Today on the show, Ran talked about the market conditions and whether there’ll be a market recovery soon or not. We also had Richard Heart and Big Cheds on the show giving their own predictions on where the winds will blow in the coming days.
- Is this recovery real?
- So, from here, where to?
- Is it safe to buy?
- Which tokens will Coinbase be listing soon?
Is this recovery real?
We are seeing a little bit of a recovery and today is the first day of the Federal Open Market Committee (FOMC) meeting. We are going to get the outcome of the meeting tomorrow. The market has responded in anticipation of what they believe the Fed is going to do. So, is this response rational or irrational and is now the time to get back to business as usual? Is the market recovering? Let’s see.
Ran thinks the market has been irrational, there has been an over-correction and we might see signs of a recovery. In fact, yesterday, Ran took a bet that the Nasdaq was going to head back up again and indeed there was an unbelievable recovery. Where did Ran get his information from? If you were here yesterday, you’ll recall that Gareth Solaway was on the show and he said he was betting on a Nasdaq bounce. He believed that the market had corrected too much and that there was going to be some kind of bounce. He also started to dollar cost average (DCA) back into Bitcoin as well as altcoins in anticipation of some kind of recovery. So far, it seems like his bet was right.
On the website is an article by Miles Deutscher, giving a major update on Fantom. In the end, Fantom actually updated the protocols that will be added to the snapshot to include Tomb Finance and Terra as well. Ran thinks this is because of Mile’s appeal to Andre Cronje.
There’s also an article coming up about the 6 best gaming tokens to buy for the market recovery. You should get in on that ASAP because Ran believes gaming is going to recover first. Looking at our portfolio, there was an aggressive recovery from some of these tokens like Guild of Guardians, Charli3. T-shares are also recovering, and this is because TOMB is at US$2.40 and FTM is at US$2.44. Which means they are 1.5 percent away from the peg and when it hits peg, the T-shares start to earn a yield.
Spirit Swap, Vader, DopeX, and are all doing well. DopeX is a decentralized derivative exchange. Ran thinks it’s a really good buy because if you look at DopeX in the last 180 days, you’ll see that it’s now trading at about $1700. The first time it hit $1700 was in October, so you’ve basically gone back in time to October,
Currently, BTC is trading at about US$37 and the truth is that the market caught everyone off-guard. We were all expecting the market to have a blow-off top, as in previous bull cycles and according to the Stock To Flow model by PlanB, this would take Bitcoin to US$135K. The reality is that most people, even whales, got caught off guard during this very strange correction that happened. There is a lesson to be learned here; try and identify and ride the narrative as much as you can, but don’t get sucked into the narrative because sometimes what ends up happening is that we get a little bit too carried away in the narrative. Don’t make the same mistake Ran did in 2017 when he got caught up in the narrative that blockchain was going to change the world (at that time). And so he rode the 2017 cycle all the way up, and back down again.
The problem with a narrative is that it gets created and everybody starts beating the same drum, then we start to believe the narrative and get carried away. Ran thinks this is exactly what’s happening in the traditional markets right now. Currently, the traditional markets are more bearish than they were at the bottom of the COVID March 2020 correction. So, investors have started to believe the narrative and they have completely lost perspective. We need to get some kind of rationality and perspective. If you look at the major markets last year, you’ll see a market that had a 40% increase during 2021. And now that the FED is talking about tapering the amount of money in the economy and maybe increasing interest rates in March, the market has completely overreacted. Just like we overreacted to the narrative of Bitcoin hitting US$100K and then having a blow-off top, the market is now overreacting to the potential of negative news. They overreacted so much that investors are now more bearish than they were in March 2020 in the traditional markets.
In crypto, the Fear and Greed Index is currently at 12 and there have been very few times that it has been this low. One is during the March 2020 correction and at the end of 2018 during the crypto bear cycle. Already, the markets have gone down and still, investors are much more bearish than they were during the COVID crash. The American Association for Individual Investors is also seeing its lowest sentiment in 10 years. So, it does feel like the markets have overreacted and we should probably start seeing some sort of rationality. We may just witness some of that rationality return yesterday when the Nasdaq Composite Index made this huge move where it went from about 15,000 all the way down to 13,700. It then recovered to 14,500. And that kind of shows that the market realized that they have been acting emotionally and should come back to some level of reality.
The same thing happened to Bitcoin. We were down to about US$33K and now we are trading around 15% higher. Currently, the market is beginning to get a relief bounce and the question is whether this bounce will continue.
Where to from here?
The markets have already corrected into what we believe is the most important Fed meeting of the year. We also saw something very interesting; yesterday’s recovery was all with some pretty high volume. We had huge volume come back in, the likes of which we didn’t even see in the 2020 crash. This shows that when people feel like the market is being too irrational and highly oversold, the buyers come in big.
