Now that the bear market has indisputably begun, many of you have been asking me how long I think it could last. Is this a temporary shakeout where we will see a recovery in a few months, or is this the beginning of a long and cold crypto winter?
Truthfully, the answer is not that clear cut. That’s because there are so many variables that determine the length and severity of a bear market. And, although we have had crypto bear markets before, the landscape has changed considerably since the 2018 crypto winter.
Some factors, such as investor profiles, have improved, but the global macro picture itself is a lot worse today than it was in 2018.
So, in my video today, I’ll be giving you a complete overview of how long this bear market is likely to last. I will break down some of the key things to consider when planning for this market downturn.
I also give you my view as to where some of these cryptocurrencies are likely to go when these turbulent times finally end.
You can watch that video here.
📊 Main Portfolio 📊
No changes to the portfolio this week. Will keep it top heavy in BTC & ETH for the time being. As I mentioned in my Telegram post last week, I would caution against going heavily into alts under these market conditions.
Updated portfolio is:
ETH 39.53% | BTC 34.18% | SOL 5.86% | DOT 5.31% | ATOM 3.30% | RUNE 1.93% | NEAR 1.63% | APE 1.50% | ADA 1.39% | AR 1.20% | MATIC 0.96% | HNT 0.94% | FTM 0.93% | INJ 0.67% | LINK 0.54% | XDEFI 0.12%
📈 Thoughts on Market 📈
And there we have it – the 9th straight week of price decline for BTC. It’s the longest losing streak in Bitcoin’s history, and it looks like it’s likely to continue. That’s because the crypto market has officially decoupled from the stock market, but not in a good way. While the stock market starts to recover, the crypto market continues to crash. So, what the hell is going on?
The first possibility is that investors still aren’t feeling brave enough to take on additional risks by investing in cryptocurrencies. This might have something to do with Terra’s recent collapse, which spooked crypto investors in many different ways. The full extent of the fallout is still being assessed, but the general consensus is that crypto regulations are coming.
The second possibility is that individuals and institutions just aren’t investing as much, be it because of inflation or uncertainty. As per the Federal Reserve’s recent report, there isn’t all that much money sloshing around in the markets. This leads to increased volatility to both the upside and the downside, which could explain the disconnect between crypto and stocks.
The third possibility is that cryptocurrency has entered a bear market, and if you watched today’s video you’ll know that this certainly seems to be the case. Make no mistake though, crypto isn’t dead. There are still billions of dollars pouring in from VCs, and crypto was a hot topic at the World Economic Forum’s recent conference. We’ll be covering that later this week.
The third possibility is the most probable, and we’re finally starting to see signs of capitulation among altcoins. Not only has Bitcoin’s dominance increased relative to altcoins, but even Ethereum’s dominance has started to drop. This seems to be because of an issue that was detected on Ethereum’s Beacon Chain which might have delayed The Merge.
Given that The Merge was one of the only big bullish milestones coming up for the crypto market, the prospect of a delay is really dragging down the crypto market. One of the other bullish milestones in the works is the approval of a spot Bitcoin ETF, but it looks like the SEC isn’t budging – they recently rejected another application and a carbon neutral one at that!
Last but not least, there seems to be lots of FUD floating around about Tether. This is because over 10 billion USDT has been redeemed over the last couple of weeks. This has led to worries that USDT will fail due to a run on the bank, but I’m not so convinced. Allow me to explain…
🤓 Why Tether Is Not A Ticking Time Bomb 🤓
As you all know, USDT is the largest stablecoin by market cap. Just about every single cryptocurrency trades against USDT as the de facto dollar pair. This is why it’s one of the most traded cryptocurrencies, occasionally even surpassing BTC and ETH. It should go without saying then that any problems with USDT would translate to an even bigger problem for cryptocurrency.
USDT is issued by Tether, a crypto company that hasn’t been the most transparent about its operations. It also has a peculiar relationship with cryptocurrency exchange Bitfinex. Tether’s relative lack of transparency and its association with Bitfinex have landed it in hot water with regulators before, but the bigger issue is the question about the assets backing USDT.
If you’ve watched my video about the assets backing the largest stablecoins, you’ll know that all three (USDT, USDC, BUSD) are backed primarily by different kinds of debt. Whereas USDC and BUSD are mostly backed by government debt, USDT is mostly backed by riskier types of corporate debt. To be fair, Tether has noted that it’s in the process of cutting down this debt.
