Summing Up The Week

After the epic rally last week, the market spent much of this week taking a breather. The Bulls kept trying to push the indexes higher, but selling continued to keep stocks from rallying out of hand like they did last week.

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

Market News

CPI shows annual inflation at 2.6%, as expected

On Wednesday, the Consumer Price Index (CPI) showed inflation in goods and services increased 0.2% in October and 2.6% over the past 12 months, both as expected by economists, reported CNBC. A tame CPI is a good sign as it shows the Federal Reserve’s decision to cut the benchmark rate by a total of 0.75% did not result in a reignition of inflation as some pundits worried it might.

Granted, consumers are still reeling from the effects of the cumulative inflation which started in 2021 with the concept of disinflation versus deflation continuing to be a sticking point with the general public. Unfortunately, the best we can likely hope for is a slowing in the increase of prices (disinflation) as opposed to a return to the prices of days gone past (deflation).

PPI rose 0.2% in October, as expected

Just as the CPI on Wednesday, Thursday’s Producer Price Index (PPI) showed an increase of 0.2% for wholesale prices in October just as expected, reported CNBC. Where the CPI measures the cost of goods and services for consumers, the PPI measures what producers get for their products.

With in-line expectations on both the CPI and PPI, the markets didn’t provide much of a reaction to either news event, as one would expect. If either had come in higher or lower than expected, that news would need to be priced in. An as-expected result means the market likely already has the news priced in.

Powell says the Fed is in no “hurry” to reduce rates

On Thursday, Federal Reserve Chairman Jerome Powell said the central bank doesn’t need to be “in a hurry” to reduce interest rates in a speech to business leaders in Dallas, Texas, reported CNBC.

“The economy is not sending any signals that we need to be in a hurry to lower rates,” Powell said in his remarks. “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”

While most economists – and even a lot of market pundits – back Powell’s comments arguing that cutting interest rates too fast could reignite inflation, the markets did not take his somewhat-hawkish comments kindly. The S&P 500 and Nasdaq composite had been trading relatively flat on Thursday prior to Powell’s speech, and both reversed to sell off on the back of news that interest rates would likely stay higher for longer.

Next Week’s Gameplan

While there will be more news catalysts next week, the biggest market-moving catalyst comes in the form of Nvidia’s (NVDA) earnings which will be reported Wednesday after the market closes. I’ll also be watching other portfolio positions Palo Alto Networks (PANW) and Snowflake (SNOW), both of whom will also report alongside Nvidia Wednesday evening.

 In the form of more macro catalysts, we have the home builder confidence index on Monday, the Philadelphia Fed manufacturing survey on Thursday, and the flash services and manufacturing PMI along with consumer sentiment on Friday. I do believe that Nvidia’s earnings will be the biggest source of potential volatility, however.

Then, on Friday, I’ll meet all of you back here, friends! 

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Crytpo Corner

Bitcoin Price Action

The True Bitcoin Bull Market has Started…

Bitcoin made a key move over the past week that, to me, signifies the start of a true new Bull Market cycle; it exploded through the past all-time highs with extreme gusto, not stopping until it hit $93,495.00 on Wednesday (according to Coinbase).

If you’re a long-time reader of my blog, you probably noticed my skepticism of the rally that took Bitcoin to $73,757.59 in March. In past Bull Market cycles, Bitcoin doesn’t just exceed the previous all-time high by a small amount; it blows through it with reckless abandon as if there were no resistance at that point at all.

In the 2013 Bull Market, Bitcoin destroyed the past all-time high from 2011 at $31.91 as if it didn’t exist, not resting until it hit $266.00 and later $1,242.00 that same year.

Before the next cycle, Bitcoin contended with the past ATH in early 2017, made a slightly higher new ATH at $1,336.50, but pulled back nearly -33.50%. This was not the start of the new Bull Market cycle because Bitcoin didn’t destroy the past ATH, it merely hopped a bit higher.

It wasn’t until Bitcoin’s next attempt in April 2017 that signified the start of the 2017 Bull Market: Bitcoin destroyed $1,336.50; paused at $2,975.75, $4,977.48, and $7,881.01; and flew to $19,804.25, the high for that cycle.

In the Bull Market cycle that started in 2020, the past ATH around $20K didn’t stand a chance. Bitcoin blew through it in December 2020 and didn’t see a significant pullback until after it doubled the high to $41,993.84 in January 2021. At that point, Bitcoin pulled back -31.24% to $28,876.75 before heading to $64,898.56; pulling back -55.69% to $28,754.40 in June 2021, and then making the new ATH for the cycle at $68,997.75.

