Preparing For a BEAR Market!! Complete 101 Guide!! 🐻
Summary
TLDRThe video discusses the uncertainty surrounding the crypto market, questioning whether a bear market is imminent or if the bull market is poised for a resurgence. It explains market cycles, the impact of human emotions, and macro factors like the debt cycle on asset prices. The presenter, Guy, predicts a potential bear market in mid-2022, influenced by the four-year crypto cycle and the bitcoin halving event. He outlines three bear market scenarios and offers strategies for preparation, including dollar-cost averaging and cautious market entry. The video is educational and not financial advice, encouraging viewers to consult professionals for personalized guidance.
Takeaways
- 📉 The crypto market has been moving sideways since mid-May, with uncertainty about whether a bear market is imminent or if the bull market will rebound to new highs.
- 📚 A bear market is part of the natural market cycle for assets and is characterized by a sustained long-term downtrend in price.
- 🧐 Human psychology and emotions like fear and greed are fundamental drivers of asset price fluctuations, affecting both fiat currencies and cryptocurrencies.
- 🚀 Cryptocurrencies are highly volatile due to the uncertainty about their true value and the potential they have to revolutionize financial systems.
- 🔗 Macro factors, including the debt cycle, have a significant impact on asset markets over the long term, influencing both bull and bear markets.
- 🌐 The cryptocurrency market has shown a correlation with the stock market, suggesting that bear markets in these markets may occur concurrently.
- 🔮 Predicting the exact timing and severity of a bear market is challenging, but historical patterns and economic indicators can provide some insights.
- 💡 Dollar-cost averaging is recommended for long-term investors in crypto, as it reduces the risk associated with market timing.
- 🛑 In a hyperinflation scenario, the value of cryptocurrencies in fiat terms may increase, but their purchasing power could decrease, affecting their utility as a store of wealth.
- 🌍 A potential global depression could lead to a prolonged bear market in cryptocurrencies, emphasizing the importance of being prepared for various economic scenarios.
- 📈 Despite the risks of a bear market, cryptocurrencies have seen enough adoption to likely survive and may present opportunities for investors with a long-term perspective.
Q & A
What is the current sentiment in the crypto market according to the video?
-The video suggests that there is uncertainty in the crypto market, with some believing we are on the brink of a bear market, while others think the bull market might recover and reach new highs.
What is the general pattern of asset market cycles as described in the video?
-The video describes a market cycle that includes periods of booms and busts, influenced by human psychology and emotions such as fear and greed, which cause prices to fluctuate.
Why are cryptocurrencies considered more volatile than fiat currencies?
-Cryptocurrencies are more volatile because their value is not as clearly defined and understood as fiat currencies, leading to larger fluctuations in price due to speculation and mixed perceptions about their worth.
What is the role of the debt cycle in influencing asset market trends?
-The debt cycle, as explained by Ray Dalio, is a significant macro factor that influences market trends. It consists of short-term and long-term cycles, where borrowing leads to economic growth and bull markets, while debt repayment leads to spending reductions and bear markets.
How does the cryptocurrency market's four-year cycle relate to Bitcoin halving?
-The cryptocurrency market follows a four-year cycle that correlates with Bitcoin halving, which occurs every four years. This event reduces the amount of newly mined BTC by 50%, leading to a reduction in supply and typically an increase in price.
What are the potential bear market scenarios for cryptocurrencies discussed in the video?
-The video discusses three potential bear market scenarios: a regular bear market, a hyperinflation bear market, and a depression bear market, each with different impacts on the value and utility of cryptocurrencies.
How can one prepare for a regular cryptocurrency bear market according to the video?
-The video suggests that long-term investors should consider holding their positions and using dollar-cost averaging to add to their holdings during a regular bear market.
What is the concept of 'bull traps' in the context of cryptocurrency markets?
-Bull traps refer to short-term price spikes that may give the false impression of a market recovery, only for the prices to continue their downward trend. Filtering out bull traps can be achieved by observing the market on a monthly scale to identify true trend reversals.
