Bitcoin Boom

On March 5,2024, the cryptocurrency Bitcoin crossed $68,900, the highest price in its 15-year history.This soar comes less than 2 years after Bitcoin dropped below $17,000 in November 2022...What is the cause of this boom?











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Gold and Interest Rates


Many analysts and investors adhere to the belief that gold prices and interest rates have an inverse relationship....But is that belief accurate, or just a longstanding assumption that does not get questioned?









2024 Real Estate Forecast



The US housing market has experienced a significant upswing in home prices over the past few years. However, forecasting the housing market for 2024, there are signs that this trend may be changing.





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By Ross Silver 27 Mar, 2024
On March 5,2024, the cryptocurrency Bitcoin crossed $68,900, the highest price in its 15-year history. This soar comes less than 2 years after Bitcoin dropped below $17,000 in November 2022. Most analysts are very familiar with the volatile cycles of Bitcoin. Immediately after reaching its record high, Bitcoin fell to $61,000 by close of the same day. Today, March 15, 2024, Bitcoin closed at $69,621.28. Bitcoin was originally designed as an alternative to the traditional finance system, in which people might be able to send money around the world without extractive intermediaries. The concept behind Bitcoin allows online payments to be transferred from one party to another without going through a financial institution. Thereby alleviating the typical processing, service and wire transfer fees that are accrued by most financial institutions. Another appealing aspect of Bitcoin is that it has been viewed as an inflation hedge. This means that Bitcoin cannot be devalued by a central bank printing more of it. Bitcoin was designed to only have 21 million units in circulation. In January, the US Financial Regulator approved exchange traded funds (ETF), which has benefited the surging price of Bitcoin since the start of the year. According to Jeff Billingham, director of strategic initiatives at Chainalysis, this approval shows there is now “institutional maturity” in the cryptocurrency market . Additionally, James Knightley, the chief international economist at the banking group ING, says elevated inflation readings have encouraged bitcoin buyers who see the cryptocurrency as an insurance policy against rising prices. According to Knightley, “Risk appetite has also soared in recent weeks with tech stocks fuelling the sense of Fomo [fear of missing out] in markets and I think bitcoin is being swept along in all of this.” Haseeb Qureshi, a managing partner at the crypto venture capital firm Dragonfly, believes that Bitcoin will only continue to increase in value over the next year. Bitcoin has yet to hit the “halving,” a mechanism built into Bitcoin that aims to make the currency more scarce and therefore, more valuable. Bitcoin halvings happen roughly every four years, with the next one set for April. Bitcoin prices rose after each of the three previous halvings, giving reason to believe that the trend will continue. Bitcoin is known for its ability to overcome any challenges and have strong comebacks. Various financial experts have been predicting that the Bitcoin bubble will pop “in the near future” for the past eight or so years; yet, somehow the coin still remains on top. BTC investors are enjoying their high profits and hoping the rising trend of Bitcoin will continue. Tickers to consider: IKT , KALA , CEI Sylva Disclaimer: https://www.sylvacap.com/disclaimer
By Ross Silver 17 Feb, 2024
Many analysts and investors adhere to the belief that gold prices and interest rates have an inverse relationship. The idea is that, since higher interest rates make fixed-income investments more attractive, money will flow out of gold and into high-yielding investments as rates rise. Therefore when the Federal Reserve raises the federal funds rate, then weakness in gold should follow. However, historical data shows no significant correlation between rising interest rates and falling gold prices. Ultimately, the relationship between gold prices and interest rates is uncertain and unstable because gold is traded on a global market subject to forces far beyond the reach of the Federal Reserve . From March 2022 to July 2023, the Federal Reserve raised the federal funds rate by more than five percentage points. In that same time period, gold prices rose from $1908.30 to $1960.40. By the end of 2023, gold was trading at $2062.40. While interest rates may have some effect on gold prices, rising rates don’t automatically drag gold prices down . The real picture involves many moving parts, including factors such as fears of inflation, geopolitics, global growth prospects, and wider investor outlooks. It is also important to remember that gold is influenced by supply and demand. Higher interest rates may reduce overall investment demand for gold. At the same time, if supplies do fall, then it is possible that the price of gold sustains, or even appreciates. The constant jostling of supply factors can influence the relationship between the gold price and interest rates. Economic and geopolitical uncertainty tend to be positive drivers for gold. Many investors view gold as a safe-haven asset during troubling times due to its ability to remain a reliable store of value. Because of its low correlation with other asset classes, gold can act as insurance during falling markets and times of geopolitical stress. J.P. Morgan research predicts that both gold and silver will have a positive forecast over the course of 2024 and into the first half of 2025. According to the J.P.Morgan, gold prices will peak at $2300/ oz in 2025. T his prediction assumes a Fed cutting cycle initially delivering 125 basis points (bp) of cuts over the second half of 2024, pushing gold prices to new nominal highs. Tickers to consider: IKT , KALA , CEI Sylva Disclaimer: https://www.sylvacap.com/disclaimer
