Update - February 14, 2023

Opportunity in Crypto?

It is a very important week for the stock market.

The headline writers are having fun with today’s inflation figures. They’ll have more fun later in the week when the latest jobs figures are released.

But when all eyes are over here… it often makes sense to look over there.

While few folks are paying attention to it, the crypto market is having some fun. Speculative traders who get in on the action could make some profits.

We see this playing out in our own portfolio. Privacy-focused Monero (XMR) is on quite a run.

Going from a near-term low of $118 in November to a recent high of over $180, it shows the power (and profit potential) of the recent rally.

Plenty of your fellow readers have written me to ask why this is happening.

A central bank digital currency is on the way… there’s virtually no chance that Monero will be a means of exchange anytime soon (if ever)… and fresh regulations are coming from D.C. nearly every week. So why is this token surging?

For the same reason so many other coins have taken off in recent weeks…

Speculation.

We can debate the merits of crypto technology and the manifold uses of blockchain infrastructure, but it’s clear what gets the crypto market moving higher… cheap money.

With Jay Powell using the word “disinflation” this month, the markets are envisioning (dreaming of?) a return to cheap money. Mark my words: When interest rates finally make their turn lower… the crypto world will rally.

Cheap money drove the sector to new highs in the past, and the mere thought of a return to it will drive money back into the market. But this time, regulations will guide the market in the right direction… and it will be clear who the winners and losers are.

The big question, of course, is when rates will begin to sink.

According to the Fed chief, the time is drawing nearer. We’re not there yet… but we’re closer than we were a month ago. Today’s inflation numbers will certainly add another variable to the equation.

I say rates need to go higher for longer if we want to ensure we don’t see a surprise spike in inflation down the road. That would not be great for crypto… at least not for this latest rally.

But I’m not in charge.

The Fed is likely to turn dovish on all of this well before it should. That’s good news for the cheap-money fans and for speculative investments.

It could be very good news for our crypto stakes.

Trading crypto isn’t easy. Risk is very high. But if you have some money you’re looking to speculate with, this is a good opportunity.

There’s a strong chance that some of this year’s best gains will come from the crypto market.

Our stake in Monero certainly looks strong.

It will be a fun position to watch.