Summing Up The Week

The markets rocketed higher this week on the back of data showing inflation is almost definitely slowing and that the Federal Reserve is nearing the end of its tightening cycle.

No more rate hikes is certainly good news for stocks, however some analysts are concerned what the “higher for longer” mantra repeatedly said by Chairman Jerome Powell could mean for the strength of the economy going forward.

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

Market News

Consumer inflation rose 0.2% in June, less than expected

On Wednesday, the report everyone had been waiting for, the Consumer Price Index (CPI), rose 0.2% in June, up 3% from a year ago and the lowest level since March 2021 against expectations for 0.3% and 3.1%, respectively, reported CNBC. Investors had been hoping for the CPI to show inflation waning as the Federal Reserve warms up another rate hike when they meet later in July.

“There has been significant progress made on the inflation front, and today’s report confirmed that while most of the country is dealing with hotter temperatures outside, inflation is finally cooling,” said George Mateyo, chief investment officer at Key Private Bank. “The Fed will embrace this report as validation that their policies are having the desired effect – inflation has fallen while growth has not yet stalled.”

Core inflation remains higher than the Fed’s 2% target, so analysts still anticipate the central bank will raise interest rates by another 0.25% when they meet.

Wholesale prices rose 0.1% in June, less than expected

Just like Wednesday’s CPI report, Thursday’s Producer Price Index (PPI) showed slowing inflation, with wholesale prices increases 0.1% in June, less than the 0.2% rise expected by Dow Jones economists, reported CNBC.

Slowing PPI, like slowing CPI, is a good indication that the Federal Reserve’s interest rate hiking mandate is much closer to its end and that next week’s expected 0.25% rate hike could actually be the Fed’s last hike.

Next Week’s Gameplan

The Federal Reserve meets in two weeks and with a 0.25% rate hike virtually certain, the market movements then will be determined based on what Fed Chair Jerome Powell says in the press conference following the Fed’s release on Wednesday. 

If Powell comes out too hawkish, that would predictably put a halt to the rally. However, if Powell comes out dovish with optimistic remarks about how the fight against inflation seems to be winning, the markets could rally even higher.

For me, it’s been Selling Season for most of 2023 with me taking profits pretty much everywhere in my portfolio. If the markets rise next week on the back of the slew of earnings reports we’re getting, then I’ll just keep trimming away!

Have a great week and I’ll see you here next Friday! 

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

Bitcoin boost from Ripple win

Bitcoin broke its multiweek trading range this week following news on Thursday that crypto company Ripple won a partial victory against the SEC in court where the U.S. District Court of the Southern District of New York ruled that the sale of Ripple’s token, called XRP, did not constitute investment contracts, reported Coindesk.

The news caused a rally across the cryptocurrency sector including both the tokens as well as companies with relationships to the space such as Coinbase (COIN), Block (SQ), and Microstrategy (MSTR).

Bitcoin broke through the year-to-date high at $31,525.10 and set a new high at $31,862.21 on Thursday, where, oddly, the Next Support of Last Resort once again presented resistance to any further upside. Additionally, Bitcoin set a higher weekly low on Monday at $29,955.00 (up from $29,715.87 last week).

The Bullish Case

Bulls remain bullish, arguing that Bitcoin holding $30K support and rallying on the news of regulation means more bullish moves to come, eyeing $34K as the next potential target for consolidation.

The Bearish Case

Bears have once again gotten smacked into licking their wounds. After pointing to Bitcoin’s price consolidation over the past few weeks as bearish in light of the positive news catalysts in the space, Bears had to concede on the back of Thursday’s breakout. Bears continue to argue there could be significant downside in the space, but, for the moment, there’s not a lot of evidence supporting the Bearish outlook.

Bitcoin Trade Update

Current Allocation: 0.500% (Unchanged since last week’s update)
Current Per-Coin Price: $30,499.46 (Unchanged since last week’s update)
Current Profit/Loss Status: +2.51% (+3.35% since last week’s update)

With all the positive news in the space, I’ve been raising my buy targets so I can aggressively add to my position on positive news. Additionally, I’m prepared to start trimming the position if this rally gets too exuberant.

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:

0.027% @ $30,256
0.027% @ $30,077
0.027% @ $29,856
0.027% @ $29,567
0.027% @ $29,249
0.027% @ $28,932
0.027% @ $28,573
0.027% @ $28,076
0.027% @ $27,310
0.119% @ $26,068

Not Your Keys, Not Your Crypto…

In light of brokerage failures in 2022, I no longer keep any of my crypto on an exchange and I only keep enough USD on the exchanges I use 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.

I do not trust anyone in the space, even with Coinbase (COIN) being publicly traded (and one of my own Investments in Play 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, Bitcoin crashed -54% to a low of $6430.00 in December 2019.
• In February 2020, Bitcoin rallied +64% to $10,522.51.
• In March , 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 2021, Bitcoin dropped -32% to a low of $28,732.00.
• In February, 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 , Bitcoin rallied +51% to a new all-time high of $64,896.75.
• In June , Bitcoin crashed -56% to a low of $28,800.00.
• In November, 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.
• In April 2023, Bitcoin rallied +101% to a high of $31,050.00.
• In June, Bitcoin dropped -20% to a low of $24,750.00
• In July, Bitcoin rallied +29% to a high of $31,862.21.

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.