WARNING: Crypto Crash Not Over

WARNING: Crypto Crash Not Over

Hey guys, this is a market update. We’re going to be looking at bitcoin and ethereum price levels. Where are they trading now and do you know where they’re going to find a level because obviously they’ve come down a lot during the Luna saga? We’re going to look at Luna as well as the price chart on that and some thoughts that I’ve got after this crazy week that we saw with Luna. So I’m going to get into the bitcoin chart right here:

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Bitcoin has hit what you would call absolute generational support right here, so we can see it is currently trading around $29,000. Obviously, $29,300 is just a massive psychological level, but it’s actually a very large technical level as well. This is the bottom line.

If we just go back through time, you can see that during the China dump and the sell-off, when you know half of the hash rate moved from one country to the rest of the world. That is you know an unbelievable kind of time period in bitcoin’s history, and you can see it went down to this level again. Then we can see a lot of support and resistance down at this level really during the first part of when bitcoin really just entered into completely new territory in terms of an asset itself. This is really important support.

If you remember the last market update I gave, I was talking about the CEO of Nexo, who is a lending and borrowing, you know, and passive income platform, saying that there are a lot of institutional orders around the 30 level, this is where we actually found some support. I guess he was obviously, you know, seeing that flow. 

If we break through this, what we really see is that there is no real precedent. This is a completely new regime for bitcoin. We had this sell-off which is obviously the Fed pivoting into a hawkish dance sell-off. You know, obviously, we had a very good channel here but we’ve come down and hit support again. So in terms of support on the downside, it’s quite worrying to see that there really isn’t much trade anywhere under $30k. We’ve hit a huge area of support and to be honest, I think levels now are really going to be price discovery, which isn’t the best news considering how hawkish you know and bearish things are right now. We are in a bear market.

If you’re a short-term trader, you know you have to be looking at selling resistance rather than buying dips and support. The next levels are around, $30k or $31k. If you’re selling any rips, or at least you know, not buying those rips if you’re a short-term trader, some really good news long term.

If you’re a long time investor in bitcoin, something that Michael Saylor posted was this fair value accounting for bitcoin.

This may change the game because a lot of companies and corporations that may possibly want to have bitcoin on their balance sheet will have it completely muck up their accounting method. It will look like you have to book it as a loss if there’s a reduction in price, so it makes accounts look extremely poor even though you may have put only a small percentage of your corporate treasury in there. But it looks like this is changing. They actually voted seven to zero to basically consider a new accounting method if corporations have bitcoin. These are the long-term fundamental, really good bits of news that actually allow bitcoin to be incorporated into the financial ecosystem and really become a large-scale, world-scale asset. It’s really important to keep an eye on those. If you’re a trader, obviously there’s not really much that that is going to give you.

Ethereum

I just want to look at Ethereum right here as well, which is also hitting just absolute generational support:

You can see around the $2,000 level, obviously another, you know, very round number and psychologically important, but you can just see the support and resistance and the areas of value on the chart. So we’re going back to February last year, huge resistance here. Then, we’ve just hit that support on multiple occasions during drawdowns and we were hitting it once more, right, so the last 12 months just completely wiped out, which is fair enough because obviously that 12 months was the Fed printing money and being as dovish as it could be.

Ethereum was holding up extremely well around this support level of $2,800 and obviously the Luna crash has just crashed everything back and taken all of those gains away. In terms of if you’re a long-term investor here, what you’re seeing is just generational support levels, areas to get into dollar cost average, you cannot pick bottoms.

If you’re a short-term trader, what you do is just wait when things like this happen. We are in a hawkish period of time, a bearish period of time. If we see a bounce, if we see a bounce up to this resistance here at $2,300, if you’re a short-term trader, you’re looking at a few weeks, a few months, you’re not buying these rips right now because we are still in a bearish period and we have to wait until the Fed pivots to be truly confident that there will be a bid under the market.

Terra LUNA UST

I’ll talk about the Fed then, what they’re telling us, and what interest rates are telling us in a second. I just want to look at the Luna chart:

 You know, an absolute disaster occurred recently. A lot of people are asking me if I should trade Luna, and what should we do here? Financial advice is just well clear of it. This is absolutely a failure. I mean, not just the price but also some of the things that industry insiders are saying here.

