All the information in this letter is NOT to be considered financial advice; it is the author’s personal views and agreed views of others from their overviews of present markets,
Some of the content will be a summary of articles I have read and believe the author got most or all of it bang on, some will be statistics that have been check for validity, but all will be content I believe is of use or interest to margincall.club members.
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Welcome to the May 2024 edition of the margincall.club FinTech Newsletter.
I will provide you with an overview of key financial events and market developments from the past month (April) and what effect those events could have in May and beyond, as always the goal is to help you stay informed and to make your own well-informed decisions.
I will also visit any of the price predictions given in the April 2024 letter to see what played out and what didn’t and why.
Financial Market Highlights:
- Stock Market:
April saw the Dow Worst Month Since September 2022
U.S. stocks sank on Tuesday with the bad news of wage growth data, this dealt another blow to the Fed in its fight against inflation, just as the central bank commenced its two-day policy meeting.
The Nasdaq Composite dropped 2% Tuesday to finish the month 4.4% lower.
The S&P 500 shed 1.6%, ending April down 4.2%.
The Dow Jones Industrial Average slid 1.5% to notch a 5% decline in April, its worst month since September 2022.
Treasury yields moved up after data showed that employment costs rose more than expected in quarter one.
- Economic Indicators:
I repeat, beware the hawks of war! The strike’s in Israel escalated in April, Israel’s Iron Dome did it’s job of protecting against waves of drones!
Iran has shown it’s hand, do not underestimate that act, in financial terms it could cripple Israel and the US war machine, Israel is using interceptor rockets that cost $1 to $3million that were meant to bring down $50million fighter jets, to bring down drones that cost $25,000 to $50,000 to build, it is financial death by a thousand cuts, these drones are the 2024 equivalent of the AK47!
Warfare is about to change in a seismic way and it will affect the arms industry and its value, Iran has brought a slingshot to fight the giant with a sword!
- Cryptocurrency Update:
Bitcoin is down $10,000 on April close, I believe that pre-halving ATPH was the first signs of supply shock, it remains to be seen if that belief is founded.
I used an excerpt from the March newsletter in April that I will use again, plus the statement I made in April below it in Green, then give my thinking on where Bitcoin price could be by the end of the year if given the right conditions, those being peace talks in both theatres moving forward, and the expected fed actions on rate reductions, with each 25 point reduction seeing a 10% to 15% increase in Bitcoin price with each Fed reduction as investors move funds away from bonds to the more profitable ETF products, this I believe is when the supply shock kicks in:
At the start of February I was of the mind that Bitcoin would get very close to >$60k< around the end of the month and it exceeded my expectations, Its hard not to remain bullish on Bitcoin, the ETF outcomes will play out as we move through March.
I still believe the supply shock is yet to hit!
I did say in the Feb letter: “the end of January could see a new all-time high for Bitcoin” that was a typo due to uploading a copy that did not have the full corrected paragraph in, and a number of people picked up on it, it should of read April, around halving date, and history tells us that when the halving hits that rodeo starts!
I now think that will come early, that could form a cup in the long term chart, which could mean a pull back to form the handle.
If it does that it would be a $50k break out to a $120k Bitcoin price in the next move!
I still think there will be a handle, Bitcoin got an all-time high for March, I am expecting an all-time high for the end of April as well, but I do expect a shock pull back to >£60k< just to shake out the weak hands.
My May 2024, 3 fiscal quarters view to the end of the year follows, This is based around my belief and the charts.
On Monday November 15th 2021 (one year after the prior halving and one month after the all time high) in the 3 day Bitcoin chart we reached the top of a head and shoulders pattern, that second shoulder played out on Monday April 4th 2022
At which point Bitcoin dropped to a low of >$15.5k< playing out the head and shoulder indicated drop nearly to the dollar by Wednesday November 9th 2022, 12 months after the high.
