November 26, 2021

Black Friday Discounts Are Here – Should You Take Them?

Nov 26, 2021

Introduction

What a nice way to wake up today and see the stock and crypto markets crumbling – seemingly out of nowhere. Is it time to panic?

hentai avenger @HentaiAvenger66

What the hell did I just wake up to

Market Watch

After seeing almost only green yesterday, today we have the opposite picture: red across the board.

According to CNBC (or their new intern?) Bitcoin has officially entered a bear market. The writer must be new to crypto…

So, what has caused today’s crash? Well, it’s Covid fears again. How much we missed them…

What did we say yesterday?

In recent years we have seen more than once that retail investors who jump into the market on a holiday get punished soon thereafter...

Well, it seems like the punishment for Thanksgiving FOMO buyers came quickly this time. We told you to be careful, especially with retail-driven rallies on public holidays.

davis 🐺🦊 @basedkarbon

Right now there’s someone out there who convinced a family member to buy crypto at thanksgiving yesterday and now they’re waking up to an angry phone call from uncle jimmy screaming about why 10% of his money is gone overnight

Should you jump in and buy the dip today? Although laddering in buys on days like today is certainly better than on a green day like yesterday, there are still reasons to be concerned about more downside price action in the short term. Particularly when the consensus in the crypto crowd is to buy the dip and traders jump in with leverage, it’s reasonable to stay cautious.

Santiment @santimentfeed

📉 The #Thanksgiving dump caught many off guard this year, as #Bitcoin dropped to below $54k for the first time since October 6th. Interest in #buying the #dip has subsequently spiked, indicating the crowd isn't too phased by this recent volatility. app.santiment.net/s/it2GIEW-?utm…

TXMC @TXMCtrades

And as if on cue, a few apes went leveraged long at the dip. 😆🤦‍♂️

Remi Tetot 🌍🌖🔴🦂 @Remi_Tetot

We havent had the liquidation candle yet…just saying…

Will Clemente @WClementeIII

Covid variant news isn't ideal. Yet to see any sizable amount of liqs or OI flush, so a wick lower is very possible. However, STH cost basis, or what I've been calling the "on-chain bull market support band", sits at $53K. Let's see if it holds over these next few daily closes.

Should you sell parts of your positions now to derisk? Well, technically, it’s not an ideal moment, and it’s always better to take profits on the way up. But if you feel like you seriously overexposed yourself to the markets, it’s always wise to monitor your risk profile.

₿yzantinΞ General @ByzGeneral

Even though BTC still looks shit, a lot of alts dumped back to support. So if you didn't sell already this is probably not the best time to panic dump. Wait for the relief bounce at least.

Will the Fed come to the rescue again, this time if the stock market crash intensifies? While that’s undoubtedly the consensus expectation and also our base case, there is a chance that “this time is different.”

Assad Tannous @AsennaWealth

According to the historical script at -10% the Fed stops tapering and starts printing again but because of inflation I think this time around the printers will run out of ink. Hope I'm wrong.

What Does Today’s Sell-off Mean for the Market Cycle?

While the short-term outlook seems uncertain, it’s essential to zoom out and continue to build your overall investing framework.

₿yzantinΞ General @ByzGeneral

@HentaiAvenger66 So I shouldn't completely change my macro thesis with every 5 minute candle?

Michaël van de Poppe @CryptoMichNL

The markets are dropping down heavily, not only #crypto, but also equities are dropping. The Plan B idea of $98K is gone. The realization of a lengthening cycle is there. We're still fine, even if we drop some more. Just a longer cycle for #Bitcoin.

Chart Simpson 🔺 @ChartSimpson

It feels like there is no bull market or bear market, there is just the market. Different sectors/narratives are having their own bull/bear. This can go on for longer than you think. Way different than 2017

Jason Choi @mrjasonchoi

Thinking out loud: What the next crypto bear market might look like. A short thread 👇

Jason Choi @mrjasonchoi

1/ Last cycle (2017 ICO boom) was characterized by vaporware and retail money that left as quickly as it came. It took a year of false recovery and lower lows to dry up all the remaining capital.

Jason Choi @mrjasonchoi

2/ Within the year, $BTC lost over 80% of its value. Unlike the short corrections we're conditioned for this entire bull run, it trended down for a year then stayed in the lows for 4 months. For alts, most that were down 90%+ went down *another* 90%, many never recovered.

