Bitcoin has fallen back to pre-Thanksgiving levels … is its bull run already over? … stock gambling addictions are growing … Luke Lango’s “ultimate” stock screener I can’t buy Bitcoin at $94K. I’ve missed the move. That came from a gym friend when we chatted shortly before Thanksgiving. Bitcoin then surged to about $108,000 over the ensuing handful of weeks. When I ran into my friend again, he echoed the refrain all investors have lamented at one time or another… I knew I should have bought! This thing is taking off! Then came the selloff… Following the Fed’s FOMC meeting last week, Bitcoin has tumbled from about $108K to the same pre-Thanksgiving level of roughly $93.5K (as I write Monday morning). 
When I bumped into my friend at the gym this weekend, I asked if he was ready to pounce on this “second chance” to buy Bitcoin at pre-Thanksgiving levels. His response? I’m not buying now when it’s crashing. I think it’s heading way lower. Now, perhaps that’ll be a wise decision. Or perhaps my friend simply isn’t willing to pay the price of investing in crypto – enduring major volatility. Why Bitcoin crashed, and why it shouldn’t alarm you Though Bitcoin’s acceptance within the global economy community has increased dramatically, it remains the poster child for “risk asset.” For a crude, illustrative visual, below we compare Bitcoin to a fund that mimics the Nasdaq 100 with triple leverage. As you know, tech stocks (the Nasdaq 100) tend to be more volatile than many other sectors… and adding leverage to anything increases your risk… so, adding triple leverage to tech stocks is basically “risk on steroids.” The chart below compares Bitcoin (in black) with this Nasdaq 100 3X leverage fund (in red) beginning in February of 2021. Rather similar, no? 
Source: TradingView Now, rewind to last Wednesday. The Fed suggested it’s likely to cut rates only twice next year instead of the four cuts it forecasted in September. With the punch bowl seemingly removed from the party, traders bailed on the riskiest parts of their portfolio…which meant Bitcoin got the boot. | Recommended Link | | | | You have just days left to prepare for a sudden change in the stock market we believe will open the biggest money-making opportunity in our firm’s 20-year history, without any long-term risk exposure. Already, you could have made a 11,340% gain in 46 days on just one of the plays identified by our study, using a system that works with 83% backtested accuracy. Learn more here. |  | | Though this pullback isn’t pleasant, it’s healthy Between Trump’s win on election day in November and Bitcoin’s high last week, the granddaddy crypto exploded 57%. For perspective, if we annualize that gain, it comes in at just under 500%. That’s no longer a sustainable growth rate for Bitcoin given its near-$2T global market cap today. Keep in mind, all of this is happening right around the psychologically significant level of $100K, which produces its own extraordinary gravity. When Bitcoin approached $100K on the way up, this psychological level lured more buyers into the market in anticipation of the milestone. But once above it, Bitcoin was still influenced by the powerful psychological gravitas. Some traders took profits, resulting in small pullbacks, that scared weak-handed “me too” investors who then sold. Rinse/repeat and the gravity of $100K pulled prices lower, and then some. Today, we’re seeing a course correct that’s par for the course for Bitcoin. Too much exuberance, too quickly, leads to froth that results in a profit-taking selloff. This transfers Bitcoin from weak hands to strong hands where we begin the cycle over again. Bottom line: A 57% explosion that brings us to a massive psychological level requires time to digest. We need a pullback to regroup before a wave of renewed buying pressure can help Bitcoin achieve “escape velocity,” pushing it beyond the gravitational pull of $100K. So, how long will it take? No one knows. But I’d err on the side of patience and wouldn’t be frustrated if we move sideways for several weeks to a couple of months. But let’s be clear about what this isn’t – the end of the Bitcoin bull run Consider that Bitcoin has survived since 2009… experienced crashes of 94% (in 2011), 86% (in 2013), 84% (in 2017-2018), 50% (in 2020), 77% (in 2021-2022), and 40% (in 2023) … Meanwhile, it’s now finally seeing a wave of institutional buying pressure… has countries using it as official fiat currency (El Salvador) … and has our president elect considering an official National Bitcoin Reserve… And yet, the extreme bear case is that now, after finally hitting $100K, that’s when Bitcoin finally peaks and begins a slow slide toward $0 and irrelevance? Unlikely. It’s far more likely that we take a breather (perhaps a meaningful one) and then keep climbing. It’s also far more likely that my friend from the gym will be lamenting not buying at $94K come mid-2025. Here’s the quick take of our crypto expert Luke Lango from this weekend’s Crypto Investor Network update: In short, the fundamental drivers powering this crypto rally remain in-tact. We just have to get through this interim Fed noise. We don’t see full resolution on the Fed front right away. The Fed stuff will take some time – likely a few weeks – to work through the markets. During that time, Bitcoin will likely remain under pressure. Altcoins, too. But we do see resolution within the next 1-2 months. And when we do get that resolution, we think Bitcoin could charge to above $120,000 in a hurry, while altcoins could stage a rally similar to the one they