 | Currently there are two main theories based on historic trend:1- "This is just a bear rally, and we will still go lower". 2- "This is the beginning of a breakout, and the end of the downward trend". The trendThis part is too early to tell. We could be in just a bear rally, or the end of a bear market. But let's look at the facts. After months of downtrend, and red/orange fear and greed index, the market has broken the trend in a big way, and reached neutral on the fear and greed index. Here's approximately how long past bear market lasted (using the same metric): 2014 a little over 400 days. 2018 nearly 1 year. 2022 a little over 1 year (assuming the bottom was $15K). Bear markets on average last 388 days. Note: the end of a bear market isn't when we reach a new ATH, it's when the downtrend ends. Also there is such a thing as something between a bear and a bull market. The macro dataIt's important not to overestimate this data. Macro economics is only one of many elements affecting the market. And since crypto doesn't have mass adoption yet, it's harder for it to be as big of a factor. It also has more an effect on short term volatility than long term trend, as we're beginning to see. -CPI: Inflation caused a lot of fear across markets, including the short term speculation of crypto. And in the most influential market, the US, it has played a key role for Fed rates. But the rate of increase of CPI has been cooling off, and the peak of increase is already behind us. -Fed rate: Fed rate goes hand in hand with CPI. It has been a key factor in increasing interest rates, which is good news for savers, but bad news for the stock market. As well as problematic for many areas, like mortgage rates. But with cooling CPI, including core CPI, the Fed no longer has to get as hawkish. -Oil prices: Energy has been a big factor in the economic turmoil and increased inflation. And it has mainly come from oil prices, which spiked to over $120 a barrel. It's now below $100, trading around $80. Which has translated to dropping gas prices at the pump for consumers. https://i.redd.it/cflae5nwetca1.gif -US GDP: While every country is important, the US seemed to have been the dominating narrative in what has affected the price action of the crypto market, which is still a market that's a little more US dominated. While we are clearly in an economic crisis, and average Joe is struggling more, GDP has actually started to rise back: And the latest estimate for Q4 puts GDP above 4%, according to the Federal Reserve of Atlanta. -Supply chain This has been a key area for the economic crisis. According to RetailNext, in 2020, 28% or retailers underwent supply shortages. The supply chain is still struggling. There are still shortages and bottlenecks. In some cases, it has contributed to more bankruptcies. Right now it's a mixed bag. Some industries and some areas are seeing a improvements and recovery, while some are still struggling. According to the US Commerce Department, in November, the trade deficit was back down 21% YOY. But part of it was due to a strong US dollar. Shipping costs do show a drop in some areas. -The real estate market: This is where we could see anything from a small correction to potentially a crash. Home prices were heavily inflated during the supply chain crunch, seeing some of the quickest price spikes in many areas. This will likely correct, we just don't know if it's going to be a small correction or a big one. So there are still some big dangers looming in this "recovery". Inventory of single family homes has started to slowly pick up again: While sales have gone down, and mortgage rates have gone up: -Retail sales slowing: This is the latest thing worrying Wall Street. Retail sales are showing increasing weakness. Conclusion:What about the war in Ukraine, China, etc...? What about the internal supply and demand, and long term tokenomic trend? Long term, there is still the effect of halvings. This is still a very volatile market, so there are gonna be corrections and spikes in price. For every volatile action, there is often an opposite volatile reaction. There are still a TON of other factors to consider. I've only presented a small part of the picture, to give you an idea of how complex the picture looks. Make sure to do your due diligence, and look at both sides. It takes work to do research, but the more work you put in, the more it pays off. But most importantly, look at the data, not the narrative. [link] [comments] |
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