By Ross Silver 18 Jan, 2024
2023 was not a good year for potential home buyers. Mortgage rates surged and hit a high of 7.79% in October. On December 13, 2023, policy makers kept the federal funds rate unchanged for a third straight meeting. The federal funds rate is the benchmark interest rate that financial institutions charge for overnight loans. The federal funds rate tends to indirectly influence mortgage rates. Although economists are optimistic that the Federal Reserve is done with its rate-hiking campaign to lower inflation due to the unchanged rate, affordability challenges will probably continue in 2024. Pent-up demand and low inventory will generally bolster prices, and elevated mortgage rates will remain until the Fed implements cuts to the federal funds rate. The US housing market has experienced a significant upswing in home prices over the past few years. However, forecasting the housing market for 2024, there are signs that this trend may be changing. The data from the housing market indicates a potential housing market correction, with home prices stabilizing and, in some regions, even dropping. According to the Central Finance Group, the real estate forecast for next 5 years presents mixed messages. Some experts predict a stable housing market, whereas others foresee a downturn, leading to a real estate crash. In order to better understand the mixed messages, factors that primarily affect the housing market need to be evaluated. First and foremost is the trend in interest rates. Higher rates typically lead to increased mortgage payments. This reduces the affordability of homes for many potential buyers. This scenario can potentially lead to a housing market correction if the rate rising trend continues. Inflation also plays a crucial role in the housing market. High inflation rates cripple the purchasing power of the consumer. This in turn makes it more challenging for individuals to afford new homes. If wages do not keep up with the cost of living, we could end up with a scenario where home price dropping becomes a common phenomenon. Despite these challenges, there does remain a healthy demand for home purchases amongst millennials. This demand could potentially protect the housing market from a severe crash. Additionally, a limited housing supply has been a persistent issue, and it continues to influence housing market predictions 2024. A limited housing supply combined with a high demand from millennials may play a leading role in keeping the housing market from crashing again. Finally, it is important to remember that in order for the demand from the millennials to positively influence the housing market; interest rates must be cut by the Fed. This is the only way these millennials will be able to afford to purchase a home. If interest rates remain high or continue to rise, it will not matter how much of a demand there is. At the end of the day, the demand will not be met simply because it is unaffordable. Tickers to consider: IKT Sylva Disclaimer: https://www.sylvacap.com/disclaimer 
By Ross Silver 20 Dec, 2023
Bitcoin was created in 2009, by a pseudonymous creator, Satoshi Nakamoto and is the world’s first cryptocurrency. Cryptocurrencies are digital tokens that use technology to facilitate instant payments without the need of a third party. From the beginning, the Bitcoin supply was capped by Nakamoto. The maximum number of coins stipulated to be in existence was 21 million. As of Nov. 12, 2023, there were 19.53 million Bitcoins in existence with 1.46 million left to be mined. However, experts believe that it will take until the year 2140 before the supply cap of 21 million is reached. In 2009, Bitcoin started trading at a price of $0.00099 per coin. On December 12, 2023, Bitcoin was trading at a price in excess of $41,000 per coin. 2023 has been a surprisingly good year for Bitcoin. Since January 1, 2023, Bitcoin has increased by 164%. It has outpaced traditional assets, including gold which has risen 10% and the S&P 500 which has gained 20%. Additionally, according to CoinGecko data, Bitcoin has increased its share of the total crypto currency market by more than 50%. ​​What is fueling this rally by Bitcoin? One of the most important factors is signs that major investment firms are set to get regulatory approval to offer spot bitcoin exchange traded funds (ETF)— a pooled investment security that can be bought and sold like stocks. Federal regulators are expected to give the “go ahead” for several bitcoin ETFs as early as January 2024. Yiannis Giokas is a senior product director at Moody’s Corporation, an American business and financial services company. According to Giokas, the green light from federal regulators for Bitcoin ETF’s could make investing in crypto more accessible to investors. In an interview with MoneyWatch, Giokas states, "As more and more managers venture into the bitcoin spot ETF space, more retail and institutional investors, even the more conservative ones, will feel a higher degree of comfort investing in this space." Asset management giants like BlackRock and Fidelity are among the 13 companies that have submitted applications to the U.S. Securities and Exchange Commission for the multi-billion dollar product. Another important factor is the growing assumption that the Federal Reserve is done hiking its benchmark interest rate and that inflation is receding. When interest rates fall, investors are more likely to pour money into riskier investments such as crypto. Greg Magadini, Director of Derivatives at the crypto data firm, Amberdata, told CBS MoneyWatch, “Lower rates are bullish for Bitcoin.” So what is in store for Bitcoin in 2024? In April 2024, Bitcoin will undergo what is known as halving. This is an event where the rewards for mining Bitcoin transactions are cut in half. This event occurs about every 4 years and cuts the rate at which new Bitcoin supplies enter the market. Past havings have led to huge rallies for Bitcoin, and another massive rally is predicted for 2024. It is important to remember that past performance is no guarantee of future performance. According to the Motley Fool, Bitcoin investors are setting their sights on the $1 Trillion mark. However, they also recommend that investors should not buy Bitcoin unless they plan on holding it for the next 5 to 10 years. Bitcoin is a “long term investment and should be treated as such.” Tickers to consider: IKT Sylva Disclaimer: https://www.sylvacap.com/disclaimer
