How Much Lower Can We GO?! Crypto Bear Market Analysis

Earlier this year we made two very Important videos about crypto one was About when the crypto bear Market could End and the other was about how low Cryptocurrencies could go during the Bear Market Over the last few months we've been Keeping a close eye on the indicators we Identified in those two videos now the Good news is that they seem to be Accurate the bad news is that the bottom Isn't in yet Today I'm going to explain why the Crypto bear Market will likely continue When it's likely to end and estimate how Low cryptocurrencies could go before It's over this is a video you don't want To miss Foreign I want to start by saying that nobody Knows the future not even me everything In this video is based on the best Information my research team and I could Find note that this is information that Could change at a moment's notice It should also go without saying that Nothing in this video is financial Advice That said the first reason why the Crypto bear Market is likely to continue Is because retail investors haven't Capitulated yet in other words lots of Regular crypto investors are still Holding on to their coins and tokens

Despite some massive losses This is also true for stocks and other Assets with retail exposure now that Second point is significant because the Prices of tech stocks and Cryptocurrencies are highly correlated This correlation has been less apparent In recent weeks as crypto-specific Factors such as the FTX Alameda Situation have caused a slight Decoupling I'll come back to that in a Moment Now there was some retail capitulation In mid-october when inflation in the United States came in hotter than Expected this crashed the stock market And caused a small flash crash in crypto However some sources suggest that most Retail investors were still buying those Dips not only that but the stock market Has been rallying since its recent October lows this seems to be because The minutes of the federal reserve's Most recent meetings suggest that the Central bank will start slowing the pace Of rate hikes in mid-December it's also Believed that stocks will see a Santa Claus rally at the same time it's Possible that the stock market will Crash in December when Pension funds are Forced to sell assets and regular people Sell assets to finance their holiday Shopping It's also possible that the FED will

Raise rates higher than investors are Currently pricing in this would also Crash the stock market Given the brutal macro backdrop of Energy shortages inflation Rising Interest rates pandemic restrictions and The war in Ukraine the likelihood of a Dump seems higher than that of a pump The technicals for stock indices like The S P 500 also suggest that stocks Will soon resume their long-term Downtrends regardless the stock market Will continue its longer term downtrend At some point While the reversal could happen as soon As December it's possible that it won't Come until early next year when Consumers realize they took on a bit too Much debt during the holiday season and Start selling When the stock market correction Inevitably comes it will likely take the Crypto Market lower as well the Technicals for the NASDAQ suggest it Could fall by around 20 to 25 percent From its current price in the next Correction this would bring the NASDAQ Back down to its pre-pandemic levels Which would make sense As I mentioned a few moments ago the Prices of tech stocks and Cryptocurrencies tend to move in Parallel the only difference is that Cryptocurrencies are more volatile I.E

Have a high beta with the market in Practical terms a 20 to 25 drop in the NASDAQ would translate to a 40 to 50 Drop in large cap cryptos and much more For those with smaller market caps The second reason why the crypto bear Market is likely to continue relates to The first and that's all the speculation And leverage that we continue to see in The crypto Market As some of you will know an easy way to Measure speculation in the crypto Market Is to look at Bitcoin dominance for Those unfamiliar Bitcoin dominance is a Measure of how much of the total crypto Market cap is just BTC Because BTC is seen as the safest Cryptocurrency Bitcoin dominance tends To rise when the entire crypto Market is Falling and Bitcoin dominance tends to Fall when the entire crypto Market is Rising as you can see Bitcoin dominance Has been stuck at around 40 percent for More than a year and though it did rise To almost 50 in June after Terror Collapsed it has since Fallen back down To around 40 percent What this means is that money has Resumed moving into altcoins and that Means there's still lots of speculation The caveat is that it's possible that Eth has also become a safe haven in the Eyes of crypto holders this means that Part of bitcoin's dominance is

Essentially being shared with ethereum Unfortunately the dominance for both has Been on the decline and this arguably Proves that lots of speculation is Indeed present If you need more proof consider that Meme coins like Dogecoin were pumping as Recently as last week There have also been a few headlines About small and medium Capital coins That have more than doubled in price Over the course of just a couple of days That is pure speculation or Price Manipulation until we stop seeing Dogecoin pump by double digits every Time Elon Musk teases Twitter's upcoming Features then it's safe to assume that The crypto bear Market bottom isn't in Yet Now speculation is mostly the retail Side of the equation Leverage is where the institutions come In some of you may recall that there was A record level of eth liquidations at The end of October when leveraged Traders got wrecked to the tune of half A billion dollars over two days The collapse of FTX and Alameda also led To around a billion dollars of Liquidations for BTC and eth in the days That followed Funnily enough Recent research by Coinshares suggests that institutional Investors have been shorting the crypto

