A Warning to all Crypto and Stock Investors.

hey everyone we kevin here yesterday we

had a substantial sell-off in the

cryptocurrency market not just in

bitcoin but in ethereum

and many other coins the entire crypto

space had a little bit of a flash crash

and what i'm going to talk about in this

video is what happened why it happened

but then i want to also talk about what

this

undercurrent is that's sort of happening

in markets right now

and that's very important for you

especially if you are investing in

crypto or

stocks so the same undercurrent is true

in both cryptocurrency and stocks

and i highly encourage you pay attention

to uh especially

that because it could specifically

affect you so let's start by what's

happening in crypto

why it happened uh and then the under

current so first things first yesterday

we had a big sell-off in the

cryptocurrency market all of a sudden

uh we saw cryptocurrencies like bitcoin

go from you know the low

60 thousands uh all the way down to

somewhere around 52

000 uh very very quickly around 7 p.m

yesterday

this massive kind of drop off and this

happens in the cryptocurrency market

but there were a lot of rumors as to

what the cause may have been

there were unsubstantiated and still

unsubstantiated rumors that the treasury

department

was going to issue a fraud claims or

potential money laundering

investigations

into a multiple different financial

institutions

uh these are still unnamed institutions

and we don't actually know if the

treasury department is

really doing this but this was all

having to do with money laundering

via cryptocurrency which if the treasury

department is like

hey y'all are basically putting

illegally created money into

cryptocurrency

and then using cryptocurrency to cover

the true

origins of where that money came from

whether it's from something like illicit

activity like drugs or whatever

and then kind of washing that money

paying taxes on it via cryptocurrency

and then introducing it to normal

markets

that would be very bad for crypto

currencies the last thing we want

are governments to think that

cryptocurrencies are

a great tool for money laundering now we

already know

that this all comes on the back of

turkey

banning cryptocurrency as a way of

buying and selling goods and services

so on thursday we had the buying and

selling of

goods and services with cryptocurrency

banned in turkey then we get these

unsubstantiated rumors of

a potential treasury department

investigation then we get

the word that potentially hash rates in

china

fell substantially for crypto miners

because there was a massive outage in a

certain province

that mines a lot of cryptocurrency and

at the same time we hear

that binance or in general the

cryptocurrency market

with the majority generally being

financed since they transact the most

uh potentially having liquidated

somewhere around 10

billion dollars worth of cryptocurrency

which is pretty crazy to think about

because

cryptocurrencies didn't fall so terribly

before this

all happened uh and and so it's weird to

me that if

cryptocurrency like bitcoin fell from 62

000 to say like 60 000 all of a sudden

we would see a trigger of like

multiple liquidations and then

liquidations upon liquidations

it's possible that maybe people are

highly leveraged up or they're highly

uh exposed to derivative contracts like

options and the cryptocurrency market

which can like few even futures

contracts which could substantially

fluctuate in value

but the point is there are reports that

we may have seen somewhere around 10

billion dollars worth of liquidations

which could have potentially been the

reason for up to 360 billion dollars of

cryptocurrency

market cap literally evaporating which

is also one of the weird things about

markets

that is when markets fall money can

literally disappear

like okay 10 billion people or 10

billion dollars got liquidated so sold

because prices fell but that led to

another 350 billion dollars disappearing

just because of market dynamics

it's kind of weird then people point to

potential

coinbase or a potential coinbase fallout

because coinbase didn't go the way a lot

of people

expected it would uh and a lot more

employees dumped shares than people

expected maybe the entire cryptocurrency

market is a little bit more unstable

basically you've just got a ton of fear

returning to the cryptocurrency markets

and this is where we kind of transition

over to

the stock market and currencies like

well cryptocurrencies together

because when fear returns to both

cryptocurrencies

and the stock market one of the first

things that people generally do

is de-leverage if they can they try to

do whatever they can

to start minimizing margin and

minimizing leverage

this is a trend that we've talked about

in a prior video

in fact if you haven't seen it i

encourage you to watch it just type in

how long will the crash

last because we're seeing a lot of

crashes in specific sectors especially

the spac sector

so watch that video how long will the

crash last especially at the same time

as index funds kind of keep going up up

up

like the s p 500 nasdaq uh the dow jones

right these guys are just going up and

to the right

but a lot of other sectors are in a lot

of pain and so

what really seems to be happening is if

if the more we get

fear whether it's again because of

liquidations

of over-leveraged people or treasury

