Ghost Trader — All Aboard

If you find yourself reading this, you probably follow the digital asset market pretty closely. As some of you reading this undoubtedly know already, the cryptocurrency market has rallied quite spectacularly recently. According to CNBC, the price of Bitcoin, the proverbial 800 pound gorilla of the digital asset world, has risen approximately 38.6% since the start of January. As of this most recent weekend, Bitcoin’s cracked the $23,000 price level for the first time since August 2022. The current price level feels like a dream compared to only a month or so ago.

The Breaking Dawn?

And yet, here we are with January having already almost passed us by. The market has begun to behave as if the macroeconomic picture has suddenly improved significantly. The Fear and Greed Index — the measure of broad market sentiment that considers seven separate indicators — sits firmly in greed territory at 63, while only a month ago it hovered around 38. We should note, that level indicates an even more significant improvement over the doldrums of May 2022, when the index plumbed the depths into the lower single digits.

It almost feels like the bears have finally withdrawn, and the bulls — filled with newfound confidence and optimism — have bounded back into action. We even heard Jim Cramer, maven of the equities and broadly recognized expert on markets, exhort everyone to sell out of their digital assets right before the current rally began. As the most reliably bad contra-indicator around, one could be forgiven for believing the bull market waits just ‘round the corner.

A Step Back For Perspective

While this rally has proven impressive in both its magnitude and its speed, a simple but undeniable reality remains. We find ourselves in an inflationary macroeconomic bear market, and digital assets remain very much risk-on assets. Everything from technology stocks, to real estate, to cryptocurrencies, to bonds have suffered severely and indiscriminately during this sustained downtrend. Short of some fundamental shift, the trend still indicates more pain on the horizon. And of course, we must not forget the looming global recession. Even considering all of the above, that fails to capture the extent of the situation.

To add to the tepid financial setting, we cannot dismiss the current state of geopolitics. The war in Ukraine appears rapidly to be approaching a decisive point. As the muddy Ukrainian Spring fast approaches, and with it the wet and rainy season that promises a much more static form of warfare that favors Russian strategies, the hopes for a quick and comparatively peaceful resolution shrink daily. The prospects of a longer, more entrenched war grow larger with each passing warm spell.

We should not downplay the continued effect this war has on the economy, particularly food production. Nor should we underestimate how much an escalation could bring about an abrupt end to the comparatively higher spirits we have seen in the market over the last couple of weeks.

Misplaced Hope

On some level, the optimism we have seen despite the reality of the world around us makes a lot of sense. Despite this prolonged bear cycle, many people still remain up 50% or more since the pandemic crash of March 2020. While that may sound difficult to believe, we need to remember: the Dow dipped as low as 18,217 during the crash. It currently sits at 33,740.

The pain simply has not been sufficient to cause a mass capitulation event. Sure, the immense market sell-off of 2022 has proven rather indiscriminate, wiping trillions from equity and cryptocurrency market capitalization alike, and more beyond. Risky and not-so-risky assets have felt the pinch, but the sloshy markets still remain somewhat waterlogged.

Nevertheless, people seem to have changed their outlook, seeing more in the way of a light at the end of the tunnel than the creeping darkness of quantitative tightening and global recession. Their reasoning seems sound. The likelihood of a pivot increases with each passing day, as inflation numbers indicate a reversal in the trend. Gold even just bounced off of its 0.702 Fibonacci retracement, indicating the distinct possibility that we have reached the apogee of the current broad market trend of using gold as a refuge.

Regardless, we need to maintain clear eyes. In the wake of the major crash in March, 2020, the Federal Reserve essentially cranked up the printing presses and began dumping immense amounts of liquidity into the market in order to bail out capital markets. The market buoyed impressively as a result. However, we should not be so sanguine as to think that the Fed has a mind to return to a policy of Quantitative Easing so quickly, especially in the wake of such dramatic rate hikes.

So, Now What?

What does all of that mean for the rest of us? Well, if history tells us anything, the market almost always follows the path of greatest pain. Greatest pain typically refers to the common phenomenon that retail sentiment almost always points in the wrong direction. With famously and comically wrong people like Cramer warning of the sky’s impending collapse, one could be forgiven for believing that the bottom has been printed on the charts already.

Still, one would be well served to consider this. The longest bear market in history resulted from the parabolic dot-com bubble bursting in the early 2000s. That bear market lasted a total of 929 days, or not quite three years. The shortest bear market lasted just 33 days, in the spring of 2020 during the covid lockdown. Excluding the longest and shortest bear markets, the average length still remains around 330 days. Still, one should not take heart from hitting the average bear cycle length.

While the current bear market has surpassed the mean recently, the other macroeconomic factors at work complicate matters significantly. At the end of the day, the fact of the matter is simple. We do not know what will happen, and we cannot predict the future. Sure, if this were like every other bear cycle, the digital asset market would already be seeing credible signs of recovery. We believe, though, that we could potentially see more downside, particularly as the recession makes itself felt moving forward and retail consumers leverage themselves further into the downturn.

The Opportunity of a Lifetime

Regardless of what happens, we here at Ghost Trader believe that the market will present us with many opportunities for those of us properly positioned to avail themselves of them.

We will in all likelihood witness greater volatility, in both directions. The more frequent, faster, and larger movements in the markets should prove very good news for GTR contributors indeed. Volatility provides our trading team with better opportunities to generate larger amounts of yield for the project, with less risk.

We have fortune in our favor, to have two such talented and accomplished traders working hard for us. While the Ghost Trader team cannot predict the ultimate future of the market, we do know that the market will provide us with loads of chances to satisfy our steadfast and patient community.

Join Us

If you have just come across our project, we would like to invite you to join us on this journey. No better time exists than the present to bridge the divide, as we fully implement our migration to the Ethereum chain. You have a limited time left to take advantage of getting on board prior to the relaunch onto Ethereum chain on Friday, January 27th. We would love to help you secure a seat for your journey to financial freedom.

Remember, this is still only the beginning. Please be sure to stay tuned to our social media outlets moving forward for updates and news of the Ghost Trader project. We invite you to check out our official Ghost Trader website, join us either on Telegram or Discord, follow us on Twitter and LinkedIn, and be sure to check out the podcast found here.