Summing Up The Week

If you’ve read my blog from the beginning, you’ll remember I started Get Irked in August 2018. Little did I know what an exciting Christmas Eve we’d have back then. Then-President Donald Trump appointed Jerome Powell as Federal Reserve Chairman and he hit the ground running.

In October, Powell said the Fed would pursue a series of rate cuts “like clockwork” in an interview, and that single statement sent the S&P 500 crashing nearly -20% from October straight through the end of Christmas, bringing us the worst Christmas Eve for stocks… ever.

Well, this week, it almost feels like deja vu. Powell came out with hawkish commentary during Wednesday’s Fed meeting, announcing the 0.25% rate cut everyone was expecting but then coming in decidedly hawkish on the potential for rate cuts in 2025, with some pundits predicting the potential for NO cuts at all!

Stocks, Bitcoin, and even gold careened on the news as a hawkish Fed means the fight against inflation is ongoing!

However, before we get into any more of that, let’s take at all the news that moved markets this week!

Market News

U.S. services booms at fastest pace since October 2021

Both services and manufacturing PMI were released on Monday, but the real standout was services. U.S. Services PMI jumped to 58.5 in December, its fastest expansion since October 2021, reported Benzinga. The manufacturing PMI came in at 48.5, slipping from November’s 49.7, and continuing to indicate a contraction in the manufacturing sector (any PMI figure less than 50.0 indicates a contraction, any PMI figure greater than 50.0 indicates expansion).

“Despite the manufacturing slowdown, the broader economy gained momentum. The Composite PMI, which measures activity across both sectors, climbed to 56.6, the sharpest expansion rate in nearly three years,” reported Benzinga. “Optimism among firms about future output also soared to its highest level since mid-2022, with employment ticking upward for the first time in five months.”

U.S. retail sales beat expectations in November

On Tuesday, U.S. retail sales showed strong growth in November, jumping 0.7% versus 0.6% estimated by polled economists, reported Reuters. Some pundits like to warn that you should “never underestimate the U.S. consumers ‘want’ to spend, not whether they ‘should’ spend.” However, a strong U.S. consumer is the backbone of the U.S. economy so as long as consumers are confident, investors should remain confident about the strength of the economy.

The solid increase in retail sales came despite a late Thanksgiving holiday that pushed Cyber Monday into December, and was consistent with a strong start to the holiday shopping season. It was also in spite of a less favorable seasonal factor, the model that the government uses to strip seasonal fluctuations from the data.

Fed cuts rates but warns against expecting further cuts soon

On Wednesday, the Federal Reserve cut rates 0.25% in line with expectations, however the Fed also came out with a decidedly hawkish tone, warning against expecting the same speed of cuts headed forward, reported CNBC. While a good approach to maintain its fight against inflation, the Fed decision sent stocks downward as many pundits believed the Fed would be more dovish.

During his press conference, Federal Reserve Chairman Jerome Powell specifically called out some of President-Elect Donald Trump’s proposed policies as a reason for caution. “We need to take our time, not rush and make a very careful assessment, but only when we’ve actually seen what the policies are and how they’ve been implemented,” said Powell. “We’re just not at that stage.”

U.S. economy grows at 3.1%, beating estimates

On Thursday, the U.S. Gross Domestic Product (GDP) showed the economy grew at 3.1% from July through September, a figure which beat the economist estimate of 3.5%. The strength of the GDP was primarily driven by the strength in consumer spending, reported Yahoo! Finance.

“This week’s data show the economy is set to end 2024 on a solid note, which is fortunate since we’ll have to contend with heightened policy uncertainty and possibly greater challenges in 2025,” Oren Klachkin, an economist at Nationwide, wrote in a note.

PCE shows inflation slowing to 2.4% in November

On Friday, the Personal Consumption Expenditures (PCE) Index, the Federal Reserve’s preferred gauge of inflation, showed year-over-year inflation rose 2.4% in November, lower than 2.5% expected by economists, reported CNBC. This lower-than-expected figure came as a welcome sigh of relief to market participants who had been selling down stocks since the Fed’s hawkish meeting on Wednesday.