staged from early November to early December (during which a lot of altcoins actually doubled). Bottom line: Bitcoin is down, but I’d bet against it being “out.” Speaking of betting… Here’s yet another reason why 2025 could be extra volatile One hint… Vegas. Here’s The Wall Street Journal from last Friday: A new type of addict is showing up at Gamblers Anonymous meetings across the country: investors hooked on the market’s riskiest trades. At Gamblers Anonymous in the Murray Hill neighborhood of Manhattan, one man called options “the crack cocaine” of the stock market. Another said he faced hundreds of thousands of dollars in trading losses after borrowing from a loan shark to double down on stocks. And one young man brought his mom and girlfriend to celebrate one year since his last bet. The stock market has always had its gunslingers, but given today’s technology, we have nothing separating us from a kneejerk trade…or, rather – a gamble. Older investors will remember what it was like decades ago. You didn’t have access to real-time stock prices. You read stock quotes in the newspaper, showing yesterday’s price. Then, if you wanted to buy or sell, you went through a broker, which could be expensive. And unless you used a limit order, your transaction price could be off somewhat significantly from where you intended to transact. This incentivized buy-and-hold while making active, frequent trading incredibly difficult for the average investor. Those days are long gone. Today, we have up-to-the-second prices… zero commissions on stock trading… and market information bombarding us constantly, tempting us to “catch the rocket ship up” and/or “avoid the crash down.” We’re in Vegas. Here’s Bloomberg: We’re living in a new age of finance. It’s never been easier to bet your money—anytime, anywhere—and meme-stock craziness is here to stay. A wave of technological advancements has coincided with new apps and platforms to create a thriving ecosystem where everyday people can trade stocks with the ease of swiping for dates on Tinder. Here’s what Warren Buffett recently observed: For whatever reasons, markets now exhibit far more casino-like behavior than they did when I was young. The casino now resides in many homes and daily tempts the occupants. As you’d expect, with more “gamblers” in the market reacting to minute-by-minute price changes, price volatility of many popular stocks has become more exaggerated – both up and down. This is partially why I’ve repeatedly urged readers to delineate between their high-conviction portfolio holdings which they’ll hold regardless of price swings, and their low-conviction holdings which need to have stop-losses attached for risk mitigation. Two weeks ago, at an investing conference in Baltimore, master trader Jeff Clark made a great point, saying that most people think they’re investors, but in reality they’re traders. An “investor” would ignore 90% of market information because the goal is to hold for years or decades. Most of us don’t do that. We check our holdings usually every week – if not multiple times a day. Unfortunately, this behavior increases the chances that an unexpected selloff transforms us from confident investors into reactionary traders. Bottom line: The market is becoming more volatile as the rise of today’s gambler mentality intensifies. Make sure you’re prepared for such an environment. | Recommended Link | | | | If we knew an alien spaceship was heading toward Earth… And we had a year before it arrived… There’s no question — you would see the largest mobilization and preparation effort in human history. And yet, when it comes to a stunning new AI development… most people are burying their heads in the sand. So listen carefully to the following conversation, AI Day One. You’ll learn what’s at stake… how and why it’s happening… what to do next… And you’ll see why you could have less than 1,000 days to make as much money as possible. Click here for the full story on AI Day One. |  | | If you want help, I’d point you toward Luke Lango and his new stock screener, Auspex This is Luke’s “ultimate” stock screener. It’s an advanced market system that searches out stocks with superior fundamental, technical, and sentiment criteria. Fundamentally, Auspex scans for stocks that are growing – positive revenue growth, positive earnings growth, positive profit margin expansion, accelerating revenue growth, and accelerating profit growth. Technically, Auspex looks for stocks that are sustainably moving higher – upward-sloping longer timeframe moving average, shorter-term moving averages crossing above long-term moving averages, and upward trending action in the Moving Average Convergence Divergence line, among other criteria. Sentimentally, Auspex flags stocks that are generating positive attention – increasing buying volume, upward earnings estimates revisions from analysts, and more. The quantitative engineering that underpins Auspex results in a highly discriminating market system, flagging just a handful of stocks with an intended hold period of just one month (unless flagged again). It’s a fantastic way to remain in this bullish market while also adding a layer of protection against stocks that gamblers are potentially driving lower if/when volatility spikes. You can learn more about it in Luke’s video right here. Whether you follow Luke’s medium-term trades in Auspex or take another approach, make sure that your personal investment plans factors in exaggerated volatility in 2025. Have a good evening, Jeff Remsburg | 
ليست هناك تعليقات:
إرسال تعليق