I predicted the 2018 bitcoin crash... It's time to sell 📉
When people live on hopium they detach from reality and refuse to look at the bigger picture
Analysis paralysis is an inability to make a decision due to over-thinking
It’s usually accompanied with an overall sentiment of wishful thinking in the financial markets
This translates to extreme fear and greed, the more fearful or greedy investors are, the harder it gets to predict the next market move. This is especially true when markets are at new all time highs or lows.
You guessed it, current market readings are overbought, everyone is greedy and wants in, and prices are at new ATH
Sooner or later this leads to one end… and it’s much simpler and uglier than you think
Crypto first, others follow
Crypto markets has relatively proven to be test grounds for conventional stock markets, as almost every major crypto crash is followed shortly by a stock market crash
I strongly believe we’re on the verge of a recession at the very least, others might even call it a depression
My view depicts an imminent bitcoin & crypto market crash, followed by a stock market crash initiating a long-term bear market and a chain reaction of global recession
Without further ado, let’s dive in!
The Technicals
Yield Curve
The yield curve shows the relationship between short-term & long-term interest rates of U.S. Treasury notes
Usually, the longer the duration, the higher the interest rate, but when the rates draw closer to one another, the yield curve flattens. An inversion of the curve is typically seen as a warning signal for the market
Long story short, The yield curve has flattened recently, with long-dated bonds nearing their lowest point for a year
Last time this happened in 2018 bitcoin crashed hard!
Consumer Price Index (U.S.)
CPI is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services in the U.S.
Pre 2008 recession, the CPI was at an all time high of 5.6%, currently it’s at an ATH of 6.8%
Inflation
You can’t print money forever!
Scarcity is the definition of value. If everyone have it, why would they want it?
In fact, this is why economies plunge and currencies become worthless just like in Venezuela and Lebanon
Quantitative easing (QE) is a monetary policy whereby a central bank purchases predetermined amounts of government bonds or other financial assets in order to inject money into the economy to expand economic activity
This fancy term simply translates to creating more money whether physically or digitally out of thin air!
The Federal Reserve has printed unprecedented amounts of money to support the coronavirus-stricken economy
Data from the Fed shows that a broad measure of the stock of dollars, known as M2, rose from $15.4 trillion at the start of 2020 to $21.18 trillion in December 2021.
The increase of $5.78 trillion equates to 27.28% per cent of the total supply of dollars.
It means more than one in four dollars was created in 2020 and 2021 !
U.S. Dollar Strength
U.S. Dollar Index (DXY) represents the value of the United States dollar relative to a basket of foreign currencies, most significant of which is the Euro, accounting for 57.6% of the basket
As of this writing, the DXY has failed twice to break historic resistance level of Fib 0.618 around 100 and unless it’s able to break it this time (which i doubt considering the over-bought RSI) it’s expected to pull back to previous support of 80 at least, if not retest ATL of 70
The EUR on the other hand is expected to rise as a hedge against the USD
Bitcoin
Technical Analysis: Overview
Looking at the weekly and monthly time frames, you can clearly see ~$70k price rejected twice with a double top, zoom out a little and a head & shoulders pattern is half complete with a declining volume, an over-bought RSI, a bearish MACD, and a widening BB.
Price action Scenarios
Best case scenario is we climb up one more leg to hit the last Fib 4.236 retracement from 2017’s ATH to 2018’s ATL at around $73.5k-$74k (depending on the exchange)
The only way we can have another bull-run continuation is if we manage to break-out and close weekly above $74k
Average case scenario is an H&S right shoulder at $53k, if we manage to break-up, it could be a bull trap retest to $58k-$60k
Worst case is we just keep dumping to retest previous key support levels at $42k, $36k, and $30k which is the neckline of the double top
If we can’t hold $30k then it’s downhill from there to $20k, $16k, $13.5k, $11.5k, and lastly $9.5k which could be the last time ever for BTC hitting 4 digits again, as $20k will be the new support
This has confluence with the intersection of 0.5 pitchfork (19850–3217–64802) and 0.5 pitchfork (64802–28149–68974) and Fib 0.382 (19850–3159) at $9534 which makes sense when viewed on a log-scale chart on the 1W frame, you can clearly see a strong support zone there.
BTC Dominance
The inverse correlation between BTC price and its market dominance means that when BTC is at ATH, BTC.D is at ATL
This is exactly the case right now where BTC.D is currently at 40.5% and seems en route to retest previous support at 37.5% thus forming a huge double bottom ready to bounce back up strongly
Altcoins
I possibly foresee one last alt season for the ones that haven’t rallied yet, especially those forgotten ones since 2017 with strong projects and fundamentals.
If it happens, this could be your last chance to get in. But don’t expect it to last for long, so you have to be careful and quick.
The Fundamentals
Omicron
Whilst the world is still suffering the impact of 2 years of quarantine and lock-downs, the new Omicron variant of Covid-19 just hit recently
People are too exhausted and traumatized mentally and financially to handle any more hardships, let alone another year or 6 months of restrictions
From a political perspective, governments will eventually have no choice but to lift all restrictions and return life to normal to avoid rebellions and turmoils
Financially, there’s no more justification for economic stimulus measures (i.e. QE), we must revert back to natural but sustainable growth by creating jobs and reducing unprecedented inflation and unemployment rates around the world
In other words, what the Fed and other governments did when Covid-19 first hit back in March 2020 — be it stimulus checks, tax breaks, loans refinancing, or any type of special financial aid to individuals or businesses — won’t happen again, or would be minuscule in comparison
The crash has only been postponed, and it’ll inevitably happen soon with all the accumulated interest
Don’t take my word, listen to the Experts
See what world’s top investors, billionaires, and hedge fund managers has to say instead, here are some samples
You’ll find unlimited videos and interviews (or “deleted” tweets in case of Michael Burry) for well-known tycoons such as Jeremy Grantham, Ray Dalio, Warren Buffett, Charlie Munger, Cathie Wood, Robert Kiyosaki and many others warning about the magnitude of the upcoming crash!
What to do?
Invest in Vital Sectors
Banks, Energy, Autos & Components, Capital Goods, and Financials are some of the best industry groups that could stand to benefit the most when the market expects inflation to rise
Other vital services that we need for survival during both hard and good times also include health, agriculture, food & supply chains
Recently, Bill Gates has secretly became the largest landowner in the US primarily targeting farmlands close to a water source
This makes sense when put into context of the looming food supply crisis, as many world-class investors has anticipated a major global food shortage and possible famines in some parts of the world
Look for the next TSLA / GME
Bull or bear, there are always opportunities in the market if you look hard
While the pandemic has massively damaged sectors like travel and tourism, it has extremely benefited others like pharmaceuticals and tech
If you explore some lower-end non-U.S. airlines’ stock prices around the world, you’ll find that they are at an all time low and haven't recovered yet
You could also consider an Airline ETF for a more diversified low-risk investment
AirBNB is the new TESLA?
NOKIA is the new Apple?
I’d also stay away from tech and pharma stocks, especially ones that have already rallied beyond possible; AAPL, MSFT, GOOGL, NFLX, TSLA are some major red flags right now!
Precious metals
People have always resorted to gold and silver as a good hedge against inflation and loss of wealth, and i don’t see any difference this time
However, compared to gold, Silver is much under-valued right now and is poised to rally to previous ATH if not make a new record
Ultimately
In the words of John Tuld of Margin Call
I’m afraid that I don’t hear a thing. Just… silence
Stay Safe, Don’t lose your money, It’ll be painful for the unprepared
See you on the other side, inch-Allah
Godspeed
DISCLAIMER: Not Financial Advice! Please trade at your own risk.
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