Inflation being less “sticky” than expected could help motivate the Fed to once again increase the number of intended rate hikes in 2025. “Sticky inflation appeared to be a little less stuck this morning,” said Chris Larkin, managing director of trading and investing at E-Trade Morgan Stanley. “The Fed’s preferred inflation gauge came in lower than expected, which may take some of the sting out of the market’s disappointment with the Fed’s interest rate announcement on Wednesday.”

Next Week’s Gameplan

Despite being a shortened trading week thanks to the Christmas Holiday on Thursday, there will continue to be a number of different datapoints released next week. On Monday, we receive the results of the December consumer confidence survey. Tuesday brings us durable-goods orders and new home sales, and, even on Friday, we receive inventory data from both retail and wholesale sectors.

Will the market selloff continue? Could we possibly see a worse Christmas Eve than 2018? Of course, I will be back here next Friday once more to let you know what happens and all of the details of the week!

Have a Happy Holiday week, friends! 

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Crytpo Corner

Bitcoin's Road to Nowhere - Get Irked
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Bitcoin Price (in USD)

%

Weekly Change

Bitcoin Price Action

The Bitcoin Skydive has Started!

Bitcoin had a wild week… even for Bitcoin! On Tuesday, Bitcoin made a new all-time high at $108,388.88 before Wednesday brought Federal Reserve Chairman Jerome Powell’s hawkish comments about additional rate cuts which sent every single asset class into a nosedive.

Bitcoin initially appeared to find support on Thursday before the bottom dropped out when the Bears regained control of the price action, sending Bitcoin careening toward its monthly low at $92,055.86.

The Bullish Case

Bulls remain vigilant about the uptrend, pointing out how a pullback of less than -9% from a new all-time high is barely average in the land of crypto. In fact, as I’ve pointed out several times in the past few weeks, Bitcoin regularly pulls back up to -40% and still maintains a bullish uptrend in past Bull Market Cycles.

Speaking of which, here are the new price targets based on key pullbacks from past Bitcoin Bull Markets:

  • -26.31% = $79,874.27

  • -30.27% = $75,581.94

  • -31.24% = $74,530.53

  • -39.53% = $65,544.81

  • -40.24% = $64,775.23

As always, there are no guarantees we’ll see pullbacks of that magnitude so I always start buying at much higher levels. Additionally, if we do see pullbacks of that ferocity, there’s never a guarantee that we’ve bottomed so I always keep dry powder on the sidelines at all times.

The Bearish Case

Bears were rejoicing on Wednesday as if a -9% pullback signified the end of Bitcoin and all things crypto. Noted permabears like “The Great Martis” couldn’t resist making posts like “Ladies and gentlemen, I present to you sub-100k. As predicted.” and “Never doubt the great one.” I swear that account is surely a parody account. It can’t be real, can it?

Regardless, the Bears’ claims did finally come to fruition early Friday morning when Bitcoin’s bottom dropped out and the mighty crypto saw lower-lows, pulling back nearly -15% from its all-time high as I write this update.

Could Bitcoin head much lower than here and remain in an uptrend? But, of course. See the updated price targets from my “The Bullish Case” above.

Make no mistake: there are permabears in every asset class. In my decades of experience, I’ve found these permabears aren’t just worthless, listening to them can cause you to miss out on HUGE opportunities.

There will always be a reason for me to talk myself out of buying an asset. I can always be bearish if I look hard enough. However, while I will never lose any money by staying out of the market, I’ll never make any money, either.

Bitcoin Trade Update

Premium subscribers to Get Irked get access to all the moves I’ve made in my Bitcoin trade over the past week as well as my next thirty (30) … yes, 30 … buys in Bitcoin including price levels, quantities, and a full layout of my ongoing long-term trade in the world’s biggest crypto.

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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 December, Bitcoin rallied +121% to a new all-time high of $108,388.88.

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.

Suicide Hotline – You Are Not Alone

Studies show that economic recessions cause an increase in suicide, especially when combined with thoughts of loneliness and anxiety. If you or someone you know are having thoughts of suicide or self-harm, please contact the National Suicide Prevention Lifeline by visiting www.suicidepreventionlifeline.org or calling 1-800-273-TALK. The hotline is open 24 hours a day, 7 days a week.