Welcome back to the Tribe! In this post we decide to look to the bear market side of the crypto industry!
Nothing should be considered investment or financial advice. Enjoy the ride!
Crypto All Time Highs
It should be quite obvious with digital assets hitting new all times highs every week that we are currently in the full swing of crypto’s first super cycle!
Bitcoin is soaring above $60,000 per coin, and Ethereum is pushing over $4,000 once again making previous highs seem like last year’s news.
A huge part of this is the amount of retail investors flooding the market pumping everything even altcoins like Doge and Shiba to insane all time highs pushing some of the top projects in the market aside.
Although, this clearly does not show market maturity, nor does it pose well for the upcoming 6-12 months for the market.
Crypto Bear Market
In fact, if you have been around for the past few years in crypto, or even since 2016, you might already be familiar with the crypto bear markets. Or at least be familiar with how they start.
Luckily, here at the Tribe we have experienced a few bear markets since our introduction to crypto in 2014.
Some bear markets will be worse than others, but the most important thing to consider for this one in particular is that the entire world is currently in a bubble.
While the previous bull markets and bear markets were almost completely uncorrelated with the traditional market, this one might not be.
Why will this one be different?
These next sets of bull and bear markets will be different because of the amount of exposure that crypto has reached. For example, the all time highs are not only partial to the crypto market, but also to the traditional market with stocks like Apple and Google soring into the trillions.
The traditional market is currently in a huge bubble with companies and nations around the world piling onto their debt bill.
Another example of this is recently in October 2021, Elon Musk made over 30 billion dollars in a single day due to stock price movements and trade deals. Clearly, this is unprecedent and hints to extreme inflation along with an underlying market bubble.
While most investors might think that the continued market growth in crypto is a huge bull sign for it, what it also does is correlate it more and more to the traditional market and world economy.
Due to all of this, the upcoming bear market will be extremely different from the previous ones.
New Bear Market
The best advice my grandfather ever gave me was:
Always be prepared for the worst. In general, plan for things to take at least 7 years to recover.
That is what we are going to mainly discuss.
With crypto becoming more and more correlated with the traditional market, it seems that this most recent super cycle is clinging onto the markets recent surge in cash flow and the never ending rise of the figurative debt ceiling for most people around the world.
This would make sense since everything is trending upward. Very few things these days are not, so why wouldn’t crypto as well? We can see these “ridiculous” signs all over the market with the amount of capital entering things like:
- Coins like Shiba and Doge (clear troll coins)
- NFTs costing 10s of millions (with almost 0 utility)
- Funding for new projects surging (ICOs are back and there are more venture capitalists in the market than ever)
All of these things are strong indications of the market nearing the top.
Then what are the next steps?
Well, honestly people need to start hedging against almost everything. When the world market collapses, crypto will sadly probably go with it this time.
While there might have been a hypothesis that crypto would not become correlated with the traditional market, it will not be true. Once the traditional market dips, crypto will ultimately follow due to countries and companies being forced to liquidate assets to meet debt payments. This includes individuals that are currently leveraging insane amounts of debt on average.
The thing to remember is that with the bear market, comes opportunity. Most importantly, the bear market is the BEST time to invest. It is not wise to invest now since prices are inflated and everyone is looking to buy.
Those that are patient will benefit the most in the next 5-7 years.
All Time Highs
Thanks for reading our post on crypto all time highs! There are clear indications to the market currently reaching a peak with its market cap scratching at 3 trillion.
Only time will tell, but long-term we are bullish on the market. Short term, it might be due for a retracement.