Market at record levels this logically Means that they will get liquidated at Record levels if the crypto Market Somehow rallies in December which is Possible given what I mentioned earlier It's important to remember that leverage Doesn't just mean trading either many Institutions in cryptocurrency have Given each other massive loans over the Last couple of years some of these loans Involved cryptocurrencies which have Since Fallen significantly The elephant in the room in this regard Is FTX and Alameda research whose ftt Backed loans eventually led to their Bankruptcies if the headlines didn't Make it clear enough the contagion of Leverage between these and other crypto Companies continues and it looks like Genesis Global will be the next to Collapse more about that in the Description Anyways the third reason why the crypto Bear Market is likely to continue is Because bitcoin's hash rate hasn't Crashed yet for context bitcoin's hash Rate has historically Fallen by between 40 and 50 percent around the time that BTC hit its bottom and of course BTC Leads the rest of the crypto Market Bitcoin's hash rate collapsing around Btc's bottom makes sense on both sides Of the cause and effect relationship if Btc's price Falls then it becomes

Unprofitable to mine BTC this forces the Least profitable Bitcoin miners to shut Up shop which causes bitcoin's hash rate To fall As some of you may have heard lots of Bitcoin mining companies are starting to Struggle particularly the publicly Traded ones to give two examples in late September compute North filed for Bankruptcy and in late October core Scientific warned it was on the brink of Doing the same this is because the Average cost of mining a BTC is Currently around 18K and the BTC price Is below that at the time of shooting This means that most Bitcoin miners are Losing lots of money and have likely Been selling lots of their existing BTC To stay afloat this is evidenced by Glass node's minor net position change Indicator which suggests Bitcoin miners Have been aggressively selling BTC since Its price dropped below 20K it's Possible that this selling has Suppressed btc's price but it's probable That most of this BTC is being sold over The counter or OTC if you watched our Video about Bitcoin miners selling BTC You'll know that the lowest price BTC Can go before the Bitcoin blockchain is At risk is 8K The thing is that this was back in August when bitcoin's difficulty was 20 Lower and it therefore required much

Less energy to mine one BTC What this means is that the lowest price BTC could go before Bitcoin itself is in Trouble is now just under 10k however This assumes that the Bitcoin difficulty Will stay the same or increase this is Unlikely as bitcoin's hash rate has Finally started to decline as miners go Bust difficulty will decline accordingly This brings me to the other side of the Cause and effect relationship of Bitcoin's hash rate and btc's price as I Just explained a decline in btc's price Can cause a decline in bitcoin's hash Rate however a decline in Bitcoin cash Rate can also cause a decline in btc's Price China's Crackdown on crypto mining last May is a great example bitcoin's hash Rate fell first as miners were forced Offline and btc's price followed This is because the news of a crypto Mining ban in China was very bearish Especially since other countries started Raising concerns about bitcoin's energy Use you can find out why those concerns Are unfounded using the link in the Description I digress Now believe it or not but Bitcoin could Be about to see the same cause and Effect relationship play out that's Because winter is coming and countries Are trying to conserve energy The European Union recently warned that

It would put a pause on crypto mining in The event of an energy shortage in Canada the province of Quebec is trying To get approval from the federal Government to end its contracts with Crypto miners citing energy use concerns The U.S state of New York recently Passed a two-year crypto mining ban for Environmental reasons and we could see Similar decrees from other states I suspect that a crash in btc's price Combined with crypto mining bans in Certain countries will be enough to Bring bitcoin's hash rate down by the 40 To 50 percent it has fallen in previous Crypto bear markets again chances are That btc's price will bottom around the Time this happens along with other Cryptos The fourth reason why the crypto bear Market is likely to continue is the Upcoming Global energy crisis that's Already being felt acutely in many Countries The one that comes to mind the most for Me is Ukraine with 80 percent of the Country reportedly being without power Due to Russian attacks although Ukraine Will likely be able to repair most of Its energy infrastructure it probably Won't be enough to prevent another wave Of refugees from fleeing to neighboring European countries in case you missed The memo other European countries aren't

Doing so well on the energy side either As such the influx of refugees alone Could lead to blackouts in some Countries this is because many European Countries have said they can avoid Blackouts if citizens couldn't serve Enough energy Something tells me they didn't factor in The demand coming from millions of new Refugees European politicians also don't Seem to be factoring in the Practical Effects their proposed price cap on Natural gas will have setting a price Cap means that the demand for gas won't Come down to match Supply this means That gas shortages are almost guaranteed And history has shown this to be the Case If that wasn't bad enough the United States and its allies will be imposing a Price cap on Russian oil starting on the 5th of December naturally the U.S Department of the treasury has Threatened to sanction any country that Violates this price cap meanwhile the Russian government recently announced That it will stop exporting oil to any Country that goes along with the price Cap this means that the countries that Comply with the price cap could soon be Short on oil and this comes at a time When OPEC has cut Global oil production Already On the demand side of the equation

