When Will The Stock & Crypto Market Crash End?!
Investors in this digital currency are now entering into panic mode as a frenzy of selling takes place and that certainly hasnt been helped on by one of the biggest crypto lending platforms celsius, which has recently halted withdrawals due to – and i quote, extreme market conditions on top Of that another popular cryptocurrency terra luna has recently collapsed. Losing 99.9 of its market value, resulting in its stable coin. Terror usd losing its peg against the dollar. Even stable coins are no longer stable in this current environment, with investors losing over 40 billion dollars pretty much overnight. So if the crypto market certainly bleeding out some very high profile, events which have recently taken place, investor confidence has certainly been damaged. It certainly left questions around the investing community on whether the kingpins of cryptocurrency, bitcoin and ethereum could potentially be prone to the same kind of fate, and some of the critics are perhaps even wondering whether cryptocurrency even has a future within the world of finance. So in todays video, i thought id share my thoughts and potentially apply some logic into what appears to be a bit of a kind of crazy situation. Im going to try and share my balanced view on how bitcoin could potentially be used as an investment vehicle and how it should be viewed upon amongst the investing community, along with how it also aligns with the broader stock market too. And hopefully, some of this added context will help us navigate this storm that were currently going through.
So with that said, lets dive into it bitcoin, as at the time of recording. This video has a current price of twenty thousand six hundred and fifty one dollars and is currently down sixty nine point, four percent from all time highs of sixty eight thousand dollars per coin ethereum, the other popular crypto currency, has a current price of one thousand. One hundred and thirty nine dollars and is currently down 76.4 percent from its all time highs of 4, 818. Now for context. The s p 500, currently trades at 3 674 points and is down just 23.4 percent from its all time highs at 4 800 points, and i think probably one of the valid questions to ask at this point is: why is bitcoin and ethereum so much more volatile Than the broader stock market – and that certainly comes down to the characteristics of the asset class, because its these very specific characteristics that turn your cryptocurrency portfolio into a little bit of a roller coaster, because both crypto and stocks are what we also commonly refer to as Risk on assets which, as kindly defined on investopedia, is an asset that carries any degree of risk risk. Assets generally refer to assets that have a significant degree of price volatility. Now, when the level of fear and uncertainty rises within the macroeconomic environment due to economic events or even geopolitical tensions, that degree of price volatility rises, usually in an unfavorable manner, as were kind of seeing playing out right now, unless mature asset classes like bitcoin as an Example are perhaps a little bit more prone to volatility when we have certain economic conditions or certain economic events or data thats being released like higher levels of inflation, as well as higher interest rates too.
The best way that i can kind of describe bitcoin is almost like a toddler one minute, hes happy running around playing with his toys and then the next minute, within a split second hes, crying kicking and screaming, and throwing his toys out the crowd. The volatility of a toddlers behavior is almost quite similar to the volatility of the price of bitcoin, whereas the stock market. On the other hand, i guess you could say is a little bit more comparable to perhaps the more mature adult the mature adult can certainly appreciate that sometimes can just hit the fan in life and its certainly not always plain sailing. Sometimes there are good days and sometimes theres bad days, and i guess over the course of our lifetime. We just kind of hope that theres more good days than bad and the stock market kind of acts in the same manner. That youd probably expect a mature adult to its slightly more stable and less volatile on a day by day basis, but also acknowledges that theres always going to be ups and downs, whereas bitcoin. On the other hand, i guess its anybodys guess as where the price could go day by day, even perhaps hour by hour. Now, on a similar note, because bitcoin exhibits such kind of extreme characteristics as an asset class, it also attracts the more extreme type of investor. The kind of investor thats prepared to take that added risk within their investment portfolio in order to potentially capitalize from the added reward from doing so.
