Why Crypto is Falling

hey everyone me kevin here in this video

i'm going to talk about why i believe

that cryptocurrencies are falling their

trajectory for 2022 is this a buy the

dip opportunity and

remember folks there's never just one

reason why things fall

with that disclaimer out of the way and

to mention that you could get four

actually five totally free stocks with

weeble via the link in the description

and down below click that get five

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let's get into the video okay first

as part of a multitude of reasons why

cryptocurrencies are falling we can

start with going to coinglass.com and

taking a peek at the total liquidations

we do have a slightly elevated amount of

liquidations right now we're sitting at

about 271.8 million in liquidations this

is actually ticked up slightly since the

last time i checked here the last time

we saw liquidations around this uh were

around december 16th and december 12th

and what i like doing is taking a peek

at what kind of price action we had on

december 12th and december 16th just to

get an idea of what liquidations can do

to the market so if we go on over to

december 12th we will see that on

december 12th bitcoin was actually up 3

so liquidations do not necessarily have

to drive selling pressure if we go to

the 16th we see that bitcoin was a 0.07

percent so on both of those recent

liquidation spikes we actually didn't

see a substantial decline actually any

decline in bitcoin's price now we did

see a lot of liquidations here see this

sort of longer candlestick right here

this wick coming way down to 42 300 this

was december 4th and if i remember

correctly december 4th ah yeah look at

this we had substantial liquidations now

this chart here shows uh 4 p.m december

3rd liquidations and then that price

action on weeble shows on december 4th

right here this is just because of the

way they measure the 24-hour differences

when they reset the 24-hour gain and

candlesticks so to speak but this is

essentially the same period of pain

right here and you could see the same

thing even if you go a day before the

12th you're still up on btc and the day

before the 16th uh the 15th you're also

up on btc so on the smaller liquidation

days where you're somewhere around two

to three hundred million like what we

saw again on the 12th and the 16th or

really today you usually don't see a

large downtrend in cryptocurrencies

there's usually something larger at play

that's either bringing the trend for

cryptocurrency up or down if you get a

substantial liquidation like in excess

of a billion dollars oh yeah absolutely

you are seeing a candle wick

fly way down now those could be nice by

the dip opportunities but they do not

tend to last long as you can see they're

usually a reason why you'll break past

support and then you come back to

support this is pretty typical right now

despite this beautiful inflection point

that we had coming off of support we

lost momentum we got rejected at 52 000

on btc and we've fallen down why are we

potentially getting rejected at btc why

did ethereum never really inflict up and

why is it that all of a sudden we're

seeing other coins also get rejected

like ada getting rejected off that 150

not able to close a full day candlestick

above 150. what's happening okay

the only thing that i could find and

then we're going to get into longer term

thesis the only thing that i could find

this morning was fear over inflation

actually going down now i thought this

was quite interesting because i've run

surveys on twitter before and of my

followers it seems that about 50 of you

invest or used to invest in

cryptocurrency because of inflation and

looking for an inflation hedge when i

re-ran that survey about 40 percent of

you and i added enough a third option

about 40 percent of you chose that third

option which is you invest in

cryptocurrencies because they trend up

in the long term that was the quote i

invested in crypto because they trend up

in the long term and 40 chose that and

then the next highest amount uh

somewhere around 30 was that you invest

in cryptocurrencies because of inflation

as an inflation hedge so we know that

when cryptocurrencies are going up and

inflation is going up crypto tends to

continue to trend up and people use

cryptocurrencies as an inflation hedge

now it's much more than that we know

that cryptocurrencies are much more than

that but what happened this morning well

the suits lowered their inflation

expectations and this is combined with

the second thing that happened so number

one inflation expectations got lowered

we're expecting only 2.8 well wall

street wall street is only expecting 2.8

percent inflation by the end of 2022 and

2.5 inflation at the beginning of 2023.

