Why bitcoin could move higher, plus US and India reach a trade deal, government shutdown latest

Key Concepts:

• Strong market rally driven by industrials, transports, and chip stocks.
• Bitcoin in a bear market but poised for institutional adoption and significant long-term growth.
• A robust economic outlook supported by monetary and fiscal tailwinds, with earnings driving market returns.
• Geopolitical developments including a US-India trade deal and ongoing government shutdown.
• Predictable market seasonality patterns for S&P 500 returns and VIX volatility.
• The transformative impact of AI on the tech industry, driving demand for chips and infrastructure, and influencing corporate strategies.
• Disney's strategic pivot towards its experiences division and cautious embrace of AI amidst CEO succession.

Market Performance Overview

The market commenced February with a robust rally. The Dow Jones Transports index achieved a record high, propelled by "outsized movement" in airlines such (United, Southwest, Delta, all up over 4%) and shipping giants (UPS and FedEx, up over 3%). The Dow Industrials climbed 529 points (1%), the NASDAQ Composite gained 0.6%, and the S&P 500 rose 0.6%. The small-cap Russell 2000 outperformed, increasing 1.5%. In the bond market, the 10-year T-note yield increased 3 basis points to 4.28%, and the 30-year yield rose 4 basis points to 4.91%, nearing the 5% mark, which has historically "spelled trouble for talk stocks," though not on this day. The dollar index was up 2/3 of 1%. Bitcoin saw a 24-hour gain, hitting $74,000 and change, despite being down 6% since Friday.

Among S&P 500 large-cap sectors, Industrials led with a 1.13% gain, reaching a record high, while Staples were up 1% and poised for their first record closing high of 2026. Financials and Tech also saw gains over 1%. Energy was the worst performer, down 1.5%, with Utilities, Real Estate, and Communication Services also in the red. The NASDAQ 100 demonstrated significant strength in chip stocks, including SanDisk (+13%), Western Digital (WDC) (+8%), and Intel, which was "roaring back" after a recent "big wipe out." Apple was up 3.5% and Walmart 3%. Software stocks, however, were largely down, with exceptions like SAP (+2%), Cisco (+3%), and IBM (+3%), attributed to Red Hat. Transportation ETFs (IYT), Regionals, Biotech, Micro caps, and the SOX (semiconductor index) all showed strong performance, up more than 2%.

Bitcoin: Bear Market, Catalysts, and Outlook

Ryan Rasmmanson, Head of Research at Bitwise, discussed Bitcoin's current struggles, noting it touched a 10-month low and is down approximately 40% from its October record high of $126,000. He attributed this to gold and other commodities taking the spotlight, and Bitcoin being in a "bear market" for "many months, probably more closer to a year," with sentiment "at an all-time low," particularly among retail investors.

However, he identified several major catalysts for Bitcoin over the next 6-12 months: the emergence from the bear market and "Institutional Adoption," which is a "major catalyst" that is "multi-year and long-term oriented." Bitwise observes "major wirehouses, RIAs, and family offices" beginning to seriously consider Bitcoin and crypto allocations. Bitwise projects Bitcoin to hit new all-time highs in 2026, breaking the historical "four-year cycle," and a long-term view of $1 million over the next decade, primarily driven by institutional adoption.

Regarding the potential nomination of Kevin Worsh as Fed chair, Rasmmanson noted Worsh is "pro Bitcoin" and understands its place in portfolios as "breakthrough technology." However, Worsh's hawkish stance on inflation and money supply growth creates a "tug-of-war" dynamic. Rasmmanson believes interest rate cuts (around 50 basis points) will still occur this year, and Worsh might be "a bit more dovish than most people are expecting."

Spot Bitcoin ETF flows, while historically "remarkable" and "the most successful ETF launches of all time" (tens of billions in flows), have slowed due to the bear market and the collapse of the "basis trade" used by hedge funds. However, Rasmmanson expects flows to "turn a corner" as major wirehouses like Morgan Stanley, UBS, Merrill Lynch, and Vanguard onboard Bitcoin ETFs for their clients, representing a "huge catalyst" for long-term demand. Corporate purchases, exemplified by MicroStrategy buying "tens of thousands worth of Bitcoin" this year, are also reaccelerating.

