The week of January 19-25 was marked by records and risks. On one hand, historical highs are being broken, but parabolic rises aren't always healthy. On the other hand, billions of dollars are leaving the market, and critical support levels are being tested. The Japanese government fell, the Fed is about to make a decision, and markets are searching for equilibrium. Records are being broken, but the foundations are cracking; could the time of collapse be approaching?
The Bank of Japan (BoJ) kept its interest rate unchanged at 0.50%, as expected. The market was expecting 0.75%, but the BoJ took a more cautious approach. Despite inflation being above its target (3.6% December CPI), it refrained from raising rates, emphasizing the fragility of the economic recovery. Governor Kazuo Ueda stated that "wage increases and domestic demand are not yet stable, and the timing is not yet right." However, he also signaled that "an interest rate hike may come in 2025."
On the same day, the government of Japanese Prime Minister Shigeru Ishiba fell after failing to win a vote of confidence. For the first time since 1948, a Japanese government has lost a vote of confidence. Opposition leader Yoshihiko Noda has also failed to form a government, plunging Japan into political chaos. The risk of renewed elections and prolonged uncertainty remains. The Bank of Japan (BoJ) postponed its interest rate hike, but left it for 2025, weakening the yen. The political crisis could hinder economic reforms and monetary policy. The risk of sudden position unwinding in carry trades has decreased, but yen volatility persists.
According to CME FedWatch data, there is a 97.2% probability that the Fed will keep interest rates stable at 3.75%. No rate cut is expected. Although rates have fallen from a peak of 5.50% to 3.75%, they are still at a high level. Markets are looking for signals in Powell's speech about when a rate cut might occur. However, with inflation stuck at 2.7%, Powell may remain cautious. Using tight stop-loss orders for futures positions is sensible. The longer the period of high interest rates continues, the greater the risk of economic collapse—credit card debt, the real estate market, small businesses are under pressure. It may be difficult to see interest rate cuts before Powell leaves office (May 2026), and the next Fed chairman's term may be more flexible.
The yield curve, with the difference between 10-year and 2-year bond yields, is now in positive territory. Historically, an inverted (negative) yield curve signaled a recession, while a positive turn could indicate that a recession is imminent (or has been overcome). Historically, a crisis (recession) has often followed a shift in the yield curve from negative to positive. However, this time, a paradigm shift is underway (see the dollar losing its reserve currency status), and with the added geopolitical problems, this recession or crisis has not yet occurred. Is this an exception, or will we see a delayed collapse? The only answer is time. The yield curve was negative (inverse yield) for two years between 2022-2024, it has now returned to normal, but this doesn't always mean "the danger has passed"—sometimes a recession begins immediately after this reversal.
Credit card default rates continue to rise, approaching 3%+. This rate was around 1.5% in 2021, and high interest rates and inflation have driven consumers into debt. The American consumer is the engine of the economy, but the engine is running out of fuel. Credit card debt is at record levels, and the default rate is increasing. This cycle will break somewhere, and it is critical to follow that crack signal.
The fundamental reasons behind the rise in gold are clear. Increased geopolitical tensions (the Middle East, Russia-Ukraine, Trump's tariff threats), the possibility of another US government shutdown, and central banks' continued gold purchases. Despite the Fed delaying interest rate cuts, gold continues to rise—the demand for a "safe haven" has not diminished. But the bigger picture is something else. When US President Nixon withdrew from the Bretton Woods system in 1971 (the gold standard ended), a world began where the dollar was no longer pegged to gold. All countries followed suit. Since then, central banks have been printing unlimited amounts of money. It's no surprise that commodities like gold, which have a limited supply, are rising—what's surprising is this parabolic rise. Technically, such a steep rise is unhealthy. There's a risk of a sharp correction in the short term. The sky is the limit, but let's not forget that there will be a segment of the population that will be disappointed and hurt by such a parabolic rise.
