Panic is decimating the market. DeFi protocols cascade. Licensed exchanges with a vengeance, and cryptocurrencies lose an average of 98% of their value. In other words, it is war. And it’s really war and more, between Ukraine and Russia. What better economic context? In reality, no context is better. We are going to see three indicators that could indicate that we have bottomed out. Which means that, now, the only possible direction is upwards.
- the fear and greed is at the lowest
- Cryptocurrency volumes are on the ground
- Central banks are attacking
Panic on cryptocurrencies: the fear and greed is at 6
It is one of the most scrutinized indicators by traders and investors. Like all indicators, it cannot be used alone to create a trading strategy. Rather, it should be taken with other signals which together can give a clue about the direction of the market. In this case, the fear and greed indicates the amount of fear or greed in the market. Fear and greed are the only two emotions that drive stock charts. Either people are scared and they sell, or they are greedy and they buy. Only 95% of investors lost money. This indicator tells us a very important thing: the feeling of the majority, which is wrong, with regard to the investment.
A clue fear and greed at 6 is a signal of deep desperation. Everyman is convinced that this market is a fool’s market, that no one wins, that it is a scamthat Warren Buffet was right, etc. And to use a famous phrase from this Buffet, ” you have to buy when there is blood in the streets. »
Since we are not institutional investors who speculate on the fall of states after civil wars, for us the blood will simply be the red of the candles on the stock charts. This is the first indicator that could give us a buy signal.
Drifting Cryptocurrency Exchange Volumes
A second indicator that shows us the disinterest of investors and small traders for this market is the volumes on the exchanges. A particularly interesting factor for Arthur Hayes, the former CEO of Bitmex. He analyzes the market as follows: “How low can we go? I think we will find out during this fateful weekend. This week, Bitcoin and Ether rebounded impressively from $20,000 and $1,000 respectively. Can they hold a fresh attack on these levels for a weekend when no fresh and dirty fiat can be deposited on cryptocurrency exchanges? »
And he’s right. Since SEPA transfers do not work on weekends – thank you banks, liquidity cannot flow to exchanges over the weekend to redeem the soak. In the event of a violent fall, or a dramatic announcement, the fall will continue until Tuesday, when the banks wake up.
But behind this risk, good news: the volumes are no longer there, people are no longer in the market, and it’s time to take a position. Once again, it is necessary to act contrary to the mass.
The actions of central banks
The last one to choose that scares everyone is the action of central banks. The latter contain little or no economy. And after printing huge amounts of money, providing that it would have no effect on the economy, central banks understand that it will have an effect on the economy. Panic is therefore in order. The equity market is entering a turbulent zone, and cryptocurrencies are in a state halfway between earthquake and tsunami. This is an opportunity to dig soak, to seek a new low, and an even more interesting entry point for traders and investors. To de-dramatize this dramatic topicality which is indeed the sign of bear marketthe former CEO of Bitmex quips:
The market is therefore in a panic attack phase. But that’s what’s good. If you wait for the euphoria to buy, you are more likely to buy bitcoin at $69,000 and realize a catastrophic loss of -68%. If, on the other hand, you buy when everyone is panicking, such as when the fear and greed was at 5, you are currently at 450% gain.
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