Crypto Sunday - Article 03 (20th of March 2022)
Welcome back to Crypto Sunday. A thrilling new week has passed and we are here to discuss it.
Let's analyse the events and the evolution of the market in the last week and draw the appropriate conclusions.
As it is no longer a secret, we already have the highest inflation in America since 1982, we have a declared inflation of over 7% and we have a good chance to see even one of 2 digits soon.
As we know, this phenomenon is not an isolated one, it is present in most economies of the world. Even if this inflation would be only in America, we must not forget that America is located on the same planet as us, and trade on this planet is spreading with astonishing speed any inflation or economic problem in a large country.
America being the strongest economy on the planet, at over $23 trillion, will export at the speed of light, along with its exports of goods and services, and its inflation.
The FED is trying to fight this inflation in time, so as not to reach a crisis again as in 2008, which is why at every meeting this year, we expect a 0.25% interest rate increase. But what does that mean? Is it a lot or not?
Well, think that now the reference interest rate in America is 0.025 which is equal to 0 we can say. A few interest rate increases by a quarter of a percentage point will throw us at an interest rate of over 2 percent and consumption will be slowed down, but with that, people will have harder access to credit and difficulty paying them.
Liquidity exists, money has been printed in the last 2 years as in the entire history of the dollar.
But what do we do when the second economic power of the planet, namely China, takes a diametrically opposite position and, beware, reduces the interest rate.
Does this mean that China wants to devalue its currency? Yes! Why would China want that?
Well, China is the factory of the planet and a weak currency against the dollar, makes it more competitive in the world export market.
At the same time, the great Evergrande, which produces millions of homes a year and accounts for more than 2% of China's GDP, is in danger of collapsing, and with its collapse we could see a new global crisis.
So in order to help Evergrande's problems and to promote the purchase of housing in China, they reduced the interest rate.
Now that we've clarified the directions of the world's largest economies, let's not forget what happened on the stock market in the last week.
Let's take a look at the goods, we see the gold quite high, at $1920, and we will see it at over $2000, but before that we could see a decrease first, maybe even up to $1870.
Silver is at $25 in free fall, wheat is close to historical highs at $740 and chances are that we'll see it exceed the highs.
And with oil, things seem to have calmed down to $104 a barrel.
If we take a look at the technology companies that collapsed dramatically after the announcement of the end of the pandemic, that is, those that evolved very well in the pandemic because everyone stayed at home and needed their services, we can see the following.
The famous Zoom, which was $573 a few months ago, is now struggling to survive at $116. With a small increase in the last week.
Look at Netflix, which has managed to go down from $700 to $380 in recent months, but has also managed to grow a few percent in the last week.
This tells us that people are starting to buy and take advantage of these corrections.
The market is starting to go up shyly, but we can still go down hard. Stock indices are at some fascinating levels, some with growth and over 100% in the last year.
So we still have a lot of room to go down, and if you want to do DCA remember the following. If you buy a stock or a cryptocurrency for $100, then it drops to $90 and you buy another one, it is true that you lower the average purchase to $95. And if you buy again at $80 and once again at $70 and even at $60, you have managed to reduce your average purchase to $75 per piece from $100 as it was originally. And now if the price goes up to $75 you get the investment back and you don't have to wait until it reaches $100.
Congratulations, but remember that from here with every $ that the price goes down, you don't lose a dollar, you lose 5.
Can you get rid of that money in the next 5 years if a massive crisis comes?
If so, and if it doesn't affect your quality of life in any way, then make the Dollar cost average, but if you need that money, stay rational, and stay an investor, not a gambler.
We all know that the stock market is only going up and so are cryptocurrencies, and that investing in these financial instruments is only a matter of time before you get rich.
This is also true, but it is very important how long you get rich.
At the great crisis of the 30's, the stock market fell so hard that it returned to its maximum values after 36 years.
