Summing Up The Week

A series of datapoints that could indicate inflation is returning combined with the unexpected shortened trading week out of respect for the passing of President Jimmy Carter did nothing to help with the market’s newfound volatility. Everything from Bitcoin to stocks has gotten choppy since the start of the new year which just goes to show exactly how jumpy investors and trades have become after two stellar years.

I believe we will continue to see increased volatility as market participants weigh the options of locking in the past two years’ worth of gains versus keeping risk on to take advantage of potential upside catalysts.

In the meantime, let’s take a look at the news that moved markets this week…

Market News

“Inflation levels seem to be rising” -ISM

On Tuesday, the ISM Services report showed the prices businesses pay for supplies rose to a near two-year high at the end of 2024, causing business owners to report a fear of inflation returning, reported MarketWatch. Additionally, businesses worry that President-Elect Donald trump’s plan to introduce large tariffs on international trading partners could spur even more inflation.

However, despite these concerns, business owners report trying to maintain an optimistic attitude. “Generally optimistic that the incoming administration will positively affect regulatory, tax and energy policies that will spur economic improvement. We are concerned about tariff activity and are hoping for the best,” one senior executive at an information company told ISM.

Jobs Report Comes in hot 256K new jobs, 4.1% unemployment

On Friday, the nonfarm payrolls report for December showed jobs increased by 256,000 versus the 212,000 in November and 155,000 expected for December, and the unemployment rate dropped to 4.1% versus 4.2% expected, reported CNBC.

Wait. A strong economy? That’s good news, right?

Well, not so much.

The Federal Reserve is walking a tightrope between providing a strong economy while also keeping rates restrictive enough to prevent a resurgence in inflation. With the job market acting much healthier than expected, there is no incentive for the Federal Reserve to cut the benchmark interest rate further which is what market participants want to have happen.

Additionally, having such a strong job market caused the yield in U.S. Treasurys to spike Friday morning. This happens because while a strong job market is good for the economy, a strong economy leads to inflation, and inflation means investors will demand a higher yield on U.S. debt in order to buy Treasurys.

As a result, despite the payroll report being positive for the economy and the average American, it was particularly bad for the stock market, with the S&P 500 and Nasdaq both dropping in excess of 1% before the market even opened for trading on Friday.

Next Week’s Gameplan

The economic data flow isn’t going to stop next week as we start getting the key inflation reports for December. On Tuesday, we’ll see the Producer Price Index (PPI) along with the NFIB optimism index and the Fed Beige book.

On Wednesday, we get one of the key reports the market pays attention to: the Consumer Price Index (CPI). Additionally, Wednesday brings us the Empire State and Philadelphia Fed manufacturing surveys along with the Home builder index.

On Thursday, U.S. retail sales drop and will let us know how comfortable (or not) the U.S. consumer was spending money throughout December.

As if the number of economic datapoints coming next week wasn’t enough, we’ll also see the kickoff of Q4 earnings season with major banks like JP Morgan (JPM) coming in hot before the market opens on Wednesday!

So, it promises to be yet another busy week (and the first full trading week we’ve had in some time)! I’ll see you back here next Friday, as always, and stay safe out there, my friends! 

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Crytpo Corner

Bitcoin Price Action

I’m never Bullish or Bearish about Bitcoin. Here’s why…

I’ve been in Bitcoin for more than seven years now. In the scope of my more than 26 years investing and trading, that’s nothing, however, in the scope of an asset class that only recently turned 16 years old on January 3, that’s not nothing.

Over that time, the one thing I’ve learned is that there are no real experts in the space. Sure, there are Bulls and there are Bears, but there’s nothing Bitcoin enjoys more than making fools out of both camps. Just when it looks like I’ve found an analyst who trader who seems to have their finger on Bitcoin’s pulse, Bitcoin whips out some massive volatility and proves that, just like the others that came before, that “expert” knew absolutely nothing.

As a result, I’m never really Bullish or Bearish on Bitcoin. My analysis certainly isn’t any different than the “experts” when it comes to this unpredictable asset class.

Instead, what I do is make a plan for what I’ll do if Bitcoin rises above my cost basis (trim off profits) and what I’ll do if it sells below my cost basis (add in ever-increasing quantities the lower Bitcoin goes).

Trying to plant a flag and say, “This is where this asset changes direction” is challenging no matter the asset class, but I’ve never found an asset that loves to screw with analysts more than Bitcoin, regardless of whether they’re Bulls or Bears.

This week, Bitcoin slapped both camps upside the face, first by rallying to a new weekly high at $102,735.99, destroying the shorts, only to roll over after news broke that the Department of Justice had approved the U.S. government’s request to sell its $6.5 billion in Bitcoin seized from the Silk Road operation years ago.

This caused Bitcoin to crash down so hard that it briefly broke through last week’s low of $91,271.19, finding support just under at $91,187.00.

The Bullish Case

Bulls were hanging from the rooftops screaming “I told you so!” when Bitcoin crossed above $102K only to have Bitcoin positively destroy any positive price action it had made since bottoming last week. While there are still plenty of Bulls claiming this is “the last chance you’ll have to buy Bitcoin below $92K,” that kind of talk is usually what precedes a 30-40% drawdown.

The Bearish Case

Bears are getting super-excited about the price action with the typical candidates calling for Bitcoin to lose key $90K support and head much lower. As far as the charts go, there’s key support at $85,010.00 and, then, the mother of all air gaps until $66,800. Sure, Bitcoin could find psychological support at $73.8K (the previous all-time high) and, then $70K (psychological support), but, truly, there’s not a whole lot of price action to support Bitcoin before $66.8K and that could be a painful drop for any Bull who’s all-in right now.

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 December, Bitcoin rallied +121% to a new all-time high of $108,388.88.
• In January 2025, Bitcoin dipped -16% to a low of $91,384.70.

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.