Summing Up The Week

In light of Iran’s attack on Israel and potentially additional heated conflict coming to the Middle East, it’s important to remember that while we, as investors, must remain objective and unemotional, that doesn’t mean we ignore the horrifying tragedies going on throughout the world. I abhor war – the ones who want it aren’t the ones who fight in it. My thoughts go out to those men and women serving in militaries for any country throughout the world.

The markets continually tried to shrug off macroeconomic and geopolitical news, rallying to start nearly every day this week only to roll over midday to give back all of the gains and then some. The consistency of this price action pattern was actually uncanny.

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

Market News

Iran launched drone attacks at Israel, says IDF military

On Saturday, Iran launched attacks against, Israel according to the Israel Defense Forces, reported CNBC. This attack comes despite repeated American intervention by President Joe Biden asking the Iranians to stand down after an Iranian embassy was attacked several weeks ago.

The tensions had already been tested as a result of Israel-Hamas War, but now with Iran entering the fray, an escalating conflict seems all but certain. As the stock markets were closed on the weekend, the reaction to the news came in the form of Bitcoin and the rest of the cryptocurrency sector crashing, losing thousands of dollars in value within minutes of the release.

Later in the weekend, Iran released a statement claiming that their strike was in retaliation for the attack on their consulate in Damascus, and that they would be engaged in no further strikes. The U.S. also released a statement that it would not be supporting Israel in any retaliatory strike on Iran. Israel, on the other hand, claimed that retaliation for Iran’s retaliation would be forth coming. 

Retail sales rose 0.7% in March, higher than expected

While many pundits believed the stock market would open lower on Monday as a result of the geopolitical strife, the Commerce Department’s retail sales report showed that sales increased 0.7% in March, significantly higher than the Dow Jones forecast for 0.3%, reported CNBC.

While it may be difficult for some outside observers to believe, the markets valued a strong consumer far more than they worried about geopolitical war. Initially, stocks rallied on the open on Monday before rolling over and closing down sharply on concerns of Israel’s potential retaliation and the spike in treasury yields.

Fed Chair Powell: “Lack of further progress”

On Tuesday, Federal Reserve Chairman Jerome Powell said there has been a “lack of further progress so far this year on returning to our 2% inflation goal” during a panel appearance at a policy forum on U.S.-Canada economic relations, reported CNBC. 

“The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,” he said. “That said, we think policy is well positioned to handle the risks that we face.” Powell added that until inflation shows more progress, “We can maintain the current level of restriction for as long as needed.”

While his comments echoed those of other members of the Federal Reserve over the past week, hearing the Chair reiterate those sentiments can send jitters through markets.

Israel launches limited strike retaliation on Iran

On Thursday evening, Israel launched a direct military attack on Iranian soil in retaliation for Iran’s retaliatory strike last weekend, reported CNBC.

While Israel has yet to officially comment on its assumed role in the reported drone strikes, some of its ministers have responded to the events via X. The country’s ultra-far right National Security Minister Itamar Ben-Gvir summed up his reaction in one word in a post: “Feeble.”

Tally Gotliv, another Israeli politician belonging to Prime Minister Benjamin Netanyahu’s far-right Likud party, offered praise. “It is a morning where our heads are held high with pride,” Gotliv wrote on X, adding, “May we regain our deterrence power.”

Tehran has not made any indications as to immediate military or political responses. Hopefully, this marks an end to the tit-for-tat military strikes, but, more importantly, sees no further escalation. The geopolitical risk will most certainly remain a concern for the stock market (and the world) in the weeks and months ahead.

Next Week’s Gameplan

While next week will bring PMIs, inventories, and the Q1 GDP, the real report everyone will be watching is the Personal Consumption Expenditures (PCE) index which won’t come out until Friday. Naturally, this is the Federal Reserve’s preferred inflation gauge, and, for the last few months, it’s bucked the trend of rising inflation that we’ve seen in the CPI and PPI reports.

