The market for cryptocurrencies is going to be moving downwards in the short term due to a period of quantitative tightening. The government is taking money out of the economy, essentially destroying demand and reducing spending, in a bid to self-correct the economy. This is the opposite of quantitative easing which was practiced in 2020 and 2021. The cryptocurrency market is likely to be hit hard in the short term, particularly smaller altcoins. A recession is predicted to happen in the next 6-8 months, making it a good time to dollar cost average. Despite the bleak outlook, there may be a silver lining for crypto if there is any bullish news exclusive to the market.
Hey you lovely people, it’s the superman, your superhero of cryptocurrency. I wanted to relay how I feel the market is going to be moving in the short term and it’s not good news.
In the last week, I’ve been doing a lot of research, and I’ve come to the conclusion that we are in a humongous show. The interest rate is only really a tip of the iceberg as far as the economic trouble that we are in. What we are in is a period of quantitative tightening, which is essentially the government taking money out of the economy.
Quantitative easing was what we were having in 2020 and 2021 which is where stimulus was being given out to various members of the public and particularly in America also in other countries. That was because of working from home; it was because of the pandemic, and people were struggling from a financial aspect. The stimulus packages were sent to prop up the economy, so that was putting money into the economy.
The Short-Term Situation
Now we’ve got the opposite of that; we’ve got money being taken out of the economy essentially to destroy demand, to reduce the amount of spending, so that the economy can self-correct. But that’s just the mountain that has been created as a result of 2020 and 2021, looks as if it’s just going to lead to a rather dire situation particularly in the short-term.
The Crypto Market
I’m hoping there is some form of silver lining that’s exclusive to the crypto market that affects the crypto market only because what we’ve got right now is we have got all of these economic troubles. We know about boycotting of Russia and therefore losing a cheaper supply of oil and natural gas means paying for individual supplies that are more expensive for oil and gas, and all of these various commodity cost increases is making the dollar stronger. So in the very short-term, I imagine there is going to be quite a bed kind of moment where I’m imagining that cryptos, I mean, they’re already making that move. You know, bitcoin was 28k earlier, and now it’s 27k and dropping, and it just looks as if we’ll get a big move to the downside very soon.
The Altcoin Market
If you’re in stables, it could be a very good time to dollar cost average should this move actually happen. But I do think that I do foresee a move more to the downside, and while bitcoin is actually sizably going down, I do think it’s going to have obviously a catastrophic effect. The smaller the altcoin essentially, the harder it could be hit possibly.
In 2018, which was the immediate year of the bear market last bear market was the worst, and of course, this is the immediate period after the bull market. It could be the case that things get better eventually maybe I don’t know. As far as I’m concerned, a recession is coming; a recession happens because the US can’t control spending.
It looks like we’re in for a rather bleak period. So, dollar-cost averaging in this period is a very good idea.