You’ve got CZ from Binance, who is basically controlling a lot of the liquidity in the market. This guy is coming out on his own twitter personally and saying don’t touch it. It’s done. It’s finished. They’re not going to be adding liquidity for you going forward, crypto.com. They all want to basically get rid of this tumor that is just taking a lot of attention away from the real, you know, advances that we’re making in the crypto industry.

There is still a way to go with the unwinding of Terra. I know there are some plans to, you know, create a second blockchain and it’s just an absolute mess. I would not get involved with it at all, if I was asked. Terra USD is still worth two billion, so there’s still two billion dollars to come out of this, you know, over time. There are questions about where the bitcoin that Terra bought is actually being held and how much they sold during this sell-off. There are so many questions and it’s just why would anyone just touch this in any way, shape, or form?

Terra Luna has dropped by 100% in the last seven days. It’s up to 60%. It’s just an absolute casino. Steer clear of it. There’s still four billion tied up in this that has to come out. The whole ecosystem is just a pariah for me. They’re not going to be left loose with any projects going forward. I’d still steer well clear of this. You may, if you haven’t traded yet, think that maybe you want to hold on to get some of the bitcoin sold off and put back to holders. It’s a total mess. It’s just better off if you are out of it, just not getting involved at all.

The Fed

If you’re a short-term trader, like I said, it’s bearish right now and you have to just have that in mind, so sell the rips or don’t buy the rips, and always have that kind of bearish mindset that we’re just going to have a lot of pressure on the market the whole time until the Fed pivots. Jerome Powell is coming out today. You have to understand that everything this guy says is like three months behind what the market is actually telling you.

So what he’s saying now is that a soft landing is really just getting back to 2% inflation. We’re at like 8% officially, but it’s obviously higher than that while keeping the labor market strong. It’s quite challenging to accomplish what the market told us to do over the last few months. The market has been forward-looking. The Fed is kind of backward-looking. It can only make statements on actual economic data, and that is obviously looking into the past. This guy is saying, “Look, inflation is so high. We’re not really getting it under control in any way, shape, or form. What we’re going to have to do is basically kill the labor market.’ The market is telling us that. However, what you need to do is really look forward and say at what point is the economy going to start breaking down and when will they pivot? When the Fed pivots, that’s when they start, lowering rates at a slower pace or even freezing rates and potentially freezing asset purchases as well, which means there’s going to be more money flowing around the system. Then assets, risk assets especially, will get a bid underneath them, and that’s when we can be really confident that we’re in a new era of asset bubble.

That’s probably, you know, still going to be a way out looking at five-year break-evens. This is the best method that I kind of see of the market’s prediction of rates, and you can see that three or four months ago, a few months ago. It was kind of up here at kind of 3.3. The market is telling us, you know, what we do see, you know, in the future. Inflation is going to come down. We’re seeing the current economy. We’re predicting the current economy is slowing down. That’s for sure. In Europe, the UK, and the US, it’s going to be slowing down. We’re seeing some tech companies, you know, scale back their operations. They’re hiring, and so that means inflation will start to tick down. That’s what we’re seeing here now.

Trying to figure out at what point this actually does happen in the economy and then those figures flow through to the fed and then when the fed pivots. You’re just trying to predict something, but it will happen, and the question is when. We don’t know when, but you know that it is coming through right now. So if you’re a long-term investor, what you’re seeing is essentially the market pricing in a terrible recession right now. Potentially that is a good time to actually go and dollar cost average and get in during the bad times considering that the asset that you’re invested in you think is actually going to survive this bear market. Many altcoins will not because they’re just simply not profitable and they were, you know, basically paying themselves through all the VC money they had. If that dries up, if they’re not profitable, they will fail. They’re just businesses like anything else.

I’ve said for a very long time now is that this bear market is going to be the DeFi regulation bear market. Anything that’s not profitable, anything that doesn’t want to be regulated and come into the sphere of regular investment, is just going to go to zero because it will be cut off from all of the venture capital. They’ve had a free run so far, and they will not be getting one in the future. This is my opinion, as you can see. 

Janet Yellen, the Treasury Secretary, said, “You know, we’re going to have to start regulating these things and they’ve been working on this.” You’ve seen that stable coin regulation is coming in. That will be happening and that will cut off a lot of the capital to some of these smaller kind of asking assets and applications that don’t have any real want to actually come in and be regulated.

[This article is a transcription of a video made by MoneyZG]

Original video: https://youtu.be/M_kgmo87w7o ]