If you are employed in economics by any of the major governments today the following statement may be triggering - Market corrections, depressions and recessions happen and they are a good thing. We can try to avoid them and slow them down all we want but they will occur. Excess weight and greedy investors will eventually get what's coming in the form of a red profit/loss sheet. When outside forces come in to bail out an investor who's made poor choices it only elongates and magnifies the coming market correction.
The Problem
I'm a Millennial (or Gen Z depending on the website you look at) and I grew up similar to how many Americans did during the mid 2000's. We saw the 2008 recession, the massive government bailout that followed, the declining markets caused by a variety of market conditions and most recently hyper inflation due to a central reserve system that refuses to slow down it's money printing. During this time the wealth divide between the ultra rich and ultra poor has achieved levels never before seen in my country's history. And like many of my compatriots I ask myself, why?
Every time the economy looks to be on the edge of a massive recession/depression the Government swoops into action to quickly bail out the market segment(s) affected. I've seen this play out many times in my life - from housing to banking to oil. What this effectively does is save the investors who got greedy or made poor decisions from the punishment they had rightfully earned. When the market correction is allowed to play its course, these investors start to divest their assets, sell out of their poor positions and/or go out of business. This effectively opens up room in the market (initially for a painful correction in the form of a minor dip, recession or full blown depression) for new people to come in and profit from making new, correct decisions.
Bear Markets & Crypto
So what does this have to do with the most recent bear looking Cryptocurrency market? Everything. Cryptocurrency is effectively the last remaining, currently unregulated, market left in the world (to my knowledge). We are free from the trappings of crony government entities coming in and saving their friends from having to face the music.
When bear markets occur those with the future in mind and wise investment choices get the opportunity to profit from the greedy investors who sold out of their positions or were forced to find a new line of work. If we look at March last year due to COVID - LINK, ETH, BTC and essentially every currency fell to lows not seen for many years. Those who knew that this would only be temporary were able to swoop in and buy up a large portion of the market that had been divested at cut rate prices. I remember reading dozens of articles here at that time about how LINK was extremely undervalued. Dipping to around $2 when just prior to March it had been looking to be set for a big run.
I wish I could say I jumped in heavily on that but I did not. Although it's price is dipping with the rest of the market (but still up 1,000%+), I see another opportunity similar to last year. Due to China, Karen Musk and a few other factors Crypto is looking to enter a strong bear market this year. But that doesn't mean that there's not massive opportunities for profit. And I'm not just talking about LINK here.
Since a large section of the market is selling out, it opens up room for a new class of whales to step in and make bank if they can see the trends to come. Take this time and learn about what makes a project good and proper market rules. Be disciplined and invest in those projects you can believe in, cultivate a diamond handed mentality and sell in chunks as the bull market hits. It can be good to hold on to your earnings during the bear times but don't forget to sell off when profit season hits. You can always buy back in during a dip or the next bear market.
Final Thoughts
So what will you do during this dip/market correction/crypto winter/bear market or whatever you choose to call it? Will you jump out of Crypto all together or choose to stay in, look for the gems and stick with it? I can't be the one to tell you what to do but I can tell you that when things look their most grim - that's usually where the most profit lies. I personally had to ask myself, was I feeling the urge to sell out of my position because I no longer believed that Crypto would recover or was it because I was just afraid of losing my money? For me, I had to calm my own nerves and remind myself of all the other bounces and volatility I'd seen the markets face. But whatever decision you make is your own and I respect that, please let me know what you plan to do below!
As a reminder, do your own research. Never EVER trust someone on the internet just because they have a blog or website or made a nice looking YouTube video - myself included. There will never be an opportunity that 30 mins of due diligence isn't worth. So I hope you enjoyed, thanks for reading. Happy earnings!
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