’ve seen over the past year, a 0% rate of inflation means that prices are not increasing further from these extraordinary levels.
Make no mistake, the existing price hikes are going to be with us for a very, very long time.
Federal Reserve hikes interest rate for 1st time in 3 years
On Wednesday, the Federal Reserve approvied a +0.25% rate hike – its first increase since December 2018 and announced that it would be the first of many to come, reported CNBC.
The benchmark rate controlled by the Fed is a key calculation for all types of credit and debt throughout the United States including treasury bonds, home mortgages, and car loans. An increase of the rate is usually a negative to markets and asset prices since it makes borrowing money more expensive for companies seeking growth.
In addition to the rate hike – lifting the interest rate range to 0.25%-0.5% – Fed Chair Jerome Powell indicated that additional rate increases will come to slow down inflation throughout the remainder of 2022.
Despite all of this hawkish (negative) news, the markets rose following the press conference. Some bullish pundits suggested that the market appreciated getting rid of the “known-unknown:” we knew that the Fed intended to raise rates, but we did not by how much and we did not know how often. However, I think the market’s pop was more likely due to hope that there may be a cease-fire between Ukraine and Russia announced shortly, not as a result of the Fed news.
Ukraine appeals to Congress; Biden approves add’l aid
On Wednesday, Ukrainian officials spoke to Congress, pleading for additional aid in its ongoing fight against Russian transgressors, reported CNBC. Following their appeal, President Joe Biden presented details on how the U.S. would spend $800 million in military and humanitarian aid for the beleaguered country.
Additionally, President Biden condemned Russian President Vladimir Putin, going so far as to call him a “war criminal” for atrocities and horrific attacks on Ukrainian citizens. “This could be a long and difficult battle, with the American people will be steadfast in our support in the people of Ukraine, in the face of Putin’s immoral, unethical attacks on civilian populations,” Biden said. “We are united in our abhorrence of Putin’s depraved onslaught.”
Next Week’s Gameplan
The Russia-Ukraine conflict shows no signs of letting up, and as long as it’s ongoing, the markets are going to focus on the potential effects of a war between Russia, which provides commodities to the world, and Ukraine, which provides food.
Hopefully, the war will end peacefully with the Russians leaving Ukraine, but, until it does, be prepared for volatile price action as the markets try to make sense of an ever-increasing amount of geopolitical and inflationary news events,
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)
%
Weekly Change
Bitcoin Price Action
Pump-and-Dump?
Bitcoin experienced a sudden pop of nearly 7% overnight on Tuesday, rising up to make an attempt at the bearish Downtrend? line that has been aggravating the bulls for months before just as suddenly losing its gain.
While the pop was not, in itself, an unusual event as cryptocurrencies are prone to huge gains (and losses), the following price action was, indeed, strange, as Bitcoin lost its gains nearly as quickly as it earned them with the entire bounce and retrace taking place in less than 2 hours.
After its pop-and-drop, Bitcoin went on to break back through $40,000, however it was unable to crack its new weekly high of $41,717.67 made early Wednesday morning. Additionally, Bitcoin created new weekly support this week at $37,560.40.
The Bullish Case
Bulls point to Bitcoin’s pattern of making higher-highs and higher-lows on the weekly chart as a sign of a potential reversal in the downtrend. However, pulling back on the timeframe shows that there’s still a lot more to go before, Bitcoin gets out of the hole it’s in.
The Bearish Case
Bears continue to maintain the upper-hand with the Downtrend? line continuing to exhibit extreme resistance to upward moves. Even if the crypto cracks its new weekly high at $41,717.67, it will likely still find resistance around $42,600, a previous high, followed by $45.425. $45,855, $48,575 and so on…
Bitcoin Trade Update
Current Allocation: 5.371% (+0.063% from last update)
Current Per-Coin Price: $41,626.30 (-0.116% from last update)
Current Profit/Loss Status: -2.387% (+3.404% from last update)
I was able to make a small buy when Bitcoin pulled back a bit over the weekend with an order that filled at $37,632.60 on Sunday. The buy lowered my per-share cost a relatively negligible -0.116% from $41,674.69 to $41,626.30 and raised my allocation +0.063% from 5.308% to 5.371%.
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:
0.060% @ $36,301
0.060% @ $35,294
0.269% @ $34,238
0.919% @ $33,168
1.419% @ $31,788
2.290% @ $30,029
3,547% @ $28,021
4.854% @ $24,599
6.738% @ $22,432
6.977% @ $20,148
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.
