Ahoy! Great voyagers of the Crypto sea, the tempest is upon us! In recent times, the smug grimacing of online crypto buccaneers has given way to the terror of churning waves of red, swallowing currencies from Solana to Ethereum to the mighty Bitcoin, itself. The fear in the comments section is palpable:
‘What is happening!? Why is the crypto market crashing? Wasn’t crypto supposed to hedge against inflation? I was supposed to go to the moon!’
Yes. The fear of the storm is upon us. What seer can offer us soothing knowledge at a time like this? Must we finally cower in shame at the skeptical feet of Peter Schiff? Might the cordial pragmatism of Michael Saylor (CEO of MicroStrategy) soothe our soul? Will the calm intellect of Dr. Saifedean Ammous tame our feeling of panic? Of course not, let’s ask Reddit instead.
The People’s Bank of China decided it was no longer happy for the people to have cryptocurrency. Since February, the CCP has cracked down on all P2P online lending platforms. That includes crypto. As a result, China-based crypto exchanges have essentially had to flee the country and Crypto traders of the middle kingdom were forced to sell out their assets. Once Indian traders got word that their asiatic cousins were dumping all their crypto assets into a metaphorical Yangtze river, they too began to flee the market, creating a panicked, completely-unwarranted-but-all-too-human shift in asset scarcity. Ergo: many crypto wallets around the world started looking much sadder.
Shuffling out into the light like a very reluctant groundhog, the Federal Reserve has finally announced that it’s going to start tapering back the stimulus it provided to parry the financial chaos of government policy over the last two years. As some of you playing at home may well know, since March 2020, the Fed has been purchasing $120bn per month in Treasury- and mortgage-backed securities. Now, the Fed has bashfully said it would like to start winding that down by a solid $15bn per month. Immediately, panic ensued and a bunch of people cashed out. It’s possible this tapering is what also affected the stock market.
There was a big ol’ drop around April 6th last year…Why was that? Well, because the BITCOIN22 event was on around then, of course. If you look back at crypto prices during previous Bitcoin events, you’re going to start seeing there’s a definitive pattern: Whales start to move things around. Is it meant as an affront to cryptocurrency? Maybe…You may have noticed a similar drop around the time El Salvador moved on to Bitcoin as a national currency. President Bukele simply shrugged off the Whale-based interference and bought more Bitcoin while the prices were down. Many other traders didn’t have his nerve and emptied their wallets instead.
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****Just like China, there is talk of crypto regulation in the U.S. The Securities and Exchange Commission have advised that they believe there may be a need for more consumer protection in the crypto markets. Once again, many people have panicked and started pulling out their cryptocurrency… Are you sensing a pattern here?
We’re all seeing it and many of us are feeling it. Just like selling off your gold watch or hocking your silverware, sometimes, when times get tough, people sell their valuables. To cope with stretched liquidity, many people have had to part way with some of their crypto stash.
In closing, let me brutally paraphrase the sagacious ol’ Captain Hayek and say there will always be highs and lows on the open sea. Most of us are in crypto not because we’re regulars on the rowing team but because we’re pirates seeking treasure in unknown lands. When the winds pick up, keep in mind why you got on the boat in the first place. Don’t forget your Pirate’s Spirit.
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