What is the potential impact of hyperinflation on cryptocurrencies?
-In a hyperinflation scenario, while the nominal value of cryptocurrencies might increase, their purchasing power could decrease. People may not use them as mediums of exchange if they are hoarded as stores of wealth.
How might a global depression affect the cryptocurrency market?
-A global depression could lead to a prolonged bear market for cryptocurrencies, as people tend to focus on acquiring essentials for survival and items that provide relief, which cryptocurrencies do not typically offer.
What are some of the assets that tend to hold their value during a depression according to the video?
-The video mentions that during a depression, assets such as shelter, energy, clothing, food, water, alcohol, cigarettes made of various plants, news media, and entertainment like movies and TV tend to hold their value.
What is the speaker's personal stance on holding Bitcoin through different bear market scenarios?
-The speaker expresses a personal commitment to holding onto their Bitcoin regardless of the bear market scenario, suggesting a belief in its long-term value.
Outlines
🐻 Crypto Bear Market Speculations and Market Cycles
The paragraph discusses the uncertainty surrounding the current state of the crypto market, with some suggesting a bear market is imminent while others believe the bull market may still surge. The speaker emphasizes the importance of understanding market cycles and the psychological factors that drive asset prices, such as fear and greed. They introduce the concept of the 'Wall Street Cheat Sheet' to illustrate the typical pattern of market cycles, and highlight the extreme volatility of cryptocurrencies compared to traditional assets. The paragraph also touches on the various perspectives on the value of cryptocurrencies and the influence of macroeconomic factors like the debt cycle on market trends.
📈 Crypto Market Cycles and Economic Correlations
This section delves into the relationship between the debt cycle and market cycles, explaining how borrowing and spending can lead to bull markets, while debt repayment leads to bear markets. The speaker draws parallels between the historical cycles of the stock market and the emerging patterns in the cryptocurrency market, suggesting a correlation between the two. They also discuss the impact of institutional exposure on the crypto market since 2017 and predict that the next bear market for cryptocurrencies may align with the stock market's cycle, potentially occurring around mid-2022, based on the four-year cycle influenced by Bitcoin halving events.
💸 Preparing for Different Crypto Bear Market Scenarios
The speaker outlines potential scenarios for the upcoming crypto bear market, including a regular bear market, a hyperinflation bear market, and a depression bear market. They advise long-term investors to consider dollar-cost averaging and caution against trying to time the market. For those looking to trade, the speaker recommends using monthly charts to identify trend reversals and avoid 'bull traps.' The paragraph also discusses the complexities of valuing cryptocurrencies during periods of hyperinflation and the potential for a prolonged depression-like scenario, suggesting that cryptocurrencies may not serve as effective stores of value in such conditions.
🌐 Global Economic Factors and Crypto Market Outlook
In this paragraph, the speaker considers the broader economic factors that could influence the crypto market, such as the possibility of a global depression and the role of central bank digital currencies (CBDCs). They suggest that while cryptocurrencies have been adopted widely enough to survive various bear market scenarios, a hyperinflation bear market could be a strategic move for governments to transition to CBDCs. The speaker also expresses their personal strategy for navigating the bear market, emphasizing the importance of holding onto Bitcoin and being prepared for any scenario. They conclude by encouraging viewers to stay informed and engaged with the crypto market through various social media platforms and newsletters.
Mindmap
Keywords
💡Crypto Bear Market
💡Market Cycles
💡Human Psychology
💡Debt Cycle
💡Bitcoin Halving
💡Dollar Cost Averaging
💡Hyperinflation
💡Depression Bear Market
💡Technical Analysis
💡Central Bank Digital Currencies (CBDCs)
💡Inflation
Highlights
The crypto market has been moving sideways since mid-May, with uncertainty about whether a bear market is imminent or if the bull market will rebound to new highs.
A bear market is on the horizon for cryptocurrencies, but its exact timing remains unknown.
The importance of having a bullish bias in the current bull market, while also preparing for the inevitable bear market.
A disclaimer that the video is for educational and entertainment purposes only and not financial advice.
