If you’ve been keeping up to date with our periodic updates and hopefully followed the same actions we took back in late April then your probably glad you did, and you’ll now understand why taking back your initial capital along with some profits can work in your favor! (If you didn’t and your feeling sick to your stomach, don’t worry, keep reading) either way you’ll have learnt a very important lesson as an investor. (Sometimes lessons are very unpleasant!)
The past week has been an absolute bloodbath in the crypto markets, just this morning (Sunday 23rd May 2021) the entire market went off yet another cliff as it has been all week. I know my stomach was churning and my mind was automatically asking why we hadn’t sold out everything a week ago, we were doing so euphorically well!
But instead of panicking Consciously think back to why we’re in this in the first place, zoom out a little and take a macro view.
We just wanted to weigh in to you, our subscribers as we know there’s a lot of questions at the moment.
Sometimes a Macro view is a good way to settle your stomach in volatile times.
If you recall in our last update in April, we decided to take our initial capital off the table as the market was showing signs that things were getting out of hand, with projects like dogecoin being a warning sign that volatility was probably around the corner somewhere. But we also stated we’d be leaving most of our hard earned gains to ride the waves which meant that we didn’t think the bull market was over.
We stand by that now as we did then, This Bull Market Is Not Over Yet!
it sure feels like it is! But it’s not!
Here’s a look at past crypto bloodbaths
You can clearly see there’s been bigger bloodbaths than the current one we’re in now, what this means is that the industry isn’t dead and at other points in history it has crashed to this extent and still maintained its bull market, so this one probably isn’t over either. but the volatility is so great that many can’t handle it and panic sell, this makes the problem worse, (the term used in investing is that the “weak hands sell and the strong hand buy” we advised taking back your initial capital as a way to mitigate your risk and to act as a voice of reason to stop all of us from panic selling in times like this, we don’t want to be the weak hands.
The bloodbath we’re now in the midst of came about as a byproduct of a whole bunch of negative news (fud) in the space which sparked negative sentiment, Panic selling by “weak hands” those that hadn’t claimed back their initial capital, and those that had more invested than they could stomach loosing.
Essentially on the back of a bunch of bad news, like chinas potential ban on cryptos, the weak hands started the sell off by dumping everything they could and bailing out, this snowballed and triggered automated sell offs of crypto related financial products including futures contracts, loan collateral in the defi space, and AMM (automated market makers) all of this has lead to the market falling off a series of cliffs with apparently no bottom in sight.
But…..in times like this we need to look at what the strong hands are doing, the strong hands are the investors that have the most invested, they have the power to move the market the most, they are not selling!
In fact some are buying,
glassnode released an update which shows that the bitcoin whales, (the wallets with the largest deposits of bitcoin have not been selling at all, not even a single bitcoin, this tells us that despite all the FUD and negative sentiment, the largest players in the game don’t think the bull market is over, this is very important and it gives us reason to believe that we are not the only ones who are holding tight and riding this one out.
As long as the whales don’t sell, this is temporary, and in our book, the whales and institutional investors won’t sell now simply because the market has crashed to hard that at least for institutional investors they’d be selling at a big loss, so they won’t, they’ll sit tight, which also means the bottom of this thing may not be far away.
We don’t know any better than you do where this current bloodbath will end, but we think it is close to its bottom and the bleeding will stop soon. If we’re right and it does, the market will either trade sideways for while before resuming its bullish sentiment or it will bounce back up fast and make new highs.
As another example, there have been a number of very large bitcoin purchases intensifying as the week progressed, what this means is that some whales and institutional investors are “buying the dip” as Rothschild once famously said, “the time to buy is when blood is running the streets” while I don’t like this saying, it’s true and their buying!
Keep in mind, crypto is one of the most volatile investments on the planet, bloodbaths happen often!
But equally as often it bounces back as hard as it crashes.
I should add that in our opinion Elon musks tweets are over rated, but he does have a cult like following and weak hands will take action based on his tweets, he knows this, (not that Elon’s tweets are solely responsible for the current bloodbath) but he is trying to manipulate the market with negative sentiment to cause a price drop so he can load up on bitcoin at a lower price, I wouldn’t be surprised if next quarter Tesla filings show that they bought a huge amount of crypto during this bloodbath, or if he came forward with a supposed solution to make bitcoin mining “green” he bought initially because he believes it has its place in the future and he hasn’t changed his mind, it’s an attempt at market manipulation that’s all, don’t be fooled!
This industry is just getting started, the future is bright, this is nothing more than a hiccup along the way, the future applications of blockchain are immense and it’s just beginning.
Keep your heads up, don’t panic, think back to why your in this in the first place, it’s not over yet, at some point soon the bleeding will stop and it just might go back up almost as fast is it’s all went down.
Hold tight!
Francis Holmes
23rd May 2021
