Summing Up The Week

The end of summer saw stocks rally throughout the week as every data point seemed to break in favor of the bulls. After seeing a lot of weakness throughout August, the markets really did turn it around this past week.

Over in Bitcoin, positive news completely flipped the cryptocurrency bullish, so there was a lot of green seen across the board in a variety of sectors.

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

Market News

First Bitcoin ETF could be coming as court rules against SEC

On Tuesday, the District of Columbia Court of Appeals ruled in favor of Grayscale, the company that runs the Bitcoin trust hoping to become the first U.S.-based Bitcoin ETF, overruling the Security and Exchange Commission’s (SEC) decision, reported CNBC.

Grayscale has long been attempting to convert its Bitcoin trust into an ETF to enable more investors to have access to the crypto without having to buy it in the spot market.

For years, the SEC has denied Grayscale from converting its trust. However, this new ruling from the Court of Appeals could indicate that a Bitcoin ETF might be coming soon, exciting news for would-be investors in the world’s largest cryptocurrency.

As a result, Bitcoin rallied on the back of the announcement, however the crypto ended up giving the gains back as the week went on. The SEC still has many tools in its toolbox to delay and outright prevent Bitcoin ETFs, so even though this was good news as a first step, there are many steps remaining before investors see an ETF.

U.S. job openings fall 8.8M in July

On Tuesday, the U.S. Job Openings and Labor Turnover Survey (JOLTS report) showed a total of 8.8 million job openings in July, 338K lower than June and the lowest since March 2021, with estimates higher at 9.5 million, reported Investing.com.

In another “bad news is good news” situation, a weakening job market is exactly what the Federal Reserve has been looking for in its fight against inflation. While the Fed doesn’t necessarily want to see Americans out of work, if the job market is tight, many consumers will reduce their spending which, in turn, will help reduce inflation as costs will come down if no one’s buying.

As a result, stocks rallied on Tuesday on the back of the news in hopes that the Fed may pause or skip its rate hike when the FOMC meets later in September.

Inflation rose 0.2% in July, in line with expectations

On Thursday, the Personal Consumption Expenditures (PCE) index showed inflation increased 0.2% in July and 3.3% for the previous 12 months, in line with estimates, reported MSN. The PCE is the Federal Reserve’s preferred gauge of inflation and an in-line reading indicates that the Fed’s policies are taking their intended effect on reducing inflation.

However, there is no sign of slowing consumer spending, which could be concerning as another of the Fed’s goals is to get consumers to save more and spend less in order to cap rising prices on goods and services.

“Condition of the American consumer remains rock solid,” RSM US LLP Principal & Chief Economist Joseph Brusuelas posted on X, formerly Twitter. He noted that spending was up 0.8%, inflation-adjusted spending was up 0.6% and 2.8% on a three-month annualized pace – placing some risk on the company’s 2.1% forecast for gross domestic product growth in the third quarter. He also pointed out that income was up 0.2%, while wages, salaries and compensation were up 0.4%.

More jobs but also more unemployment than expected in August

On Friday, the nonfarm payrolls report showed 187,000 new jobs were added in August, ahead of the estimate for 170,000, however unemployment came in higher than expected, reported CNBC.

While the unemployment rate was 3.8%, higher than expected, the more realistic figure which includes discouraged workers as well rose 0.4% to 7.1%, the highest since May 2022. Average hourly earnings increased 0.2% in August, below the estimate for 0.3%.

In yet another example of bad news being good news, the markets rallied on Friday on hopes that the increase in unemployment would be taken as a sign that the Federal Reserve’s policies are working, resulting in a pause of hikes in September.

Next Week’s Gameplan

With August officially over, we’re now entering into the one month of the year where markets are down on average – yes, September is that bad. However, for investors with a long time horizon, September typically offers fantastic buying opportunities, particularly when bigger market-wide selloffs discount high-flying outperforming stocks.

There are a series of potentially negative catalysts that could really flip the markets over the course of the month including a potential strike of the United Auto Workers union mid-month; the U.S. government budget negotiations that may lead to a shutdown at the end of the month; the Federal Reserve meeting where they might hike rates later in the month; and student loan payments resuming on September 1 with the first payment due October 1 which could cause weakness in the consumer.

Long story short, get your buying plan ready as it could be a rocky and exciting time throughout September and going into October!

I’ll see you back 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

“It Works Until It Doesn’t…”

Technical analysts are a weird bunch. They’ll tell you the fundamentals don’t matter and that all they need is charts – not news events. In fact, many technical analysts arrogantly proclaim, “Show me the charts and I’ll tell you the news.”

Well, Tuesday’s price action in Bitcoin following the announcement that a court had overturned the SEC’s denial of Grayscale converting its trust into an ETF shows that the news will throw all technical analysis overboard if the catalyst is large enough. In other words, as another old adage goes, “technical analysis works until it doesn’t.”

Bitcoin shot through all of the bearish technicals that Bears have been using as reasoning for lower targets in Bitcoin, making a new weekly high at $28,184.89 on Tuesday before rolling over and giving back nearly the entire rally on Thursday. 

While that’s a nice new high, the pullback indicates that the low from last week at $25,350.00 is still very much in play going forward.

The Bullish Case

Bulls believe the overturning of the SEC’s denial of the Grayscale Trust is a hugely bullish sign for Bitcoin. They argue that buyers will try to snap up as much Bitcoin as they can before the ETFs become active and that institutions will come into the space as ETF approvals offer legitimacy to cryptocurrency as an investment.

The Bearish Case

Bears argue that the SEC still has a lot of tools in its toolbox including regularly delaying ETF approvals as the regulators have done in the past. Additionally, Bears argue that Bitcoin has few positive catalysts in the near to moderate term. And, as proven by Thursday’s price action, the Bears certainly have the upper-hand once more.

Bitcoin Trade Update

Current Allocation: 1.767% (+0.200% since last update)
Current Per-Coin Price: $28,040.70 (-0.75% since last update)
Current Profit/Loss Status: -7.59% (-0.34% since last update)

More Bitcoin buying this week with my orders starting to fill last Friday at $25,796.47. However, when Bitcoin rocketed skyward after the news about the Grayscale Trust’s possible conversion to an ETF on Tuesday, I raised my buy targets (and lowered the quantities for each buy, of course) and bought more at higher prices as Bitcoin returned back to where it was near the start of the week..

All in all, my average buy price was $26,477.91 (after trading fees).

The buys lowered my per-coin cost -0.75% from $28,253.58 down to $28,040.70 and raised my allocation +0.200% from 1.567% to 1.767%. 

From here, I will continue doing what’s been working and will add to my position slowly in stages if Bitcoin continues to weaken.

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% @ $25,730
0.027% @ $25,475
0.027% @ $25,282
0.054% @ $24,467
0.054% @ $24,226
0.389% @ $23,205
0.329% @ $22,646
0.227% @ $22,328
0.588% @ $21,583
0.416% @ $21,169

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.
• In August, Bitcoin dropped -21% to a low of $25,234.76

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.