However, i think its worthwhile. We saying at this point that absolutely nothing is guaranteed when investing into speculative assets like bitcoin and ethereum, or even any other cryptocurrency for that matter. Ive certainly recorded countless videos on this channel where weve looked at all of the research papers, which explain the use cases and the underlying fundamentals behind bitcoin and ethereum and their potential use cases for the future. But despite all of that information that weve gathered and ive shared with you guys on this channel, certainly nothing is guaranteed. I guess just like you could say the long term. Success of companies like apple and microsoft, certainly arent guaranteed either because weve seen big names fall from the top of the tree before and no doubt well see. Big names fall from the top of the tree in the future, so it is in my opinion that there is no single cryptocurrency or single stock that is still too big to fail as such, with the added risk of investing into, i guess more speculative, highly volatile. Less mature assets like bitcoin, not only will you see kind of big swings to the upside, just like we saw throughout the course of 2021, but equally, you should also be expecting that there will be equal and proportionate downside swings within the price of bitcoin too, because, As we all know, the cryptocurrency market, or any financial market in that matter, certainly doesnt move in straight lines. Sometimes days are good and sometimes days are bad and, as a result, its certainly a different kind of mindset when youre investing into bitcoin versus a stock.
Like apple, because, if i were to tell you guys that apple stock was going to crash within the short term, 70 80 or perhaps even 90 percent im pretty sure that most investors would probably laugh me out the room and im sure that most investors would say That thats, probably never ever gon na happen unless vladimir putin decides to start world war three and goes on to blow up most of apples factories as a result, however, with bitcoin. On the other hand, market crashes to the tune of 70, 80 and even 90 are actually fairly common. We saw a 55 percent crash in 2021, an 84 crash in 2017 and an 86 crash in 2013., so in actual facts, similarly to how the stock market operates, every three to four years or so bitcoin will actually enter into its new market cycle, where the price Of bitcoin goes on to crash before then going on to see new, all time highs thereafter and when you analyze the price of bitcoin over the course of the past decade, its very much the kind of boom and bust asset class, which, if we lets say, apply An 85 market crash to this current market cycle, just like we saw back in 2017 and 2013 that would actually take the price of bitcoin from 68 000 per coin to around about ten thousand dollars per coin at the absolute bottom of the cycle, and as such, You cant take the same: investing mindset into investing into an asset like bitcoin versus a stock like apple, because, whilst theyre both risk on assets, theyre actually two fundamentally different things.
When you look at it on the risk spectrum and whilst were on the topic of market cycles, the only market cycle that probably any of you guys are interested in is when the next upside cycle is going to be, and fortunately, for you guys. I can tell you exactly when thats going to happen, but i just cant put a time frame on it. However, when it will happen, is when the risk on sentiment comes back to financial markets. Itll be the point where we move away from the sentiment of extreme fear within the markets. Itll be the point where inflation starts to fall month on month and returns back to somewhat more of a stable level. Itll be the point where the economy starts to grow. Rather than contract and itll also be the point where the collective market mind reaches a point of equilibrium where there starts to be a little bit more positivity and optimism injected back into financial markets, itll be when all of the panic selling stops and the smart money. Slowly starts to re, enter the market and only once all of that criteria has been hit. At that point i could certainly say, with a very high degree of probability, that the collective markets on the whole will start to recover. But what are the chances that we go risk on anytime soon? Well, in my personal opinion, without being the bearer of bad news, im, not too sure that its gon na happen within the next few months, because the bank of england is still forecasting inflation to rise upwards of 11 by the end of the year.
So, in reality, i suspect were probably talking into 2023 before we start to see any kind of stabilizing within the economy and therefore a risk on sentiment within financial markets. However, that will also be an opportunity to use this time wisely to start to wisely deploy cash into the market, as the market potentially could still fall down in value, because shell only go on to benefit more when potentially the elusive 100 000 bitcoin price target is Met perhaps at some point in the future, it may never be hit, but perhaps at some point in the future, along with when the s p, 500 inevitably goes on to make new all time highs too. However, unless youve got a crystal ball or a time machine, nobody truly knows whats going to happen with any kind of degree of certainty. What i will say is, despite being inundated with bad news, which it kind of feels like we are at the moment and with financial markets cratering on a day, by day basis on investment portfolios absolutely cratering in value. One quote that i wanted to leave you guys at the end of this. Video is a quote from someone called benjamin, graham who once said, the intelligent investor is a realist who sells to the optimists and buys from the pessimists so providing there are still pessimists within this world. There will still be pessimistic market cycles, certainly not all of the time, but every now and again.
However, these are certainly the times where the biggest transfer of wealth takes place. If you can put yourself in a position to capitalize from the opportunity. So, if those parting thoughts, if you want to know exactly why selling your stocks right now may just be the worst mistake, youve ever made be sure to click on this video here be sure to drop a like on this video guys.