Welcome Anon, today we are going to dive into the question every other person is asking. I don’t have the answer but will simply make your brain work.
Everybody wishes that they could simply just buy the bottom and sell the top. While that is a pipe dream that most likely won’t happen unless you got a crystal ball, you can put yourself in a good position to thrive in the long term.
We saw with the FTX crash that it just proves what is wrong with central entities and counterparties. So much for Gary Gensler’s protection when he has been targeting a transparent DeFi while centralized actors have been scamming their users. This is not crypto and builds a stronger case for it when you remove your emotions from the situation.
However, the market sentiment is peculiar at the moment. Depending on how you approach the coming months ahead of you, you should be able to take advantage accordingly.
Have we Bottomed?
First of all, if you are a short-term trader and have benefitted from a run-up and are up bigly, now is not a bad time to take some profit. There is no doubt that we have been experiencing a bear market rally (especially when you see people claim that the bull market is back) as some alts have been returning multiples and will finance some pleasant Christmas gifts.
If you operate with a more long-term approach and can sustain a potential drawdown of 20-30% then you will be in good stead. Right now you can tell that the sentiment is expecting a final curve ball to hit the market. It is highly unlikely that it would rise exponentially quickly after this and you will have time to accumulate within a good price range.
A downturn of this mold would be around $900-1000 ETH, which is a good entry but not as good as the summer bottom.
Note: I will not attempt to predict prices, the numbers stated above are simple math based on a potential drawdown of 20-30%.
What builds the case for a potential bottom already having taken place is that if we look at previous crypto prices (BTC & ETH) we usually see bottoms early when prices are crashing-we normally get a wick as people are panicking and then we bounce. Normally prices depreciate after this but in most cases, they don’t reach the prices of the bottom again. E.g. BTC crashed to 4k and we didn’t see it again after that. ETH crashed to $80 and we didn’t see a repeat of those prices either. Normally these price gems are found during wicks and are filled quickly. If you want to capitalize on these wicks and potentially buy as people get liquidated, using the Liquity protocol enables a good option.
When markets turn and bull markets return the only thing we regret is that we didn’t buy more. This story will always repeat itself.
When you see economists talking about crypto being dead and its downfall, it’s normally a good position to start scaling in slowly.
They are praying on our downfall, you should rejoice.
Moreover, it’s currently deemed embarrassing to talk about crypto which bodes well. In general, you should never brag about being in crypto unless you prefer HFBK. But in times when it is deemed embarrassing considering the current mess it has been experiencing along with price action that isn’t encouraging, this is what you want.
Many people want the market to turn into a bull (I don’t see why at this stage), and a pipe dream would be to get 1 year to accumulate at these levels.
What’s the other argument?
The counterargument: We have a whole new generation of people investing that are used to simply buying the dip as soon as the market dips. These people are always trying to be ahead of the curve but end up catching a falling knife instead. They don’t know what market pain means as it has been in easy mode over the last years. This leads to the bear market rallies we have been experiencing lately.
In the meantime, there has never been a time when markets have bottomed during the time the Fed has increased rates as the yield curve is inverted.
Furthermore, there are still uncertainties regarding Genesis Trading and their exposure to FTX and many other firms that are trying to cover up their trail and pretend like everything is fine. More dominos to fall, the truth shall set you free.
Regulation will be a growing factor in 2023 as the fraudsters have been running galore (and somehow people keep welcoming them back).
Whatever you do, do not become discouraged and leave at this stage. This is when the winners are forged as you can benefit strongly from this period in the long run. When people around you give up or check out, that is the time to double down. That’s how you get ahead.
Lastly, most of you forget what you have withstood this year. If you have come out of Luna, 3AC, BlockFi, Celsius, Voyager, and FTX unscathed, you are doing better than most people and are in a good position to capitalize and position yourself for the coming years.
My goal with this article is not to get you to buy aggressively right now but instead to contextualize the information and run with it independently. If you’re not comfortable buying and aren’t in a stable financial position you should focus on getting that part sorted first. Especially if you rely on trading to make ends meet.
Nonetheless, as most of you are quite smart I expect you to use this to your advantage. Also, I’m just a Redacted Sensei on the Internet and my opinions don’t matter. See you on the other side.
Well done if you managed to congest all that information, I hope you enjoyed the post. Don’t forget that you are more than welcome to leave feedback or drop any questions in the comment section.
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Disclaimer: All Content on this site is information of a general nature and does not address the circumstances of any particular individual or entity. Nothing on the site constitutes professional and/or financial advice, nor does any information on the site constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. I am just a random degenerate sensei sharing an opinion.