As commodities rise in value, a warning sign appears in the market; the crypto speculator’s market is over. Covered: State of Crypto: Equity Correlation The ‘Boring Stage’ of Crypto State Of Crypto: Equity Correlation Bitcoin and the crypto market seemed to be rebounding well after the downward movement due to Russia’s invasion of Ukraine on […] The post State of Crypto: The Speculators Market is Over appeared first on CryptosRus.

State of Crypto: The Speculators Market is Over

As commodities rise in value, a warning sign appears in the market; the crypto speculator’s market is over.

Covered:

  • State of Crypto: Equity Correlation
  • The ‘Boring Stage’ of Crypto

State Of Crypto: Equity Correlation

Bitcoin and the crypto market seemed to be rebounding well after the downward movement due to Russia’s invasion of Ukraine on February 24th, moving as high as 47k just two weeks ago. On Monday, the market capitulated in a very sudden manner, with Bitcoin plunging to 39k.

Unfortunately, we cannot understand the exact mechanics behind such a move, but it appears to point to one reason: macro/equities. On Monday, the Dow fell more than 400 points, with energy and tech leading the plunge.

What is the reason for this? Continuing macro instability, and anticipation of a bad inflation reading (it came in at a whopping 8.5%) likely contributed. To combat this, Biden is set to visit Iowa on Tuesday. The President is making a rare stop in the heartland to talk about rising costs for the working folk.

Analysts are also making bleak predictions for equities for the rest of the year. Oliver Allen, markets economist for Capital Economics, predicts “meager gains in the U.S. stock market over the rest of this year.”

According to Will Clemente, Bitcoin has increased its correlation with tech stocks, and the more they suffer the more Bitcoin will suffer. Institutions have increasingly viewed Bitcoin as a tech play and risk asset; this is the unintended consequence of mainstream adoption.

Clemente urged his followers to “step away from the market” while these conditions persist. Adding that the market as a whole “doesn’t look very compelling.” What seems quite clear in light of this, is that the year of 2021 was the alt-season.

Bitcoin moved to nearly 70k, and Solana went up thousands of percent along with Polygon, Fantom, Doge, and others. Investors are now starting to digest the settling dust in the market.

The market has now moved into the “boring stage” where the overall macro outlook drives the sentiment in the crypto market. The issue is this stage cannot be “reversed”.

There likely won’t be another time where crypto is hyped up to such a degree that teenagers are dumping money into Doge and others. This simply means crypto will be judged based on the boring fundamentals and will be tethered to quantifiable progression and adoption.

The Boring Stage of Crypto

We may see an exodus from hapless speculators, and the “cum rockets” of 2021 will be but a distant memory as 2022 saunters along. Those that are waiting for a giant moon shot for the entire space will be woefully dejected this year, and beyond.

One piece of data that proves this notion is the waning interest of Dogecoin; a proxy for the interest of fair weather crypto investors. According to Google Trends, the interest in Doge has entirely plummeted since the hype of last April.

Expect this to continue to decrease as much as it is possible. It is my opinion that this development is a good thing. The wholly irrational hype that drove many coins to the moon was not nearly proportional to the actual ‘value’ they brought to the table.

In truth, it was fiat looking for a place to go. The crypto market needs rational theses for investing. Relying on the fiat money printer for market liquidity is shortsighted and of course, ironic. The market succeeding on the failure of fiat yet desiring its liquidity is madness.

Money printing pumps our bags, but at what cost? The costs are asset bubbles that go pop followed by a stark rise in commodity values and basic goods. Once the printing party of money is over, and the hype subsides, what becomes valuable are things like Lithium, Wheat, and Copper. You could substitute out many different commodities, and the point remains.

Case in point, the price of copper is the highest it’s ever been. Necessities like copper, a conductor of electricity, are always worth more than anything else at the end of the day. Equities, crypto, and other assets only accrue in value when the macro outlook is stable.

So, as fiat continues to debase, commodities continue to increase in value. Why? Because nothing is worth more than what sustains existence. To drive this point to its logical conclusion, it’s easy to understand that nothing is more valuable than water, right? Or fertilizer to grow food. Fertilizer stocks are going parabolic for this exact reason.

NTR Fertilizer Stock out of Canada

All this is to say: don’t expect the fall of fiat to pump your bags necessarily. If the fiat wheels fall off, so do assets, especially speculative ones. Anyone off the street could create a coin with a supply of 1,000, but it doesn’t mean that a fixed supply means higher value down the road. So what is one to make of all this?

That is hard to say. One thing that is obvious is that the speculators market is completely and utterly over for the time being. What is valuable, and will continue to be valuable, is an asset that has productive, intrinsic, and tangible necessity, like fertilizer. Make of that what you will.

Recommended: What Ethereum DeFi Tells Us About The Surprising Strength Of The Crypto Market

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