Hey folks, if you’re reading this, my guess is that you’ve already opened up your crypto portfolio today and saw something similar to this:
Although by no means do I consider myself a Crypto OG, but now that I’ve gotten a full market cycle under my belt, I’d like to think that I’ve gained a bit more insight (or at the very least, the ability to zoom out a bit farther) than compared to when I first entered the cryptospace. If you are a new arrival to this scene, there are a few observations that I think are worth mentioning.
This wasn’t the first pullback, nor will it be the last.
Nothing in DeFi or TradFi ever goes up only or in a straight line. $BTC’s most recent correction that occurred was roughly around a -12% drop over the course of barely a 24-hour period, which may sound a bit alarming at first, but when we put this up against $BTC’s other drops, it’s actually typical, or perhaps maybe not even all the way over:
As you can see from the graphic above, from this snapshot we can see that since late 2020 there’s only been one $BTC pullback that was less than -12% which occurred in early 2021. All others ranged from -16.75% to all the way to the soul-crushing -55.96% drop we saw in late May 2021 of 2021.
We were overleveraged, way overleveraged
As bullish as I am myself on $BTC and the cryptomarket as a whole, I prefer to try to not F* around with leveraged trading, especially when the market was getting as frothy as it has. I see massive leveraged trading synonymous with artificial pricing, and it’s clear that there was a lot of artificial pricing going on:
When so much leverage is occurring, it’s only a matter of time that it’ll get flushed out, causing a cascading effect as we’ve seen today.
If you were waiting for a certain time to enter, now might be the time
In the same vein, since most leverage has been flushed out, we’re now seeing some of the “truer” prices (without leverage) on your favorite altcoins. I myself increased some of my $SOL, $AVAX, $ATOM, along with $ETH and $BTC holdings — tokens and coins that I’m particularly bullish on for the long-term.
And even though I bought in at $AVAX at $36 dollars could it drop further? Sure. But I’m more confident that it will hit $40 dollars again than it will go down to $32. And as an additional reminder, remember that just as of yesterday (January 2nd) institutional investors anticipating an imminent $BTC Spot ETF approval were willing to buy $BTC futures for more than $47k dollars, which was more than a $1600 dollar premium above the market price, meaning that the more $BTC you buy today, you’re most likely just getting a better discount for the future.
Prices have gone down, but the reasons why are simply just noise.
From what I’ve gathered, the main trigger for this price correction was due to the publication of one article by Matrixport, a crypto-analytics firm who predicted that the SEC would not be approving the $BTC spot ETF by January, like the majority of the market was predicting:
What’s interesting about this , is that just like this article you’re reading now, they have published an article that really provides no new analysis nor does it convey any insider information towards the SEC’s decision-making process, making it pure speculation, an observation if you will, against the market. What’s more interesting, is that as of just yesterday, Matrixport predicted that $BTC would reach $50k by the end of January due to “an imminent Bitcoin Spot ETF approval”:
Personally with the juxtaposition of these two articles, it makes it a bit difficult for me to trust either, which makes this once again — all noise.
I know pullbacks can be scary, but they have a completely different tone in a bull market compared to a bear, and I hope that however you’re looking at these prices fall — that you’re interpreting it as an opportunity rather than a nightmare where the sky is falling.
And as always, thanks for taking the time to read this and be sure to follow me on twitter (https://twitter.com/CryptosWith) to get all my latest updates. Also, looking for a gift for your Crypto-loving/hating friend? Give them a REKT journal to cheer them up!
Disclaimer: And as a final reminder, this is not financial advice and this is for educational and entertainment purposes only. Please as always, do your own research and find what investments are best for you. Cheers everyone!
