In January, the only gains usually made are in Gym Memberships and people’s weight. But for many, it’s been in the crypto market, and I can’t help smiling.
Over the last decade, cryptocurrency has gone from an overlooked asset to a wildly popular investment, and in the past nine months, we’ve seen biblical losses that sent many to seek a higher faith.
The crypto market was heavily leveraged last year, with both retail investors and some giant funds like Three Arrows Capital and Alameda Research, going down, like ‘knees’ on Sunday, praying their super leveraged positions would play out ( if the price went up ), but they didn’t. It’s dropped, and dropped and dropped, forcing them out of their positions.
When $60 billion blockchain giant Terra Luna collapsed in May, it followed the Crypto’s’ Scooby-doo moment ‘, revealing that Sam Bankman Freids FTX wasn’t what it seemed. But then the real panic set in, and bitcoin dropped to $15,500.
But more importantly, big crypto lenders BlockFi and Genesis filed for bankruptcy – and when they did, bitcoin held its ground.
It’s now trading back above where it was before FTX went under. How about that?
Prices are less affected by bad news now, indicating the market may have already incorporated expected pain or that leveraged and problematic elements have been removed, leaving room for growth. Hence 30% up for the year.
So while most digital assets follow bitcoin’s lead as it’s the major crypto asset with the most liquidity. It usually cools off, investors start distributing liquidity into altcoins, taking more significant risks. Recently, bitcoin has risen 50% and gained a 5% market share, similar to the 2018-19 bottom. The network is looking more robust, with more investors joining and holding coins for the long term. The following “halving” event, where new coins minted by miners per block is cut in half, is 62 weeks away.
Historically, these events occurred at or near bear market bottoms, and the US yearly inflation rate has dropped every month since its 9.1% peak in June ( 6.5% as of December ).
The entire Crypto Markets joint manifestation may have worked. Let us hope so.
