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Hello, welcome to this special Market Update.
Today is the 12 May 2022.
My name is Vincenzo Stefanini and my eToro username is vincenzost.
I am making this video because many people are asking me what is happening in the crypto market? and what do I think about it?
There are multiple reasons:
1. High inflation. As you know, the inflation in the US (and the rest of the world) is very high at the moment.
2. Rising interest rates. Because inflation is very high, the Federal Reserve (and other central banks) are increasing the interest rates. They do this because they want to reduce inflation. However, this also pushes down the prices of stocks and cryptos. In fact, both stocks and cryptos have been in a downtrend since November of last year, when the tapering and the increase of interest rates were announced. The crypto market is correlated to the stock market at the moment. So when stocks go down, also cryptos go down. This is a temporary situation.
3. Luna and UST stablecoin. The recent crash in the crypto LUNA and the drop in the related stablecoin UST, have added additional pressures on the crypto market.
4. The war in Ukraine. This has been going on for months now and it creates uncertainties in the markets.
5. Negative sentiment. Because of all these reasons, the sentiment of the investors is very negative. People are scared and are selling. New investors with little experience tend to make mistakes. They buy at the top because of the fear of missing out and they sell at the bottom because they are scared. This is the worst thing to do.
So, what do we do now?
What do I think about the current situation?
First of all, I think this is perfectly normal. There are uncertainties in the market, the interest rates are increasing and the investors are scared.
However, I am not worried. I have been through these negative situations and in a bear market and I remain calm.
Selling now at loss and waiting on the sideline is the worst thing to do.
In fact, the best thing to do is the opposite.
I am a contrarian investor and I do the opposite of the crown.
When the crowd is scared and the media start saying how low the market can go, I buy.
When people are too greedy and start saying how high the market can go, I am worried and start to take profits.
So, right now I am not selling any position at loss. I have closed some positions at a profit and holding the other positions.
I am buying more cryptos and stocks as the prices keep going down.
This means that in the short term you will see the portfolio value keep going down but please remain calm and keep the copy open and trust my strategy.
As you know, it’s normal to have some months negative, but in the long term, I am always making a profit.
In fact, I made a lot of profit buying during the last crash in March 2020 when all people were selling.
So, if you are already invested in my portfolio, keep the copy open, make sure the copy stop loss is set at the minimum and relax. Remember that this is an investment for the long term.
If you have some cash that you don’t need in the next few months, consider adding more funds to the copy.
If you are not copying my portfolio, now might be a good time to start investing.
If you have a large sum to invest, I suggest starting small and adding a fixed amount to the copy every month. In this way, when the market recovers, you will make a big profit.
By the way, I am adding to the portfolio some hedge assets and some short positions. In this way, when the market drops, the drawdown will be reduced.
I am not holding any positions on LUNA, so we have not been impacted by the recent crash on LUNA.
I am using the cash already available on balance for the new positions, so if you cannot add more money to the copy, it’s fine, you will benefit from the new positions anyway.
Despite all this negativity, there are some positive expectations.
Inflation seems to start going down, so if it will keep going down, it will be positive for the market.
The FED is likely going to do something to calm down this drop in the market, especially because of the midterm elections in November.
All assets are oversold at the moment, so we can expect at least a small rally to higher levels.
The fundamentals of Bitcoin remain the same.
Cryptos move in cycles, so after this negative cycle, there will be again a positive cycle. Cryptos are not dead.
This is instead a great opportunity.
I believe we are close to the bottom.
I hope this video has been helpful for you.
If you liked this video, please press the like button and subscribe to my channel.
If you have any questions, you can contact me on eToro or on my social media accounts.
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Hope you have an amazing day.
See you in the next video. Bye.
Popular Investor presso eToro