This will be a quick one.
Most of you that follow me on Twitter and in general use Twitter to get their crypto news, know by now that FTX, 2nd largest crypto exchange has filed for bankruptcy after numerous attempts to find a sucker to buy them out or “give” money to plug a hole around 9b.
Initial issues with FTT token being dumped by Binance was only the start and that was enough to start a death spiral on it and cause ripple effects across other crypto assets like Solana.
Add to that 130 other companies including hugely important to crypto market Alameda research (that SBF clearly used to get money out of others in layman terms), possibly SEC chair involvement in helping FTX find loopholes in legislation and god knows how many other things will be discovered over the coming weeks and you get the biggest scam/crash in history of crypto market.
What all this means for crypto market?
I think “Mr Bear” explains it all, yes I am fairly sure despite very low reading on CPI this week and a wide pump on equities, crypto will fall even further.
While I was quite skeptical on reaching 10-12k range, especially after inflation data and numerous FED members mentioning pausing of interest rate hikes in 2023, bad actors of crypto ensured Bitcoin’s decoupling from stock market will mean its price has a high likelihood of reaching that very low range.
Of course you will see influencers telling you to buy altcoins every time we will dip a little lower, but unless we see 50% drop on most of them from current prices I would not touch anything.
You can keep DCA weekly into Bitcoin and maybe ETH since it’s been holding up well, but stay away from everything else. We need a real demand destruction, everyone in tears, media screaming to ban Bitcoin, governments to bring in strict regulation before we can say that yes true bear market bottom is in.
Up until now there was way too much optimism, everyone waiting for that quick rally to the moon and beyond, making millionaires in a matter of months. It will take time, lots of patience, disregarding all the FUD you will hear in the coming weeks/months and your trust in technology and its use case in the future to see this trough.
When everyone gives up that is when you buy and hold, another bull cycle will come and we knew that it is few years away all along, so nothing changes.
I will keep you updated if I see anything changing in medium term outlook for crypto, but with bullish stock market that might not last as long as some think and not much on economic calendar until September’s FOMC meeting minutes are released in 2 weeks, we might have to wait until December’s employment and inflation data preceding last FED's interest rate decision this year.
Until then stay away from crypto exchanges apart from Binance and try not to hold any stablecoins. For those with investments over 5,000$, I would recommend buying a cold storage device and send your Bitcoin/ETH out of exchanges after any purchase.
Keep safe and hope none of you lost any money with FTX.
Great read! Thanks again. I have all my portfolio in Dai, and waiting. What would recommend as an alternative? Thanks