To global finance, 2022 has seen one challenge after another. During the first half of the year, the US stock market had been bleak: the Dow Jones fell by 15.31%, the S&P 500 by 20.58%, and the Nasdaq by 29.51%. The commodity market also suffered a major short squeeze in Q1. By the end of the epic short, JPMorgan Chase lost $120 million, and Tsingshan Holdings went into a quiet period.
As the macro-finance kept declining, countries have had to adjust their monetary policies to tighten liquidity and control inflation, which has had a considerable impact on the crypto market. Meanwhile, the LUNA meltdown has turned the over-leveraged market into a minefield. Three Arrows Capital may become the first big institution to fall in the current bear market, which has been unnerving for both individual and institutional investors.
Filled with all kinds of “tips”, the market has been overtaken by panics, and investors have also become pessimistic, which is natural considering that the current decline set the market back by two years. That said, where there are risks, opportunities follow. Since June, though many individual investors have been swayed by market sentiment, some institutional investors have recovered their cool and started buying low.
Digging gold amidst market panics
On June 13, Anthony Scaramucci, founder of SkyBridge Capital, said in an interview that he is still optimistic about the market prospect of Bitcoin and Ethereum, and that the Company has bought more Bitcoin and Ethereum.
On June 28, Hany Rashwan, founder of the crypto ETP issuer 21Shares, said in an interview that the platform saw $30 million of inflows into their flagship BTC ETP, signaling new waves of investors entering the space.
On June 29, MicroStrategy announced that it acquired approximately 480 bitcoins for approximately $10 million, at an average price of approximately $20,817 per bitcoin. As of this writing, the company holds about 129,699 bitcoins that are worth about $2.53 billion.
At the same time, El Salvador’s President Nayib Bukele also announced on social media on July 1 that the country bought 80 more bitcoins at approximately $19,000 each. El Salvador now holds about 2,301 bitcoins that are about $44.94 million.
These are all signals that the current bear market might have hit rock bottom. Some institutional investors and national governments seem to think that the time for bargain hunting has arrived. Yes, the inflow of funds has little impact on the overall crypto market, with no substantial price influence, but such moves at least help us determine the future market trend. Moreover, the market will not necessarily rebound after bottoming out, and whether there will be a real recovery depends on global financial liquidity and the flow of funds in global financial markets.
Predict trends through market indicators
Let’s now turn to certain indicators that have tracked the crypto market since the last bull. First of all, although the dominance of the BTC market cap has dropped to around 40%, Bitcoin remains the primary underlying asset of the crypto market.
Next is the Bitcoin Ahr999 Index, which has once become the golden rule for crypto holders. Throughout the first six months of 2022, the Index had been fluctuating around the fixed investment zone, but making fixed investments now is not advisable considering the extreme market swings. On June 13, the Index fell below the buy-at-the-bottom line, which explains the actions taken by institutional investors. To date, the Bitcoin Ahr999 Index still fluctuates around the fixed investment zone. Note: the reference to the Bitcoin Ahr999 Index is merely for assessing the overall market trend and should not be relied on as the prediction of the BTC price.
Lastly, let’s take a brief look at the BTC fund flow distribution. From June to now, there have been more daily outflows than daily inflows, which reflects weak market confidence throughout June. This is also a major factor that determines whether the market will rebound in the coming months.
The various market crises are merely part of a crypto reshuffle that echoes the trends of our time. Meanwhile, as global finance declined, the world suffered from a liquidity crunch, which led to the chain reaction of crypto de-leveraging. After the reshuffle, only long-term investors and top cryptos will survive. Apart from that, some crypto companies with sound asset performance have not been much affected by the sluggish market conditions, and we believe that the market will soon take a turn for the better.
A final tip: if you did not buy any cryptos in today’s bear market, then you would not be able to profit from the next crypto bull. So, are you prepared for the bargain hunt?
Disclaimer: This article offers no investment advice, and all statistics mentioned herein are for reference only. The information provided herein may not be relied upon for investment decisions, for which you will be fully liable.
Many individual investors have been swayed by market sentiment.
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