The fed is tightening its yields and scaring large institutional investors who are the kings of panic sellers and buyers.
A crash yet again, we have seen 4 large crashes in the crypto market in 2021 alone. This is no surprise to us, but there is something bigger at play here. The fed announced it would be pulling back on treasury yields, announcing a mere 1.75% rate for 10-year purchases. Rather than reacting in a rational manner (which large investors never do) the market began panic selling dumping the sp500 by 7%. Now 7% for stocks in a single day is a massive number, crypto suffered over 20%.
Since Bitcoin is viewed as an inflation hedge, I find this sell of rather interesting. Large investors are going to be begging for a place to stack some of their large cash reserves. Bitcoin should have been a likely answer, but it has sold off alongside the larger equity market. My view is that the sell off will continue for a while, we may even see a covid type complete washout crash of epic proportions. I also believe that big investors will have that lightbulb moment and realize that BTC is a possible answer for these market conditions. I do not anticipate BTC staying bearish for the year. We thought 38k would be the lowest but that is not in the cards today. BTC further flash crashed to below 35k briefly.
Bitcoin Logarithmic Chart
I am not a mathematician. However, the log charts can be helpful for smoothing out the edges and reducing some of the drastic visuals when looking at any market history. The chart also shows a general uptrend similar to the growth of the sp500. As the color goes from warm to cold, you capture a more drastic discount on the macro scale. This dip doesn’t seem so bad when you look at it from this perspective. Keep in mind, those who are overexposed to alt coins and medium to micro caps will feel the most pain. I am a prime example of this as I do not hold much BTC I hold mostly Ethereum as my risk hedge. However, the majority of my portfolio is in altcoins that we have discussed over the months, I am feeling the pain too for sure!
During the corona crash I was mostly invested in stocks, with my crypto exposure being tied up in grayscale funds. I held those stocks through the entire dip and added more and more over the months. The market rebounded with epic proportions, anyone who bought that year was in profit, especially those who had to conviction to buy during the extreme crash we witnessed.
Hidden Bullish News
Behind all the fear, uncertainty, and doubt is a majorly bullish picture. Walmart, Instagram, Facebook, Adidas, Nike and Puma are jumping into NFTs. Banks are considering adding Bitcoin collateral for purchasing real estate. Large crypto investors are buying thousands of Bitcoins over the counter. None of this is spoken about in the mainstream media, however it is news that we must account for! Billionaire investor Bill Miller announced he swapped 50% of his assets into Bitcoin recently. Shark Tank’s Kevin O’leary is buying more and more crypto companies. Tesla has only sold 10% of their Bitcoin they bought last January. Everyone can make their own decision, but I will continue to dollar-cost-average deep into this dip. We are still up 300% since the summer, we are only up that much because we bought the major dips in June-July-August. We will do the same now, if everything plays out similarly that 300% just might be 900-1000% by end of year. Please remember to stay safe out there, do your own research, we my two cents on the market today. Have a great weekend!