Meanwhile we have the United States Which will soon be looking to refill its Strategic petroleum Reserve which has Been emptied by the current Administration in a bid to keep Inflation low many investors are also Expecting China's economy to open up Again sometime early next year the Recent protest against the ccp's Pandemic policies suggest China's Reopening Could Happen much sooner than Initially expected if it does it will Create a massive surge in manufacturing Related energy demand these and other Factors will cause Energy prices around The world to Skyrocket over the winter This will do direct damage to the Economy in the form of higher prices and It will do indirect damage to the Economy in the form of higher interest Rates from central banks trying to fight Inflation Obviously it's difficult to see how the Crypto Market could go in any other Direction but down in these kinds of Conditions never mind the crypto mining Bans there will be millions of people Selling everything they can to keep the Lights on in their homes and businesses That includes cryptocurrencies the fifth Reason why the crypto bear Market is Likely to continue ties into the fourth And that's the uncertainty around how High interest rates will go and how high

They will stay this ultimately depends On how high inflation goes and how high It will stay something we'll only know In a few months time this is probably Why investors currently expect the FED To stop raising interest rates sometime Early next year to be clear stopping Rate hikes isn't the same as bringing Interest rates back down rate Cuts Aren't expected to occur until later Next year at the earliest and could come As late as early 2024 then again rate Cuts could come much sooner if something In the economy starts to break because Of high interest rates this is basically Why there is a correlation between the FED dropping interest rates and the Bottom of a stock market cycle something Broke so the FED dropped interest rates In response More often than not the thing that would Break was the stock market This is why investors have become so Conditioned to buy the dip they expect The FED to step in to save the stock Market every time it crashes to record Lows because this is what the FED has Been doing for years This Time It's Different however and I Know it's a cliche to say that but it Really is inflation is the highest it's Been in almost half a century Central banks must bring this inflation Down at all costs or else it will do

Even more damage to the economy and Could even lead to hyperinflation of Some Fiat currencies however this Doesn't mean the FED won't blink when Something breaks it's just that the Threshold for what needs to break is Much higher than the stock market Dropping by double digits as it so Happens some fed officials are starting To get concerned that something big will Break if they keep hiking rates This is why the Federal Open markets Committee or fomc agreed it would be Appropriate to start slowing the pace of Rate Heights if you watched our video Summarizing the minutes of the fed's Aforementioned meeting you'll know the Central Bank may stop raising rates as Soon as January now this is all well and Good but I'll reiterate that pausing is Not the same as pivoting Depending on the inflation situation we Could see lots of capital flow to Traditionally Safe Haven assets like Government bonds and precious metals It's possible that cryptocurrencies like BTC will be a part of this basket but The fact of the matter is that investors See Bitcoin and other large cap Cryptocurrencies as being akin to tech Stocks these kinds of assets will Continue to struggle in a high interest Rate environment which again could last Until 2024. the final reason why the

Crypto bear Market is likely to continue Has to do with technical analysis if you Are subscribed to My Weekly Newsletter Or have been keeping up to date with our Weekly crypto reviews you'll know that I've been watching a massive Bear Flag Form on bitcoin's monthly chart for Months now This massive Bear Flag seemed to have Finally broken last month I had Initially expected it to break back in July but BTC managed to hold on for Three more months before breaking down This begs the question of just how low This Bear Flag will go and the answer Really depends on how you measure it if You measure from the initial Bear Flag From three months ago then BTC is headed For the 10K range and in my opinion this Is the last stop However if you measure from the more Recent breakdown then it's possible that We've already seen the bear Market Bottom at around 15K what's interesting Is that we saw the same double Bear Flag Pattern on btc's monthly chart during The previous crypto bear Market in 2018. Back then the second breakdown initially Looked like the bear Market bottom but In the months that followed BTC hit the Target of the initial break down to 4K As the saying goes history doesn't Repeat but it does Rhyme considering all The factors I've mentioned in this video

And others it's quite possible that we Will see something similar happen again After all there's no shortage of bullish Crypto catalysts coming in early to mid 2023 that could cause a recovery more About that in the description Now before I go I want to bring your Attention to one last indicator and That's the balance of BTC on Cryptocurrency exchanges as you may have Heard the balance of BTC on exchanges is The lowest it's been in almost five Years this means that btc's price is Going to be very volatile in the coming Months and that means that the kind of Technical analysis we just did may be Way off the target For instance BTC could temporarily fall Much lower than 10K due to a lack of Liquidity and liquidations by any Leveraged traders who are left this Means that you need to be extremely Careful if you're planning on trading Cryptocurrencies in the coming months I Will be dollar cost averaging into Promising crypto projects and you can Find out which ones I'll be accumulating By signing up to my Weekly Newsletter The link for that will be in the Description anyways thank you so much For watching guys and I will see you Next time [Music]