Right now, the Crypto market feels like it’s in freefall. Is it the end of the world for crypto or just regular market fluctuations? Well, your answer may be influenced by social media or the TV. Some say Crypto is “dead” while others say, “this is the time to buy”. But what will your decision be? Here’s what could happen and what may be happening.
What is Happening?
The market, both crypto and stock, are all over the map. They are moving like water being churned by a storm. Perhaps it is a storm throwing the crypto market off course. That would make logical sense, wouldn’t it? I mean, we see several crypto companies and blockchain techs making huge moves but no real price changes. What’s up with that? $Matic, AKA Polygon, has announced partnerships with Meta, Instagram, and Starbucks but they have not seen a catapult in prices. The same goes with $Cro and $Shib. Each respective token has made substantial ground in the positive direction but no real positive gains in prices. When FTX announced yesterday that it had over 6 BILLION in debt and paused withdrawals, it set off a bomb on the market. People panicked trying to get their money out, Bitcoin and Ethereum jumped off price cliffs. It felt like the sky was falling. Many investors are torn between thinking the bear market is drawing to a close and there is more pain ahead. Are we in for a hard landing?
Hard Landing Incoming?
Given global issues such as the war in Ukraine, supply chain snags and general discourse, it feels like a hard landing is inevitable. From the U.S perspective, the stock market has definitely seen better days and the mid-term elections have not boosted the market. The crypto market is flailing just as bad as the stock market but it is still performing better, believe it or not. Below is the crash in 2015 for Bitcoin
Bitcoin Bear Market Signals Courtesy @rovercrc
The graph on the right shows where we are as of today with Bitcoin. It is possible to slide a little further before it is all said and done. However, it does look promising to say that the end is in sight. If the FTX situation deteriorates further, anticipate a harder landing than forecasted. Although, if your optimistic, you could read this graphic and see that the end is near! If that is the case, then a soft landing is in store.
Soft Landing?
Could there be a soft landing for the crypto market? If we analyze the previous “collapse” of crypto, the answer is yes. Take a look at the graphic below:
Crypto vs Stock Courtesy @CryptoCapo_
The top trendlines are for the crypto market while the bottom is the stock market. When the last crash happened, crypto bottomed and rebounded faster than our stock market did. It also saw higher lows and set much higher highs. What does this all mean for crypto and investors? That cryptocurrency appears to be a much smarter investment than the stock market for ROI. Could this trend change? Absolutely. Nothing is certain. However, markets tend to follow cycles and this may be the 2008 market all over again, which took 1 to 2 years to recover from. With that in mind, it is possible to say if the current market conditions do not deteriorate further, the crypto market could get a soft landing.
Bringing it Home
While there certainly could be other variables to influence the market, it appears the heaviest hitters are behind us. At least for now. Will there be a further slide? Most likely. Given tax season is just around the corner. But it would be a cautiously optimistic take to think that it will begin to draw the bottom. I personally am an eternal optimist so I think it is likely the bottom will be in the Spring of 2023. Could I be wrong? Absolutely. Take this broad analysis with a grain of salt and remember you are the only one responsible for your investments.
