Quick Market Analysis from a non financial advisor
Hello hello Wonderful being!!
Been some time since my last publish, and lots of actions have happened; one of which my predicaments: We have not yet seen the full impact of the Corona on the financial market.
So, in this post I will try to take several steps back from the BTC window and look a little more into the whole stock market and see if there are correlations and effects into BTC and any good indications?
Digital Gold argument
So there is an argument out there that says BTC is digital gold and a safe haven for traders alike.
Personally, I would love to believe that, but I do not see the correlation, just yet.
I see it can become something like a digital gold in the future, but today it is not. BTC and possibly other crypto is used today in hedging, or would make more sense to be used in such a fashion.
Hedging, in the sense that BTC and crypto has no correlations with the rest of the financial market.
When hedging or protecting your portfolio against risk, you usually choose assets that are less correlated to each other. That means that if one action or element in the news or internation affects your asset A, it does not affect your asset B.
You do not want your portfolio to be over exposed into certain areas.
It is based on this argument above (non correlated asset) that i believe BTC will increase in value over the next few months.
Because more and more traders will add BTC into their portfolio, when market is now correcting.
which brings me to my next argument.
Market Bubble and over valued
Many financial analytics out there, including myself (self proclaimed financial analytic), believe that the market has been overpriced or over valued. The good last few years of nothing but gain gain gain and low interest rates, has made us lazy and too hopeful.
Money has been streaming into companies and stocks, especially tech market, which made them over valued. Also in 2019 we experience many of the top tech companies buying their own stocks, which also impacted the price.
In the beginning of 2020 (January), I saw signs of the first trend reversal and possible beginning of a correction. However, I expected the stronger correction to happen in summer time, due to the fact that central banks and other institutes would do everything they can to post pone any strong correction.
However with the Corona Virus and its effect on factories and stock market, it is working as a possible catalyst to my initial theory.
Where do we go from here?
Well, with these two arguments in mind, I believe two scenarios that are most likely:
1. We will fall about 10-20% more in BTC before finding stronger support line. From here we will see positive incline of price.
2. We have already hit support line and our climb will start slowly but surely.
What are my own strategy in this
I sold all my funds and stocks in late 2019, waiting for a buy in opportunity in both stock and crypto.
The buy in opportunity in stocks I believe will come either in this month in March or in April, if not then probably not until early 2021.
Reason for that late buy in is that, if the central banks and other institutes start their serious counter actions for this correction. It will have a strong effect and will last for some time, but not very long though.
If they wait with their counter actions, then we will see stronger corrections than we have today and that is my buy in opportunity.
My crypto strategy however is slightly different, since its not that correlated to the rest (it is affected but not strongly).
I am tempted to already now rebalance my portfolio in the crypto fund I am managing, and be more heavy into BTC and Ethereum, and another.
Also, looking into buy in for the same crypto in my private wallet as well.
Wish you all a happy hunting for your fortune and glory, but remember to be safe!
PS
Dont forget to look at your charts on daily and weekly to see long term trends, and remember also that trend reversal always starts from within; which means short term like the hourly or 4 hourly :)
Been some time since my last publish, and lots of actions have happened; one of which my predicaments: We have not yet seen the full impact of the Corona on the financial market.
So, in this post I will try to take several steps back from the BTC window and look a little more into the whole stock market and see if there are correlations and effects into BTC and any good indications?
Digital Gold argument
So there is an argument out there that says BTC is digital gold and a safe haven for traders alike.
Personally, I would love to believe that, but I do not see the correlation, just yet.
I see it can become something like a digital gold in the future, but today it is not. BTC and possibly other crypto is used today in hedging, or would make more sense to be used in such a fashion.
Hedging, in the sense that BTC and crypto has no correlations with the rest of the financial market.
When hedging or protecting your portfolio against risk, you usually choose assets that are less correlated to each other. That means that if one action or element in the news or internation affects your asset A, it does not affect your asset B.
You do not want your portfolio to be over exposed into certain areas.
It is based on this argument above (non correlated asset) that i believe BTC will increase in value over the next few months.
Because more and more traders will add BTC into their portfolio, when market is now correcting.
which brings me to my next argument.
Market Bubble and over valued
Many financial analytics out there, including myself (self proclaimed financial analytic), believe that the market has been overpriced or over valued. The good last few years of nothing but gain gain gain and low interest rates, has made us lazy and too hopeful.
Money has been streaming into companies and stocks, especially tech market, which made them over valued. Also in 2019 we experience many of the top tech companies buying their own stocks, which also impacted the price.
In the beginning of 2020 (January), I saw signs of the first trend reversal and possible beginning of a correction. However, I expected the stronger correction to happen in summer time, due to the fact that central banks and other institutes would do everything they can to post pone any strong correction.
However with the Corona Virus and its effect on factories and stock market, it is working as a possible catalyst to my initial theory.
Where do we go from here?
Well, with these two arguments in mind, I believe two scenarios that are most likely:
1. We will fall about 10-20% more in BTC before finding stronger support line. From here we will see positive incline of price.
2. We have already hit support line and our climb will start slowly but surely.
What are my own strategy in this
I sold all my funds and stocks in late 2019, waiting for a buy in opportunity in both stock and crypto.
The buy in opportunity in stocks I believe will come either in this month in March or in April, if not then probably not until early 2021.
Reason for that late buy in is that, if the central banks and other institutes start their serious counter actions for this correction. It will have a strong effect and will last for some time, but not very long though.
If they wait with their counter actions, then we will see stronger corrections than we have today and that is my buy in opportunity.
My crypto strategy however is slightly different, since its not that correlated to the rest (it is affected but not strongly).
I am tempted to already now rebalance my portfolio in the crypto fund I am managing, and be more heavy into BTC and Ethereum, and another.
Also, looking into buy in for the same crypto in my private wallet as well.
Wish you all a happy hunting for your fortune and glory, but remember to be safe!
PS
Dont forget to look at your charts on daily and weekly to see long term trends, and remember also that trend reversal always starts from within; which means short term like the hourly or 4 hourly :)
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