Comparing Bitcoin to gold, Rasmmanson acknowledged gold's "historic run" as a "fun party," driven initially by central banks increasing gold allocations since 2022-2023 for "self-custody of assets" and reduced reliance on other governments, now evolving into a "momentum trade." He highlighted gold's fundamental thesis as a store of value against "fiat debasement," "spiraling debt," and "irresponsible monetary and fiscal policy," noting these "same topics" have driven Bitcoin's narrative for over a decade. He believes these themes will eventually lead investors to view Bitcoin as a "digital store of value," much like gold is a "physical store of value."

Economic Outlook and Market Strength

Jeff Schulsey, Head of Economic and Market Strategy at ClearBridge Investments, addressed concerns about the market "partying like it's 1999." While acknowledging surface-level similarities like high valuations and an infatuation with growth stocks, he emphasized key differences: the economy benefits from "twin tailwinds of monetary and fiscal support" this year, a rare combination outside of recessions; wage growth continues to moderate, which is "good from a macroeconomic perspective" and a "key reason why the Fed has cut over the course of the last year and will likely continue to cut"; and the "AI capex story still continues to be alive and well." He expects GDP to exceed consensus expectations.

Crucially, he noted that over 82% of the S&P 500's 16% return last year was driven by "earnings delivery," with less than 20% from "multiple expansion," a "stark difference" from the late 1990s. This year's "playbook" will see earnings continue to do the "heavy lifting."

Regarding fiscal stimulus, Schulsey stated the Congressional Budget Office expects a 0.9% boost to GDP from a "big beautiful bill," with half going to US consumers via higher tax refunds for low and middle-income individuals, and the other half to businesses through tax incentives. This will create a "much more uniform spending picture" and a "robust economy" and "robust earnings."

For monetary stimulus, his base case is two Fed cuts this year, likely after a new Fed chair is appointed "towards the middle part of the year." He anticipates "much weaker inflation than what's anticipated," driven by a "jobless recovery" similar to 2001 (60-70k job creation per month), moderating shelter inflation, and moderating goods inflation as "peak tariffs" are passed, alongside productivity gains from AI.

Schulsey dismissed "AI bubble" talk, citing investors' consistent underestimation of AI capex (e.g., hyperscalers' 2025 capex expectations were 50% lower than actual delivery). He highlighted that current AI capex is largely driven by "free cash flow generation" rather than debt or equity, a key difference from the late 1990s, suggesting problems are "years away." He maintains a constructive outlook, advocating for "buying dips" in what he expects to be a "choppy year," predicting another "double-digit year of returns" if earnings meet the 15% consensus.

Geopolitical and Domestic Policy Updates

Yahoo Finance's Ben Workllo reported on a US-India trade deal announced by President Trump and Prime Minister Narendra Modi. The "big headline" is reciprocal tariffs: US tariffs on Indian goods will drop from 25% to 18%, and Trump's 25% tariffs on India's purchases of Russian oil will be "scrapped entirely." India's commitments, though "pretty sparse," include stopping Russian oil purchases, US investments, and lowering trade barriers, though Modi "notably did not confirm the Russian oil purchase pitch." This deal is a "major stepdown" in tariffs, aiming for a "partnership."

On the government shutdown, now three days in, labor market data (BLS) will be delayed starting Friday. While the Senate passed a funding bill 71-29, showing "widespread bipartisan support," the House faces "procedural roadblocks." The House Rules Committee is expected to set terms for a vote, but lawmakers may try to attach amendments. Workllo expects the shutdown to last "a couple days more, one or two," before an agreement is reached, avoiding "longer economic effects."

