Markets are reeling after the Chairman of the Federal Reserve Jerome Powell warned that additional pain was coming for the economy. Interest rates are still poised to move even higher, which will likely put additional pressure on risk assets. In the long run, rising interest rates will only mildly impede the adoption of digital assets. It is important to remember that major players like Point72’s Steve Cohen are beginning to position some of their capital into crypto. In time, we expect to see more institutional money make a big impact in the crypto space.
One digital asset that we have not yet covered in our briefs is Avalanche. Avalanche is designed to be a better version of Ethereum – with faster and cheaper transactions – and an ability to create custom applications on its network. Presently, the Avalanche price chart has some severe market-wide implications and may very well be a ‘canary in the coal mine.’ For instance AVAX is near a critical level of support, and should we see a break beneath $20, then it is possible we witness Avalanche break down to $9.
With all of the market catalysts that are at play right now, whether it be geopolitical concerns with China or Russia, the launch of Ethereum 2.0, a stock market crash, or 140,000 BTC awarded to the victims of Mt Gox attack being distributed at the end of the month, much pain appears to be ahead for Crypto. In our opinion, now is not the time to be foolhardy and build out robust long positions in the market, but rather wait patiently on the sidelines and see what the market has to offer. If we do see an additional correction in crypto, that will be an incredible dip opportunity.
Typically, after we see a large wick down in digital assets, there is an incredibly strong rebound quickly. Over the span of a few days, it is possible to see certain altcoins rally 50% to 100%. The ones that have the tendency to perform the best during those times are usually those that have been hit hardest. If we see another leg down in crypto, then we will provide a comprehensive report as to which altcoins we believe will have the strongest rebounds. We remain steadfast in our long term choices available in the Model Portfolio in the Crypto Portal.
