Yesterday was a pretty tough one. We saw Bitcoin trade down to sub $22k, and Ether just barely avoided triple digits. The scale of the bear extends well beyond the coins, as the global financial system is not in a good way.
We saw the 10y-2y bond yield curve invert yesterday two, for the second time in just a few months. Something out there is very broken, and over the coming weeks to months we will find out what it was.
There is unfortunately very little good news i’m afraid. Now is not the time to be taking undue risks, and certainly not the time to be going out on the risk curve. Now is the time to consider closing out any and all debts you currently have. That Maker Vault, or Compound loan you have? Consider very seriously unwinding it.
This market is hunting for any and all liquidation levels, and the reality is it will probably find and hit many of them.
This is not the time to be FOMOing into any relief bounces. It is not the time to add to a Dogecoin position. It is not the time to take on additional DeFi leverage.
Take this market very seriously, this bear is angry, and it is much much bigger than our coins. It is ugly, and being prepared is most important at this stage.
The Good News
With the above prelude to highlight the risk and realities of the situation, lets look to the state of price levels at the moment.
Yesterday we saw prices meet two very significant support levels: The Realized Price and the 200 Week moving average. Historically, the Realized Price has signalled we are in the last phase of the bear market. This is the capitulation phase, and on average, the entire market is now under water.
The 200W MA has historically caught the very bottom wick of bears. Interestingly, we have both of them at the price right now. So in theory this should be a remarkably strong level of support.
Nevertheless, please please please take the first section of this article very seriously. If there was ever a time that such models get thrown out the window, it is right now. We need to wait for the dust to settle. We simply do not know how bad things are, nor how bad they can get.
For me, I did deploy capital into Bitcoin at these levels. However it is capital I allocate with a 10yr time horizon, and it is not money I will need any time soon. However I am simultaneously paying off the little leverage I have left in this market and plan to sit only in spot. There is value down here, but it could take many months, to even years to pay off, so does require a long-term view, and an iron stomach.
Hang in there folks. We will get through this, just don’t do anything that would liquidate you if we saw another 50%+ decline from here. It could happen if the bond market implodes, as unfortunately, not much will survive such an event.