You don’t need to try and time to bottom
Without hindsight, nobody knows when the market will bottom. Traders and investors need to realise that timing the bottom is impossible, and you don’t need to time the bottom in order to capitalise on significant returns. Therefore, taking advantage of current prices should be on your mind.
So from all time highs:
BTC is down 55%
ETH is down 57%
Low cap alts are down 70%+
S&P 500 is down 25%
Naturally, in a bear market, you will have everyone and their dads telling you that: the “bottom is close”, “the bottom is near”, “the bottom will be next year” and so on. The important factors you must look at are the macro arguments.
Here is why it is likely we go lower:
- Inflation is still high and not looking to be fixed any time soon hinting at a worsening economy and risk assets being those that will be most affected.
- FED are unsure on hikes over the next couple months meaning further uncertainty in equity markets.
- GDP is worsening leading many to believe we are on the brink of a recession. Negative GDP in Q2 will mean we are entering a recession.
- Looking at historic bear markets, equities have been hit far worse where stock markets near -40% and $BTC dropping -80%. This further hints to the facts that capitulation has not happened yet. The current market is still running on slight hopium that we recover.
- There is likely more downside in reference the FED and the shedding of their balance sheet.
And now reasons we have already bottomed:
- Inflation some may say is rolling over
- Market sentiment is so deeply in the mud that we can only go up from here
- The market has already priced in the rate hikes over the coming months and the deleveraging of the FED.
- The central banks will print their way out of a recession like they always do which is essentially positive for risk assets.
Ok cool so again, its undecided. Each point on the chart below represents a drawdown categorized by its low points and how long it lasted. The current situation isn’t very common even for the stock market, as you can see.
My point of this article is, regardless of how we look now, you don’t have to be an economist or trading genius to capitalise on the prices we have now to get good returns in 5–10 years.
In the short term, there is too much uncertainty in the markets to predict the bottom but in a few years we will definitely see a correction in the markets and that is what you should be focusing on.
Unless the markets suddenly die overnight, its unlikely they will go away anytime soon.
The S&P 500 is a magnet for funds and by default is where a lot of people’s money goes. Unless there was a total distrust in confidence for capital markets it won’t go down forever. Bitcoin is seen as a store of value and can certainly dominate in the long run as can Ethereum and other major alt coins.
Now if you do dollar cost average or unload capital on the dips, yes, it is likely you will be in drawdown for a little while but that’s ok. With inflation still high, the global economy is weaker than ever, and the FED are doing everything they can to bring around a recession. Therefore, keeping cash on the sidelines to unload if we see more drops is important.
Stay consistent over the long run, get in at good prices, have a solid investment plan and don’t try and time the bottom. Again, capitalise on these discounted prices regardless of being in drawdown for a period of time. Choose the right projects (you can do that here: www.defihustle.co.uk ), diversify appropriately and keep cash on the side lines.