Summing Up The Week

The Bulls and the Bears still can’t figure out which way they want to take stocks. Whenever one camp gets a foothold, the other swings their legs out from under them. On the one hand, the intraday volatility can provide a lot of opportunities for day-traders, however, on the other hand, limited price swings are downright boring for long-term investors.

That’s fine, though. Weeks like these serve as reminders that, in truth, investing should be boring. If an investor is making moves too often, that likely means they need to adjust their strategy as the name of the game is “long term” which means buying and holding, not trading.

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

Market News

China dismisses results of Taiwan’s election

On Saturday, Lai Ching-te, the leader of the Democratic Progressive Party in Taiwan, emerged as the winner of the country’s presidential election, only to have China claim “Taiwan is China’s Taiwan” and dismiss the election’s outcome, reported CNBC.

The Democratic Progressive Party (DPP) supports the ideals of a free and independent in direct conflict with the China-held view that Taiwan has never been independent and should be brought back in to the fold as a part of greater China.

“This election cannot change the basic pattern and the development of cross-Strait relations, nor can it change the common desire of compatriots on both sides of the Taiwan Strait to draw closer,” said Chen Binhua, the spokesperson for the Taiwan Affairs Office of the State Council.

In his recent meeting with President Joseph Biden, Chinese President Xi Jinping informed the President that China would do whatever it takes to once again make Taiwan part of the greater motherland. The result of Taiwan’s elections not selecting the candidate of the party China prefers will likely affect China’s approach to Taiwan and the relationship between China and the U.S. going forward.

Retail sales in December come in hot at 0.6%

On Wednesday, retail sales numbers for December came in at 0.6% versus the 0.4% expected by economists, reported CNBC. While indicating that the American consumer is still strong – very strong, in fact – this result is not what the Federal Reserve was hoping for; they want to see American consumers cutting back.

As a result, the 10-year U.S. Treasury rose above 4.11% during intraday trading, and that, combined with the retail sales numbers, caused stocks to pull back. The market had priced in a rate cut in March which is less likely to happen now that the economy is stronger than expected.

Next Week’s Gameplan

Next week’s big catalysts include new PMI figures for services and manufacturing on Wednesday, the first Q4 GDP figures on Thursday, and, then, the big whopper – the Personal Consumption Expenditure (PCE) report on Friday.

The PCE serves as the Federal Reserve’s primary and preferred indicator of inflation, and the majority of analysts expect the PCE report will show that inflation is continuing to cool, just as it did last month. However, should the PCE come in “as expected,” or, worse, come in hot, Friday could be an incredibly volatile day.

As always, I’ll be here after the market close next Friday to go over all the news, so I’ll see you then, friends!

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

New Bitcoin investments are always “sell-the-news” events

Having been involved with Bitcoin since December 2017 when the futures were introduced, I’ve learned that every new investment introduction is a sell-the-news event. When the futures were introduced, Bitcoin sold off. When the Grayscale Bitcoin Trust (GBTC) was introduced, Bitcoin sold off. And, now, with the introduction of spot Bitcoin ETFs, Bitcoin sold off.

The big question now isn’t whether or not ETFs were a sell-the-news event, the question is how low will Bitcoin go during this pullback?

So far, Bitcoin broke last week’s support at $43,200.44 and monthly support at $40,625.68 leaving $40,000 as the last real line of the sand before an air-gap gives us a downside price target of around $36,900.

If you want some more background about the lessons I learned from Bitcoin’s crash in 2018 when it pulled back nearly -85% from its 2017 high just under $20K to its low of $3,130 in 2018, check out my new video here: https://www.youtube.com/watch?v=-U6yaBVPoWU

The Bullish Case

Bulls believe this week’s pullback represents healthy consolidation as the market absorbs the new funds flowing into the crypto space. The lowest price target I’ve heard from a Bull for this pullback is $39,000. Personally, I’m hoping for a more dramatic reaction, but even $39K presents decent buying opportunities, particularly for those with no exposure.

The Bearish Case

Despite Bulls continuing to believe that the introduction of Bitcoin ETFs would push prices higher, the Bears have been right with their thesis that the institutions did all their buying into the launch of the spot ETFs. From here, Bears are predicting pullbacks anywhere from -25% which would give us a price target of $36,750; -50% which puts us at $24,500; or even -85% which dumps Bitcoin to $7,350 (a highly unlikely scenario, in my opinion, but an amazing buying opportunity).

Bitcoin Trade Update

Current Allocation: 2.283% (+14.15% from Last Update)
Current Per-Coin Price: $45,968.09 (-1.34% from Last Update)
Current Profit/Loss Status: -11.23% (-9.02% from Last Update)

Bitcoin triggered buy orders throughout the week, but it really started in earnest when the real dump started Thursday. After all was said and done, I made a total of 17 small buys and was left with an average price of $42,008.50 (after fees). The series of buys lowered my per-coin cost -1.34% from $46,590.22 to $45,968.09 and increased my allocation 14.15% from 2.000% to 2.283%.

As you might notice, I’m adding in very small quantities and this is entirely risk management. When Bitcoin rallied so epically from last summer through to the ETF approval, it also did so breaking its record for the longest period of time without at least a -25% drawdown since its inception.

Yes, I think a big drawdown could be coming, but I also want exposure if I’m wrong. Accordingly, I hold a position, but I ensure my sizing is such that I can be prepared if the bearish of bear predictions comes true (no matter how unlikely) and we see Bitcoin re-test its $15K low.

Is that possible? Anything is possible, particularly in Bitcoin and crypto.

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:

0.014% @ $40,206
0.014% @ $39,834
0.014% @ $38,916
0.060% @ $37,964
0.229% @ $37,088
0.278% @ $36,184
0.289% @ $35,363
0.338% @ $34,514
0.381% @ $33,686
0.425% @ $32,885

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 September, Bitcoin dropped -22% to a low of $24,900.00.
• In January 2024, Bitcoin rallied +97% to a high of $49,102.29

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.