Bulls vs Bears

In this economic climate, there are always going to be arguments and reasons to be bearish, but also bullish.

Let us review each case before we make a concrete conclusion.

🐻 𝗕𝗲𝗮𝗿𝗶𝘀𝗵 𝗰𝗮𝘀𝗲:

- Interest rates --> reducing consumption and spending in the economy which will inevitably tip economies into recessions, also likely to hurt businesses' earnings reports.

- Russia and Ukraine --> Putin continues to threaten the use of nuclear weapons against Ukraine, deterring other countries from getting involved. This crisis has since driven up electricity prices and the price of commodities, for example, Oil.

- China and Taiwan --> due to the Russia-Ukraine crisis, China most-likely believe they can take Taiwan under the radar.

- China lockdowns --> China continues to place lockdown implications on people and factories, slowing down production and Chinese exports. This could lead to countries having to shift to a more internal and self-sufficient model or alternatively increasing tariffs against China to try and slow down demand (leading to more inflationary pressure worldwide).

🐂 𝗕𝘂𝗹𝗹𝗶𝘀𝗵 𝗰𝗮𝘀𝗲:

- High interest rates --> higher interest rates mean they can go down further when the FED eventually lowers them in order to stimulate the economy. This can lead to huge gains in the market, just look at 2020.

- Job market --> in the US, the job market is at pre-pandemic levels, so very strong. This enables the government to focus on spending less in subsidies and (hopefully) can spend the money in an effective way, such as solutions for energy and supply chain issues (which have been a key cause of inflation).

- Institutions are heavy on cash --> when we pivot back to a bull market (it's a question of "when", not "if"), it's going to be the most hated rally in the history of markets. Most institutions are extremely bearish, with shorts in play and cash on the side. They will miss the bottom and they will go on CNBC calling out for worse times ahead to be able to buy back in. There's nothing worse than missing the bull train.

- Technology --> you don't want to be against human ingenuity. Technology will streamline operations and open up new avenues that we didn't think of before. Technology is, by definition, an extremely powerful deflationary force.

- $BTC halving in 2024 --> Yes, a bit early to be talking about the halving but historically speaking it's always been frontrun and I don't expect this time to be different.

- $ETH merge --> Yes, it was a sell the news event for 2 reasons:

1) institutions bought/borrowed ETH to potentially benefit from a possible fork

2) ~46% of the staked supply is in the hands of 3 centralised parties, which are in the US. The US government will regulate the s*** out of it and our BFF Gary Gensler (U.S govt official) alluded to the fact that ETH could be a security. That said, I think this event will be bullish because it sent a clear message to the whole world: The Crypto community was able to pull off one of the most complex upgrades in the history of software.

I am looking at incorporating more crypto-related information and analysis in future weeks.

If you are truly invested for the long term, zoom out on every chart you see. It has been historically proven that those who continue to invest and DCA (especially during times of uncertainty) are those who are most successful, and they are also those who outperform day traders.

Thank you for reading :)

Sources used:

CNBC

MarketWatch

YahooFinance

Davide Marcotti

Next Article...$META stock analysis - this Wednesday.