Silver reached its all-time high of $103 on January 24th. Similar to gold, macroeconomic factors (geopolitical risk, inflation protection, fiat currency uncertainty) are driving silver upwards. However, there's a critical difference with silver: very strong industrial demand. Solar panels, electric vehicles, 5G infrastructure, electronic circuits – silver is used in all of them. Renewable energy and the technological transition are making silver not just an investment, but an essential raw material. Supply shortages persist, inventories are dwindling, and demand is increasing. It's more volatile than gold, but its momentum is stronger. Technically, silver is also in a parabolic zone. A short-term pullback to $95-98 could be healthy, but the upward trend could continue in the medium to long term. Silver is no longer just "gold's poor cousin"; the industrial revolution has made it a critical strategic commodity, but the rise is very rapid, so be careful.
The S&P 500 broke its rising trend support, which has been in place since April 2025. The index showed weakness during the week of January 19-25, falling to 6,915. Technically, critical support: SMA50 (6,838). If this level is lost, selling pressure may deepen, and the next target will be SMA111 (6,726). Above, the psychological resistance is the 7,000 level. It's too early to say "the rally continues" without seeing sustained closes above this level. Momentum is still on the side of the sellers. The uptrend has been broken, and the bulls are losing strength. There's no need for excitement until we see a close above 7,000.
LMT (Lockheed Martin): +2.1% (weekly), Q4 2025 earnings report is due on Wednesday, January 29th. SMA50: $492, SMA200: $473. The stock is currently around $590, holding above the SMA50. The continued geopolitical risk premium supports LMT.
GOOGL (Alphabet): -1.9% (weekly), Q4 2025 earnings report is due on Tuesday, February 4th. SMA50: $312, SMA200: $229. The stock is around $327, above the SMA50, but down from the start of the week. The tech sector is under pressure.
JNJ (Johnson & Johnson): +0.5% (weekly), Weekly: ~$220 (record high). Q4 2025 earnings announced Tuesday, January 21: EPS $2.04 (expected $2.01), revenue $22.52B. SMA50: $207, SMA200: $177. The stock is above both SMAs, hitting an all-time high of $222 on January 22. The SMA50 is critical for short-term momentum. Sustained price above the SMA50 indicates buyer strength, while a drop below indicates seller pressure.
The week of January 19-25 was disastrous for Bitcoin and Ethereum spot ETFs. Approximately $1.3 billion was withdrawn from Bitcoin Spot ETFs. Last week's $1.4 billion inflow, led by IBIT, has completely reversed. Ethereum Spot ETFs have seen a $1 billion outflow. ETH was already weaker than BTC, and this outflow has completely broken the momentum. BTC Spot ETF Realized Price (RP): ~$82K, ETH Accumulation Address (RP): ~$2.7K. Below these two levels is a dark ocean, and seeing the bottom is impossible. Serious panic could start for BTC below 82K and for ETH below 2.7K. ETF outflows indicate institutional uncertainty. Macroeconomic uncertainty (Fed, Trump tariffs) has also hit the crypto markets. Be prepared for red screens if the 82K (BTC) and 2.7K (ETH) levels are lost.
Bitcoin is trading below its Short-Term Holder Realized Price (STH RP), a critical signal historically indicating the start of a bear market. Bitcoin is still below the STH RP, and this points to a period where the bear market is officially established, similar to 2022. Short-term investors are at a loss, and selling pressure continues. It's too early to talk about a trend reversal until we see a sustained close above STH RP. We are currently in dangerous territory.
STH MVRV (Short-Term Holder Market Value to Realized Value) is currently at 0.92. It approached 1.00 last week but failed to break above it. Being at 0.92 now indicates that investors who bought Bitcoin in the last 155 days are, on average, down 8%. Short-term investors are still unhappy. A bull market won't start until they are happy. Historically, it's difficult to see strong rallies when STH MVRV remains below 1.
The information, comments and recommendations contained herein are not within the scope of investment consultancy. Investment consultancy services are provided within the framework of the investment consultancy agreement to be signed between brokerage firms, portfolio management companies, banks that do not accept deposits and customers. The comments in this article are only my personal comments and these comments may not be appropriate for your financial situation and risk return. For this reason, investments should not be made based on the information and comments in my articles.