The Coin Bureau focuses on high-quality crypto content, minimizing hype and emphasizing the truth.
Cryptocurrency market cycles follow a pattern similar to the 'Wall Street Cheat Sheet', driven by human psychology and emotions.
Cryptocurrencies are highly volatile due to the uncertainty of their true value and the influence of human emotions.
Macro factors, such as the debt cycle, have a significant impact on asset markets in the long term.
Cryptocurrency market cycles show a correlation with the stock market, suggesting a potential bear market in mid-2022.
The cryptocurrency market follows a four-year cycle influenced by the Bitcoin halving event.
The possibility of a cryptocurrency market super cycle where cryptocurrencies replace the current financial system.
The potential for a hyperinflation bear market where cryptocurrencies' fiat value increases but purchasing power decreases.
Preparing for a regular bear market involves dollar-cost averaging and waiting for a clear trend reversal.
In a hyperinflation bear market, the focus should be on estimating cryptocurrencies' value relative to other needed assets.
The possibility of a depression bear market, which could last a decade and significantly impact the cryptocurrency market.
The importance of holding onto Bitcoin through various bear market scenarios, as a form of wealth preservation.
Transcripts
the crypto bear market is here
or at least that's what clickbait news
headlines
would have you believe it's no mystery
that the crypto market has been moving
sideways
since mid-may and sometimes it does feel
like we might be on the brink of another
big
crash that begins the bear market other
times
it seems like the bull market is about
to spring back to its feet
and sprint to new all-time highs it's
wise to have
a bullish bias in a bull market like
this one but the truth is that a bear
market
is somewhere on the horizon although the
bear market might not be here yet
it will come eventually but when how
will you know
when we're in a bear market how can you
prepare for it what even
is a bear market now if these are the
sorts of questions that have been
bouncing around your brain then this
video is
for you
i know you're eager to start but diving
in without a disclaimer wouldn't be
smart
you need to know that i can't help you
with your financial matters
this video is just for your education
and entertainment
so if you need help with your money then
please consult a financial planner
if this is your first time here my name
is guy and crypto
is my career the coin bureau is where i
create the highest quality crypto
content you'll find
anywhere on the internet coins tokens
news and reviews
i keep the hype to a minimum and focus
on the truth
as the saying goes knowledge is power so
if you want to increase your power level
subscribe to the channel and ping that
notification bell to make sure you get
this content on the hour
your time is priceless which is why i've
left timestamps in the video timeline
so you can see today's topic list feel
free to skip ahead if you see something
that catches your eye
remember though that watching the whole
way through will make it easier for
others to find
now that we're on the same page let's
get into the crypto market spare phase
every single asset has its own market
cycle of booms
and busts while each asset's market
cycle
tends to vary in length and volatility
all of them
follow a similar pattern to this famous
photo the so-called
wall street cheat sheet as the photo
suggests the fundamental
reason why the price of an asset goes up
and down in the short term
has to do with human psychology
specifically human emotions like
fear and greed this is why even fiat
currencies fluctuate in value
every day they're not really stable it's
just that the degree to which fiat
currencies fluctuate
is often small enough that they can be
considered stable
even then there's an entire foreign
exchange market where traders make
millions of dollars of percentage in
point changes or
pips in various fiat currencies that's
one hundredth of one percent now by
contrast
cryptocurrencies can change in value by
hundreds and sometimes
thousands of percentage points per day
this puts them
on the opposite end of the asset
volatility spectrum
the reason why cryptocurrencies are so
volatile is because nobody knows for
sure
what they're actually worth take a
cryptocurrency like ethereum for example
ethereum makes it possible to do things
like lend borrow
and save money without a middleman like
a bank and all you need
is an internet connection to access
these services
there's even something called a flash
loan that lets you borrow over 20
billion dollars of cryptocurrency for 15
seconds
with zero collateral and zero risk you
just need to pay a small network
fee now what kind of price tag do you
put on a technology like that
some would argue that cryptocurrencies
are worth more than all the money in the
world since they exist
to replace the financial system others
say
that cryptocurrencies should be worth at
least as much as their real world
