Summing Up The Week

The week seemed to kick off with a negative vibe following Fed Chair Jerome Powell’s interview on 60 Minutes on Sunday sending markets into a tailspin. However, that pullback was incredibly brief, and, by the end of the week, the S&P 500 actually ticked an historic (but not really important) high of crossing over 5,000 for the first time in its history!

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

Market News

Powell says Fed will make fewer rate cuts than markets expect

The market-moving news kicked off early this week when Federal Reserve Chairman Jerome Powell said the Fed will take extreme care with rate cuts, likely making fewer cuts than the market expects during a 60 Minutes interview on Sunday, reported CNBC.

“With the economy strong like that, we feel like we can approach the question of when to begin to reduce interest rates carefully,” he told the news magazine’s Scott Pelley, according to a transcript CBS released. “We want to see more evidence that inflation is moving sustainably down to 2%. Our confidence is rising. We just want some more confidence before we take that very important step of beginning to cut interest rates.”

Powell’s insistence that the rate cuts will be few and far between caused both Bitcoin and gold to see selling pressure Sunday afternoon.

S&P 500 hits 5,000 for first time in history

While not actually significant in terms of relativity to market performance, the S&P 500 index did hit 5,000 for the first time in history on Thursday… before pulling back immediately. The week’s rally seemed to have left many participants confused, both buyers and sellers weren’t eager to take action. 

Some pundits believe that the market will pull back from this historic high, even if the figure is only psychological. While more bullish analysts believe the market still has plenty of gas left in its tank. 

Inflation in December lower than reported

On Friday, a key, little-known piece of data was released, revised figures on Consumer Price Index (CPI). Each month, the Labor Department reviews prior months’ CPI reports and makes adjustments when necessary. In this case, the updates to the CPI showed that inflation increased 0.2% in December versus the 0.3% initially released, reported CNBC.

While the initial release of CPI reports are market-moving, as you might imagine, the revisions also have the ability to move markets, too. If the revised figures had shown that inflation increased, then the markets would likely have sold off. However, since the revision showed inflation to be cooler than initially reported, the markets continued their rally with the S&P 500 easily breaking above the 5,000 mark once more.

Next Week’s Gameplan

The market’s starting to feel pretty strange. On the one hand, it feels as though we are most certainly due for a pullback, however, on the other hand, without any significant negative catalyst, the general tone for the economy and company earnings has been relatively good.

While I did trim profits across the board this week, that was simply due to companies hitting record highs or rallying too far from their lows. In other words, my usual approach of trimming when positions start to feel frothy.

If you are feeling FOMO right now, I’d advise caution. Don’t forget you can always buy tiny amounts – there’s no reason to go all-in at literal all-time highs. However, if you have too much cash on the sidelines (or are all cash), nibbling on positions here and there just to alleviate the fear of missing out isn’t the end of the world.

In the meantime, I’ll see you all back here next Friday, 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

Let the Bitcoin re-correlation begin!

After wallowing around the low $40K-43K range for what feels like forever, watching all the growth and technology stocks take off without it, it seems Bitcoin finally got off its keister and decided to get bullish again. 

Just as the S&P 500 was hitting new all-time highs, Bitcoin started to get off the mat and rally with some serious fervor. On Wednesday, the crypto broke through our weekly high at $43,872.99, before not even taking a breath and crashing through the next key point of resistance at $45,000.00 on Thursday. 

Bitcoin wasn’t done, though, crashing through the next level of resistance at $45,952.82 and rocketing to $47,723.78 before pulling back. If that resistance fails to keep the momentum at bay, there’s another quick stop at $47,901.00 before Bitcoin sees a bit of an airgap deep to the highs of the year.

The Bullish Case

Bulls started to get excited this week as Bitcoin correlated back to growth stocks. Analysts claim that this new bull rally will attract even more money into the space since the ETFs mean Bitcoin is open to a whole new audience who may have been too intimidated to buy spot Bitcoin off crypto exchanges.

The Bearish Case

Bears point out that until Bitcoin breaks through the 2024 high set at $49,102.29 that the crypto is just making a new lower-high. Lower-highs are often indicative of more downside to come, which is exactly what the Bears predict. There are still many Bearish analysts who believe that Bitcoin’s low at $38,501.00 set after the launch of ETFs won’t hold and that it will break down to $36K and lower.

Bitcoin Trade Update

Current Allocation: 2.967% (+7.23% since Last Update)
Current Per-Coin Price: $44,962.85 (-0.48% since Last Update)
Current Profit/Loss Status: +6.14% (+11.54% since Last Update)

Despite Bitcoin’s rally, I did make 7 more buys over the past week ending with an average buying price of $42,779.44 (after fees). The buys lowered my cost -0.43% from $45,181.62 down to $44,985.15 and increased my allocation +8.42% from 2.767% to 3.000%.

When Bitcoin exploded through my cost basis, it started hitting my trimming targets with a sell order which filled at $47,346.89 (before fees). The sale sold just 1.10% of my allocation, taking it to 2.967% and lowered my per-coin cost -just 0.01% from $44,985.15 to $44,962.85.

I know it seems pointless to take profits that do so little, but I’ve learned that, for me, it’s better to reduce risk whenever Bitcoin flies above my cost basis. As I always say, if you don’t take profits when you have them to take, the market will take them from you.

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% @ $42,642
0.014% @ $42,221
0.027% @ $41,724
0.027% @ $41,186
0.054% @ $40,538
0.054% @ $40,213
0.054% @ $40,061
0.054% @ $39,627
0.081% @ $39,254
0.081% @ $38,833

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 my Gemini referral link to open an account.

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.
• Later in January, Bitcoin dropped -22% to a low of $38,501.00.

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.