that's a substantial decline from the

6.9 percent cpi reads where we are now

and we believe that cpi is grossly

understating how much inflation we

actually have

to to see a substantial downtrend in uh

the cpi read while at the same time we

expect wages to go up and rents to

finally show up as increasing in uh the

uh owner's equivalent rents in the cpi

data and we're still expecting inflation

to rotate down and now lower than

expected or this wall street is that

could be one of the reasons we're seeing

a little bit of selling pressure in

cryptocurrencies because if expectations

for inflation are going down then maybe

the need for a hedge via

cryptocurrencies is going down so that

is a potential rationale now keep in

mind many of us in the cryptocurrency

space and i don't blame you believe that

the cpi is rigged in fact i've watched

other creators talk about how rigged the

cpi is that it's not fair that the

basket of goods changes every so often

to adjust to different products now this

i actually and trust me i agree that a

lot of things are rigged but this i

actually agree

with the data collectors for cpi on

you've got to change the basket of goods

regularly when you've got constant

technological innovations otherwise

you're comparing things that don't make

sense anymore like you can't constantly

compare the price of a 20-inch tv year

after year after year for year because

consumers aren't only buying 20-inch tvs

anymore in fact i don't remember anyone

ever buying a 20-inch tv recently but

anyway

so so that makes sense but i will say i

agree that owner's equivalent rent is a

fraud maybe i shouldn't say it's a fraud

but it's ridiculous basically the cpi

lags in rent inflation by about six

months the reason it lags by about six

months is because it takes time for

rents to go up for property managers to

essentially either raise rents or to

find new tenants and then recognize

those higher rents and then for owners

to go okay the rental values have gone

up

own the cpi data does not just measure

the very last most recent comparable

sale or comparable rental comp even

though that's actually what they

probably should do to properly measure

uh what actual rental inflation is so

this now all this what i just talked

about with cpi combine this with the

fact that if we're expecting owner's

equivalent rent to go up why is

inflation still expected to go down when

housing or shelter costs make up

one-third of cpi like if we're expecting

owner's equivalent rent and shelter

costs to skyrocket in 2022 via cpi

because they already have skyrocketed

then shouldn't inflation go up and

that's the argument that yeah but we

might actually or at least the market is

expecting substantial deflation in

certain prices whether it's supply

chains finally uh getting back together

or autos chips whatever interestingly we

actually haven't seen that much

inflation in chips part of that however

could be due to the fact that a lot of

companies lock in 12 to 24 month

contracts for chip supplies so we might

still see that chip inflation so there's

still things that could push inflation

up chip inflation after contracts were

off wages

and and housing shelter which again

makes up one-third of cpi so there could

still be reason to see inflation go up

which i think is one of the reasons why

it still makes sense to maintain a

cryptocurrency hedge uh but uh

there's another thing to consider and

that is that wall street conducts about

70 of cryptocurrency trading whether

that's through algorithms or or

institutionals manually conducting these

trades

institutions believe that inflation is

going to be lower than what consumers

expect consumers expect that in a year

inflation's going to be closer to 4.3

percent notice that divergence if

institutions are doing most of the

trading and they believe that inflation

expectations are going to be lower

consumers believe inflation expectations

are going to be higher it means

consumers are going to be much more

likely to buy the dip and huddle on

crypto where institutions might be some

of the first to go

now is that justified should you be the

first to go well here's the thing

cryptocurrencies tend to trade with at

least lately or lately and this did not

used to be true but they tend to trade a

little bit more closely with tech stocks

and when we notice a tech rotation or a

rotation away from tech we do sometimes

notice that cryptocurrencies fall

now this does not mean that the indices

have to be down we've learned this

hardcore already we're seeing recovery

stocks pumped today and as recovery

stocks are pumping today like carnival

cruise lines and disney and american

airlines the indices are higher this is

one of the crazy things about the

indices but anyway if you look at some

of our larger uh tech stocks in the s p

you'll see that uh nvidia is down you'll

pull up tesla so we're almost down three

percent on nvidia we're down about point

nine percent on tesla down about one

percent on rk uh i do wonder if apple

and microsoft are up no apple's actually

down as well msft

is also down so you're seeing some of

our bigger tech players down uh and then

of course the fintech space is

continuing to get obliterated as well as

uh software businesses adobe has

recovered from some of its bottom though

but it is not uncommon

for you to see a sell-off in

cryptocurrencies either come before a

tech sell-off or after or with a tax

sell-off not uncommon at all and so it

is entirely possible that some of the

institutional traders are taking money

that they've actually parked in tech or

in cryptocurrencies and they're moving

them over to recovery stocks which are

at a decent discount right now as we're

noticing that omicron is continuing to

prove to be more of a nothing burger now

i i have to say that very sensitively if

anybody is severely sick or hospitalized

or dying with omicron my heart goes out

to you and your family