Since that bottom Bitcoins rise has been upward with consolidations, no real pull backs until the handle to the cup started to form at the end of March, which is where I got my pull back to >60K<, in my view that would confirm the cup, and that the handle is forming.
I published a video of the 3 day chart and my beliefs in market direction on “X” on May 4th with the figures I believe Bitcoin will achieve by ends of year.
A video of the chart view is here https://screenrec.com/share/FWHsBr2unf and published on “X” May 4th.
- Commodities and Forex:
I don’t provide updates in this letter on commodities like oil, gold, and Fiat currencies as these are assets that are affected by market trends and all the above.
Investment Insights:
- Market Analysis:
I stand by what I said before as this is a macro view regarding El Salvador, Argentina on the other hand seems to be falling to pressure from the IMF, as I said last month there is news that the new Argentinian President is going back on his word, that’s not good.
The draught law in the EU banning all self-custody wallets seems to have spread to the US, but I do believe that would be challenged in the European and US courts under constitution and EU right’s laws!
The developments in fiscal digital transfer service in the African sub-continent seem to be gathering momentum.
With growing support by a number of Governments in the African sub-continent, expect any service looking to promote these services will do well till year end.
- Investment Strategies & Featured Asset:
Nothing has changed here from last month, my Macro view is you want to have a foot in both traditional and crypto markets and you have to look at data miners and companies like Micro strategy.
The miners can switch to data storage and Micro Strategy will most probably capitalise some Bitcoin to cover costs of purchase if BTC goes >4X as that would be prudent to reduce debt, much the same as a stock buy back.
If you see any ATM company looking to use those machines when idle to mine Bitcoin or a company that is using renewables, solar, water and wind to power miners all would be worth doing Due diligence to see if they are investable.
Plus any deals you hear about between Ai and data storage companies would be worth due diligence time.
The only thing I would add to that is buy some tradeable bullion, gold or silver coins.
Financial News:
- Global Financial News:
Now that the Iranian military machine has shown its sword it could draw the attention of the US, not a good idea, if a wounded bear is walking past your front door you don’t go and poke it!
If events in Ukraine, Gaza and Iran continue to escalate it could still see a chain reaction in events, that would move US markets down as stated before.
1. **Interest Rate Rises have to start to reduce soon – But More Still to Come from countries outside the US.
We got that dovish April/May presentation from the feed, I still hold that June, maybe now July will see a rate cut, should be small at first. Watch the numbers on this, if it’s below 0.25 they don’t feel in control, if its 0.25 or above they feel in control. (the fed state what data they use, google it to educate yourselves).
As last month
2. **Food Prices will rise in 2024 and 2025 more than inflation.
– Global food prices are expected to stay elevated in 2024 due to factors like drought, excessive rain, the war in Ukraine, and Gaza plus high energy costs impacting global farm production.
– The politicians have run out of smoke and the mirrors are broken, western countries that have only experienced single figure inflation are now experiencing inflation in the >20%< range on consumer edible’s.
People are seeing those price increases and shrinkflation (the producer’s art of reducing the amount in a packet and still making look the same!) the only way to reduce those increases is less tax on the costs of transport and in the supply chain, which means reduction in tax income which in turn means more cow bell!
I would add to this that companies will exploit “Shrinkflation” in products, less product same price strategies!
- Regulatory Updates:
Said this last three months and stand by it now after Bitcoins friend Larry Fink said he wants the ETH ETF, he wants that ETH ETF so he can offer zero fee’s ETF’s as he will offer staking and promote ETH as the tool to tokenise traditional finance!
News on ETH ETF’s expected this month, Gary is going to have a hard time explaining why he allowed other ETH products in the past and not a spot ETF to a judge.
Personal thoughts:
Just holding and waiting for the hand to play out, it will be the match that lights the supply shock!
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James,
You’ve written terrific content on this topic, which goes to show how knowledgable you are on this subject. Thank you and keep posting good stuff!