equivalents
as they slowly take on similar roles in
certain regions of the world
a few still insist that cryptocurrencies
are nothing more than a ponzi scheme
and to be fair some cryptocurrencies are
nothing short of that these mixed
messages
result in mixed emotions for the average
trader who typically
buys and sells cryptocurrencies based on
how they feel
this is actually the basis of technical
analysis trading
and you can start learning about it by
watching my first
technical analysis tutorial using the
link up there
in the top right besides human emotions
there are also macro factors at play
which influence the ebb and flow of any
given asset market
these tend to have a much larger impact
in the long term
according to famous hedge fund manager
ray dalio the most
important macro market factor is
something called the debt cycle
this debt cycle is broken down into two
phases
a short-term debt cycle which lasts five
to eight years
and ends in a recession and a long-term
debt cycle which lasts 75 to 100 years
and ends in a depression i'll leave a
link to rey's own explanation of the
debt cycle in the video description if
you're interested but the tldr
is basically this borrowing money
creates economic growth
in the short term individuals typically
use borrowed money to buy more stuff
corporations use it to create more stuff
and governments use it to fund more
programs this creates a bull market for
most asset classes
a sustained long-term uptrend in price
higher highs lower lows all that fun
stuff
eventually that debt piles up and all
these individuals corporations and
governments need to start
paying off some of that debt this
requires a reduction
in spending this reduction in spending
means that individuals buy less stuff
corporations
make less stuff and governments cut back
on their
programs this creates a bear market for
most asset classes
a sustained long-term downtrend in price
lower lows lower highs definitely not
the fun stuff if you look at the price
history of a big stock market index like
the s p
500 you can clearly see this debt cycle
in action
from 1997 to 2002 from 2002 to 2009
from 2009 to 2016 and
from 2016 to whenever this cycle ends
note that i'm counting the end of each
cycle from the start of each bear market
not the bull market peak what's
interesting is that when you compare
cryptocurrencies previous market cycles
to the stock market you can see
a surprising degree of correlation in
other words
whenever the crypto market was reaching
its highs chances are the stock market
was doing something similar and vice
versa
now this makes sense because we live in
a globalized world where all assets are
linked in some way
even more so for cryptocurrency since
2017
when the institutions got exposure via
bitcoin's cme futures
case in point bitcoin hit its highest
correlation to the stock market
last year now why does this matter
well it means that the cryptocurrency
market will probably see its bear market
around the same time the stock market
does
the stock market's price history
suggests this will be sometime in mid
2022 and this happens to correspond to
what cryptocurrency's
own market cycle is signaling
as most of you will know by now the
cryptocurrency market follows a
four-year cycle that seems to be caused
by the bitcoin halving which
surprise surprise occurs every four
years
the halving reduces the amount of newly
mined btc
by 50 and this reduction in supply
coupled with a gradual increase in
demand means
btc goes up in price because almost
every cryptocurrency is correlated to
bitcoin
the rest of the market responds in kind
the last bitcoin halving took place in
may last year and
assuming history repeats itself this
means the top of this bull market will
happen sometime
this summer or in the early fall if you
want an in-depth video of how to spot
the top of this crypto market you can
watch my video about that
using the link up there in the top right
anyways after the crypto market top we
will see a big
crash and then about a year of gradual
price decline
until we hit the bottom of this current
cycle to clarify
this decline is the start of the bear
market and the bear market bottom
should be sometime in the summer or fall
of 2022
there are just two caveats here firstly
there is a chance that this
cryptocurrency bull market continues
indefinitely into the future
as all the cryptocurrency coins tokens
and technologies
swoop in to replace the current
financial system
this is called the cryptocurrency market
super cycle and even though it is
possible
it's not very plausible this is simply
because it's logistically impossible to
accomplish something like this
in such a short period of time the
adoption of cryptocurrencies
has been and will continue to be a
gradual process with lots of hurdles and
red tape
that said cryptocurrencies could see a
super cycle in fiat terms because of
hyperinflation
this is arguably more likely than an
adoption-driven super cycle
governments around the world have been
printing currency like mad
and the inflationary effects of this are
