“The Profits Keep Rolling!”

Hi There! This morning, my brother and sister-in-law called and greeted me with “Compliments for the Season.” Naturally, I responded, “Many happy returns.” That simple exchange instantly took me back to Grenada, where Christmas is a vibe, a rhythm that fills the air with joy and tradition.

Growing up, preparing for Christmas was a production. The house got a full makeover, deep cleaning, painting, putting up new curtains, and varnishing wooden floors. The smells of the season were unforgettable: black cake baking, coconut buns cooling on the kitchen table, potato pudding rich with spices, and salt ham bubbling on the coal pot outside. And then there were the drinks: sorrel with a splash of Clark’s Court White Rum, ginger beer, and wines made from local fruits. All of this unfolded to the lively sounds of parang music, bringing a festive energy that was impossible to resist.

But the real magic came on Christmas Day and Boxing Day—two holidays back-to-back that were all about family, community, and celebration.

So, “Compliments for the Season” to you, dear readers. May your days be filled with warmth, tradition, and the peace of cherishing life’s simplest moments. Thank you for being part of this community!

Alright, let’s dig in!

Last Week’s Market Overview (December 15 - December 21, 2024)

Global markets faced a challenging week as a hawkish Federal Reserve rate cut spurred concerns about future monetary policy. U.S. stocks declined amid mixed economic data and political uncertainty, while European and Asian equities mirrored the downward trend. Treasury yields rose sharply, reflecting market skepticism about inflation control, and commodities dipped as the stronger U.S. dollar weighed on demand.

U.S. Markets Recap

Equities: Major indexes retreated, with the S&P 500 down 1.99%, the Nasdaq shedding 1.78%, and the Dow falling 2.25%. Growth sectors such as technology held up better than value, while small caps slid 3.9%. Notable movers included Tesla (+10%) and Alphabet (+9%) on strong growth narratives. Weak market breadth persisted, with more stocks declining than advancing for 14 consecutive sessions.

Fixed Income: The Bloomberg U.S. Aggregate Index dropped as Treasury yields climbed. The 10-year yield rose 11 basis points, and the two-year yield gained 5 basis points. Despite a rate cut from the Fed, hawkish comments and dissent from Cleveland Fed President Hammack signaled policy uncertainty and slower rate reductions in 2025.

Commodities: The Bloomberg Commodity Index fell 1.1%, led by a 2.5% decline in crude oil as higher borrowing costs raised demand concerns. Silver and copper also slipped, while gold declined 0.8% due to dollar strength.

Currencies: The U.S. Dollar Index rose 0.6%, nearing two-year highs after the Fed’s hawkish tone. A stronger dollar created headwinds for emerging market currencies like the yen and rupee.

U.S. Economic Recap (December 15 - December 21, 2024)

• November inflation eased to 0.1% month-over-month, the slowest pace since May. Annual inflation ticked up to 2.4%, while core inflation held steady at 2.8%. Housing and utilities costs moderated, giving the Fed room to maintain its cautious approach to rate cuts.

• November retail activity was solid, with inflation-adjusted sales up 0.4%. Auto sales supported growth, while discretionary spending like dining out slowed slightly but remained above September levels.

• Strong consumer spending driven by rising incomes and portfolio values continues to support growth. However, the Fed remains focused on managing inflation expectations as it navigates 2025.

Global Markets Recap (December 15 - December 21, 2024)

• Europe: European equities had their worst week in three months. Novo Nordisk’s sharp drop after disappointing drug trial results dragged markets down, while softer inflation data provided limited support.

• Asia: Asian markets fell under pressure from a rising U.S. dollar and geopolitical concerns. Greater China declined despite renewed fiscal commitments, while South Korea saw sharp losses due to currency weakness and political turmoil.

Crypto Recap (December 15 - December 21, 2024)

• Bitcoin Pullback: Bitcoin fell 5.9% to $100,605 after Fed Chair Jerome Powell ruled out central bank Bitcoin holdings, ending its rally from the previous week’s record $108,000 high. The broader crypto market also dipped, with Ethereum and Solana recording significant losses.

• Policy Developments: Vancouver Mayor Ken Sim gained support for making the city more Bitcoin-friendly, including exploring a strategic Bitcoin reserve and tax payments in Bitcoin.

• Last week’s top crypto gainers: HYPE, MOVE, LINK, and SUI

Here are other key highlights from last week:

• RWA platform Allo secures $100M Bitcoin-backed credit facility.

• Ether ETFs poised to surge in 2025.

• The positive impact of RWA and NFTs on agriculture - Interview with Dimitra.

• Avara founder backs proposal to offboard Polygon markets from Aave.

It’s a lighter week as markets wind down for the holiday season!

Key U.S. Economic Releases to Watch This Week:

1. Consumer Confidence (Mon.)

2. Durable Goods Orders (Tues.)

3. New Home Sales (Tues.)

4. Jobless Claims (Thurs.)

No Fed speakers this week!