claims or countries banning

cryptocurrencies or the coinbase fallout

or drama in the spac market whatever

there's a lot of fear right now

cryptocurrencies and space lots of fear

high tech or or high p e tech lots of

fear right now

anytime we see that we tend to get a

deleveraging and that seems to be what

we're seeing happening right now not

just in crypto but also in stocks

and this is a big red flag if you have a

lot of leverage

right now personally my portfolio sits

at 21.1 percent

margin i'm really excited to get this

under 20

it's going to be a milestone for me and

then i'm going to work to getting it

under

10 because i just i've gotten to the

point where i want to now

scroll back my limit which usually my

threshold for margin is 20

i don't want any more than 20 margin but

i want to start dialing that pack to 10

anywho the big big big thing here

is keep this in mind if we go through

a massive period of deleveraging

the pain that we're seeing in the

markets could

stay around longer and that's a downside

when we're in a period of people paying

off debt and deleveraging

money that people make or businesses

make or

or whatever profits that come to people

don't necessarily get reflected

in share prices because people are

taking new profits

and they're using it to just pay down

debt which remember

paying down debt puts zero upward

pressure on on the valuation of an

underlying security

whether that's something like

cryptocurrency

if we can call it a security currency

whatever i'm not going to have that

debate in this video

or a stock so think about that for a

moment if

uh somebody has 50 000 of tesla shares

but

half of that is margin well when they go

buy another ten thousand dollars of

tesla shares on margin

and they go to sixty thousand dollars of

tesla shares but now thirty five

thousand dollars of margin what have

they done

they've put upward price pressure on

tesla's stock because they're a buyer of

stock

or a buyer of shares so they're taking

shares out of the market which supply

and demand means price goes up

obviously not on this small scale it's

not going to make a difference but the

point is

when somebody then instead says hey i've

got an extra ten thousand dollars for my

job or whatever

and they decide to pay down their margin

from 25k to 15k in that example

what happens no price pressure on the

stock

and for anyone else like the next dude

is like man

these stocks have been trading sideways

for a while or they just haven't been

that good you know what

i'm gonna sell to reduce my margin

what happens again less price pressure

on the stock if anything

you've just created more selling

pressure on the stock and prices go down

so this period of deleveraging

is not just something that we're going

to see in crypto but it's also something

we're seeing in

stocks and it doesn't surprise me and to

me

i would not be shocked to see a very not

only volatile but

potentially sideways trading market over

the next six months

as we wait for uh inflation data to

actually

come in to show okay are we inflecting

up

and are we staying up because don't get

me wrong we have inflation

inflation's going up but is it going to

stay up or is it going to inflect back

down

or is it going to accelerate to the

upside to hyperinflation right we're

going to

be on standby for that it's potentially

going to lead more people to want to pay

off their margin

in addition to that the more people pay

off margin the less pressure we have on

stocks and cryptos which mean

values could come down or at least trade

sideways

so the big warning or the big bottom

line of this whole video here is

if you're exposed to leverage

or you're expecting really really quick

returns like we kind of had in 2020

you probably would be well served to

consider reducing margin and i know that

kind of exacerbates the problem that i'm

talking about here

but in fairness to all the people who

watch and support my channel i just want

to be upfront like

that's probably what's happening and

some part of that is probably very

prudent

to reduce that but in addition to

reducing

that debt it's also probably prudent to

consider

we're not going to see those crazy

returns at least not yet

they'll come and they'll come quick this

is one of the reasons i don't want to

sell

but we might not see those crazy returns

as quickly as we've been used to

the big question is okay well does that

mean we

do we just sit around and stay in stocks

or do we sell payoff debt and then buy

back in when things turn around

personally i don't like doing that

because usually when the turnaround

happens

and all of a sudden spanx and

cryptocurrencies and everything really

starts rallying again

usually it's too late when you're like

oh it's starting to rally again it's

like yeah well it just had its 30 or 40

rally or whatever right usually it gets

too late so this is why generally i like

to be

in my stocks i like to be in my bitcoin

or

whatever positions that i'm in so that

way

when the run comes i'm ready but in the

meantime i'm going to be patient

i'm going to pay off margin if i've got

margin paid down to levels i'm happy at

i'm going to go shopping for some

specific deals whether that's in

sell-off periods in crypto

or in specs or certain other stocks

anyway

sort of my thought here on a sunday here

hopefully you found this helpful if you

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