Where do we go from here?
In the past 7 days, we’ve seen a significant gain of +10% in $AVAX, +14% in $ETH and +32% in $MATIC (Polygon). Right now you’re probably feeling like what everybody else is feeling:
Am I going to miss some big gains? Should I invest now?
You then do a bit of your own research, and read that Russia is now banning cryptocurrency as a form of payment for goods & services. The United Nations also issued a statement, warning all developing countries to be cautious of the social risks cryptocurrency brings, outweighing the benefits it would give. Meanwhile, $BTC just hit above $20k, and you’re sitting there with your teeth clenched, worrying that your money will be worthless soon if you don’t do something, as Powell vows to keep rising interest rates to combat inflation.
Assuming you’re in the US, by now you’ve probably noticed that the CSI (Consumer Sentiment Index, measures how we all feel about spending) is back at the same level as when the 2008 recession hit. With the CPI (Consumer Pricing Index, basically how much we pay for stuff) at a 9.1% high, and GDP (Gross Domestic Product, how we’re all doing as a country) decreasing at an annual rate of -1.6%, you’re wondering if employment layoffs are about to happen in Q3-Q4 of 2022. Here is what some experts over at Wall Street Journal has to say to all of this:
Labor Force Participation rate has been steadily declining since 2000, and Unfilled Job Rate has drastically increased since 2020. 11 million jobs are out there and they just can’t find the right people to fill it.
With demand being at all time high, a strong stimulus pumped into the economy and baby boomers gradually retiring, we are currently still in a very robust labor market. The recession of 2022 hence, be an unprecedented kind, as we shift from one generation to another:
There can only be two possible outcomes, one is our economy continues to contract, which will lead companies to start laying off workers. The other is our economy will bounce back, leading companies to continue to expand. None of which are precedented.
Before we move any further, understand this: Cryptocurrency is built on top of real-world economy, if the real-world economy crashes, there will be no crypto. Here is another great video summarizing the Web3 downturn, where speculation has drastically decreased compared to 2021:
“if you’re a crypto skeptic who thinks that much of the industry is fueled by retail traders who like speculating on risky assets, you might believe that this sort of spells the beginning of the end for crypto projects. But just by the virtue of the amount of capital that’s been reserved to help fund and get these projects off the ground, we’re going to see more crypto and web3 companies getting funded in the coming years.” — Berber Jin, WSJ Reporter
Long story short, we’re in a 50/50 chance right now of seeing a further contraction of our economy. If you’re in a specialist field, chances are there’s so many openings for you right now that you could easily switch companies for a higher paying role. And if you play your cards right, you could be in a position to juggernaut into an even higher position when the market expands. And we can all use a bit more salary to secure better investments during a bearish market.
So anyways, are we all losing right now? Yes. Should we all invest more? Perhaps. Do recessions last forever? Most certainly not. With all this being said, I am no financial adviser, and I am simply sharing my own research and opinion to you all for your entertainment.
Stay safe out there!