There’s no beating around the bush here, so let’s get right to it: the crypto markets are getting whacked.
As if the Terra/Luna crash wasn’t enough, the selling cascade continued this week with the probable implosion of Celsius (covered more in detail below). Today, we were also met with news that the Fed has lifted interest rates by .75 points, the largest increase since 1994, pushing crypto businesses and investors further into uncharted territory.
Making matters worse, at least at this point in time, it’s increasingly becoming more obvious that gold is kicking bitcoin’s a** as both a store of value and as a hedge against inflation – two narratives that millions of investors, even guys like Paul Tudor Jones, have relied upon in recent months.
To sum it up, in conjunction with the greater economy and rising inflation, it’s not looking pretty right now – not one bit. And that’s just us being brutally honest.
All the gains bitcoin and Ethereum made in the 2020-2021 bull run are officially gone. Bitcoin, which has dropped more than 24% in the last week, is trading at $22,400 at the time of writing. That’s the same level it was at in mid-December 2020. Ethereum, on the other hand, which has slipped 31% in the last week, has fallen to $1,200. Last time it was at that level was January 2021. Even more jarring, earlier this week, Ethereum slipped below its all-time high during the rally of early 2018.
The latest market downfall, as you can imagine, isn’t only affecting ordinary investors like us either…
- Crypto firms like Coinbase and BlockFi are slashing jobs left and right, laying off ~20% of their staff
- On-chain data has prompted speculation that Three Arrows Capital, a crypto-focused, Singapore-based hedge fund, is insolvent and may become the latest high-flying company to crash in the bear market
- Tron’s USDD – another algorithmic stablecoin we warned people about weeks ago – has dipped below 96 cents, entering it’s fourth day trading below $1
- And then there’s MicroStrategy (MSTR), which is now faced with a possible margin call that investors fear could force the company to liquidate its bitcoin holdings
It happens in every bear market – total capitulation.
All things considered, hold on to your hats… because things might get worse not only in crypto, but in traditional markets as well. Stay away from leverage. Diversify away from second-tier altcoins if you haven’t already. Adopt a go-slow, buy-and-hold approach, and only add to your positions on big down days.
Regardless, through the thick and thin, we’ll still be here delivering insights on the market every week. Prices aside, bear markets are for building. And that’s really when things get interesting.