It is true that it has recovered, but are you willing to stay 30 years with the money blocked just to stay at 0? Although if we take into account inflation in those 30 years, you may find that you are still at a great loss.
There is something else to keep in mind, when the stock market came back, over 60% of the companies no longer existed, so you had a great chance of running out of money.
If a new strong crisis comes, a lot of companies and a lot of cryptocurrencies will disappear again.
Certainly the ones with real value and utility will remain. But after each crisis, the markets are clearing of residues and it would be better not to get caught with the crisis with residues in your portfolio.
If we get to the crypto market, we notice that it started up nicely.
Bitcoin has gained 6.5% in the last 7 days and is trading today at $41700.
Ethereum seems to be the star of the week, with a gain of 14%, reaching a trading price today of $2948.
Almost all good projects have grown in the last week, and the market earns over $100 billion, reaching nearly $1.9 trillion.
Bitcoin dominance drops to 42.1%, and this could indicate that the world is starting to become optimistic about the market, although there are not too many reasons at this time.
If we look at the index of fear and greed we notice that it confirms this trend, passing in the last week from extreme fear to fear and increasing by 6 points.
Good projects continue to work and develop, and the effects will be seen in the next bull run. We remain in a good period of accumulation, but we do not know for sure if we will have a return of the market until the next halving of Bitcoin or not. Opinions are divided and we're curious what you think about it.
If you want to diversify your investments, but also to avoid inflation, don't forget that real estate investments are recognised in this sense.
In this direction, we invite you to watch our video about InRento, the platform with which you can also invest in real estate, starting with just 500 Euros and starting to receive money for rent from the following month.
You can choose which property to invest in, whether you want to choose a hotel, a holiday home, or an office building.
All properties are rented so they all generate passive monthly income. Do you want to go on holiday to the house you invested in, but of course you want it to be free because part of the property is yours? Well, this is also possible for buildings that are rented as hotels in tourist areas.
Next, you must follow with interest and great attention everything that happens in the market and invest carefully only in what is worth your money.
It is very important in investing to be able to control your fear and greed, that is why one of the most important indices after which we trade is called exactly that, the index of fear and greed.
Don't buy impulsively, don't buy emotionally, don't react to every news and don't watch every hour if your portfolio has decreased or increased because it doesn't help you at all, instead it consumes all your energy and sometimes it can even put you in depression.
Do not allocate all your money for investments, that is, do not invest if you do not have an emergency fund to which you turn in case of a problem or bad periods because then you will have to liquidate your positions even if they are minus, and so you will mark a loss.
As important as the previous point is not to invest all the money allocated for investments. Sounds weird? Then it means you are at the beginning of the road.
I'll explain now what that means. If you have $10,000 ready for investment, you have a share for the big corrections in the market.
Some investors keep 10% of their portfolio in cash, others 20% or 30%, others even over 50%.
Real profits are made when you buy after a big correction, but if you have already blocked your money, you will not be able to take advantage of that price correction.
Don't try to sell and buy the same currency or stock many times trying to beat the market because most of the time the market will beat you.
Markets are made to take your money, all your money. Whether they are called stock exchanges, commodity exchanges or cryptocurrency exchanges.
In order to earn money in these markets, you need to understand them, and the first step is to realise that the only ones who make money in every transaction, whether it is a winner or not, are these platforms. And their role is not to help you make money, but to take your money.
Don't invest in what you don't understand and don't invest just because you see something interesting on our channel, on another channel or anywhere else.
Be disciplined and rational, learn new things, document yourself, learn from mistakes, and persevere.
Following a survey conducted yesterday on our youtube channel, to which you can respond if you have not yet succeeded, we found that 25% of you have never made a profit.
Reach us on our social media channels and tell us what problems you have encountered, and we will make videos and articles that will guide you to profit, because this is your goal in the market, to make money.
Also, follow us on all social networks and don't miss the lessons we share with you there as well.
Thank you for reading until the end, and don't forget to press the like button if you liked it.
Until next time, don't forget to take care of your money!