The cryptocurrency market has been quiet this year.
Bitcoin (BTC) has been stuck in a range for months now. But that trend may be beginning to change...
The crypto bulls are coming back out of the woodwork. And there are several reasons to believe that higher prices are in our future.
Headline No. 1:
'As Bitcoin Climbs Past $30,000, Bulls Now Are Eyeing $40,000.'
McCall's Call: That was the headline of a Barron's article this morning. It made me laugh – because obviously the bitcoin bulls are eying higher prices. But more important, it speaks to the momentum we've seen in the world's largest crypto over the past 10 days.
Several headlines have been driving the rally...
Rumors began circulating that the U.S. Securities and Exchange Commission ("SEC") may be on the verge of approving the first spot-price bitcoin exchange-traded fund ("ETF"). The agency chose not to challenge the overturning of its block of the Grayscale Bitcoin Trust.
That sent bitcoin's price up more than $1,000 in less than an hour.
On Friday, it hit $30,000 for the first time in four months. But then it was confirmed that the rumor was just that. The rally lost its legs and bitcoin pulled back again.
The rumor got investors thinking, though...
A spot-bitcoin ETF approval is likely in the near future. That will increase demand for the crypto and result in higher prices.
To make investors even more jittery, JPMorgan Chase (JPM) recently said that it believes an ETF will be approved by the SEC by January 10, 2024. That's less than three months away.
But JPMorgan isn't the only investment firm betting on bitcoin. Morgan Stanley (MS) has said that the crypto winter is over. In fact, it believes the upcoming bitcoin halving will help fuel a new bitcoin bull market.
The bitcoin halving – or halvening – occurs roughly every four years and cuts the reward for mining the crypto in half. When that happens, the supply of bitcoin will lessen. And if a bitcoin ETF is approved around the same time, demand for the coin will rise.
The next halving is currently expected in mid-April 2024. And according to Morgan Stanely, the majority of the gains attributed to previous halvings came after one took place. That would set the coin up for a late-2024 into early 2025 rally.
In the meantime, I like what we've been seeing in bitcoin's price action recently...
The crypto is back above $30,000. As you can see in the chart below, the $30,500 to $31,500 range has been an area of tough resistance over the past year.
If bitcoin can rally above that level and hold for a few days, it would represent a major breakout. And from there, the chart would open up for a run toward the $40,000 level that Barron's mentioned this morning.
I think that's a bit conservative. I'd go so far as to say that bitcoin will be back above $50,000 and testing new all-time highs by the middle of next year.
But of course, nothing goes straight up in the stock market. And cryptos are notoriously volatile. So buckle up for the ride.
Headline No. 2:
Chevron (CVX) will buy Hess (HES) for $53 billion.
McCall's Call: Deals are flying in the energy sector...
A few weeks ago, oil and gas giant ExxonMobil (XOM) agreed to buy rival energy producer Pioneer Natural Resources (PXD) in a massive $60 billion deal. This all-stock acquisition is expected to close in the first half of 2024. And it will mark one of the biggest consolidations in the energy sector in years.
The buyout will bolster Exxon's position in the Permian Basin – located in West Texas. This oil-rich region has consistently been one of the top oil-producing areas in the United States.
The firm expects its oil production there will more than double to 1.3 million barrels of oil equivalent – a metric that combines oil, natural gas, and natural gas liquid production into a single figure – per day after the deal is done.
Exxon is already the largest U.S. oil and gas firm. And this acquisition means it's only going to get bigger.
So naturally, Exxon's closest competitor is looking for ways to do the same...
This morning, Chevron announced that it will purchase Hess (HES) for $53 billion. Chevron will use its stock to buy Hess at $171 per share. The goal is to get this deal done so it can add an emerging – and massive – asset to its books.
Just a few years ago, there was almost no oil production in the small South American country of Guyana. But thanks to a massive offshore oil discovery by Exxon and Hess, the region has become one of the hottest new players in the world.
Today, the country's production has jumped up to about 400,000 barrels of oil per day.
Chevron knows this. And by buying Hess, it instantly increases its exposure to this promising new oil and gas field. The acquisition will add 30% ownership of more than 11 billion barrels of oil and gas reserves equivalent.
That's a staggering amount of oil and gas. And Chevron will be able to produce energy from this field for years to come.
The mergers and acquisitions activity in the energy sector is important for several reasons...
For starters, the sheer size of these two deals is staggering. These leading energy firms were willing to drop $113 billion to add oil and gas assets to their balance sheets. And they simply wouldn't have done that if they expected oil prices to fall significantly or oil demand to fall off a cliff anytime soon.
That makes this a big statement from the oil and gas industry.
The shift toward cleaner, renewable sources of power has begun – and it's a near certainty they'll fulfill more of our energy needs in the future.
But "dirty" sources of energy like oil and gas are going to be around much longer than most folks expect. So don't count these stocks out when building your energy-related portfolios.
The world needs both sources of energy in the future. These deals are just more proof.
Here's to the future,
Matt McCall
Editor, Daily Insight
October 23, 2023
Did You Miss My Latest Podcast?
Last Wednesday marked the end of this year's Stansberry Conference & Alliance Meeting. I had a blast, and I thank all the subscribers who came out. But just because the conference has ended doesn't mean the discussions have stopped. On this episode of Making Money With Matt McCall, Marko Papic joins the show to talk about what's going on in the world and give us his big-picture view on the market.
Marko and I begin by discussing the geopolitical conflict between Israel and Hamas. Marko discussed what it means from a macro-investing standpoint. Then, we set our sights domestically to talk about the upcoming U.S. elections. Marko explains that this election is the most important noneconomic event that should be on every investor's radar. Tune in to find out how all of this could affect your portfolio.
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