Just recently I saw a lot of influencers, “stock gurus” and “crypto teachers” preaching that we reached the bottom of this economic cycle. I was very skeptical when listening to their arguments because they were always trying to see the glass half full and look into the future optimistically. At the moment I am the complete opposite. I am trying to plan for the worst and hope for the best. This is the reason why I want to talk with you today about some factors that make me very pessimistic about the future but which also show the chance in the upcoming months.
Crisis Mode In Many Countries!
For starters let’s take a look to Europe. Right now the Euro is losing more and more ground towards the dollar. While in the beginning of the year the Euro was around 1.2 USD it is now very close to be equal to the USD. This just shows that the European Central Bank has started to increase their interest rates far to late. The problem with that is that if they start rising the interest rates, countries like Greece and Italy will have very big problems paying back their debt, putting the EU in a very difficult situation overall.
Staying in Italy, where the people are currently experiencing a very hard time in the agricultural sector. Due to lack of rain and the hot weather, their crops are next to nothing this year. Combined with the fact that the needed corn in Ukraine is stuck and Russia won’t let any exports happen, the Southern European countries can start to suffer a big hunger crisis. Combined with the growing energy crisis Europe’s economy could slowly see very hard times ahead of it!
This energy crisis is especially caused by the dependency on Russia’s gas and oil. With the Stream 2 being closed under sanctions and Stream 1 being closed due to a failed turbine, the supply of energy is very low to Central Europe right now. Combined with the current war situation in Ukraine, the EU will have to make a hard decision soon. With the winter approaching, there will certainly be some escalation going on very soon.
Upcoming Interest Rate Hikes & Recession Warning
Turning to the US market, it does not look any better. With the upcoming numbers and FED meeting in the end of July, we could see another step towards the long predicted recession. Once it is official, the markets will certainly react very negatively and due to another 75 basis points interest rate hike, in order to battle inflation, the faith of the S&P 500 as well as the crypto industry does not look very rosy. I think that the bottom is long not here, and that we will see BTC at around 12k to 10 k and that the S&P500 will drop another 5-10%.
This is certainly not the best news for investors that are looking to cash out in the near future or for investors that just started their journey. But I am trying to prepare for the worst. Currently, it feels like catching a falling knife to invest into assets that are constantly losing value. But looking at the big picture just proves that exactly this time is where the future money is made.
This is why I am having such a hard time listening to all those predictions, when and whether the bottom is reached. It is literally impossible to predict when exactly the bottom is reached. This is why I am trying to make the best out of it ad buy in as long as the prices are on the lower end. Looking at the big picture, the ones who invest now will have a much better time looking at their portfolios 10 years from now.
Crypto Under Fire
Wit the markets going down, we need to talk about the crypto industry as well. It is no secret that more institutions are trying to get into this space but are unwilling to so as long as there is no regulations in place. Well, in the current situation with many big crypto companies, such as Voyager or 3AC, declaring bankruptcy, it is certainly not the best CV for the crypto industry. The problem with these companies was overleverage and it was very well known problem in this industry. The issue now is that the regulatory organs are seeing this as a reason to try and centralize the whole industry. In my eyes this is the complete wrong way and would destroy the whole purpose of this industry. I really hope that they will not be successful with their plan and that we will get regulations that will serve every player in this industry well.
It will be also very interesting to see which country will allow cryptocurrency next and will implement it into their balance sheet. It looks like El Savador is not doing worse and arguably even better after integrating BTC payments as legal tender. I think that many other smaller countries will see the benefit of this and step into the footsteps of El Savador.
Conclusion
With this being said, I am really preparing myself for the worst in the next few months. Especially the winter will be a time that will tear every bodies nerfs and show which investors truly have diamond hands. I feel like, once the new year will start, we will see slow progress in any economic market as well as some crypto regulations taken place which will help the industry tremendously if done correctly. What are your thoughts on the current situation? Are we already at the bottom or can we see another major drop in the asset markets?
Published by ga38jem on
LeoFinance
On 11th July 2022