Holiday Gatherings - Perfect Time For Crypto Conversations - Is the Bear Market (almost) Over?

It is that time of the year again, this year is different

After almost three years of social abnormality, this year things are back to almost 2019 normal. In person parties are back! Everyone is in good spirit and it feels surreal to meet so many people at once in the physical world. Hugs are back too! It was uncommon and often frowned upon in the past couple of years.

Unlike previous years, people don't talk about the markets, people don't talk about investment success and what to buy. In this environment such chatters only add to stress. Holiday season is the time to celebrate, for many, financial matters are not something to be proud of this year.

With SBF and FTX grabbing the headlines (again) just this week, inevitably, the conversation quickly turned into something like this:

"Did you lose money on FTX?"

"I would never buy crypto."

"If I cannot touch crypto, I am not buying it."

"Are you sure you can cash out the value?"

Interesting, bad news still sells. What else is new? They don't have crypto, so they don't feel bad talking about crypto!

This is a good sign, we are still nowhere close to "mass adoption", that means we have at least another cycle to make extraordinary gains in crypto

These are the people who were awed by the massive run up in 2020, and almost dipped their toes into crypto back in 2021 after hearing BTC was going to top $100,000.

Due to technical reasons they never pulled the trigger - wallets and keys and taking responsibilities were too hard to comprehend.

They missed the boat on the way up. Thankfully they also missed the boat on the way down, which may have caused bitterness and distress right now.

It seems the majority of people still have not invested or experienced any crypto, we are still early!

Crypto space is still very inaccessible for the masses

Centralized exchanges have been the gateway for newcomers to get comfortable with crypto. After the FTX mess and the contagion it caused bankruptcy to multiple other CEX, there will be trust issue to get new people into this space.

Is regulation the only solution? The potential fallout is investors crying for regulators to step in after FTX saga.

Regulation tend to instill trust and the sense of legitimacy in the mind of the masses. Or will someone come up with a solution that does not involve regulation while building back the trust and confidence to further crypto adoption?

• How do we ensure new people can easily safeguard their private keys and self-custody without resorting to centralized entities?
• We want decentralization and how do we ensure people don't lose assets in the event of DeFi hacks? (At least under the current banking system depositors would be compensated and made whole)
• What will be the next breakthrough to make crypto simple and non-technical for an average person?
• How to on/off ramp to fiat easily while still complying with AML without going through centralized KYC exchanges?

This bear market really made the splash

There are hardly any signs of bullishness, whether it is stocks or crypto or real estate, and this is good. People are so worried about their mortgage payments and interest rates going up. Everyone is expecting a recession next year, the question is how deep?

Fed absolutely wants to see a recession, they will make sure of it. The market knows that, the market priced in a recession, the market priced in further interest rate increases.

The market does not like bad surprises, there could be another black swan event (and always will be. The question is when and not if).

With so many issues everywhere, the war still going on, geopolitical tensions seem to escalate, supply chains continue to reorganize and disrupted, and draconian policies continue to be proposed and implemented despite protests, there are just so many and too many issues that could tank the market.

Other than black swan event which we cannot predict, what's known are already priced in.

This is more bullish than bearish

We have to remember:

• Market is forward looking.
• Market recovers before the economy recovers.
• Market climbs the wall of worry on the way up.
• Market turns the direction when you least expected.

Historically bull markets last way longer than bear markets

An average bear market don't last longer than 1 year (for stocks). BTC bear markets were a bit over 1 year. Aren't we almost there?

2023 may be the year of accumulation (this is speculation, not a financial advice)

I doubt crypto will be top of mind for most people. Recession needs to play out. Companies will use this opportunity to restructure their workforce (lay offs), clean up the operations, strengthen the balance sheets, perfect opportunity to get all the bad news out there and reset.

Consumer Price Index (CPI) tapered because people, like the market, form expectations. The expectation is bad times are coming, just wait until January when all the Black Friday and Christmas shopping bills come in, alongside winter heating bills. Some will face even bigger challenges with job losses as companies downsize.

That's the maximum pain and capitulation. Then the cycle starts over.

Crypto will really go up when the hot money (capital flow) returns in due time, until then, we have to be conscious and prepared that there may be another leg down in the final capitulation as many would be forced to sell their investments (including cryptos) to stay afloat and pay the bills come next year, even if they have the sell at a loss.

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If you haven't already, please check out my other posts talking about diversifying your income and cashflow, investing vs. gambling, and historical Fed Funds Rate implications.

• The Winning Strategy in BOTH Bull and Bear Markets
• Are You Investing? Or Are You Gambling?
• Is Higher Interest Rate Really That Bad? From a Historical and Mathematical Perspectives.

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