The crypto hangover

Debt is a double edge sword. It can allow you to gain more money or ruin your financial health, magnifying your losses. When debt is cheap we tend to jump into ventures that were not attractive when the cost of debt was higher. It is a boom and bust cycle. And it impacts crypto.

Bitcoin was born when debt was ruining monetary assets, especially fiat money. And now, the dollar is strengthening as a consequence of the debt repayment: the demand for dollars is rising to settle some contracts. Now the desire is to increase interest rates so that inflation gets under control.

Crypto used to receive alcohol, debt and profits from other markets. And now, it is suffering the hangover of the repayment and the losses that have to be covered. The music stopped playing and we may need to calm ourselves a little bit. Go home and revisit the fundamental thesis. The global economic environment may be negative for crypto, but it does not impact all the coins and tokens in the same way.

Where will the bottom be?

The 200 Weekly Moving Average is being really useful in former cycles. It does not need to be the same this time. But it is a price range that we should take into account, 24K USD is where it lies now. It can wick below, as in the past, 20K and 19K may be on the table if it overreacts. The interesting thing is that bitcoin tends to go to that mark relatively fast after the all time high as we can see below. So it may have already printed the bottom.

What about bitcoin dominance?

Bitcoin tends to lead the market after a huge drop. The dominance is starting to go up and it can go up based on that hypothesis, trying to find the top for the BTC. It may be useful to know when it is wise to get back into altcoins. That is a prediction based on the logic and reasoning of what to buy first.

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We can buy fewer things with the same salary and it has something in common with the velocity of the money. If we keep on moving fast (traveling, shopping and enjoying) prices will go up but it may not necessarily help with the debt cycle. We need to see the bottom before we start the hangover.