If you’re new to cryptocurrency, then you may feel as if the current price crash and bear market is something of a disaster. However, if you have already lived through a crypto winter, like the 2018/9 bear market, then you will know that this crash in prices is nothing new and is all part of the predictable and regular cycle for cryptocurrency. All of the crypto market is led by bitcoin, which is built to have four year cycles based on its halving. These 70% declines in bitcoin price are perfectly normal and predictable. OGs know this and simply ride it out while awaiting the return to new ATHs (all time highs) after the next halving, which will be in 2024.
These cycles are indeed more volatile than the mainstream market but they are predictable and happen every four years. The difference this time around is that the whole planet is in a major historic economic downtrend, which is adding fuel to the fire of market price declines. Take a look at these stats and notice that even major legacy stocks are down just as much as bitcoin from the previous ATHs. It puts a lot into perspective and should alleviate the FUD (fear, uncertainty and doubt) which may be plaguing crypto enthusiasts right now.
Current drop in value for legacy stocks compared to bitcoin:
Apple -23%
Microsoft -24%
Alphabet -25%
Tesla -35%
Zoom -40%
Airbnb -45%
Pintrest -49%
Nvidia -50%
Uber -50%
Meta (Facebook) -53%
Paypal -62%
BTC -70%
Netflix -70%
Snap -72%
ETH -73%
Shopify -74%
Coinbase -80%
So even if you were invested in the mainstream top tech stocks on Wall Street, you would be as much in the red as a crypto investor. Thus crypto is not in any way worse off or at higher risk when compared to the stock market. The good news is that bitcoin is programmed to undergo a halving in supply in 2024 which usually pushes price back up to new highs, whereas nobody knows where the legacy stocks will end up.
This macroeconomic downturn is one of the worst since the 2008 crash, the 2000 dotcom crash and possibly even worse than that. For example we are due to enter a global food crisis in the next six months, with multiple famines declared, according the UN head. This global economic collapse has just begun and may be with us for a few years.
If we look at stats for the USA, the world’s leading economy where consumer spending makes up 70% of that economy, we can see that retail sales have slumped, particularly auto sales. This may be fuelled by the massive petrol price increases, no pun intended. Furthermore, USA consumer sentiment is the lowest in 70 years.
Manufacturing has also slowed to a two year low (based on PMI) which will drag down GDP. Higher interest rates, slower demand and supply chain constraints are all contributing to what looks like a perfect storm. Real estate sales are down and over-supplied. This will push housing prices down even further, leading to further decline in consumer confidence. If your house is worth less, then you may tend to spend less.
In China the housing and real estate market has already collapsed, according to some information, although the CCP won’t reveal their true figures to the world. Remember it was a housing market collapse that added to the 2008 recession, along with the collapse of the financial corporation Lehman Brothers, which caused considerable contagion.
What indicates just how bad this particular recession will be is inflation, which in the USA is at its highest since 1981. This is what inspired the FED to raise interest rates by 0.75%, with another 0.75% to come in the next few months. This will crush any life left in the economy and lead to “stagflation” which was at its worst in the 1970s. We could be returning to that kind of crisis, except this time it’s worse. Back then the FED chair, Paul Volker, raised interest rates to near 20%. Today we are only seeing a 1.5% increase and already the financial system is cracking under the strain.
If we look at the EU situation, we can see a major energy crisis and food shortage with double digit inflation. This is causing the ECB (European central bank) to raise interest rates for the first time in eleven years. The EU is likely to also enter the coming recession. We could blame it all on Covid lockdowns or Russia in Ukraine, though some say the whole collapse was engineered by the WEF and hidden hand of the global elites in order to usher in their Great Reset and Communist dictatorship.
Here in sunny South Africa Covid restrictions have been over for a month already so I certainly hope the rest of the world is following suit. This, accompanied by China opening up supply chains again, could bring some relief to the crashing economy and steady the ship. One thing is for sure though, a rising tide lifts all ships – and vice versa – so in today’s interconnected world contagion will spread really fast. And as we see emerging market economies already sinking in the storm, I certainly hope some captains of industry have the interests of the people in mind, though I won’t be holding my breath, but will be preparing my life raft, based on metals and bitcoin.
(image: pexels free photo stock)