Earnings:

No earnings this week due to the Christmas holiday.

Global Economic Events This Week:

• Monday: Canada GDP, Australia Monetary Policy Minutes

• Tuesday: BoJ Gov Ueda speaks

• Thursday: Japan CPI

Trading Tip:

“During the start of a bull market, buy the dips!”

Week 12/15/24 - 12/21/24 Recap

Special Tools and Strategies

Crypto Trading Strategies!

I see this all the time! A new trader, excited about the buzz around crypto, buys a coin simply because it’s trending on social media. Within days (sometimes minutes), the coin’s price drops, and that new trader panics, selling at a loss. What went wrong? This beginner lacked a well-planned trading strategy to guide his/her decisions and manage his/her risks.

Crypto trading can be exciting, but without a solid strategy, it’s easy to fall prey to market volatility. Here are some simple, actionable trading strategies that can help you navigate the fast-paced world of crypto with confidence.

Crypto Trading Basics

Key concepts that underpin crypto trading:

1. Market Volatility: Crypto prices are highly unpredictable and can swing dramatically in minutes.

2. Trading Pairs: Cryptos are traded in pairs like BTC/USDT or ETH/BTC. The first currency is what you're buying or selling, and the second is its valuation benchmark.

3. Risk-Reward Ratio: Successful traders always weigh potential gains against possible losses.

How Crypto Markets Work

• Price Dynamics: Prices are influenced by supply, demand, market sentiment, and news.

• Market Mechanics: Centralized exchanges (CEXs) act as intermediaries, while decentralized exchanges (DEXs) operate peer-to-peer.

• Key Players: Retail investors, institutional traders, and automated bots all play roles in price movements.

Entry and Exit Strategies

• Entry Points: Look for buy opportunities based on price trends, support levels, or news events.

  • Example: Buying Bitcoin after a dip near its historical support level.

• Exit Points: Plan when to sell—either to secure profits or cut losses.

  • Example: Setting a stop-loss order at 10% below your buy price.

Trading Strategies: Explore Your Approach

Here’s a breakdown of popular crypto trading strategies:

1. HODLing (Buy-and-Hold)

• What it is: Buying a cryptocurrency and holding it long-term, regardless of short-term price swings.

• Use Case: Perfect for beginner investors who believe in a coin’s long-term value.

• Pros: Low stress, no need for constant monitoring.

• Cons: Misses short-term opportunities.

• Example: Buying Bitcoin and holding it through market cycles.

2. Day Trading

• What it is: Buying and selling within a single day to capitalize on intraday price movements.

• Use Case: Suitable for experienced traders with time to monitor markets.

• Pros: Potential for quick profits.

• Cons: High risk, time-intensive.

• Example: Spotting a 5% spike in Ethereum during a market uptrend and selling before the day ends.

3. Swing Trading

• What it is: Holding a crypto asset for several days or weeks to capture medium-term trends.

• Use Case: Ideal for investors balancing work and trading.

• Pros: Less stress than day trading, more flexibility.

• Cons: Requires patience and technical analysis skills.

• Example: Buying Solana during a bullish trend and selling after a 20% gain over two weeks.

4. Scalping

• What it is: Making small, frequent trades to profit from minor price changes.

• Use Case: Best for traders who can make quick decisions and love fast-paced action.

• Pros: Can generate steady, small profits.

• Cons: Requires discipline and high trading volumes.

• Example: Buying a coin at $1.00 and selling at $1.05 multiple times in a day.

5. Arbitrage Trading

• What it is: Buying crypto on one exchange and selling it on another where the price is higher.

• Use Case: For traders looking for low-risk opportunities.

• Pros: Exploits price inefficiencies.

• Cons: Requires fast transactions and multiple exchange accounts.

• Example: Buying Bitcoin at $98,000 on Binance and selling it for $98,200 on Kraken.

Portfolio Management and Risk Mitigation

• Diversification: Spread your investments across multiple coins to reduce risk.

• Position Sizing: Only invest a small portion of your portfolio in high-risk trades.

• Stop-Loss Orders: Set automated sell orders to limit potential losses.

• Continuous Learning: Stay updated on market trends and trading tools.

Comparison Table: Key Trading Strategies

Key Takeaways

• Start Small: Experiment with a small portion of your capital.

• Know Your Style: Choose a strategy that fits your time, risk tolerance, and goals.

• Plan Ahead: Always define entry and exit points before making trades.

• Stay Educated: Markets evolve, and continuous learning is vital.

Crypto trading can be a rewarding journey when approached strategically. Reflect on your investor type (discussed in Issue #102) to find a trading style that matches your goals. Remember, every trade is a learning experience, and managing risk is the cornerstone of success.

Disclaimer: This newsletter is strictly educational. The information this report provides does not constitute investment, financial, trading, or any other advice. You should not treat any of the report’s content as such. Please be careful and do your research.