Jason Choi @mrjasonchoi

3/ Many who were around are conditioned to think we'll have a spectacular asset-class wide blow off, followed by years of down chop. I can't claim that this time will be different - cycles/bear markets will always happen, but I do think the next bear will *look* different.

Jason Choi @mrjasonchoi

4/ There are wider macro developments and a whole conversation around QE that I don't think I'm qualified to opine on. But a few endogenous factors in crypto are *very* different this time: 1. Amount of capital 2. Type of participant 2. Progress of crypto

Jason Choi @mrjasonchoi

5/ The sheer amount of capital raised for crypto is astounding. While the general crypto market cap is up 4x since last peak, I think the capital seeking to be deployed is at the very least 10-20x, probably more.

Jason Choi @mrjasonchoi

6/ This is in part due to the type of participants that are coming in - not just degens on Binance slinging shitcoins based on YouTube videos anymore. Billion dollar VC funds, trad asset managers, corporate balance sheets are all pouring $ into this space hand over fist.

Jason Choi @mrjasonchoi

7/ If you thought 2017 was excessive - 2021 YTD funding dwarved 2017 by magnitudes.

Jason Choi @mrjasonchoi

8/ This is in part because the opportunity has dramatically increased. As opposed to vaporware L1s, there's almost $300B in real money deposited across DeFi protocols today (vs...$0 in 2017).

Jason Choi @mrjasonchoi

9/ By May 2018, crypto community has spent ~$23M in buying CryptoKitties, a digital cat released as this ...esoteric little thing called an NFT. Today, a SINGLE guild in a NFT/P2E game controls over $800M in holdings. (@YieldGuild)

Jason Choi @mrjasonchoi

10/ So ok, it's no longer just vaporware. There's hundreds of billions at stake today, and much wider mainstream acceptance and adoption. So up only, forever?

Jason Choi @mrjasonchoi

11/ With valuations bid to where they are now, there will be a point when even the most Tiger-esque of investors realize the risk/reward is not worth it. Bids disappear, valuations begin to reset - that's my basis for how the "bear market" will begin.

Jason Choi @mrjasonchoi

12/ Last time, when bids disappeared, confidence also disappeared. Since the entire reality of crypto was based on price alone (with not many immediately usable products being built), this led to a reflexive spiral that doomed the market for years.

Jason Choi @mrjasonchoi

13/ However, with so much dedicated capital prepared to deploy and clear sector focus emerging... I think what we'll see this time round is less down magnitude in $BTC, but also significant de-correlation between cryptos.

Jason Choi @mrjasonchoi

14/ While your NFTs were pumping, this is already happening! Instead of crypto moving as a monolithic asset class, with the entire asset class moving into winter and bull simultaneously, sophisticated capital and quantifiable traction has led to massive decorrelation.

Jason Choi @mrjasonchoi

15/ As one example - in the same time that P2E entered into bubble territory, DeFi has been in a year-long bear market. Returns measured against ETH: $AXS +4242% $YGG +192% $ILV +896% $SUSHi -80% $SNX -90% $CREAM -98%

Jason Choi @mrjasonchoi

16/ Re: sector agnostic bear market, the two-month long -50% selloff in $BTC back in May might have more in common with the next crypto bear market than the last 1 year long -80% grind.

Jason Choi @mrjasonchoi

Debating whether we're in a crypto bear market is *pure* semantics... I don't think you can call a 50% drawdown with no major relief 40 days+ a "dip" or a "correction". Only which assets recover hardest + when and where we bottom matter. https://t.co/pPiiM0ckki

Jason Choi @mrjasonchoi

17/ In short, I think we see: a. Market wide + sector-agnostic bear phases that are somewhat quickly recovered as $ realizes there's nowhere else to go but b. Brutal multiple months resets in some sectors as capital flows to other sectors

Jason Choi @mrjasonchoi

p.s./ Some friends who are much more experienced in markets outside of crypto than me seem to agree with (a) based on current climate around tapering/ rates, will leave for more well-versed voices to comment Anyhow, not a thesis, just trying to Cunningham's Law. Wagmi!

A significant difference between 2018 (the first year of the last bear market) and 2022 is that this time around, massive fundamental catalysts are coming up, such as ZK-Rollups and “the Merge” for Ethereum as well as the emergence of highly anticipated ecosystems (e.g., Polkdaot, Cardano).