Since I started observing the bear trend at $58,800 and calling for exit. Most crypto cultists made me their enemies. Some even called me a prophet of doom. Issokay!
I trade what I see and I invest in what I understand. If I don’t have the knowledge I spend money to educate myself on it.
“The beginning of wisdom is this: Get wisdom. Though it cost all you have, get understanding.” – Quote from the Provb 4:7
Back to why we are here. We shall be looking at three big figures in the Crypto Space:
1. Feds (interest rate)/ DXY
2. Elon Musk
3. Michael Saylor
1. THE FEDS (INTEREST RATE AND DOLLAR)
My fundamental view: I don’t care what you think about the technology (forgive my ignorance). But the reason why cryptos have seen a massive run since 2020 till date is because interest rate has been low. We have also witnessed massive money printing to cushion the effect of COVID-19 on the global economy.
Now that most countries around the world are clamouring for higher taxes and CBs looking at higher interest. It’s time to know that the party is over.
Technical view: DXY is about to break a trend it has been struggling with since 1985. Yeah! 1985!!. This is no joke. If this breaks out successfully, we could see a multi-year bear market.
What could this mean for Cryptos?
You would be living in denial if you don’t know that over 70% of crypto traders are leverage traders. In other words, they borrow USDT to buy their cryptos. Considering USDT is backed by real US Dollars, we should expect exchanges in the coming months to jack-up USDT borrowing interest rates which could cause quick liquidation for over-leveraged traders in the market. This could result in a cascade selling effect bringing them down quicker than expected (As one liquidation brings prices down for another liquidation to happen).
Reality sets in and it is no longer about the technology but about wealth preservation!
We also do not want to look into the implication of government taxing Crypto exchanges and publicly known Whales with a big hammer .
2. ELON MUSK (NA MY GUY BE THIS)
Crypto became fun since the passionate and shrewd businessman joined the train. For some weeks we have seen Elon Musk sell off some of his Tesla shares to pay taxes of close to $15 billion USD (does this ring a bell?)
Musk started buying BTC around the $30,000s region. Ask yourself this logical question; If Musk can sell Tesla shares (his own company) to pay off tax debts. What emotion does he have for BTC if the government comes for crypto taxes or if he sees an impending loss in sight?
Let me leave that for the universe to answer.
(You would not argue that Elon Musk loves Bitcoin / DogeCoin more than he loves Tesla )
3. MICHAEL SAYLOR (THE OGA PATAKA OF ALL REKT-NATION)
Saylor is a guy of vision, he sees BTC at $500k or $1million in a few years. I agree with him. Why? I think BTC is designed to always trade higher based on scarcity. But I think he failed to understand that the BTC market works in cycles.
Study shows that Micro-strategy’s BTC portfolio averages around $29,000. Incase you don’t know, Saylor poured close to $1 billion of borrowed funds into the crypto market to buy BTC. Considering my analysis above, If BTC falls below $35,000 and interest rates goes higher, Saylor will have trouble paying interest rates and he will be forced to liquidate the assets to pay back debts.
Sorry Saylor, I don’t want to laugh. But this effect could drive prices below $20,000
Blood will be too much and investors may lose faith in the crypto space. This is where the smart money will come in to buy.
Conclusion: I may be wrong, because most times I am usually wrong. Won’t it be nice you are prepared for the worst-case scenario? Well, If the trend changes, trust me, I would be updating my view on this market.
I AM NOT A BULL OR BEAR CULTIST. I AM JUST HERE TO MAKE MONEY. IT’S ALWAYS EASIER TO SWIM IN THE DIRECTION OF THE WAVE.
Written by Black Legend
