Happy New Year 2023

The crypto market turned red

The crypt turned sharply red when no one was expecting it! It would seem that bitcoin and the crypto market stood like a stone in a sideways movement and the funds looked stronger. Why was there a sharp exit down?

  1. There is a strong manipulation by system players: binance wants to absorb FTX and do it cheaply. It is desirable that investors would pay them extra for this.
  2. This should have happened systematically, accumulations are strong, and going down looked more logical.
  3. In the absence of liquidity, the crypt cannot grow contrary to the markets. Everything in the financial system is connected so far! Until the fed softens the rhetoric and gives liquidity, it will be difficult for the crypt to grow on a broad front. Yes, private ideas will take off, and there will be more and more of them. But, globally, while there is no fuel, this rocket will not fly up.

To sum up, the crypt has naturally adjusted, bitcoin has only 20% left to fall before targets, and then it will be possible to make a decision about purchases.

Bond Market Outlook

The smartest market in the world is the bond market, which seems to be starting to find a bottom. 10-year maturity bonds came to a 4% yield, essentially playing back the news of a sharp rate hike from the Fed! Upon the release of the updates, there will be no reaction, it is important what Powell and the FED say at the next meeting!

The panic started in bad debts, there is a fall at a stronger pace and this is a good signal, just when the state debt falls in the same way as all sorts of bad companies, it skews the market and it becomes irrational.

My opinion is that the panic exit has not happened yet, but the climax of the moment is already close, and it’s time to think about forming positions! The growth in bonds in a year or two may amount to 20 or even 30%, but this is subject to the beginning of incentives and easing of monetary policy.

For stock markets, this does not mean a reversal, securities have not fallen yet and volatility continues, but I do not rule out sharp rebounds, on verbal interventions from regulators.

We are closely watching the debt market, and we are working on the stocks!

Can we fight inflation?

American markets continue to collapse, and it’s understandable, Powell has arranged a clear agenda for everyone – money will rise in price while inflation is high! What should happen in order for inflation to stop – raw materials should collapse, the cost of production should fall, sales in all segments slow down – in fact, stop consumption.

Energy markets have heard the signal. Oil and gas prices have already fallen, and most goods have plummeted – metals, grains, soybeans, everything – the fight against inflation is in full swing.

Yes, you mostly don’t notice it in everyday life, but central banks are fighting an unreal battle, we’ll see how it ends.

Will the crisis end? Yes, of course, the question is with what losses, and which sectors will die, like, for example, the auto sector in the USA after 2008, or a bunch of companies and online stores after the dotcom crisis! But it will definitely pass.

Crypto market outlook

Against the background of the severe collapse of the US stock market, which began its campaign with a speech by Jerome Powell at Jackson Hall, cryptocurrencies look strong.  They fell after the rebound, but overall the situation is stable.

The main question is why and for how long?

Why – it seems that the crypto markets plummeted -70% since the beginning of the year, this is a lot, the stock market fell no more than 30%.

They will hold on for a long time: if the situation on the stock market does not change and we see 3500 points on a wide SP500 index, then we will see a powerful drop in the crypto with Bitcoin trading below 14000.

Let’s see – while we keep portfolios in point ideas and mostly in free positions.

The world economy is increasingly plunging into a protracted crisis, recession and inflation

But how do the markets behave?

In the chart you can see that bullish markets are much longer and more powerful than bearish ones.
In recent years, they are generally very short.

Yes, collapses happen, but they are fleeting, for many reasons:
Inflation, money printing, the model of the world economy of constant growth, new corporate giants and growing consumption.

No one is ever sure what will happen this time, but there are not so many options, the markets will have to beat inflation and those who want to save their money will have to invest in good corporations.

Yes, it is the growing business, retail, raw materials, and ultimately technology, pharmaceuticals, finance, are the ones that will rebound price shocks the fastest.

Nowadays, everything is happening very quickly, much faster than 10-20 years ago, the shock of the pandemic was redeemed in less than 6 months, before it ended! But now there is a systemic crisis, liquidity is being taken away from the market, this is a different situation, and we will see how the regulator will cope with it.