Summing Up The Week

In the middle of the week where the virus was supposed to peak in New York, the U.S. epicenter, markets rocketed skyward on the slightest hint of good news and seemed to fly higher even on profoundly bad news.

There’s a lot of FOMO from new investors out there who feel they missed the market’s bottom and are buying into this rally big-time.

Despite most professional analysts warning that this move is simply a Bear Market rally with a test of March’s low incoming, everyone – new and old traders alike – seems to be ignoring that advice as the market continued to bounce extraordinarily from its March bottom throughout this four-day holiday week.

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

Market News

UK Prime Minister in Intensive Care with COVID-19

On Monday, U.K. Prime Minister Boris Johnson was moved to intensive care and put on oxygen as his COVID-19 symptoms worsened, reported CNBC.

Foreign Secretary Dominic Raab will temporarily take over the prime minister’s duties while Johnson is hospitalized.

Trump Bickers with WHO, Threatens Funding Cuts

In the first half of the week, President Donald Trump called out the World Health Organization (WHO), claiming it got “every aspect of it [COVID-19] wrong” and threatening to cut funding to the WHO, reported CNBC.

Media pointed out that while the WHO didn’t declare the outbreak a pandemic until March 11, it was the President who regularly told the American public not to treat the novel coronavirus COVID-19 as anything more than the common flu.

Sanders Drops Out of Presidential Race

Senator Bernie Sanders dropped out of the 2020 Presidential race on Wednesday, reported CNBC. Sanders announced his withdrawal to his staff during a conference call, pointing to a series of losses in the campaign primaries combined with the COVID-19 pandemic stalling his campaign.

Sanders’ withdrawal sets up a general election competition between President Donald Trump and former Vice President Joe Biden. The markets rallied substantially following Sanders’ announcement.

U.S. Loses 10% of Workforce in Three Weeks

The jobless claims report jumped by 6.6 million on Thursday, resulting in an overall job loss amount of more than 10% of the U.S. workforce in three weeks, according to CNBC.

Bizarrely, the markets continued rocketing higher on the news, with many analysts believe investors and traders see the economy recovering in a “V” shape.

Next Week’s Gameplan

The markets have returned to robust frothiness and exuberance in lightning-quick fashion and that means we’ve exited Buying Season and have entered Selling Season.

Yes, I am taking profits.

Some of my positions have, quite literally, doubled from where I bought them three weeks ago, so it’s time to take at least a little profits in long-term holdings even if they’ve just been added to.

Many of the analysts I follow and trust not only don’t believe this epic rally, but they believe we’ll test (or get close to) the March lows based on economic data that will only be called “horrific” when companies start to report earnings soon.

Batten down the hatches, the market’s going to be incredibly volatile for some time.

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 set this week’s low at $6606.06 last Friday and hasn’t looked back since, jumping more than 10% to set a new weekly high of $7461.

The 2020 low of $3858 still looms quite a bit below here, particularly since it was only set 3 weeks ago. This kind of recovery is historically unusual, even for Bitcoin and the crazy cryptocurrency space.

The Bullish Case

The Bulls believe that the Halving (the next point where mining rewards will be cut in half) taking place in May will cause the Bitcoin and crypto market to rally as it has in the past. Historically, Bitcoin has substantially increased in value following the halving as fewer Bitcoins being mined means the scarcity is increased, theoretically increasing the value.

If this happens, we could see Bitcoin head to the Support of Last Resort which will now provide resistance around $8100 followed by the Line That Shall Not Be Crossed around $9000.

If Bitcoin continues higher from there, we’re looking at 2019’s high around $13,300 followed by a potential try at the all-time high over $19,000.

The Bearish Case

While Bears do acknowledge the halving, many believe Bitcoin will make a test of the $5,000, at least, before bouncing from the halving. Some point to the historical pattern where Bitcoin sells off quite substantially following the halving before making new all-time highs.

Bulls point to the COVID-19-induced selloff to $3858 as making the historical drop unlikely, however, as we all know, anything’s possible with Bitcoin…

Bitcoin Gameplan

Current Allocation: 9.304%
Current Per-Coin Price: $4,734.91
Current Status: +54.61%

I continue taking snippets of the position off as Bitcoin makes new highs with the sales from the last week reducing my per-coin cost by -2.05% from $4833.84 to $4734.91, an overall reduction of -47.603% from my first buy at $9036.68 back in January.

As always, I have plans in both directions. Now that I’ve been able to substantially reduce my per-coin cost, my first buy will be at a level resistance ABOVE my current per-coin cost in case Bitcoin only tests a low near $5,000, however, the buy will only raise my per-coin +0.4% from $4734.91 (the current per-coin price) to $4755.67

Bitcoin Buying Targets

Based on past support levels, Moving Averages (both Simple and Exponential), and a positively terrifying past trendline, I’ve come up with the following buy targets:

0.516% @ $5138
0.868% @ $4077
1.336% @ $3891
2.437% @ $3216
3.132% @ $2989
6.347% @ $2636
8.589% @ $2089
22.852% @ $1388
33.087% @ $1091

Bitcoin Selling Targets

As I have for the past few weeks, I’ll continue taking small profits at key levels unless we break $10,000 where I’ll start using stop-loss orders at greater distance to entirely close the trade.

Why the differing quantities at each level instead of a flat percentage?
Rather than buying an equal percentage, I change my buying quantity at each stage as a reflection of how likely Bitcoin could bottom and rebound from that stage. Rather than increasing my quantity on the way down, I’m used a fixed amount of money, so I’m basing how much I buy by how likely I think Bitcoin will drop to a certain level. In this case, I don’t think it’s likely Bitcoin will be able to break its $3128 low, so my quantities under that price point are less to account for the chances it will get to them.

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 (sometimes a drop of near -90% or a gain of up to +1000% or more), Bitcoin has demonstrated that, more than any speculative asset, its price is capable of doing anything.

Here are just a few recent price movements over the past couple of years:

• Bitcoin rose +2,707% from its January 2017 low of $734.64 to make an all-time high of $19,891.99 in December of the same year.
• Then, Bitcoin crashed nearly -85% from its high to a December 2018 low of $3128.89.
• In the first half of 2019, Bitcoin rebounded +343% from $3128.89 to $13,868.44.
• From June 2019, Bitcoin dropped -53.64% to a low of $6430.00 in December 2019.
• From December 2019’s low, Bitcoin rebounded +64% from $6430.00 to $10,522.51.
  
• In March 2020, Bitcoin dropped -63.33% to a low of $3858.00, mostly in 24 hours
• From $3858.00, Bitcoin has rebounded +89.75% to $7320.62.
• 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 2% of my assets to speculating in crypto.

I feel that anyone who doesn’t 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.

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.