Summing Up The Week
Earnings season has kicked off with a number of significant companies reporting this week. While we received positive news in the fight against inflation over in Europe, Big Tech disappointments upset the apple cart a bit later in the week.
Let’s take a look at the news that moved the markets this week…
UK inflation drops to 7.9%, beating expectations
On Wednesday, the United Kingdom reported inflation had cooled in June, coming in at 7.9% annually versus expectations for 8.2%, reported CNBC. However, the difference in inflation between the U.K., Europe, and the United States remains evident as the U.S. has nearly half the rate of inflation seen overseas.
Much like Janet Yellen, U.S. Treasury Secretary, the U.K.’s Chief Secretary to the Treasury, John Glen, reiterated the intent of the Treasury to continue its fight against inflation. “There’s no complacency here in the Treasury,” he said. “We’re working closely in lockstep with the Bank of England as we try to halve it this year and get it down to its long term norm of 2%.”
Disappointing tech earnings upset the Nasdaq
On Wednesday evening, both Netflix (NFLX) and Tesla (TSLA) gave disappointing quarterly reports which caused the Nasdaq to roll over a bit on Thursday.
Netflix (NFLX) gave forward guidance that was far more sluggish than investors had been hoping for. Additionally, the streaming company didn’t generate the revenue and profit margins that analysts had expected. The ad-based subscription tier is certainly working for the company, but the stock came hot into the quarter with hopes Netflix would give a blowout report, which it did not. The stock dropped more than -9% in Thursday trading.
Tesla (TSLA) beat expectations which initially led to a pop in the stock price during after-hours trading, however, during the conference call, CEO Elon Musk announced that the EV company would be lowering prices once more. While Tesla’s profit margins are second-to-none for the auto industry, the stock was priced to perfection assuming that increasing sales volume would lead to greater profits. With Musk lowering prices to gain market share, he will have to sacrifice profit margins to do so, and this disappointed investors greatly with the stock selling off more than -6% on Thursday.
With both companies representing a significant part of the NASDAQ, the tech sector, as a whole, rolled over during Thursday trading as investors started to worry more tech companies could report disappointing quarters going forward.
Next Week’s Gameplan
The Federal Reserve will once again take center stage next week when their two-day meeting ends on Wednesday with the announcement of their next move followed by a press conference with Chairman Jerome Powell.
As I mentioned last week, the market fully expects the Fed to go through with another +0.25% benchmark interest rate hike, so the big question mark falls on the press conference – will Powell come out hawkish or dovish?
Plus, earnings season continues, so there will be a lot of potential market-moving catalysts that could make for an exciting week. Maybe we’ll finally start exiting Selling Season and head back into a Buying Season? Fingers crossed.
I’ll see you all back here next Friday!
Bitcoin Price (in USD)
Bitcoin Price Action
Bitcoin bulls and bears battling at $30K
Bitcoin was unable to hold the momentum from last week, breaking through the weekly low set at $29,955.00 and not finding new weekly support until Tuesday at $29,525.00.
The $30K mark remains a battlefield with the Bulls struggling to push Bitcoin much higher than that and the Bears slowly easing Bitcoin back to lower-lows. The price action is decidedly on the Bears side, for the moment, but, as we’ve seen in recent weeks, the momentum can shift in a hurry.
The Bullish Case
Bulls argue that Bitcoin’s strength in staying about $29,400 shows many buyers are entering the space, snatching up Bitcoin and what they think is a good value. Bulls believe this ongoing price consolidation will eventually lead to a breakout in the price where Bitcoin will head for $34K and higher.
The Bearish Case
Bears point out that the weakness in Bitcoin even with the U.S. dollar selling off indicates an overall downtrend in the crypto sector. Typically, Bitcoin is inversely correlated to USD. In other words, when the U.S. dollar sells off, Bitcoin should rise in price. The USD has seen quite a selloff in recent weeks, and, yet, Bitcoin’s price has remained sluggish. Bears suggest this action indicates further downside ahead for crypto.
Bitcoin Trade Update
Current Allocation: 0.600% (+0.100% since last week’s update)
Current Per-Coin Price: $30,445.93 (-0.18% since last week’s update)
Current Profit/Loss Status: -2.00% (-4.51% since last week’s update)
I started adding to my position when Bitcoin sold off over the past week with my first buy at $30,256.50 and my lowest buy at $30,015.00 giving me an average buy of $30,181.09 (after fees).
The combined buys lowered my per-coin cost -0.18% from $30,499.46 to $30,445.93 and increased my allocation +0.100% from 0.500% to 0.600%.
If the weakness in Bitcoin continues, I’ll keep adding to my position with quantities that will increase once we start nearing June’s lows around $25K.
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% @ $29,139
0.027% @ $28,276
0.027% @ $27,607
0.087% @ $26,289
0.168% @ $25,489
0.293% @ $24,267
0.341% @ $23,460
0.580% @ $22,308
0.721% @ $21,404
1.138% @ $20,325
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.