On yesterday’s show, Gareth said that he sees a short-term bottom, and Ran agrees with this sentiment. It just feels like all of these signs are showing us that the market has overreacted in anticipation of the FOMC meeting tomorrow. The meeting is one of the most important meetings there’s ever been. Jerome Powell is going to try to balance the strength of the economy against inflation. On one hand, they have rampant inflation that they need to get under control, and on the other hand, they can’t destroy the markets. If the markets are down just in anticipation of what Jerome Powell is about to do, imagine what will happen if Jerome Powell decides to be aggressive with his approach.
Last week, market participants braced themselves for the worst, ahead of this week’s FOMC meeting. They were overly emotional and completely overreacted. And now we’re getting closer to reality and people are wondering if they have overreacted. They have realized that if they overreacted, they need to start correcting in the other direction. This is most likely why we’re starting to see a recovery in Bitcoin and the Nasdaq.
The question now is when do we get some kind of unwinding from this downward movement we’ve had? Everyone is presently expecting the first interest rate hike to be announced during the March 15th-16th Fed meeting. The market has predicted with a 94.4% probability that rates remain the same in January. If this holds true, Bitcoin and other risk assets are likely going to bounce.
Is it safe to buy?
Right now people are saying we’ve reached the bottom and they’re going full risk-on. And there are early signs that institutional money is starting to come back in. Ran pulled out a layout of the big countries and corporations that have invested in Bitcoin and what their cost base is. We’ve got the president of El Salvador Nayib Bukele, with an average cost of about US$47,750 per coin, Tesla at about US$31K, MicroStrategy at about US$30K, and Block (formerly Square) coming in at US$27,407.
Ran also talked about time cycles for bull and bear runs. In the last few cycles at least, each has lasted about 96 days. So, it appears we have 96 days where the price goes up and 96 days with the price coming down. The 24th of January is the 96th day of the downward trend and if this is right, we’re about to go up again. There are a whole lot of signs that we may have hit the bottom and we may be getting a recovery bounce.
Bringing Richard Heart to the show, he talked about how the bounces in the last bull market were about 75%. But the market isn’t the same. He feels like this isn’t a bull run like we’ve seen before, in his opinion this is a bear market and people are still throwing money at every stupid idea possible (such as NFTs of Jpegs and various memecoins). Richard thinks the Fed can do anything they want, despite predictions to the contrary. He also feels like crypto is its own thing and Bitcoin can go up while macro is going down, and Bitcoin can go down while macro is going up. They don’t have to stay 1:1 correlated.
From here, Richard thinks we’re going to have a ‘dead cat bounce’. He believes we’re going to get a relief bounce, but there are things that can screw this up and one is the Grayscale premium being negative.
Ran then brought on Big Cheds and he talked about agreeing with Ran on how a lot of people were expecting US$100K, but he saw we needed a little bit more of a measured move in the consolidation phase. We’re looking at a relief rally, but how strong is it? It’s important to have perspective. If Richard’s perspective is that this bounce is a ‘dead cat’, you also want to mark a level on your chart where you’re ready to change your mind; where the bounce becomes a continuation. So, if we recapture and get back up above US40K, Cheds thinks we’ll be in a good position to climb higher.
Which tokens will Coinbase be listing soon?
Grayscale made an announcement of the list of tokens under consideration for 2022. Among the tokens/coins they’re considering are:$ALGO, $AR, $ATOM, $BORA, $EGLD, $FTM, etc. We know that Grayscale is one of Coinbase’s biggest customers. Looking at all the assets that Grayscale has in their product family, they are actually all listed on Coinbase. Many of the assets under consideration are not currently listed on Coinbase.
If every other Grayscale token/coin is listed on Coinbase, and Grayscale is one of Coinbase’s biggest trading clients, plus the fact that Digital Currency Group (DCG) owns shares in Coinbase and owns Grayscale – then the assets that aren’t yet listed on Coinbase but are under consideration by Grayscale have a high chance of getting listed on Coinbase. The list of these assets are going to be displayed on our BBS account, so go check it out.
Banter wisdom
Right now, we can all agree that a bounce is imminent (and it appears that it may already have begun). A lot of different metrics support this. Therefore it’s time to position your portfolio to start buying. You need to have a plan on what your portfolio will look like. You should also look at which tokens are going to recover quickly.
We’ll be discussing building a plan on tomorrow’s show, so you should set your reminders and make sure not to miss it.
You should also check out the Crypto Banter Youtube channel for the technical analysis tutorials, if you want to get an edge in the market.
