Can Bitcoin Break Above $12K?

August 20, 2019
“Investing puts money to work. The only reason to save money is to invest it”
― Grant Cardone

5-Day Change

  • Bitcoin: $10,675.01
  • Ethereum: $197.03
  • S&P 500: $2,923.70
  • Dow Jones: $26,135.80

Bitcoin is still up, but struggling to pass 12K

Bitcoin’s $20,000 peak is still achievable...but it all depends on the $12,000 resistance. Now that Bitcoin is out of the sub $10,000 range, bullish sentiment is picking up, but a higher break above $12,000 is what’s needed to keep the momentum going. Meanwhile, the alts are still in the red over the week, despite news of Ripple’s $30 million partnership with Moneygram, the 2nd largest money transfer firm. 

So do the bulls or the bears have it? For Bitcoin, it’s not entirely clear. While the price has recovered from the $9,500 low earlier this month, it still needs to push past the $12,000 resistance to truly reignite the bull run. Even though the $12,000 resistance has been broken four times over the past month and a half, each spike above $11,800 has been swiftly corrected. These corrections show that the resistance is significant, and there’s no guarantee that Bitcoin will break it any time soon.

But the altcoins are still doing worse? Yeah, and it isn’t comparable. Despite altcoin gains yesterday, Ethereum, Litecoin, and Ripple are still down 1%, 2.8%, and 3.34% just today, and 5.3%, 10.39%, and 7.43% over the past seven days. There is good news for Ripple, at least - its partnership with Moneygram marks one of the first uses for a crypto asset at scale, though it remains to be seen whether that will reverse XRP’s fortunes this year. For Litecoin, though, good news seems to be missing: despite a price bump due to the halving at the start of the month, it still plunged to a new 2019 low last week, with no signs of relief in sight.

Seems pretty bad for the alts! It is, especially considering that even with all the ups and downs, Bitcoin is still green over all the same timespans. But even if the altcoins aren’t faring well, crypto as a whole is pretty healthy - barometers like NVidia’s earnings (the preferred chip maker for miners) are doing well, with a 6.2% jump in stock price on the earnings beat. 

Wut We Think: Even if altcoins are doing poorly, it could represent an opportunity for traders who’re willing to take that risk - there’s a good reason to believe that Litecoin, for example, is approaching its bedrock support - meaning that buying in and enjoying any appreciation could pay off handsomely. On the other hand, there’s always Bitcoin - it’s hard to argue with success, and with constantly improving fundamentals and a growing reputation as a safe haven, it seems that sooner or later the $12,000 resistance will be broken and be on the way to new heights.  

General Electric (GE) Plummets 11% For Worst Loss in 11 Years

GE is running a bigger scam than Enron...according to financial analyst Harry Markopolos  (the same guy responsible for calling out the Ponzi scheme run by Bernie Madoff way before regulators caught him). Markopolos is claiming to have discovered fraud totaling $38 billion in GE’s books, which he points out to being bigger than Enron and WorldCom combined. The news took the stock down more than 10% on Thursday, though it’s recovered about 7% of that loss since then.

So what exactly is the fraud? The majority of the $38 billion is hidden, according to Markopolos’ claims, in GE’s Long-Term Care insurance deals - long-term care refers to insurance that is intended to cover stays at nursing homes and treatment for chronic illnesses. These deals have led to the need for an additional $29 billion in cash reserves for GE - despite 10-Ks and management assurances that GE would be cash flow positive by 2021. There’s also an additional $9 billion ‘hidden loss’ incurred by GE’s energy division, Baker Hughes - due to a difference in how Baker Hughes shares are treated.

What did GE say? Baloney, it’s all a load of baloney, I tells ya! Well, not in those exact words, but that is the gist, calling the whistleblowers report meritless and pure market manipulation. But GE itself doesn’t have a great history of credibility when it comes to transparent accounting - including an example just this week of a fudged number during an investor call. 

What’s the market saying? The market may not be the final arbiter of truth, but it is often a relatively decent barometer of it. And judging by the 11% plunge in GE’s stock price, the market seems pretty firmly on the side of the whistleblower. That’s not to say that the report doesn’t have its criticisms, such as the fact that the report emerged during Markopolos’ work for a short-seller instead of SEC whistleblowing - but no one has been able to refute the individual points in the report, and indeed, a lot of them have come as no surprise to long-time GE watchers.

Wut We Think: GE has its work cut out for it in refuting the fraud allegations - but if Markopolos’ claims are valid, then get ready for a wild ride - but one, luckily, that will have its damage limited unless you hold GE. After being kicked out of the Dow Jones last year, as well as shedding $140 billion of market value, GE hasn’t been an investor darling in quite some time. On the other hand, it still employs nearly 300,000 people and has assets ranging up to $310 billion - so when the pain comes, expect far-reaching effects beyond immediate stockholders.

Walmart Beat Expectations With Q2 Earnings Report

Despite a looming recession, consumers are still shopping least that’s the feeling after Walmart, the world’s second-largest retailer, released its earnings on Thursday. Walmart’s stock jumped 5% on the earnings beat and is currently 7% higher week-over-week. The retailer beat expectations on revenue, earnings per share, and same-store sales, despite slightly revising 2020 guidance down in some areas. 

So what’re the details? Pretty good if you’re following the US consumer spending landscape (and you should since it is a pretty good indicator of recession). The biggest changes, besides beating analyst expectations, is a whopping 8.8% rise in shareholder returns, coupled with a 1.8% rise in revenue. In fact, almost every metric that could rise, did - net sales are up (US and Sam’s Club, the big-box discount retail segment), though international sales did experience a minor slump.

Are there any risks going forward? There’s always something, but Walmart’s guidance does a pretty good job of isolating them. Slowing global demand driven by the US-China trade war, for example, led to a 1-2% revision in net international sales downwards, leading to about 3% growth in net sales all around. Uniquely, Walmart may actually have the upper hand going into the trade war, as its size gives it more of a negotiating position compared to other grocers, though with delivery growing as a share of grocery shopping, it may run into competition with Amazon and Kroger.

Are other retailers doing just as well? It depends on the retailer, but the biggest - Amazon and Alibaba - sure are. Alibaba, in particular, saw a massive 40% jump in sales last quarter, putting it in a comfortable position, trade war or no trade war - and its 10% stock rise since its earnings report is keeping the Chinese retailer ahead of recession worries. But outside of Amazon, Walmart, and Alibaba, the picture is a lot less rosy - department store stalwarts JC Penny and Macy’s have both missed expectations pretty handily.

Wut We Think: It’s an excellent time to be a major retailer, but the real story has been in adapting to the new retail reality. Online order and pickup has now defined grocery shopping for many families, and companies that can’t offer that are rightly suffering - giving smaller, less nimble retailers even less room to maneuver if the trade war escalates. Meanwhile, Amazon, Walmart, and Alibaba will keep using their size to cut favorable deals and will continue being the retailer of last resort when consumers look for ways to save as much as possible if a recession does hit. 

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