Bitcoin is back in the news this morning after climbing +$2K in the last 24 hours. At one point, this morning, Bitcoin reached $47,685 before retreating sharply by about $700 just in the last half hour as I write (9:30am) to just below $47K. At the moment, Bitcoin sits at $47,017 after a slight recovery. There's a lot of talk of Bitcoin hitting $48K soon. Are we finally going to see $50K as I've been speculating for about a month or so?
What's driving the rise in Bitcoin this time? Bitcoin was pushed below $39K after hitting a low on January 23. It was speculated at the time that South Korean investors unloaded to take in some profits after Bitcoin hit a high of $48,494 on January 11. They should have held on a little longer. Instead of going down further, Bitcoin has recovered substantially.
Bitcoin appears to be rising along with the major Indices. The Dow Jones Index which surpassed $37K around the middle of December, has continued to rise sharply, to $38K on January 22. At one point this morning, the Dow sat at a record $38,701. What's truly shocking is that only a handful of listed companies are in the green. The rest are in the red.
Before I started to write this post, the S&P 500 was just $2 shy of breaking $5K. When I checked again just now as I write, it finally happened. Like the Dow though, only a few companies are propping up this index. If just one of them puts out a bad report, look out! Still, out of the last 15 weeks, the S&P has moved higher 14 weeks, matching a previous record 15 week stretch.
It's not just the Dow Jones and S&P indices that are doing well. Since December 11, the Nasdaq has risen over $1.4K to where it sits now at $15,862.
(Also see: 'Russell 2000 Breakout')
Bitcoin hit a low on January 23 and we can see from the three charts above that around this date was where the indices really started taking off. The week before last saw a stellar jobs report come out of the USA which fueled the markets. Thing is, most of those new jobs were part-time. Also, look for revisions from the BLS. They always do this a couple of months down the road and they seem to always revise lower, meaning they skew the numbers to make things look rosy.
The US Dollar, after peaking sharply to 104.597 on February 5, has retreated a bit to 104.066 and is still up almost 2 full points in the last 30 days. I expect the dollar to go higher over the next little while as I see a 'flight to safety' occurring as investors flee weak currencies into the strong dollar.
Investors also appear to be piling into oil. Forget the green movement. Oil will be with us for some time yet. WTI crude is up 1.2% this morning to $77.15 after rising sharply the last few days by about $4.50 per barrel. Brent crude is back above the $80 handle, rising almost 1% to $82.36 where it now sits. Last weekend, the Pentagon fired missiles at sites in Iraq and Syria. Don't be too surprised if they do it again this weekend, after markets are closed. Tensions continue to build in the Middle East so expect oil prices to continue rising as a consequence, unfortunately.
Usually, when the dollar is strong, gold goes down. They are each other's nemesis. With the indices hitting new record highs, it's not too surprising to see the gold price taking a hit but when the hit amounts to just $10 or so, it becomes clear that gold wants to stay in the 'big leagues'. Attempted smackdowns in the last month bore no fruit and gold has remained above $2K since last December.
As I've previously mentioned, there is a strong correlation between oil and gold. If oil continues to rise, as it appears to be, then expect gold to follow. The correlation between the two goes back more than 7 decades. BRICS countries plan on trading oil for gold, ditching the dollar outright. The world is changing fast so stay in shape, just to keep up!
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