So, when Bitcoin contended with the 2021 high earlier in 2024 and only broke higher to $73,757.39 before finding resistance, I started making projections for how far Bitcoin might pull back before truly starting a new Bull Market cycle. When Bitcoin pulled back -27.52% to $53,458.05 at the beginning of July, I warned that I didn’t believe that was the bottom as it would have been the shallowest pullback from an ATH in Bitcoin’s history.

I was proven right.

On August 5th, pulled back -33.27% from its high to $49,217.00 which would be the bottom.

As I said at the beginning of this blog, the key price action I was looking for was what happened this past weekend: not just a pop above the past ATH, but complete and utter destruction of it.

That signifies the start of the next Bull Market Cycle.

This will be my third cycle in Bitcoin, and one of the key characteristics I’ve noticed is how little Bitcoin pulls back after blowing through a past all-time high. This lack of significant retracement creates a significant problem for investors and traders (like me) who typically prefer to wait for better entry points.

Bitcoin simply doesn’t offer them.

Accordingly, in the 2020 Bull Market, I knew that I needed to add often. Even then, I wasn’t aggressive enough. So, this time around, you’ll see that I have already become much, much more aggressive. Later in this post, you’ll see that I’ve already “reset my trade” twice in the past week, locking in significant gains while also building up my allocation size.

On August 5th, pulled back -33.27% from its high to $49,217.00 which would be the bottom.

As I said at the beginning of this blog, the key price action I was looking for was what happened this past weekend: not just a pop above the past ATH, but complete and utter destruction of it.

As always, it’s positively critical for anyone in the space to manage risk. Risk management – not profit targeting – is my absolute #1 priority in this sector. Accordingly, I have a set amount of money I’m willing to risk and cannot add any more than that. I also make a buying plan that accounts for low-side buying targets that most in the cryptocurrency space would think impossible or even downright preposterous.

My strategies have protected me through two epic Crypto Winters (2018-19 and 2021-24), but there are no guarantees in life. It’s imperative that you figure out the best strategies and disciplines that work for you and take extreme care to avoid FOMO and greed.

With future price targets of $1,000,000 to $2,500,000 per Bitcoin, we’re still early, but that doesn’t mean we can’t see more epic drawdowns. When Bitcoin hit its all-time high in November 2021, many Bulls were screaming that the days of Bitcoin’s volatility were behind us.

Bitcoin then crashed -77.57% from $68,997.75 in November 2021 to $15,473.78 in November 2022.

Could Bitcoin hit $188,000, $300,000, or even $1,000,000 this cycle?

Sure. Why not?

Could we have already seen the top for this cycle and might watch Bitcoin crash back to $21,000, roughly -77.57% lower than its new ATH?

Sure. Why not?

In fact, Bitcoin regularly sees pullbacks of -25% to -40% during Bull Market Cycles.

In Bitcoin’s 2017 Bull Market, on the way to its $20K, Bitcoin sold off -39.53% in July, -40.24% in September, and -30.27% in November.

In 2021’s Bull Market on its way to $65K, Bitcoin sold off -31.24% in January and -26.31% in February before hitting ~$65K in April.

If $93,500 is an intermediate top, here are some potential buying targets based on this information:

• -26.31% = $68,900

• -30.27% = $65,200

• -31.24% = $64,290

• -39.53% = $56,600

• -40.24% = $55,900

REMEMBER: Anything is possible with Bitcoin. Anything. Plan for all possible outcomes.

The Bullish Case

With Bitcoin making new all-time high after new all-time high, Bulls are firmly in the driver’s seat. Reasonable high-end price projections for the new Bull Market Cycle range from $180,000 to $300,000. Naturally, there are some crazier Bulls predicting this is the cycle that we’ll see $1,000,000 Bitcoin prices — particularly if President-Elect Donald Trump implements the Strategic Bitcoin Fund for the U.S. Government.

Personally, I don’t make projections for Bitcoin upside. I prefer to stick to my knitting of making one good trade after another, adding to my stack slowly but surely over time.

The Bearish Case

Bears can’t deny the power of the week’s bull rally, so they’ve turned to the old chestnut of warning that Bitcoin is in a bubble. These Bears claim that everyone piling into Bitcoin is a result of the “Greater Fool Theory,” and if Bitcoin should flip over, the huge number of new “weak hands” will cause Bitcoin to lose more than -50% of its value in a matter of weeks.

Bitcoin Trade Update

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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 August, Bitcoin dropped -33% to a low of $49,050.01.
• In November, Bitcoin rallied +83% to a new all-time high of $89,993.69.

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.