All the information in this letter is NOT to be considered financial advice; it is the author’s personal view and agreed views of others from their overviews of present markets. This content includes a summary of articles that I believe to be insightful and data that has been verified. The purpose is to provide content that is of interest and relevance to MarginCall.Club members.
Welcome to the February 2025 Edition of the MarginCall.Club FinTech Newsletter
This month, we’ll review the key financial events of January 2025 and explore how they might impact February and beyond. As always, our goal is to provide you with timely, relevant insights to help you navigate the market effectively.
Financial Market Highlights – January 2025
1. Stock Market:
- Dow Jones Industrial Average (DJIA): Closed January at 46,250, gaining 1.45% in the month as market optimism grew around upcoming corporate earnings.
- S&P 500: Ended at 6,012.80, up 2.2%, supported by stronger-than-expected retail performance and stabilizing interest rate expectations.
- Nasdaq Composite: Closed at 19,950.30, rising 2.3%, driven by continued strength in AI, semiconductor stocks, and large-cap tech.
2. Economic Indicators:
- GDP Growth: Preliminary estimates indicate 2.6% Q4 2024 GDP growth, slightly up from December’s 2.4%, signaling resilient economic momentum.
- Inflation: January CPI showed a 2.1% year-over-year increase, with core inflation easing further to 2.5%.
- Employment: The unemployment rate dropped to 3.5%, with job gains concentrated in healthcare, finance, and manufacturing.
- Interest Rates: The Federal Reserve kept rates unchanged at 4.25% – 4.50%, signaling a potential cut later in 2025 depending on inflation trends.
3. Cryptocurrency Update:
- Bitcoin (BTC): Closed January at $102,084, gaining momentum as institutional adoption surged.
- Ethereum (ETH): Ended the month at $3,258.76, with Layer 2 solutions driving increased network activity.
- Regulatory Developments: The SEC’s approval of multiple spot Bitcoin ETFs has spurred investor confidence.
- DeFi and NFTs: Renewed interest in NFTs, particularly in gaming and metaverse applications, continues.
4. Geopolitical and Macroeconomic Factors:
- Geopolitical Tensions: U.S.-China trade discussions remain unresolved, while Eastern European conflicts continue to weigh on markets.
- Energy Prices: Crude oil averaged $75 per barrel, up slightly from December due to winter demand and supply constraints.
Key Events to Watch in February 2025
- Retail Earnings Reports: Post-holiday retail sector earnings will provide a key indicator of consumer spending resilience.
- Federal Reserve’s February Meeting: Market participants will look for clues on potential rate cuts later in 2025.
- Q4 2024 Corporate Earnings Reports: Big tech and financial sector earnings will shape investor sentiment.
Market Sentiment and Investment Insights
1. Cryptocurrency Market
Bitcoin remains on a bullish trajectory, with analysts targeting $115,000 in early 2025, a price and reason I gave in the 2024 February FinTech letter. However, resistance near $105,000 could lead to short-term volatility.
2. Key Market Threats – February 2025
- Weak retail earnings could dampen market optimism.
- Hawkish Federal Reserve statements may put downward pressure on equities.
- Geopolitical risks could push investors toward safe-haven assets like gold.
3. Bitcoin Technical Analysis: Cup & Handle Pattern
Bitcoin’s weekly chart continues to display a 350% cup-and-handle formation, indicating a target of $275,000 by August/September 2025. A pullback could occur before a rally past $500,000 by October 2025, aligning with past Bitcoin halving cycles.
Updated Q&A Section
Q: Why are yields still elevated, and what’s driving swap spreads in February?
A: The key factors include:
- Treasury Issuance and Demand-Supply Imbalance:
- The U.S. Treasury continues high levels of debt issuance, keeping yields elevated.
- Institutional demand, while improving, has yet to counteract supply-side pressures.
- Federal Reserve Policy and Market Volatility:
- The Fed’s cautious approach to rate cuts has contributed to volatility in fixed-income markets, affecting swap spreads.
- Geopolitical and Fiscal Uncertainty:
- Persistent global conflicts and U.S. fiscal challenges maintain higher risk premiums.
- Liquidity Constraints:
- Hedge funds and institutional traders repositioning for 2025 add to market dislocations.
Summary: Stabilization may come mid-2025 if the Fed signals a dovish pivot and geopolitical tensions ease.
Final Thoughts on Crypto
As we step into February, global markets remain focused on Federal Reserve guidance, retail earnings, and geopolitical shifts. Cryptocurrency markets continue to display resilience, positioning themselves as potential hedges against macroeconomic risks.
Stay tuned for further updates, and remember: well-informed decisions are the foundation of strong financial outcomes.
My Thoughts on the Coming Month
The recent U.S. presidential election, with Donald Trump’s victory, continues to shape Bitcoin’s trajectory. Based on current trends, here are my updated insights:
Deductions:
- U.S. Debt Crisis:
- The national debt now exceeds $40 trillion, posing major challenges for the administration.
- Strategic Loss in 2024:
- Democrats may have deliberately ceded 2024 to avoid inheriting the debt crisis.
- 2028 Comeback Strategy:
- Democrats may position a figure like Michelle Obama as the “savior” candidate in 2028.
Opinions:
Trump’s Bitcoin Strategy:
- Plans are in motion for the U.S. to acquire 1 million BTC over five years.
- Bitcoin is being positioned as a national asset to hedge debt risks.
- The first loans are appearing that add Bitcoin to a Collateralised building loan that requires the borrower to hold those Bitcoins for a minimum of 4 years. it was on a US CNBC Market alert see that here
Potential Plan:
- Year 1: Accumulate 200,000 BTC through dollar-cost averaging (~$20 billion investment).
- Launch government-subsidized Bitcoin mining initiatives to bolster domestic production.
Long-Term Vision:
- By 2028, Bitcoin could appreciate significantly, positively impacting the U.S. debt balance.
- A $1M+ price per BTC by 2028 is gaining traction across political and financial circles.
Final Thoughts
While speculative, this scenario highlights the intersection of politics, economics, and crypto. If executed effectively, it could reshape the U.S. financial landscape and Bitcoin’s global standing.
I previously rated this plan 50/50 on probability; I now see it as 65/35 in favour of playing out.
Regards,
James
