Summing Up The Week

Holiday weeks can often be interesting to watch. With many professionals and retail traders taking the entire week off, trading volume decreases which means relatively small news events can really move the markets. Of course, with everyone being away on holiday, these weeks can often be incredibly dull, too.

This U.S. Thanksgiving week fell somewhere in between, with a few news stories that moved the markets in a relatively muted way…

Market News

In a Surprise Move, Disney replaced its CEO over the weekend

Normally, a single company doesn’t make enough news to cause the market to react, however Disney did when it fired CEO Bob Chapek on Sunday after reaching out to ex-CEO Bob Iger on Friday to secure his return to the company, reported CNBC. Disney makes up a significant part of both the Dow Jones Industrial Index and the S&P 500, so when the stock popped 10% on Monday following the news of the beleagured CEO’s termination, some of the week’s initial selloff was staved off.

Bob Chapek took over the reins at Disney in February 2020, mere days before the pandemic shut down the world’s economy. While his poor performance for the first year or two of his term could have been blamed on COVID-19, the last few earnings reports have been utter disappointments and pointed to a more concerning lack of ability to lead on his part.

The straw that broke the camel’s back came when Disney reported its most disappointing quarter, perhaps ever, in October, and Chapek tried to blow it off with promises things would improve 2024. Analysts, pundits, and even CNBC’s Jim Cramer began to call for Chapek’s termination, and it seems that Disney’s Board of Directors agreed with those calls, reaching out to ex-CEO Bob Iger to ask if he would return from his retirement last Friday and then firing Chapek on Sunday.

Fed sees smaller rate hikes “soon?”

On Wednesday, the minutes from the Federal Reserve’s November meeting showed that many of the officials agreed that smaller interest rate hikes should happen soon, reported CNBC.

“A substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate,” the minutes stated. “The uncertain lags and magnitudes associated with the effects of monetary policy actions on economic activity and inflation were among the reasons cited regarding why such an assessment was important.”

The past four rate hikes have been historic 0.75% hikes – rarely seen in the Fed’s history and much less seen back-to-back – so many analysts and pundits already believed the Fed would reduce the next rate hike (expected on December 14) to 0.5%, even that representing double the Fed’s typical 0.25% rate hikes from the past 20+ years.

Despite much of this knowledge being known, it apparently wasn’t “baked in” as markets rallied on the back of the release of the minutes.

Next Week’s Gameplan

As we near the end of November and start December, the big question for the remainder of the year is – who’s right? Will the Bulls get their “Santa Claus Rally” and the markets head higher into year-end, or will the Bears be vindicated with additional macroeconomic and geopolitical concerns bringing the markets down?

Either way, I stick to my gameplan which is to have a plan for both directions – what am I going to do if the market goes up tomorrow and what am I going to do if the market goes down tomorrow?

I hope all of my American friends had a Happy Thanksgiving holiday, and, for everyone else, I hope you got some juicy Black Friday deals!

See you here next 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

Bitcoin Price Action

Crypto Contagion Continues…

Bitcoin pulled back pretty severely early in the week, breaking through its 2022 low at $15,512.00 before establishing new support at $15,460.00. After bouncing from its new low, Bitcoin set a lower weekly high at $16,797.28 on Thursday, a technical indication  (lower highs and lower lows) perhaps predicting more pain could be in store for the crypto in the coming days and weeks.

Bitcoin’s moves came on the revelations that bankrupt brokerage FTX only had $1.24 billion in cash on its balance sheet and owes at least $3.1 billion (Source: CNBC). Additionally, the Grayscale Bitcoin Trust (GBTC) refused to share proof of reserves following concerns that its parent company had exposure to FTX’s fallout (Source: CNBC).

GBTC is an asset traded on the open stock market designed to let investors have exposure to Bitcoin without buying the crypto itself. While investors can’t send or receive Bitcoin (or hold it themselves), GBTC is supposed to buy Bitcoin 1:1 for every dollar invested in the trust. Concerns that the parent company may be insolvent could potentially reveal GBTC itself to be violated, not actually holding the amount of Bitcoin it claims to (and is legally required to).

On Thursday, Binance, the biggest cryptocurrency exchange, announced it would devote $1 billion to a recovery fund in light of FTX’s bankruptcy, reported CNBC. The news had little to no effect on the crypto market itself, likely due a sector numb from false promises that end up falling through (FTX’s ex-CEO Sam Bankman-Fried had also promised billions of dollars in recovery after the collapse the of the Luna algorithmic stable-coin in May sent Bitcoin tumbling from $30,000 to under $18,000. Of course, those promises failed to bare fruit as Bankman-Fried turned out to be a charlatan and a fraud).

The Bullish Case

Many Bulls continue to point out how resilient Bitcoin has been, staying about the $15K mark despite all the “FUD” (Fear, Uncertainty, and Doubt) that Bulls claim is misinformation disseminated by media which wants to see Bitcoin fail. An objective analysis, however, shows no positive catalysts, fundamentals, or price action currently, with all signs pointing to further downside.

The Bearish Case

Bears continue to remain correct in their assessment of Bitcoin – the crypto potentially has a lot more downside left in it before it bottoms for this cycle. Accordingly, all of my upcoming buys have been reduced in quantity to accommodate this downside potential.

Bitcoin Trade Update

Current Allocation: 18.462% (+0.129% since last update)
Current Per-Coin Price: $22,606.17 (-0.283% since last update)
Current Profit/Loss Status: -26.872% (-0.427% since last update)

My tiny Bitcoin buys resumed when the crypto broke through its 2022 low on Monday, with multiple buys filling giving me an average $16,086.58 buying price (after fees).

The buys lowered my per-coin cost – 0.283% from $22,670.42 to $22,606.17 and increased my allocation +0.129% from 18.333% to 18.462%.

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:

0.143% @ $15,587
0.143% @ $15,111
0.143% @ $14,870
0.143% @ $14,090
0.143% @ $13,324
0.143% @ $13,027
0.143% @ $12,310
0.143% @ $11,889
0.143% @ $10,868
1.132% @ $10,302

Not Your Keys, Not Your Crypto…

In light of everything happening with brokerages, I no longer keep any of my crypto on an exchange and I only keep enough USD on the exchange to execute my next few buys. I use multiple cold wallets from the brands Ledger and Trezor to hold my crypto (click the links to access the direct sites, and I receive no affiliate benefits from these links).

Additionally, I have now divided my allocated USD between two different exchanges – Gemini and Coinbase – in case one (or both) becomes insolvent. Disclaimer: We both receive a bonus if you use either my Gemini or Coinbase referral links to open accounts.

Given everything that happened with FTX and Sam Bankman-Fried claiming customer funds were safe only to have it go completely bankrupt, I do not trust anyone in the space, even with Coinbase being publicly traded (and one of my own positions).

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 (possible moves include drops of -90% or more and gains of +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.
• In December 2019, Bitcoin crashed -54% to a low of $6430.00 in December 2019.
• In February 2020, Bitcoin rallied +64% to $10,522.51.
• 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 November 2022, Bitcoin crashed -78% to a low of $15,460.00.

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

What if Bitcoin’s headed to zero?

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.