If the PCE comes in hot – something it hasn’t done, yet – that could be a pretty bad negative catalyst for the markets. If it comes in cool, however, maybe that’ll stem the selling we saw for the majority of this week. Additionally, global macroeconomic and geopolitical concerns will continue to hold sway over markets as there is no sign that the strife in the Middle East is waning.

As for me, none of my positions have pulled back enough to trigger any of my buy targets, so I’ve just been patiently sitting on my hands waiting for a bigger move lower.

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 Crashed to New Lows! What’s Next?

Bitcoin completely broke down this week, shooting through all levels of support, and quite nearly dropping through the very key support at $59,224.68, barely finding support above it at $59,573.32 early Friday morning, our new weekly low. Should Bitcoin drop through the key support, there is an immense air gap down to the low $50K region before we see any other support.

On Friday, Bitcoin saw a significant bounce after news of Israel’s retaliatory strikes against Iran being limited, rallying to $65,479.00 before finding resistance. 

The Bullish Case

Bulls argue that the Halving Event – which may have already happened by the time you’re reading this – which cuts the Bitcoin rewards miners receive by half will cause demand to rocket and take prices with it. Bulls believe this pullback is just healthy consolidation for Bitcoin to bring in new buying interest before finally breaking through all-time highs with enough momentum to carry it to the $80K region.

The Bearish Case

Bears point to the fact that Bitcoin remains correlated to risk-on assets like tech stocks and has not (yet) become “digital gold.” Gold has been rallying for weeks while Bitcoin has been selling off. As such, as long as the markets remain under pressure, the Bears argue that Bitcoin will continue finding new lower-lows headed forward.

Bitcoin Trade Update

Current Allocation: 2.100% (+173.79% since Last Update)
Current Per-Coin Price: $63,411.03 (-3.71% since Last Update)
Current Profit/Loss Status: +2.94% (+1.06% since Last Update)

During Saturday’s collapse following Iran’s attack on Israel, I made a total of 4 buys which left me with an average buying price of $63,732.95 (after fees). The buys lowered my per-coin cost -1.39% from $65,850.98 to $64,933.80 and increased my allocation +73.79% from 0.767% to 1.333%.

When Bitcoin briefly rallied above my cost basis on Sunday, I made a tiny sale at $65,129.61 (after fees). The sale lowered my per-coin cost a nearly insignificant -$5.01 from $64,933.80 to $64,928.79 and decreased my allocation -2.48% from 1.333% down to 1.300%.

On Monday, after Bitcoin rolled over once more, I started adding once more with a total of 8 buys leaving me with an average buying price of $61,350.85 (after fees). The buys lowered my per-coin cost -2.28% from $64,928.79 to $63,448.68 and increased my allocation +66.69% from 1.300% to 2.167%.

Then, Bitcoin saw incredible volatility on Thursday following Israel’s retaliation on Iran for their retaliation on, well… okay. Anyway, Bitcoin sold off -6.68% only to rally +9.39% – all within less than 10 hours – after the news broke that the Israel’s strikes were limited.

As a result, my trade went from buying to selling once more with 2 sales which left me with an average selling price of $64,657.96. (after fees). The risk mitigation sales lowered my per-coin cost -$37.65 from $63,448.68 to $63,411.03 and lowered my allocation -3.09% from 2.167% to 2.100%.

To learn more about my Trade2HODL trading strategy which I developed in 2018 and has never had an unsuccessful Bitcoin trade since that time, check out my tutorial video on YouTube here.

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:

0.100% @ $60,713
0.167% @ $59,673
0.333% @ $58,057
0.333% @ $56,581
0.333% @ $55,164
0.333% @ $54,027
0.333% @ $52,610
0.333% @ $51,407
0.333% @ $50,131
0.333% @ $48,972

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.
• In March, Bitcoin rallied +92% to a new all-time high of $73,835.57.
• In April, Bitcoin dropped -19% to a low of $59,573.32.

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.