only just beginning to surface
the thing is that just because the
prices of bitcoin and ethereum are in
the hundreds of millions of dollars in
paper terms
it doesn't necessarily mean that the
purchasing power of btc or eth has gone
up
bitcoin and ethereum could technically
be in a bear market but still be
increasing
in nominal terms just because the value
of money is going down
due to inflation this inflationary
effect has probably played a role in the
so-called bubbles in housing stocks and
cryptocurrencies we're supposedly seeing
i'll leave a link to my video about
inflation in the video description if
you want to learn more about that and i
recommend you check it out when you get
a chance
the second caveat involves the
possibility that the next crypto bear
market will last
a lot longer than a year or two as i
mentioned earlier the long-term debt
cycle lasts between 75
and 100 years assuming this model is
correct
a depression could be around the corner
this is because the last depression took
place in the 1930s which was around
90 years ago some economists have argued
we are in a depression
already because of the pandemic others
insist
that the depression should have happened
in 2008 but the governments have managed
to keep kicking that can down the road
by printing money like mad a few even
believe
that there will never be a depression
again because of our magical
modern monetary policy when the
depression
inevitably happens history suggests that
it could last as long as a decade
again the next depression could be many
years away and there's no guarantee
it will happen but this is something you
need to keep in mind
when planning for the next crypto bear
market
on that note let's take a look at how
you can prepare
for these different bear market
scenarios
to quickly recap there are three
possible crypto bear market scenarios
a regular bear market a hyper inflation
bear market
and a depression bear market regarding a
regular bear market i'll start by saying
that if you're in crypto for the long
run you're better off huddling what you
have and adding to your position
on a regular basis this is called dollar
cost averaging
and it is statistically the most
successful
long-term investment strategy regardless
of the asset
if you're looking to ride the wave the
first thing you need to understand
is that it is extremely unlikely that
you will buy the absolute bottom
of the next bear market where that
bottom will be
is anyone's guess and my personal guess
is that the bear market bottom
will be somewhere in the 20 to 30k range
assuming we have
a regular bear market on the way down to
the bottom of the bear market we're
going to see a series of bull traps
this is where the price suddenly spikes
in the short term before continuing its
collapse
the easiest way to filter out these bull
traps is to set the price chart to
monthly
this will give you a better view of the
longer term price trend
in terms of entry what you'll be looking
for is a clear trend reversal
now using bitcoin's previous bear market
as an example this was around the six
thousand dollar mark in may 2019
note that i'm now on the weekly chart
while it would have been ideal to get in
at the 3 000
range there's no way of knowing if that
was really the bottom
and you'll be kicking yourself if you go
all in at that price
and it keeps dropping it's better to be
on the safe side
and wait for that reversal especially if
we're dealing
with the other two bear market scenarios
in a hyper inflation bear market the
price of cryptocurrencies will probably
go through the roof
but their purchasing power will decrease
this might sound surprising because it's
often said that assets like bitcoin and
gold
thrive under these inflationary
conditions apparently
this is not all that accurate a
financial youtuber called starpath
academy recently made a series of videos
about the value of precious metals
during the hyperinflationary period in
romania in the 1990s
at the time the annual inflation rate of
the romanian lay
was well over 100 percent and even went
over 200 percent for two straight years
gold and silver were not used as mediums
of exchange and this was primarily
because
most people didn't have any gold or
silver
those that did hold gold and silver
understood that precious metals are the
best way to store your wealth long term
so it was often the last thing they sold
this ties into something called
gresham's law which states that people
generally use the least valuable form of
money they have
to buy things with anyways the practical
effects of this precious metal hoarding
meant that whenever someone did sell
gold or silver
this meant they had nothing left to sell
the person buying could therefore offer
a much lower price than what the gold or
silver was really worth
because the seller was desperate now
this consequently crashed the value of
gold and silver relative to other assets
that were used as currency in romania at
the time
such as food livestock building
materials and tools
what this means is that if we enter some