Even so, the concern here is that the assets backing USDT are harder to sell for the same price at short notice. This means that if too many USDT holders tried to cash out via Tether at the same time, Tether might not have enough US dollars to give them. This concern is a part of why USDT briefly lost its dollar peg during Terra’s implosion – that and regulatory concerns.
As I mentioned a few moments ago, 10 billion dollars worth of USDT has been redeemed over the last two weeks, and Tether hasn’t flinched – it’s managed to provide dollars to those who demanded them. Not surprisingly, many of those who cashed out seem to have taken their dollars to Circle and Paxos to mint USDC and BUSD, because these two issuers are regulated.
And this is exactly why Tether is not a ticking time bomb – USDT holders are volunarily rotating into stablecoins with more regulatory certainty, and it’s possible if not likely that this process will continue. Assuming that Tether has enough dollars for USDT holders to cash out (which seems to be the case), then USDT’s decline will be a slow transition to safety, not a run on the bank.
Call me crazy, but I think Tether can see the shift that’s occurring among stablecoin holders in the crypto market. This is because of all the headlines like this one that talk about how Tether is going to continue expanding and improving etc. This is a rhetoric that I have not heard before, and it’s a sign that we’re headed for some interesting times. As if those we’re in aren’t interesting enough.
🐻 Bear Market Expectations 🐻
Now that we appear to be at the beginning of a bear market, it’s an important time to take a cold, hard look at your portfolios with a critical eye. That’s because of the unfortunate reality that some cryptocurrencies, which you thought may have had amazing potential, are unlikely to achieve those previous highs again.
This is based purely on previous experience from the 2018-2020 bear market. Prior to that time, there were a number of cryptocurrencies that ranked near the top of CMC, had extensive exchange support and were the staples of many people’s portfolios.
You can view the historical rankings on CMC for yourself. Some of the cryptocurrencies such as Bitcoin Cash, IOTA & DASH reached dizzying highs in the previous bull markets. However, they never reached those highs again.
I don’t mean to single out these cryptocurrencies, as there are many other coins lower down on the list that also haven’t recovered. It’s also not an indictment on a project if the coin or token hasn’t been able to reach those previous highs again. Sometimes, no matter how much potential a project may have and how amazing its tech is, the market perpetually discounts it.
What this means is that there are likely to be a number of other cryptocurrencies that reached all time highs in the 2021 bull market that are unlikely to recover.
This is also likely to play out to a large degree in the NFT space. I am of the view that at least 95% of the most highly hyped collections are unlikely to ever recover. During the NFT mania of last year, there was too much saturation and insane speculation, which will lead to capitulation.
Now of course, I don’t know what your portfolio looks like. You may have a solid selection of really promising cryptocurrencies that are likely to outlast this bear market and thrive. Likewise, you may have invested in that NFT that turned out to be one of the 5% that did go to the moon.
All I am doing is playing a bit of devil’s advocate and asking you to analyse your portfolio through a completely impartial and critical lense. The last thing that you want to do is hold a bag through this bear market hoping for a return to bull market highs – all while passing on some of the newest projects building in the space.
🔥 Deal of The Week 🔥
It’s no secret that the vast majority of crypto fans are currently men. That’s a bit of a shame for overall crypto adoption, as last time I checked, women actually influence or carry out 85% of all retail spending.
That’s why I think that the increased interest in crypto, amongst women, is important for the long-term growth of the crypto markets.
So, I am keen to get Coin Bureau ladies’ merch into as many hands as possible and that is why my team and I have decided to run a flash sale for a week. So, if you want some ladies merch from the Bureau then now is your chance to bag yourself a discount!
🔮 Video Pipeline 🔮
- Worst Bear Market Mistakes You Can Make
- Is There Still a Future in GameFi?
- Avalanche Update: Still Worth It?
- World Economic Forum: Their Thoughts on Crypto…
- Vitalik Buterin Research Paper: Crazy Idea – Souls as NFTs
- The IMF: Saviours or Villians?
🏆 What’s New At CoinBureau.com This Week? 🏆
✅ Splinterlands: Blockchain’s TCG Powerhouse?
That’s it for this week. Yes, the bear market isn’t as exciting as the bull variant. However, the Coin Bureau Team and I are blown away by how many of you continue to care about our educational content. This honestly means the world and gives us that motivation to continue creating the best videos and articles we can. So, thank you for that!
Guy your crypto guy