Bitcoin has finally broken $18k as real capitulation begins to set in. And while the past two days have seen a brief bounce in the crypto market following positive CPI data, we do not believe the bottom is in for crypto or stocks. Our projections for a low in Bitcoin are between $9,000 to $12,000. The lower Bitcoin is able to go, the cheaper altcoins will be.
The current situation with FTX serves as a harrowing reminder that nothing in crypto is certain. A few months ago, FTX appeared to be an unstoppable force acting as the crypto industry’s pseudo central bank. However, within the span of a week, we have witnessed FTX go from a titan in the crypto space to filling for bankruptcy. The best way to safeguard against points of failure in crypto is to take custody of your own crypto by leveraging a cold storage wallet. While cold storage sounds intimidating and overly complex, certain platforms can make it quite simple and easy. Our preferred option is provided by the company Ledger and takes only 10-15 minutes to set up.
With FTX continues, collapsing there is the potential for systemic risk in the market. FTX took capital from other crypto companies and exchanges as well as from prominent investors such as Kevin O’Leary. With many of these companies are now in a fragile position due to the lack of interest in crypto, the situation with FTX will likely cause more strain on their balance sheets. Over the coming weeks, these companies could suffer from a liquidity crunch, which at best will lead to them liquidating more of their assets, and at worst filing for bankruptcy.
Even though the crypto market’s sentiment is extremely grim, opportunities like these allow people to accumulate large positions in different projects at incredible prices. The real beneficiaries of crypto’s momentum in 2021 and the beginning of 2022, were those who had exposure to it for a number of years. We believe that accumulating crypto during bloody pullbacks in the market improves an investor’s chances of entering a winning position. Ultimately, it is our belief that crypto is a waiting game. Despite many people entering the space with the hope of getting rich quickly, investors who are willing to hold and establish positions during bear markets are the ones who will be most greatly rewarded.