sort of bear market hyperinflationary
period
the last thing you'll want to do is buy
or sell your cryptocurrencies
based on their fiat value instead you'll
have to do your best to estimate
how much value your cryptocurrencies
have relative to other assets
that you actually need or want and buy
and sell your crypto
based on that information by that point
i reckon you'll have bigger concerns
than buying the bear market bottom and
this will probably also be the case
with the third bear market scenario
if the next cryptocurrency bear market
ends up being part of a global
depression
it will make for an amazing dollar cost
averaging opportunity
assuming you have the funds to spare of
course the problem with spotting
depressions
is that you don't know you're in one
until much later
typically they start off like a regular
recession slash bear market
and that means a big old crash and lots
of lost
jobs although the crypto market hasn't
gone through a depression before
history suggests that it won't hold up
too well and the price
could continue to drop for years
this is because people tend to buy two
types of things
during depressions the things that they
need to survive
and things that take the edge off
cryptocurrencies don't fall into either
of these categories
the things that do fall into these
categories are shelter
energy clothing food water and
interestingly alcohol cigarettes made of
various plants
news media and even entertainment like
movies and tv
all the companies that provided these
much needed outlets during such
stressful
times fared pretty well during the great
depression and some of them
even managed to grow during this period
the only cryptocurrencies that could
potentially provide the same outlet are
those that power virtual worlds like
decentraland and those that are used in
esport
and video games like engine coin now
something tells me that people won't be
too eager to spend their limited funds
on some sort of in-game nfts
but i could totally see people gambling
their crypto in decentraland during the
next depression
you can learn more about decentraland by
watching my video about it
and you already know where to find that
link yes you do yeah well
top right if you forgot
the thought of a crypto bear market
might make you worry but it's a normal
and necessary part of every assets
market cycle
this is easy to forget when you're used
to seeing your favorite cryptos
consistently go up by double digits
on a weekly basis the last month of
choppy price action
might make you feel like the bear market
is here but the global
and crypto macro economic factors
suggest that this is not the case
assets are continuing to rally across
the board and even though there is
some volatility in the short term the
long term
upward trend continues what comes up
must come down though and 2022 seems to
be the year
when that decline begins the real
question
is how hard the next spare market will
be on cryptocurrencies
the good news is that cryptocurrencies
have seen enough adoption
that they are likely to survive every
type of bear market scenario on the
table
a regular bear market would be ideal but
i have a gut feeling that we might end
up with one of the more severe bear
market scenarios
i lean towards a hyperinflation bear
market because it would be a convenient
way
for governments around the world to
transition their populations
to central bank digital currencies
governments probably know they can't
convince their citizens to give up their
cash
but they can devalue it to the point
that people start looking
for alternative forms of currency you
could argue that cryptocurrencies would
fill this void but the fact of the
matter is
that there is no cryptocurrency on the
market today that is ready to become the
planet's payment network
now for what it's worth i'd much rather
have a dystopian cbdc than a world war
which seems to be what ended the last
depression
no matter what happens though i plan to
hold on to my bitcoin for dear life
with some luck i'll have enough stashed
away to deal with whatever bear market
scenario comes my way
if you learned something new today smash
that like button to make my day
subscribing to the channel and pinging
that notification bell is a great idea
too
you can even follow me on social media
if you want to stay in the loop
i've got a twitter tic top instagram and
even a free telegram channel
where i give you my take on the crypto
market every day
if you're into newsletters and who isn't
i happen to have one myself
it's jam-packed with everything you need
to know to supercharge your
crypto portfolio you even get to see
mine
and how it changes from week to week if
you're a real crypto freak
head on over to the coin bureau merge
store to get some awesome crypto teas
and hoodies
i know you want to join the 21 million
club
links to all of these resources are in
the video description
you can't miss them that's all i've got
for today folks
many thanks for watching and i'll see
you all next time
[Music]
you
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