Regarding Kevin Worsh's potential Senate confirmation as Fed chair, Trump's assertion of "no trouble" was countered by Workllo, who predicted a "bumpy ride" due to Senator Tom Tillis (NC). Tillis is blocking any Fed nominees over "Federal Reserve independence," specifically a "criminal investigation" against current chair Jerome Powell. Tillis, a retiring senator, holds significant power on the Senate Banking Committee (13-11 split), where his "no" vote would create a 12-12 tie, blocking the nomination. A resolution would likely involve "some sort of deal worked out" or a "ramp down of the investigation against Jerome Powell" to satisfy Tillis, with Powell's term ending in May as a key timeline.

Market Seasonality and Volatility

Jared Blicker presented "Stocks in Translation," explaining market seasonality as "recurring calendar patterns" in returns, serving as a guide for "headwinds and tailwinds" rather than a "definite prediction" or "timing tool." Analyzing S&P 500 median returns since 1990, no month skews negative. January typically sees a 1.7% gain (1.4% this year), and February 0.8%, both with a 58% "win percentage" (closing green). March, April, and May typically gain over 1%, with April and May having win percentages over 70%. Summer and early fall months show small gains, except for July (+1.8%). The year typically ends bullishly from October through December. A longer historical view (since 1928, matching day of week) shows a trend up into late April, a dip into May, a rally into early August, another dip into late September, and a "big rally" into early December, then sideways to up into year-end.

VIX seasonality (since 1990) shows volatility starting the year around 19 (currently 15, lower than historical average), trending up into mid-March, dipping over summer, then rising to its "largest readings of the year" in October and November, which is "prime time cash crash season." Despite this, median S&P 500 returns are good in these months, but "outliers are pretty big." Volatility then reduces into year-end, concurrent with the "big year-end rally."

The AI Landscape: Tech Earnings and Strategic Investments

Dan How, Yahoo Finance Tech Editor, previewed AMD's Q4 earnings as a "big indicator for the AI trade." Expectations are for EPS of $1.32 on $9.6 billion revenue (up from $1.09 and $7.7 billion last year). Data Center revenue is projected at $4.97 billion (+29%), Client at $2.9 billion, and Gaming at $800 million. CEO Lisa Su is expected to discuss new chips like the Helios platform and new PC chips. How highlighted a persistent "memory shortage" impacting the PC industry, affecting not just HBM (RAM) but also long-term data storage due to the AI buildout. This could lead to price increases for PCs and other consumer devices, potentially causing "demand destruction" and impacting AMD and Intel's client segments. He noted that building new factories "overnight" is not feasible. AMD's upcoming GPUs include a new next-gen system (MI500) announced at CES, claiming "a thousand times better performance" than its MI300 predecessor. AMD also introduced "Helios," a rack-scale system with 72 GPUs, which CEO Lisa Su called "the best AI server in the world," a direct "swipe at Nvidia."

Austin Lyons, Senior Analyst at Creative Strategies, discussed the reported "on ice" $100 billion Nvidia-OpenAI deal. The original September announcement involved Nvidia investing as OpenAI stood up gigawatts of data centers, raising "circular financing" concerns. Subsequent OpenAI deals with AMD (including warrants) and Broadcom (custom chip) suggested OpenAI was "hedging its bet." Lyons suggested Nvidia might be shifting to a "direct equity investment" in OpenAI, which has "less of the concerns around the circular financing." Nvidia CEO Jensen Huang's strategy to invest in AI model companies like OpenAI and Anthropic is driven by his vision of AI transforming every industry through accelerated compute. As an infrastructure platform, Nvidia is incentivized to help partners "bring that future to bear as quickly as possible." While OpenAI is a "very big customer" for Nvidia (Microsoft buys Nvidia GPUs to serve OpenAI's models), Lyons noted Nvidia's diversification, with other model makers like Anthropic, Google, open-source options, and XAI. A stumble by OpenAI would "obviously impact demand for compute across the industry," but Nvidia "doesn't have all its eggs in the OpenAI basket," though "quite a pile of eggs" are there.

