ZC: #3. Zeahl's Edge
A look at how 2024 has kicked off.
Happy Monday folks!
In the third edition of the Zeahl Capital newsletter, Zeahl’s Edge, we look at how markets performed in the opening weeks of 2024.
Crypto
As anticipated the Bitcoin ETF proved to be priced in with the price of the number 1 cryptocurrency plummeting 15% in the hours following the SEC approvals. Nevertheless, the approvals no doubt made this a Rubicon moment for the digital assets industry. Bitcoin has now cemented itself on the "‘TradFi’ table with the spot ETF adding another option for institutions to purchase Bitcoin, even if the numbers aren’t looking great.
The legitimacy of the cryptocurrency seemed unlikely even just 18 months ago with the self destructing FTX debacle, however the fundamentals of Bitcoin has never changed. It’s value is derived from a number of unique parameters encoded by the unknown creator, such as scarcity, a programmed monetary policy and ultimately, total an utter ownership by the individual. Desired qualities when you consider the state of the fiat world in the past few years.
As mentioned in the previous newsletter, we expected the price of Bitcoin to drop in the aftermath of the ETF approvals however make no mistake, the price will rise further in the next two years. Although we see further downside from the current levels, we predict a price of $200,000 per Bitcoin within the next 18 months.
Stocks
It’s been a mixed start to stocks with those linked to crypto taking a battering post ETF. COIN 0.00%↑, MSTR 0.00%↑ and HOOD 0.00%↑ for example seeing double digit losses after a stellar Q4.
Tech stocks are also a mixed bag with $APPL appearing to put in a double top, TSLA 0.00%↑ failing to break our of resistance while NVDA 0.00%↑ made new highs. Also at the highs is META 0.00%↑ where the stock is up 300% in the past 12 months. Zuckerberg’s empire marches on.
The S&P continues to flirt with it’s all time high set in 2021. Whether this becomes a double top is yet to be seen. A breakout here will likely to lead to significant upside across the board.
Going forward
In the coming weeks the focus will be on the federal reserve’s decision on interest rates, whether they will keep them as is or cut, and whether the economy is indeed grinding on. As prices continue to rise, inflation is still high, are consumers finally feeling the pinch after two years of pain.
As we know, the market is often detached from the economy and with the S&P at these levels, it’s interesting to see whether sellers will step in again here at the highs. For the past two weeks they’ve managed to keep all time highs at bay but as you can see by the chart, buyers are stepping in to buy the dip.
At this point we’re inclined to say that we believe new highs are coming and as mentioned in the previous newsletter, a US election is always good for markets.
Thanks for your viewership and support as always. We wish you a pleasant and profitable start to the week!
