Popular Youtuber and Crypto Analyst Michael recently released a video in which he explained the current crash in the crypto market and how it affects Bitcoin as well as Altcoins. Michael’s observations are intended to help investors navigate through these challenging periods with the focus on the need to make sound decisions and understand markets.
The current market has been termed as one of the worst in the history of altcoins such as Arbitrum and Optimism. Similarly, Bitcoin has also depreciated to the lowest it has been since October of last year and is trading at around $54,000.
Altcoins Performance Defies Macroeconomic Trends
Notably, this decline is not being influenced by macroeconomic variables because the US dollar is depreciating and the price of gold is increasing due to uncertainty in the global market. Historically, a weak dollar should be good for Bitcoin, but the opposite is taking place.
Michael also notes that the yields on the US Treasury bonds, which are a key meter for risk on and risk off assets have also gone down. This situation should be more favorable for Bitcoin, but the currency deviates from this pattern. He dismisses this difference to other market determinants specific to the crypto market as opposed to general economic factors.
As stated by Michael, the main cause for Bitcoin’s decline is Germany’s decision to liquidate some of its Bitcoin holdings. As a result of this, the market has been severely panicked and put under pressure to sell by cutting down Germany’s Bitcoin stash to 3.2 billion to 2.3 billion. Also, the much-awaited repayments from the Mt. Gox have started and huge amounts of Bitcoins have been sent to the exchanges which has aggravated the market situation further.
Analyst’s Altcoin Optimism
However, Michael does not lose hope for the better in the given situation as the overall mood is rather negative. He adds that we are possibly in a similar place to where we were after the FTX fiasco, which is suggestive of the market having reached its low. He says such events occur at the onset of market rally and should be viewed as a buying opportunity by the investor.
This is Michael’s own investment approach and he has disclosed that he is now more interested in the alt-coins than in the Bitcoins. He knows full well that the situation is unpredictable and dangerous but does not waver. He tries to assess altcoins against Bitcoin instead of USD in his trading, and the end goal is to hold more Bitcoin, which in his opinion is the best kind of money in the current environment.
For example, even though his USD portfolio value has been affected negatively, his Ethereum, which is an altcoin, has proven to be quite stable when valued against Bitcoin. This strategy shows his long-term vision of the Bitcoin value and, therefore, his desire to buy more at the current prices.
The analyst also stresses the need to choose the correct altcoins. However, the newer coins may have higher returns and hence may be more profitable but they are also risky. Michael also told investors not to panic and to stick to their plans and forget the short term performance of the stock markets. He also focuses on the issues of conviction and allocation when it comes to trading in a highly volatile environment such as the crypto market.