69
The overall crypto market has corrected by over fifty percent since the November all-time high. Explanations abound as portfolios vaporize. Whether it’s the Federal Reserve’s tapering, or the deliberation over raising interest rates, the fear of the equities bubble finally bursting, or the simultaneity of all these happening at once, but one explanation that has received scarce mention in the Cryptoverse is that the skittishness has arisen from the spectre of war hanging over eastern Europe. While prices have stabilized from the “welcome to 2022 crash,” we continue to trend down and are far from being out of the woods.
This bear market sneakily crept upon us, at first it was a small slide from the all-time high, then a large dump when the Fed’s not unexpected remarks were made public. At this stage denial was still strong that there would be a couple of months of choppy sideways BTC before a new parabolic leg up. Now we can finally dispense with those delusions. Zooming out on the daily and weekly time frame Bitcoin is going to have a rough first half of 2022. Could this latest price crash be related to geopolitical tensions? Are institutional players manipulating the price to accumulate?
Of all the excuses and justifications for the collapse of the crypto market there is one shadow that looms overall, and that shadow is the threat of war. As the armies of Russia stand poised to violate the sovereignty of the Ukraine, markets are volatile and destabilized. It is a surprise that there is a general lack of recognition in the Cryptoverse about the effects a war in Europe will have on the markets. There is a disconnect between the crypto world and the real world. Many macro factors are just simply ignored. As the crypto market becomes more entwined and correlated to the traditional markets this discontinuity can no longer be ignored.
Bitcoin has over the past couple of years become heavily correlated to traditional equity markets. Crypto currencies have become a high risk, high reward place to park capital. As the financial herd bolts at the first whiff of blood, the Cryptoverse suffers a more exaggerated capitulation do a risk off attitude during periods of high volatility. As more “institutional money pours into this emerging sector then this correlation will tighten, crypto is vulnerable to plutocratic capture.
Despite all the volatility and uncertainty one thing is clear, we are in a multidimensional shift of order in human societies on a global scale. The post-war order geopolitical order is disintegrating, authoritarian regimes around the world are ascendant, the rules-based order that has served the world for the past seventy-five years is under strain as nation states pursue more self-serving autarchic agendas. The financial system is in the midst of a monumental transformation as well. The injections of liquidity and measures that have been in place for the last dozen years are coming to an end. The age of easy cash is probably already over. The real estate market in China is unravelling despite the CCP’s attempts to paper over the crumbling concrete with propaganda. The true extent of China’s real estate bubble has not been fully felt by the global economy.
Momentous technological, and sociological metamorphoses are all occurring in tandem with all that is happening, we are truly living in an unprecedented era of accelerating change. Change and disruption are typically a good thing, innovation and increasing efficiencies are a benefit to all. But when these disruptions are applied to the nation state level and empires are threatened to be disrupted and the current modus operandi is no longer applicable then disruption becomes destabilizing. A brief example of such a disruption is the development of hypersonic missiles. This technology threatens to upend the geostrategic concept of mutually-assured-destruction the cornerstone of the nuclear age. Many changes such as this are threatening the order of the world and are scary to the old men desperately gripping onto power in the world’s autocratic regimes, or their developments embolden these same despots. Either way the world is changing, and not necessarily for the better.
A Russian invasion of Ukraine will send shockwaves through the financial markets, there will most definitely be a panic fueled sell off. This shock will have a disproportionate effect on the Cryptoverse, further exacerbating the downward trend we are witnessing. Panicky sell offs are a good buying opportunity for long term hodlers, but it’ll be rough. The coming weeks will provide a denouement for the Ukraine “crisis” Russia could very well invade causing havoc in Europe and the global markets. Or Russia could continue to hold its position to keep everyone off balance and the pressure on Ukraine, similar in fashion to how China is treating Taiwan. Either way the next couple of weeks will be decisive, and if there’s to be an invasion it will have to begin sooner rather than later.
Fellow cryptonauts ignore the bigger geopolitical picture at your peril. Any major shocks to the traditional financial system will have an outsized response in the crypto sphere. Are we out of the woods yet just because the last couple of weeks has seen a modest stabilization/recovery in the crypto markets? No definitely not, in the short to medium term we may see further price declines as the downtrend continues to playout but long term the macro uptrend continues to hold we just have to suffer a little pain with our patience.
TIME is the most valuable coin and thank you for spending yours reading my post. I hope you have a wonderful day.
>>> Anarchiss <<<
Check out some of my previous posts:
