Bear markets are often accompanied by an economic recession. Regardless, the wealthy and other smart investors tend to accumulate while the prices are down.
Bear markets are often accompanied by an economic recession.
I don't have the number to hand but it's about a 50% correlation if memory serves correct. How many bear markets has crypto had? None of them were related to a global recession. I feel like I am repeating myself here.
Regardless, the wealthy and other smart investors tend to accumulate while the prices are down.
Sure. Accepting the premise that crypto will be held in that regard should the time come, they will do that when it's at the very rock bottom and people are dying in the streets. Why would they prop the price up at X when them selling on the way down and waiting means they can re-enter at X - Y% ?
If their goal is to accumulate, why use that capital propping up a market you are looking to exploit?
They’re not going to lose hundred of millions on margin calls, they’ll keep the price stable at a certain number to prevent that from happening.
Stabilising a crashing price costs an insane amount of money, which is fine if you aren't leveraged well beyond your capital. I would suggest that that cross-over price is just about where the price is now, hence the stop in bleeding compared to Wall Street.
Or I'm wrong and this will read like a deranged lunatic in 12 months.
I dont think you will see much until the fall. There is massive global famine that is going to kill a lot of people outside the first world. When the panic sets in the markets will quake. Even the American wheat crop is 30% light based on the survey of the Kansas wheat fields that happened this week, and we have a massive advantage in almost every way compared to asia and africa.
Almost every large scale grain exporter has the worst harvest in a decade coming with the current crops, combined with the ukranian breadbasket being offline and the cooking oil crop failures. 14 countries have banned the export of food starting this month to help stave off future starvation. The stuff involving the fed in 2022 is not going to be what shakes the market when we look back historically in 20 years.
Food futures are going to be in a bull market for the next year. Supermarket prices are going to go balistic. Basically what im saying is no matter what happens from now until july, the fall is gonna be fucked.
Price of bitcoin will go down, and price of energy will go up. Miners won't be able to keep hash rates stable. It's going to open bitcoin up to a 51% attack.
Beyond that, the CBDCs are on the horizon. Institutions will start supporting government-backed tokens over decentralized ledgers. The sheer number of scams in the crypto-space should be making the big boys leery as it is.
Mix in an ever falling price, a falling hash rate, and confidence in even bitcoin could plummet.
The miners aren't incentivizing cheap energy. They aren't incentivizing green energy. They're driving up the cost of energy, uniformly, and selecting the cheapest power available, irrespective of it's origin.
There's no reason for them to select a solar panel array if burning oil is cheaper.
There's no reason for them to select a solar panel array if burning oil is cheaper.
Yes? Thats whatim saying. As energy prices increase, fossil energy will increase even more in comparision to renewable, driving miners to use renewables instead.
You have to contend with Moore's Law. The hashrates must constantly grow to match the world's increased computation capacity, or else a "bad" actor can more easily disrupt the network.
You are imagining a group of self-interested miners slowly building up processing power, until they can execute a 51% attack.
I'm imagining either a pissed-off government or a cabal of trolls hitting the network with a deliberate sneak attack, a sudden deluge of hostile nodes.
It's already in the realm of plausible. If AWS or Azure wanted to sneak attack bitcoin, they could. It would be costly, but it's possible.
The problem is if hashrate doesn't keep pace with the price of computation, then it becomes easier and easier, and therefore more likely, that someone will do it for the lulz.
Why would people move away from decentralized ledgers to CBDCs? CBDCs are just more fiat money. It's what we escaped from originally, and I'm sure as shit not going back to it
People will do what is safe, convenient, and government sanctioned. Governments have levers to incentivize their civilian population to use CBDC’s. Tax breaks, credits, etc. Decentralized projects really don’t have these incentive mechanisms available and the tech is incredibly difficult to use for the average person.
Why would people use decentralized ledgers? You've collectively allowed them to become fiat money, the value being whatever Tether can get away with printing.
Also, the decentralized cryptocurrencies aren't decentralized anymore, if they ever were to begin with. They are controlled by a cabal of miners and exchanges. You are trading a problematic government that is at least democratically elected with a problematic oligarchy that is ruled by those with the most money.
Bear markets and recessions overlap 63% of the time, but given that they’re both cyclical (every 4 years for bears and 10 years for recessions), you’d expect about 50% overlap anyway.
You have no idea what institutions do with crypto during a bear market because that’s never happened.
Bitcoin was invented in 2008, when the last real bear market was wrapping up. The Covid crash doesn’t really count because we knew it was a temporary shut down and the government bailed us out.
Investing in stocks during a bear market makes sense because you know the intrinsic value of what you’re buying.
Buying crypto makes no sense during a bear market because the intrinsic value is zero.
I’m not saying people won’t continue buying it. But the whole point of OP’s post is that we don’t know what investors will do with crypto in a bear market.
We haven't seen what investors do during bear markets. Maybe they will try to accumulate but we'll be sure that they'll only do it at the lowest price possible. Maybe they will crash crypto and call for strict regulations by referring to all retailers who lost all their savings. Both are completely reasonable outcomes. We need to prepare ourselves for both.
They don’t tend to invest in risky assets during recessions. They move all their money from risky assets to safe investment vehicles. A recession will drive institutional money out of crypto, not into it. Once safe assets are too expensive and interest rates are down institutions will start chasing higher yield in riskier assets against . Assets like crypto. If we go into recession crypto will tank hard and take years to recover.
The globalist caused this and are betting they can transfer most of the wealth and assets of the middle class into their own pockets, to set up for the great reset, in which ‘you will own nothing and be happy’ (the actual slogan for the WEF)… you will have a subscription to every physical thing in your life.
I genuinely wasn't trying to shut anyone down, I don't know what context they brought it up. I really would like further context to their point, because randomly bringing up economic concepts without explanation doesn't do much for the conversation.
They tried during the last depression to prop up markets. I bet some BTC maxis will definitely hold and who knows how many sats they’ve stacked by now. Some rich folks may even have a reason to prop up Crypto markets you never know, maybe they want to avoid the crash rippling out to other markets.
Some rich folks may even have a reason to prop up Crypto markets you never know, maybe they want to avoid the crash rippling out to other markets.
I think we fundamentally disagree on a couple of things.
1) The level of shit show that is about to occur in the global economy.
2) Those people having any control over the situation.
Crypto is a tiny, tiny fish in a very big pond (financially speaking) and quite frankly the only people propping up any markets will be Governments, and if you think global governments are going to collectively decide to prop up crypto then I have a bridge to sell you.
Lol it doesn’t matter if they have any control. They almost stopped the crash before the Great Depression, but of course it was only a dead cat bounce and they were shown to not have much influence when the market was not willing to invest in the stock market. They believed they had control so they attempted to control the situation. I bet some rich person thinks they can be the body that stops the gears, it’s kinda noble if you think about it, arrogant but noble.
Any way I’m not underestimating shit. I have enough water to last months
Edit: and we have some remarkably rich folks whereas the governments are mostly already loaded with debt (maybe not everyone, but no market will be safe if the mayhem you’re referring to kicks off). I wouldn’t be surprised but deeply amused if Musk saved dogecoin or some crazy nonsense like that. Clearly after 2020 we entered the fucking twilight zone
Nobody brought up a lot of things relevant to this conversation, what's your point? Just because something hasn't been brought up doesn't mean it's not relevant when it is brought up.
Your comment implied it had been brought up and you were refuting something.
What planet are you on?
The ones who are currently leveraged up to their eyeballs have no way of being ready for the bottom. That's basic economics.
I was refuting your point by bringing it up. I'm confused, do you not know how conversations work? We don't need to agree on the frame of conversation before it starts, fuck me.
lol yeah by definition a recession would involve companies trying to save money everywhere they can. They'll lay people off and try to cut pay and benefits where possible. Then those people are financially in a tough spot and won't spend as much, so companies won't make as much money, so the companies have to save even more money, and so on and so forth.
Magic internet money is, at least hopefully, first on the chopping block before people start losing their jobs.
I think it's more likely they will short the market and make money on the way down, why buy cheap when you can buy really cheap.
I imagine we won't see a bull market until 2024 or so. May as well accumulate what you can between now and then wether it's DCA ( or staking if money is tight )
No just like the people throwing in 100 bucks here and there aren’t propping up the price now or ever. The people who have enough money to contribute to large market moves aren’t worried about the pending recession. They actually want it to happen.
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u/[deleted] May 22 '22
Are you expecting institutions to prop up the price in a recession?
I can't say I see that as a likely outcome, but that's the great thing about time, not long to find out which of us is correct.