Bitcoin still remains in a precarious position. BTC will not resume any sustained bullish uptrend until it overcomes the $17,500 level. As more information unfolds about systemic risks in the crypto market, we expect investors to price in these potential risks. Historically, bear markets are a time for the integrity of various pieces of the cryptocurrency ecosystem to be tested by the market. While many companies inevitably go bankrupt during times of economic scarcity, the ones that do survive typically come back stronger. FTX, Voyager, BlockFi, and Celsius are all examples of weak companies that failed to survive the bear market, and in time we suspect to see more major firms go under. One such suspect is Micheal Saylor’s company, MicroStrategy, which has been purchasing Bitcoin with leverage for several years now. Speculation around MicroStrategy’s leveraged entry prices – all much higher than current levels – suggests the extent of used leverage can lead to a massive margin call should Bitcoin reach some unknown level beneath $10k. As we have expressed before, crypto as it exists today has never been through an equities bear market, and digital assets can surprise investors to the downside. However, should we see a massive decline in the crypto market next year, we suspect that this will create a slingshot effect for the crypto market’s next inevitable bull cycle. A smart strategy to capitalize on this bull market is to dollar-cost-average in over time, regardless of the price of assets. On a weekly, monthly, or quarterly basis, accumulating more assets during a bear market will more often than not prove lucrative.
Even though it is a troubling time to be a crypto investor, there is the possibility that XRP decouples from the crypto market. Since 2018. XRP has created a cup-and-handle pattern on the monthly chart, and with the lawsuit going in a promising direction, it is possible that XRP could produce a large move. Unlikely many altcoins, XRP is being actively used by the company Ripple for cross-border payments. If Ripple is given the green light to operate in the United States, then we expect to see XRP increase in value due to speculation and real-world utility.
