Month: November 2022

Turning to the charts…

No it’s not going to be pleasant, we can see that BTC is bleeding hard and that’s because it finally broke a massive bear flag that had been forming on the monthly.

Previous zones of support and resistance suggest we could drop to 14K or 15K in the coming weeks before falling to the final destination 10K to 12K so buckle up.

Last week’s top performing cryptos were Trust Wallets (TWT) token, Pax Gold, GMX, Dex’s GMX token, Gemini’s GUSD stablecoin and Fey protocol’s Fey USD stablecoin.

Starting with Trust Wallet it’s TWT token seems to have pumped because of the sudden shift towards self-custody in the crypto community caused of course by all the FTX Alameda situation.

On-chain data confirms that large amounts of BTC and ETH have left exchanges over the last week.

Now I must admit that I don’t really trust the TWT tokens price action because it’s been up only since the start of 2020.

Almost all its trading volume is happening on Binance which makes sense since the exchange bought the wallet and made it its native wallet.

So I’d be careful with this one.

Next up we have Pax Gold or PAXG which is a gold back token issued by Paxos the same company that issues Binance’s BUSD stablecoin.

As expected Pax cheese rally is due to a rally in the price of gold plus a bit of extra volatility from crypto holders fleeing to safety in times of crypto market chaos.

Because I’m not all that familiar with the gold market it would be unwise for me to do any kind of analysis on the price of PAXG, all I will say is that gold tends to rally during times of general economic stress and you’ll recall that we are on the brink of a global recession.

Then there’s the Gmxdex’s GMX token which is probably rallying because crypto holders have switched from using centralized exchanges to decentralized exchanges as a result of last week’s events.

To clarify GMX is a decentralized exchange on arbitrim one of Ethereum’s many layer twos.

Funnily enough gmx’s limited price history again makes it hard to assess where the token will go next.

The longer term charts suggest it is in a slow but steady uptrend, note that this could change on a dime if DeFy related regulations are introduced in the United States and this is a very real possibility.

The same applies to stable coins and this is one of the reasons I’ve been watching them very closely.

Lately the slight increase in the price of Gemini’s GUSD stablecoin seems to be because of the billions of dollars that are being rotated out of Tether’s USDT and into other stable coins namely Circle’s USDC.

And finally we have Fey protocol’s Faye USD stablecoin which is a decentralized stable coin.

I must say that it’s done a good job of maintaining its Peg so far.

This could change as the bear market gets worse but I reckon there’s a bullish case to be made for the decentralized stable coins that survive the purge.

One thing’s for sure and that’s that centralized stable coins will come out the other side of the bear market more powerful than ever.

Although it may not seem like it, most asset classes are currently in a bear market. Keep reading to learn eight key things about bear markets so as to improve your trading strategy.

The stock market usually experiences a bear market about once every three to five years. A bear market is when the prices of stocks drop by 20% or more from their peak, and it typically lasts for several months. Even though we’re in a bear market right now, there are still eight important things to remember.

Bear markets are a crucial component of the market cycle. If we look at history, stock market winters occur every 5 years on average. Similarly, it appears that crypto winters also follow this pattern–with bear markets appearing after around 3.5 years have passed.

Bear markets aren’t fun, but they do give assets the time needed to recover and prepare for the next bull market.

While the stock market generally corrects by 36%, Bitcoin goes as low as 86%.

In the current bear market, someassets have fallen by more than the index. For example, Microsoft is down around 40%.

Another key distinction between stock and crypto winters is the length of bear markets. In general, bear markets in the stock market are shorter than bull markets (usually lasting around 10 months whereas bull markets last an average of 32 months). This indicates a time of prolonged growth followed by a sudden drop.

Bear markets in crypto last about as long as bull markets, at 19 to 26 months each. However, crypto winters begin sharply but take more time to settle at the lows before starting a new run.

It’s hard to predict a bear market before it happens, even though there are always signs. Most people don’t manage to see the crash coming until it’s too late.

We believe that it is more beneficial to keep milking the cow until it stops producing than to worrying about it constantly. You should use your energy to make profits when the market is doing well and create a risk management system for when the market crashes.

Down to the nitty-gritty!

Time is one of the most critical factors in investing, whether you’re putting your money into stocks or cryptocurrency. It might seem like things are going bad if a bear marketdrags your portfolio down, but if you zoom out and look at a larger time frame, you’ll probably see it start to turn around. In fact, historical data shows that even though the S&P 500 has had negative returns in one out of every three quarters over the last 20 years, holding onto investments for 10 years has resulted in positive returns 94% of the time!

If you’re holding Bitcoin with a long-term outlook, you’re more likely to see an increase in value (as shown in the graph below). Buying Bitcoin within the last year may have resulted in a loss, but if history repeats itself, you could be back in the green at some point soon.

As anyone will tell you, it’s tough to forecast a bear market. It’s similarly hard to understand when the market reaches its lowest point. Usually, the bottom happens when people think conditions will continue deteriorating.

When the market plummets, a lot of people sell their assets at a loss. “Crypto is dead” or “the stock market has finally burst” will become too common. But if we look at it from another perspective, investing during these times might not be such a bad idea after all.

This is the first time that both crypto and stock markets have entered a bear market simultaneously. However, as you can see from the chart below, the 2016-2017 crypto bull run started when the stock market was already in a bearish phase.

Although in the past crypto and the stock market have seldom moved together, recently they have become more correlated than ever. Only time will tell how long this trend will continue.

After a long period of decline in the cryptocurrency market, many altcoins are abandoned. This was especially apparent during the previous bull market, where coins that failed to hit new highs became less popular as newer projects gained more attention. This happens because investors tend to flock towards digital currencies with more innovative features and potential for growth.

When acurrency or “crypto” bull run occurs, it usually happens because of the strength of the story or narrative behind that currency. Older coins don’t have as strong of narratives as newer coins do at this point in time, but that is changed expected to change over time. The industry will become more sophisticated and nuanced, which will be evident by Ethereum’s recent performance in light of its launch date in 2015. It was one fo the top performers duringthe most recent market growth spurt..

To end on a high note, if you manage to stick around during a bear market, generally you are rewarded with profit. As we stated earlier, time is of the essence. If you can be patient enough to get through the tough times without giving up, the next bull run will probably bring success your way.

Be persistent, invest in what shows potential, and be patient for the next market boom!