By Ross Silver 09 Nov, 2023
Conflicts and stand-offs like the most recent Israel- Palestinian war have global implications, not only for peace and security, but also for the economy and global stock markets. Despite a certain level of uncertainty that war can bring, stock markets have shown resilience over time. In his article on counterintuitive market outcomes, Ben Carlson, Director of Institutional Asset Management at Ritholtz Wealth Management, wrote "From the start of World War II in 1939 until it ended in late 1945, the Dow was up a total of 50%, more than 7% per year…” In the days and weeks following the Russia/ Ukraine conflict, the S&P 500 fell more than 7%, but within a month, the market had rebounded and the S&P 500 was trading at a higher level than before the invasion. So what can we expect from the Israel - Hamas conflict? Although Israel is only about the size of New Jersey, it has a huge influence on the US Stock Market. According to Bloomberg, funds in the US hold more than $43 billion in Israeli stocks and bonds. More than 100 Israeli companies are listed on US exchanges, with a combined market cap of more than $150 billion – Israel has the fourth most companies listed on the Nasdaq after the United States, Canada and China. Analysts are predicting that if the conflict remains between Israel and Palestine, then the markets will likely forget about it after a few days or weeks. Historical evidence suggests that conflicts can have an impact on stock market performance. Past conflicts have shown that stock markets can experience initial declines in response to escalating tensions and uncertainties. However, once the Israel-Hamas conflict reaches a resolution, the stock market has the potential to experience a recovery and stabilization period. Historically, military surprises typically decline the S&P 500 for about 30 days after the initial conflict, and then recover about 60 days after the event. Tickers to consider: IKT Sylva Disclaimer: https://www.sylvacap.com/disclaimer
By Ross Silver 29 Sep, 2023
The Federal Reserve (The Fed) is the central banking system of the United States. It comprises 12 regional banks and is responsible for governing and conducting monetary policy , supervising and regulating financial institutions, and maintaining the overall stability of the banking and financial system of this country. Monetary policy is the approach taken by a central bank or government authority with the intent to influence economic growth by expanding or constraining the supply of money in that region. The question to be answered is how does The Fed’s monetary policy affect the Stock Market (The Market)? On September 20, 2023, The Fed officials held the benchmark overnight interest rate in the current 5.25%-5.50% range, but sketched a stricter policy path moving forward in an inflation fight they now see lasting into 2026. Fed Chair Jerome Powell said, a solid economy combined with strong job growth, will allow the central bank to keep additional pressure on financial conditions through 2025. In August, inflation fell to 3.7% , down from 7.0% when it peaked in June 2022. However, that still remains well above the Federal Open Market Committee's (FOMC) objective of 2 percent. Bringing inflation back to 2 percent will likely require a period of below-trend growth and some softening of labor market conditions. In response to high inflation, the FOMC continued to increase interest rates 11 times and reduce its securities holdings of the Treasury and mortgage-backed securities over the course of this past year. The Federal Reserve is acutely aware that high inflation imposes significant hardship, especially on those least able to meet the higher costs of essentials. The FOMC is strongly committed to returning inflation to its 2 percent objective. Long story -short, The Fed will continue to raise interest rates until they reach their goal for 2% inflation. What does this mean for the outlook of the Stock Market? The Market has endured significant volatility as investors factored in rising rates. Juan Pablo Villamarin, senior investment advisor at Intercontinental Wealth Advisors, notes that the Fed’s primary policy tool is the Fed Fund Rate (FFR). The FFR is the rate that banks borrow and lend to each other overnight. Changes in the FFR affect the overall economy by making money easier or more difficult to borrow. A higher FFR results in a higher cost of borrowing for businesses. This in turn means that businesses no longer have access to cheap capital for reinvestment in growth. Consumers no longer have access to low interest rates for car purchases and mortgages, causing them to spend less. Villamarin notes that the primary result of Fed interest rate hikes on stocks is an increase in the cost of capital. “All else being equal, a higher cost of capital causes future potential profits to be worth less, and decreases investment and spending on margin by companies," he says. Robert Johnson, chairman and CEO at Economic Index Associates, agrees, finding that during "restrictive," or rising-interest-rate, environments, stock returns tend to be more muted. Johnson notes that the average annual real return for stocks over a 55-year period was 13.8% in expansive periods, but only 1.7% in restrictive periods. However, businesses that are more cyclical in their demand tend to be disproportionately affected by a restrictive environment. This often includes stocks from technology, materials and consumer cyclical sectors and small-cap stocks.  Tickers to consider: IKT Sylva Disclaimer: https://www.sylvacap.com/disclaimer
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