Will the Bitcoin ETFs get approved this week? Crypto correction and will it continue?
Mortgage reset for 2024 and what will it do to prices?
🚀Dear Valued Subscribers,
Welcome to another exciting week filled with compelling topics and investment insights. In this newsletter, we're delving into key areas that have been making waves in various markets. Here's a sneak peek into the topics we'll be exploring:
Bitcoin ETF To Be Approved In Q1?
Crypto Correction Reaction… What Next?
Stock Market Expectations Heading Into Q1
30-Year Fixed Mortgage Rates To Reset In 2024…
So folks, strap in as we have a lot to cover as we dive into the materials for this week's newsletter!
Expectation of Bitcoin ETF Approvals in Q1 of 2024
For quite some time now, I have closely been following the Bitcoin Spot ETF approval process. Through many setbacks along the way, and many strides forward after those setbacks, one thing seems abundantly clear now: it’s not “if” the ETF’s will be approved, but “when.”
When assessing when the ETF might be approved, many of the signs are pointing to Q1 of 2024, possibly even as early as Wednesday.
What Do We Know?
It was reported on Wednesday that SEC staff attorneys from the Division of Trading and Markets met with officials from the major stock trading exchanges such as the NYSE and the Nasdaq to name a couple. This is seen as a significant sign because these are where the ETF’s would trade. We also know that the SEC has a deadline of January 10th to approve this round's applicants, and many believe that all 14 application’s could be approved on or around that deadline.
What Would Approval Mean?
One thing that I think a lot of people are missing when talking about the benefits of having an ETF brought to market, is the access it’ll provide to those who don’t normally consider investing in this asset class.
Since Bitcoin is seen as a riskier investment, many people who don’t understand crypto tend to avoid it. Approval of a Bitcoin ETF could end up making it a potential staple in 401(k)s, IRAs, and pension plans used by everyday people who normally wouldn’t understand how to invest in Bitcoin.
This can be seen as an extremely bullish sign for the Bitcoin market, as tons of new money will flood into the crypto market that otherwise wouldn’t.
So for right now, it's best we sit back and patiently wait until January 10th to see what the SEC’s decision results in. Hopefully by this time next week, I am including the topic of “Bitcoin ETF APPROVED” into my newsletter!
Bitcoin Experiences Price Correction… Will It Continue?
Despite the bullish sentiment surrounding the ETF approval, Bitcoin experienced an unexpected (by most) correction from local highs of about $45,000 down to about $40,700. This marks about a 10% correction, but since then it has rebounded to about $44,000 (at the time of writing this).
While many have speculated that this may be a sign of negative news to come for the ETF approval, I would counter that approach by saying that corrections are healthy for thriving markets. In fact, in the last bull market there were multiple corrections that spanned over 30%, so this correction (thus far) can be seen more as just a hiccup in the price direction. This isn’t to say that it won’t continue, however, I wouldn’t read too much into it.
Why Do Corrections Happen?
There are quite a few reasons as to why corrections happen in bullish markets, but a major one is simply because larger investors want to take some profits. While I can’t confirm for certain that this correction was a direct result of that, a lot of the signs point to large investors taking profits.
I say this because of how the price has recovered since correcting down to $40,700 just one day ago. Since the price almost instantly recovered to $44,000, it shows me that the masses are buying up the sales of a couple larger players at the current prices. This shows that retail investors are still bullish on Bitcoin at its current levels.
Another reason why Bitcoin may have corrected might have to do with the leveraged markets in the space. Leverage trading is essentially the options market of crypto, and allows people to multiply their margin using leverage. Without getting too technical, these markets tend to correct themselves when too many people are long (or short) from the same region.
It was reported that $540,000,000 was liquidated in this crash, but since then price has worked all the way back to where the crash began. This shows me that the market makers may have created this crash to scare people out of their leveraged longs. If this is true, it could point to a potential higher move upwards, as the market makers tend to scare people out of positions that are good positions for the moves that are to come…
What To Expect Next:
With the next ETF approval window for the SEC closes on January 10th, which is Wednesday of next week, I’d expect the next major price movement to happen when that decision comes out. Until then, I’d expect the price to dance around current levels, as speculation on this decision continues to swirl.
What’s Next For The Stock Market In Q1 of 2024
After having its 4th worst year in the last 85 years in 2022, the S&P 500 had a stellar recovery in 2023, finishing 2023 up 24.23%… WOW!
Most recently, the SPX rallied 15% in the last nine weeks of 2023, recording 9 green weekly candles in a row. While this is very encouraging, and has created great sentiment in the markets for 2024, it’s important to consider a short term correction in the near future.
I say this not because the stock market looks bearish right now, but because it’s extremely rare for any asset or stock to record 9 straight green weeks in price action in a row. Take a look at the chart below:
Here you can see the 9 prior green weeks in a row. What I find to be very interesting about this, is that it looks to be (temporarily) topping out right at all time highs. While I think there’s a good chance of all time high’s being broken in Q1, I wouldn’t be surprised if there was a short-term pullback of 3-5% before doing so (as shown on the chart).
Thus, a short-term pull back could create the cool-off needed to explode through all-time high in early 2024!
2023 Was A Tough Year For Home Buyers… Will 2024 Be Better?
2023 Was The Least Affordable Home Buying Year in The Last Two Decades
When the FED started raising rates in March of 2022, the average 30-year fixed mortgage rate was approximately 4.4%. As a result of rate hikes, 30-year fixed mortgage rates soared, which made it extremely harsh conditions for new home buyers in 2023.
In 2023, the 30-year fixed mortgage rate peaked in October of 2023 hitting 8%, which was the first time since 2000 that the fixed rate was this high.
Since then, rates have cooled off a bit, and now rest at about 6.9%…
With rate cuts coming in 2024 as announced by FED chairman Powell, it’s expected that mortgage rates should cool off for a while.
While mortgage rates aren’t expected to go back to pre-pandemic lows, many analysts believe that it will remain in the 5-6% range, which is far more favorable for homebuyers than in 2023…
Happy 2024 to each and every one of you!!! I am so excited for the months to come and crushing it with you throughout the year.