It’s a tough time to predict what’s going to happen with cryptocurrency.
Some people insist a global recession will crush the market.
China’s in rough shape. The Israel-Hamas conflict could spark oil embargoes or World War 3. Ukraine-Russia, too.
The European Union is already in a technical recession—two consecutive quarters of negative growth, possibly three once Q3 numbers come out. Doesn’t sound good for so-called “risk assets.”
On the other hand, some people insist the worst is behind us and cryptocurrency’s about to start a massive bull run.
A sequel, seven years later?
If history is our guide, crypto prices should do something comparable to 2016—sideways with big upswings and downswings for weeks or months before a big ZOOM and a big crash, maybe with another ETH hack or the collapse of some big exchange.
Of course, history is not always our guide. You can also look at metrics, data, and trends.
In my updates for premium subscribers of my newsletter, Crypto is Easy, I’ve pointed out coincidental similarities with early 2016 on multiple dimensions.
Macro circumstances. On-chain movements of Bitcoins. Uncanny similarities in some trading indicators. Mirror-image changes in key metrics like Puell Multiple and MVRV Z-Score. Various measures of profit and loss. Long-term and short-term investor behavior. Changes in the composition of HODLers.
A few examples among many:
Even the price action matches 2016’s hugging of the long-term “Fib retracement” of .236, a key psychological level where prices tend to go up and down within a trend.
Same fib, as you see as the black lines on this chart:
General global economic trends rhyme with what you saw in early 2016:
China had started to recover after an economic crisis. The US dollar went up as the US economy and stock market digested rate hikes and a surge in oil prices. Europe struggled.
At that time, a Pew research report showed 75% of Americans rated the US economy as fair or poor. The International Monetary Fund’s 2016 outlook predicted “subdued demand,” “diminished prospects,” and “tilted to the downside.” Some large countries went into recession.
Maybe that’s ok.
Sometimes, when you overlap a bunch of coincidences from different angles that look at different behaviors across different dimensions as they change over time, and they all match up, you can get a much clearer picture of the market than you’d get from cherry-picking a key chart, projection, or trend.
Crypto did not do so bad
Crypto did ok in 2016. Up 126% from start to finish. Up 500% from the 2015 bottom to December 31, 2016.
All we need now is for a sudden, short-lived burst in prices, a major protocol to collapse, and a major exchange to get hacked. That would match perfectly the ETH DAO debacle and the Bitfinex hack of 2016.
Then we can finally confirm for everybody that the bull market started last year.
All good either way
Fortunately, you have a good allocation to the market with cash in reserve. Now’s a good time to think about your larger portfolio strategy. You can see mine.
You may want to use this time to reflect on what you have, what you want to have, and what you want to get out of this market.
What goals do you have for yourself and your finances? How does cryptocurrency fit into those goals?
Or, subscribe to the Crypto is Easy newsletter, where I give you more perspective, insights, and strategies that can’t fit within this post.