February 12 REX Wire Market Outlook

The S&P is hitting new all-time highs, and bitcoin is well on the way as its own bull market accelerates.

Following the S&P, Bitcoin is starting to heat up.

The numbers are going up, more or less across the board. The S&P smashed all-time highs last week and is continuing higher now, having already gained another half-percent since breaking 5,000. The same is true of the Nasdaq, and the Dow isn't far off its highs either. The DXY seems to be cooling a little, possibly eyeing a break lower from 104 (which would help stocks and other risk assets). Gold remains above $2,000.

Following last week's rally, Chinese stock markets are taking a break for the new year holiday, but will be keenly watched when trading reopens. It's worth noting, however, that the move up is solely due to government intervention. Deflation in China is now a serious problem.

In better news, contagion does not seem to have spread from NYCB to other regional banks (yet). Fed Chair Jerome Powell has said that banks' exposure to commercial real estate is something they are aware of and working to address with the banks. Although that is a process that might take many years and entail significant losses, he says "I don't think there's much risk of a repeat of 2008."

Bitcoin Storms Ahead

Bitcoin ended last week strong and closed above $48,000, recovering the losses it suffered since the launch of the spot ETFs. Almost everyone who bought the ETFs is now in profit.

Moreover, interest isn't waning, but accelerating. Volumes and inflows are up, and Grayscale's selling has ebbed to a few tens of millions of dollars a day.

There is a flywheel effect here: A virtuous cycle in which new TradFi buyers are attracted by rising prices.

It's worth saying, of course, that this is exactly how bubbles occur, and it's highly likely that's precisely what is going to happen. The rate of BTC's price increase suggests the process is already under way. Where it tops out, and when, cannot be known; we're still in the early stages. But top out it surely will (despite what those influencer accounts tell you), and when that time comes, The Reckoning will surely be severe. Plan accordingly.

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