Summing Up The Week

While stocks attempted to stage a recovery following the selling rout into last weekend, when the numbers started rolling in on Thursday with a bad GDP print, stocks rolled over once more. Friday’s hotter-than-expected inflation gauge continued to add fuel to the fire, too, as reigniting inflation means no rate cuts from the Federal Reserve anytime soon.

It’s beginning to look more and more like the Bears may be right and we may be in for a longer-stage drawdown than just a 5% pullback on the S&P 500.

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

Market News

GDP increased at 1.6%, much less than 2.4% expected

On Thursday, one of the key news reports investors had been waiting was released, the United States’ Gross Domestic Product (GDP) for the first quarter of 2024 came in at 1.6%, a significant miss from the 2.4% expected by economists, reported CNBC. Market bulls had been hanging their hat on a strong and resilient economy to keep stocks moving higher in spite of geopolitcal and global macroeconomic concerns. However, the initial GDP figure seems to indicate that the U.S. is weakening now, too.

As a result, the pre-market selloff that had been initiated when Meta (META) disappointed investors Wednesday night with horrendous capital expenditures figures was exacerbated by the poor GDP post.

PCE rose 2.8%, more than 2.7% estimate

On Friday, the Federal Reserve’s preferred gauge of inflation, the Personal Consumption Expenditures (PCE) index cam in at 2.8%, hotter than the 2.7% estimate by Dow Jones economists, reported CNBC. This surprised most pundits as, despite CPI and PPI coming in hot the past three months, the PCE had been maintaining a lower outlook on inflation. With the PCE now reigniting, the potential for inflation to return in a larger way has certainly grown.

“Inflation reports released this morning were not as a hot as feared, but investors should not get overly anchored to the idea that inflation has been completely cured and the Fed will be cutting interest rates in the near-term,” said George Mateyo, chief investment officer at Key Wealth. “The prospects of rate cuts remain, but they are not assured, and the Fed will likely need weakness in the labor market before they have the confidence to cut.”

Next Week’s Gameplan

Next week brings the Chicago PMI and Consumer Confidence survey on Tuesday followed by the FOMC interest-rate decision on Wednesday. Within theory, the FOMC meeting should be a “Nothing Burger.” It’s a certainty that the Federal Reserve won’t lower rates and the chances of rate hike are slim to none. However, we all know that when Fed Chair Jerome Powell speaks, the market listens (and misinterprets), so Wednesday could still be eventful.

Friday brings the nonfarm payroll report, and if unemployment starts to tick up, the market, already jumpy as seen the past two weeks, could take another step lower as the signs there are cracks forming in the U.S. economy seem to be getting more numerous.

As for me, some positions are starting to pull back to key support levels, so I might finally be able to enter Buying Season. However, up until this point, the Bulls have been buying every dip so your guess is as good as mine as to what we can expect to see next week.

In the meantime, I’ll be right back here next Friday to sum up what happens, 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

The Bitcoin Bulls Fail to Break Out…

Bitcoin was able to break through to a higher weekly high this week, cracking through $65,479.00 before finding resistance at $67,272.73. Unfortunately, that wasn’t the momentous kind of breakout the Bulls had been hoping for as Bitcoin quickly lost support and started to pull back pretty quickly from there on Wednesday.

On Thursday, Bitcoin set a higher low at $62,747.18, although there’s no telling how strong or weak that support may be until retested. Should it break, the next support is With no significant weekly support set, we’re back to looking at $59,573.32 as the line in the sand for the Bulls. If the Bears are able to regain control and crack that support, there’s basically nothing but a huge air gap down to $50K. 

The Bullish Case

Bulls continue to claim that Bitcoin is simply in a consolidation pattern. Bulls argue that, soon, institutional buyers still in a lockout period will be able to scoop up the Bitcoin ETFs which will cause the giant orange crypto to rally to new all-time highs near $85K.

The Bearish Case

Bears make the legitimate argument that even when the lockout period expires, institutional buyers won’t just roar into an asset that’s currently under selling pressure. Some Bears argue that the institutions may even start their foray into the Bitcoin ETFs by shorting them in an effort to send Bitcoin down to much, much lower prices which would provide better entry points. Some Bears predict we’ll see $50K very soon, and the more bearish Bears say $40K is within sight in the coming weeks.

*Bitcoin Trade Reset* 3.83% gain, 31.77% annl

With Bitcoin solidly above my cost basis from the last update through the middle of the week, I trimmed down my trade substantially. I made 34 small sales the last update using stop-limit orders. The sales gave me an average selling price of $65,022.99 (after fees). Additionally, sales reduced my per-coin cost -2.82% from $63,411.03 to $61,620.05, and, more importantly, reduced my allocation -53.95% from 2.100% to 0.967%.

I continue to expect a significant downdraft between now and the end of April (if not into May, as well) as I cannot find any positive catalysts and historical price action tells me to be extremely wary right now.

When Bitcoin surprised me on Thursday by finding much higher support than I anticipated, I decided it was time to perform a Trade Reset, locking in a +3.83% gain since March 12 which works out to +31.77% annualized.

I also raised my per-coin cost up to $67,000.00. While I could have raised my per-coin cost higher, I still believe we’ll see a substantial pullback in the coming days and weeks, so I didn’t want to get too carried away.

Plus, a nearly 32% annualized gain is nothing to sneeze at; I now have +7.603% more Bitcoin (not in a trade) Year-To-Date than I had at the beginning of 2024. I prefer to use the measurement of how much more Bitcoin I’ve accumulated as opposed to measuring my Bitcoin’s value in USD since getting away from fiat currency is one of the big points of Bitcoin in the first place.

What is a “Trade Reset?”

Whenever Bitcoin is in a bull rally and I start to feel that I don’t have enough allocated, instead of adding more to the position, I simply reset the trade by raising my cost basis and removing the difference in Bitcoin from the exchange.

Over the years, I’ve discovered that I absolutely hate raising my cost basis. This is entirely psychological, but I’ve found that by raising my cost basis, I’m able to add to my allocation more easily since it lowers my new cost basis rather than raising it.

Additionally, whenever I reset the trade, I don’t sell the difference in Bitcoin (or whatever crypto I may be trading), I pocket the profits in the coin I was trading. This way, I increase my stack and increase my future exposure.

Bitcoin Trade Update

Current Allocation: 1.033% (+6.83% since Trade Start)
Current Per-Coin Price: $66,707.07 (-0.44% since Trade Start)
Current Profit/Loss Status: -4.37% (*New Trade*)

After resetting the trade, my new trade started with a 0.967% allocation at $67,000, however, with a higher cost basis I also raised my buy targets, so two additional buys were triggered, leaving me with an average buy price of $62,739.19 (after fees). The two buys lowered my per-coin cost -0.44% from $67,000 to $66,707.70 and increased my allocation +6.83% from 0.967% to 1.033%.

If we see a substantial selloff as I expect, below are my next ten buy orders (keeping in mind that I have dozens of buying targets below these, as well).

Stay frosty, my friends. 😀👍

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:

0.033% @ $62,853
0.100% @ $60,913
0.167% @ $59,806
0.333% @ $58,064
0.333% @ $56,714
0.333% @ $55,363
0.333% @ $54,035
0.333% @ $52,817
0.333% @ $51,562
0.333% @ $50,271

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?

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.