How Deep Can We Plunge?
Peoples are asking:
How deep can we plunge with crypto markets?
We have never been in such dare macro state since BTC go live. So, to answer this question I take the NASDAQ 100 Futures log graph for 2000–2002 period (when tech stocks plummeted but, still, macros were not looking so bad as now) and chart on its the classical Elliot 5-waves structure. After that I superimpose on that new graph the 2022–24 scale.
Here is the two pic I’ve got:
2000–2002 NASDAQ 100 went from ~5200 to ~780 (85% downfall).
The projection for 2022–2024 gives us ~ 1500 as a bottom (88% reduction from current levels and 94% from the 2021 top).
Of course, this ‘analysis method’ I use is very rough. Still, BTC neatly follows NASDAQ. So I might take 88% (or 8,280 USD) of the top (~69,000 USD) reached by BTC during 2021 bull run as an approximation of expected bear market bottom in 2024.
On a bright side, history never repeats itself. Lets hope that it will not rhyme as well.
[ Also, note, that most analytics expect NASDAQ to bottom much earlier at mid/end Summer at ~7000 (3000 S&P).
Mine optimistic forecast was formulated back in March 2022:
I am still assigning the~60% probability to this optimistic projection.
However, macros have been only getting worse since March. So, now, I have to take that into consideration too.]
The follow up question, which I have already received from readers of this publication is:
Are we going to repeat the 1929 —1932 market crash which started the Great Depression?
During October 1929 — July 1932 depression period DJIA crashed 90% from its October 24 levels. That is not too far from what I’m projecting for NASDAQ in my forecast. Also, it had already happened to NSADAQ in 2000–2002 (85% down in 2 years). So, repeating 1929–1932 market crash is not ‘unthinkable’ at all.
However, macro factors are now drastically different from those in 1930th. For example, USA real GDP (inflation excluded) is 18,384.7 bln in 2022 (as opposed to 1,110.2 in 1939). (source: https://www.statista.com/statistics/1031678/gdp-and-real-gdp-united-states-1930-2019/)
So, per-capita (weighted on population) in 2021 is ~ 50k USD (18,385 billion USD / 331 million people). It was only 8409 USD (1,110.2 billion USD / 132,164,569 peoples) in 1939.
It means that peoples’ incomes from the ‘real’ sectors are today 5x higher (on average) of its levels reached 100 years ago. That makes stock market crashes (when ‘paper profits’ from the stocks’ appreciation evaporate) much less detrimental for USA households than in 1930th.
BTW, this also makes FED obsolete too. The technological progress has already economically empowered an ‘average’ USA consumer far beyond a point when we need a ‘baby-sitter’ controlling how we spend our ‘lunch-money’.