Recession, could it be an opportunity?
If you invest in and/or trade cryptocurrencies, particularly Bitcoin, you’ll have noticed that thanks to the current recession, the price has come down quite a bit. What’s to think?
No one can say whether the price will fall much further, but what is certain is that waiting for everyone else to buy Bitcoin is certainly not a good idea, and is exactly the attitude to shun. But what does the current context tell us?
JP Morgan CEO Jamie Dimon warns, « This is serious! »
It is clear to everyone that the economic and financial world is going through serious turbulence. We can say that it is at least as serious as in 2008, and maybe even worse.
Global financial chaos is looming and could bring with it the collapse of economies, banks and currencies.
Does this worry investors and traders in cryptocurrencies? Some yes, obviously, but for many others, not at all, the answer is clearly no. On the contrary, many see it as a unique opportunity to multiply their assets like never before. Do they succeed? For the moment, we can say yes.
Recession, what you should not ignore?
Central banks will go where the Fed goes. The dollar remains the undisputed reference currency, the one with the most qualities. When financial uncertainty increases, everyone takes refuge in the safest, least risky and most liquid asset: the greenback. Even when the U.S. financial system was in serious trouble in 2008, the dollar appreciated because it was still the safest asset relative to others.
And since central bank decisions are highly correlated with those of the U.S. Federal Reserve, we can expect to see an overall increase in rates in the months to come.
With the exception of Erdogan, who is actively pushing for the hyper-bitcoinization of the world, other nations will have to continue to tighten their monetary policy to avoid capital flight to America. Indeed, when US rates rise, investors tend to move their capital from foreign bonds to US bonds to benefit from the higher yields.
All signals point to a severe, global recession. However, recessions triggered by rate hikes tend to be shorter than those triggered by banking crises (between 18 months and 5 years).
Jamie Dimon, CEO of JP Morgan, recently spoke of the serious risk of a global recession within 6 to 9 months.
The financier does not exclude a 20% drop in the S&P500 and thus joins the forecasts of Ray Dalio who held the same speech these last weeks.
Despite the risk of thermonuclear World War III, banking risk and inflation risk, crypto-devotees are not shy about embracing volatility. Being conservative and taking advice from Ray Dalio, Jamie Dimon or Paul Tudor Jones is out of the question.
They want to get rich quick. So be it. The only solution is to quickly find the new crypto of the moment and play smart with leverage.
Bitcoin, a first observation on the level of volatility:
Despite the macro and geopolitical storm we just described, the price of bitcoin has been relatively stable compared to the equity markets. It is surprising to see the asset known and criticized repeatedly for its volatility being close to record lows in volatility.
The remarkable stability we are currently seeing is astonishing and could foreshadow an imminent move up or down in BTC.
Investing in bear market:
There are two types of people who invest in bear market times. Those who buy Bitcoin to hold, thinking they have bought it at a very good price. Then there are those who choose to trade, they choose a decentralized trading platform and trade with leverage by scalping.
Sometimes, some people do both. What is certain is that if one thinks that Bitcoin can reach $100,000 and even much more, then the current price can be a good entry point if one is patient and believes in the potential of Bitcoin. It is true that the potential upside, when you have this viewpoint, can leave you dreaming.
