Crypto is down and everyone is getting a bit agitated. Some of the price plunging in crypto is due to the recent failure of companies like Terra and Celsius. CPI the consumer price index which is the thing we used to measure inflation came out it was way worse than we thought because inflation is now at 8.6 setting another 40-year record high it was food shelter and gas that contributed to the most inflation the last time our cpi reading was this high was in the year 1982
“Given today’s macroeconomic environment, with the Federal Reserve tightening interest rates to stave off high inflation, some crypto investors opine prices may fall further. Companies are also preparing for a recession and possible “crypto winter,” or when prices fall and stay low for an extended period.
“This wouldn’t be a good entry point now, adding that the one exception would be investors with very long time horizons and who are dollar-cost averaging into the asset, similar to how people invest with a 401(k) plan.” (CNBC)
Bear markets are part of the system. They come along regularly, and if you’re going to invest money, you’re going to be hit by one of these declines sooner or later. But the biggest factor contributing to bear markets this year is uncertainty. People hate uncertainty. We have so much uncertainty right now. 80% of all US dollars were printed in 22 months. Inflation at 40-year highs. Supply chains took a dive in 2020, never fully healed, then turned into dive 2.0 thanks to a war going on. One of the largest cryptocurrencies completely crashed and home prices have never been higher. So, yes, things aren’t very certain.
And it doesn’t help that the news loves this stuff. They make the most money when there’s chaos, and we just absolutely eat it up every single time. So we need to rewire our minds a bit within a bear market. I like to remind myself that there’s only one thing I can be certain of, uncertainty. I can’t predict or control massive economic forces like inflation. So instead, I focus on what I can control, my personal investment decisions. This is why the psychology of investing is so very important.
You could look at Netflix stock right now and think, wow, Netflix must suck. I’m never going to invest in them. Or you might look at it like it’s one of the largest media giants in the world that’s slightly shifting focus to be more profitable, causing it to temporarily sell at a severe discount. The same goes with Bitcoin, down more than 50% from all-time highs. When Bitcoin was at $69,000. everyone wished they picked some up at $30K. Well, here’s the $30k you wished for.
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