HOW MUCH CAN HE DO? - The market remains confined to a nervous sideways trade but is getting to that point where it could be very close to coming to an end, which means welcome volatility ahead. For the most part, the story continues to be about this new X factor in markets. The market just isn't familiar with the US administration taking such an interest and while it is definitely something participants have been worried about, they also aren't ready to just assume the administration will be able to actually deliver on its very big promises. So President Trump wants to weaken the US Dollar to pay down the deficit....but can he actually push things in a way that will be able to achieve this objective while running into such strong resistance at every turn? I think he can effectuate this change and I think this is a risk that still has not been taken as seriously by the market as it needs to be considered. But we will wait and see, as right now, that's all we can do.
EXPLORING BITCOIN - While we're waiting on all of that to get going again, I thought it would be a good opportunity to talk cryptocurrency a little. As most of us know, Bitcoin has been under a lot of pressure in 2018. This follows a 2017 which saw the price rocket to just under $20,000USD! We've since seen this market give back about 70% of that, recently trading back down into the $5k area. And so naturally, there have been many out there looking to take advantage of the dip, seeing a huge discount and waiting for the next run, that these players have seen so many times over the past several years. Now I do like Bitcoin and all of the technology that goes along with it, but I am concerned these cryptotraders are overlooking some important points that could still expose this market to even deeper setbacks.
CRYPTO WORRY - For one thing, as dramatic as the decline has been, we're only back to levels the market was making records highs at not even one year ago! And perhaps more importantly, Bitcoin has seen no downturn in the global economy. It has not lived long enough to see such an event. Bitcoin was born in late 2018, just as the greatest risk incentives of all time were put in place to stimulate recovery from the global financial markets crisis - a recovery that has resulted in record high stocks ten years later into this year! And so, while it could be argued that a downturn in stocks would be good for Bitcoin, given what many believe to be an alternative store of value asset, I would be very concerned that we could see Bitcoin suffer quite a bit more in such a backdrop...at least this time round. Food for thought.