OpenAI's reported annualized revenue surpassed $20 billion in 2025 (up from $6 billion in 2024), with a projection of $100 billion by 2028. Lyons found the current figures credible, and while the $100 billion projection is "hard to say," he doesn't doubt "a ton of AI consumption" by 2028, especially with new form factors and the "year of the agents." OpenAI is also working on an advertising system, a potential revenue driver. Both OpenAI and Anthropic are considering going public, possibly by late 2026, which would reveal more financial details. Oracle's plan to raise $50 billion for its AI infrastructure buildout signals "very high" demand and "limited" supply in the "early days" of the AI capex cycle. Oracle, as the "first really big person to go raise debt" to become a hyperscaler, believes the risk is "worth it" and the "pie is expanding."

Disney's Strategic Pivot and Leadership Transition

Disney's board is expected to vote on CEO Bob Iger's successor this week, with candidates narrowed to Dana Walden (co-chair, Disney Entertainment) and Josh D'Amaro (chairman, Disney Experiences). Bloomberg reports D'Amaro is the likely choice. D'Amaro, who joined Disney in 1998, oversees global theme parks, resorts, cruise line, consumer products, and Imagineering. He led Disney Experiences through the pandemic, making it the company's "primary profit driver," accounting for a majority of operating income and outpacing media, streaming, and sports.

Despite beating Q1 earnings estimates, Disney shares were "under pressure" due to a "tepid" outlook. Chris Morangi, Co-CIO of Value at Gabelli Fan Funds, was "a little surprised" by the share drop, noting that while operating income was down 9% and adjusted EPS down 7%, these are "pretty good numbers" given the company's transition from "traditional linear distribution to direct to consumer (DTC)." He believes the company is "far along" in this transition, successfully experimenting with bundles. Morangi suggested D'Amaro's potential appointment reflects Disney as an "experiences company," with "more than two-thirds of earnings and probably three-quarters of the value" in that business. He expressed confidence in the succession process, hoping Iger will "get it right this time" in stepping back.

On the future of filmed entertainment, Morangi acknowledged AI will "change this business in ways that we probably can't even predict today." Disney's approach is to "embrace AI," having signed a deal with OpenAI for Sora, an AI video generation model that allows users to upload content. The company's strategy remains producing "great content, great IP" (Intellectual Property), exemplified by Zootopia 2 achieving the highest grossing animation status and significant popularity in China. The value of this IP has been "underscored by the battle that we've seen for Warner Brothers Discovery."

Despite Disney shares going "virtually nowhere in almost four years" (and stagnating over five years), Morangi argued its chart "looks better than a lot of other media companies" facing "secularly challenged" (long-term fundamental decline) linear media. He believes the "value of experiences is not going to go down" and will be "even more valuable as we go to this world dominated by AI," suggesting a strategic shift towards tangible, real-world entertainment as a counterpoint to digitally generated content. The question of whether Disney represents a "value trap" (a stock that appears cheap but lacks growth potential) was raised, but the company's management of broader secular challenges was noted as relatively good. Bob Iger's leadership since 2005 occurred during massive industry upheaval, including the emergence of YouTube as "arguably the biggest media company in the world," yet Disney's historical strengths in premium linear cable (ESPN) and its studio system are largely maintained.

Conclusion

The YouTube video paints a picture of a dynamic market at the start of February, characterized by a broad rally, particularly in industrials and tech, despite underlying concerns like bond yields nearing critical levels. While Bitcoin navigates a bear market, significant institutional adoption and long-term growth are anticipated, mirroring gold's role as a store of value against economic instability. The broader economic outlook remains robust, driven by strong earnings and supportive fiscal and monetary policies, with AI capex fueling growth without immediate "bubble" concerns. Geopolitical events and domestic policy challenges, such as the US-India trade deal and a looming government shutdown, add layers of complexity. Meanwhile, the tech sector is deeply engaged in the AI revolution, with companies like AMD, Nvidia, and Oracle making strategic moves to capitalize on the immense demand for AI infrastructure and chips, even as memory shortages pose challenges. Finally, Disney is strategically pivoting towards its experiences division and cautiously embracing AI, signaling a future where tangible entertainment may become even more valuable in an increasingly AI-dominated world, as it navigates CEO succession and the evolving media landscape.