the reason i say this

no is because for the vast majority of

folks it appears knock on wood that

omicron is severely minor or

substantially uh

mild i should say

markets initially overreacted sold off

recoveries traded into cryptocurrencies

and some of the big mega caps like apple

now we're seeing a little bit of a

rotation back to recoveries as omicron

is proving to be less severe so so far

we've got a few different things here

okay we've got inflation expectations

very important then we've got attack and

potentially rotation into recoveries

tech sell-off pushes down kryptos crypto

sell-off also can push down tech but

anyway rotation from these over into

recoveries makes sense

what else folks

well this is a longer run belief and

most people say this is just pure fud

and it's totally fine i agree that what

i'm about to say is just fud and it's

not stopping me from investing in fact

what i'm going to do just because i want

to prove it to you is i'm going to show

you my coin base right now which is

where i keep all my crypto with the

exception of about 40 or 50 well maybe

like 35 000 uh of axe infinity uh and

that's because we have actually teams uh

oh gosh everything's red but anyway i

will just go ahead and show my total

holdings just so i can be transparent i

like to be as transparent as possible so

i've got about uh 271 in ada 222 eth 213

solana btc 161 polygon 116 polka dot 111

uh tazos 92 um uh

avax 32.3 a luna uh 28 and then like six

thousand dollars here and leftover

dollars uh anyway

i'm still working on on balancing this

out because i've been re creating this

portfolio that's because i sold like 95

of the crypto that i had while bitcoin

was sitting at about 58 000. i saw a

larger downtrend coming and i've been

rebuying really between forty eight

thousand and about fifty thousand five

hundred that's been kind of my rebuy

target which is essentially where we are

now we're roughly at about forty nine

thousand right now in btc okay so full

transparency out there i still believe

in this but now what is the fun that i'm

gonna say okay i gotta get the out

of the way

so look the fud uh is that a

i believe blockchain technology uh is uh

and uh

the uh asymmetric uh cryptography that

we use for uh for encrypting

blockchain technology is absolutely

incredible i also believe that we are

going to evolve to a new form of

cryptography when uh quantum computers

start becoming more of a thing and so i

believe that blockchain technology is

going to remain quite immutable and

essentially irreversible for a very very

long time into the future uh i'm very

very bullish on blockchain technology

for that aspect i'm also very diff

bullish on various different types of

blockchains which i love not just layer

two solutions built on top of let's say

ethereum uh but also the advances that

we're seeing within cardano ethereum

going to 2.0 uh and btc

going over to lightning these very much

excite me but i do have concerns that at

some point in the future potentially 20

30 years down the road or sooner i don't

know but at some point in the future

blockchain technology will become a

utility that is the best forms of

utility will kind of be like your socal

gas or your pg e or your socal edison or

your comcast versus your att where

basically you're paying a utility bill

for blockchain as your uh

essential backbone for all financial

transactions whether that's your

quickbooks transactions or your mint.com

stuff for your bank stuff whatever

somehow i do think that blockchain

technology is going to underlie all of

this

unfortunately and this happens a lot in

the cryptocurrency space as much as we

can love a technology there is a very

very common disconnect

between that that is overlooked i should

say a very commonly overlooked

disconnect

between blockchain technology and

tokenomics this is very important

remember folks tokenomics are a slice of

the market cap of a token

but blockchain technology is different

blockchain is what the token sits on top

of so the token sits on top of

blockchain okay most of you all already

know this

point is

just because the blockchain does very

well does not necessarily mean that in

20 or 30 years the token has to do well

so i do have a longer term concern that

token values with the exception of

purely deflationary tokens are going to

come under pressure

and this is where i do think that btc

has a longer run edge now i also really

really believe in ethereum

i think in the short term like

temporarily you could potentially even

see a flipping where you see ethereum

surpass

the the price of bitcoin where you get

this sort of inflection point but i do

think at some point in the future that

would rotate down if we ever did see

that kind of flipping because of

particularly this reason here that

blockchain technology does not

necessarily mean the tokens that ride on

it have to maintain their value

especially if they're slightly

inflationary which ethereum still is i'm

i'm bullish on bitcoin but then again

bitcoin is very important as an

inflation hedge for a lot of individuals

and if inflation rotates back down more

substantially and quicker than we

believe

then we could see some pain for btc

pricing in 2022 now personally i'm still

bullish on cryptocurrency tokens for

2022 and i want to make this clear oop

that's a different video there you go

so the reason i'm bullish is

specifically because of

regulation i believe that regulation is

going to be a massive positive catalyst

for cryptocurrencies going into 2022 and

well i mean we're going into 22 right

now so throughout 2022 i think it's

going to be a positive catalyst that is

going to open up a lot of new money to

cryptocurrencies whether we get

excitement over spot etfs or whatever it

is going to happen in my opinion we're

going to get spot etfs in either 2022 or

2023 and i do believe that we're going

to see all-time new highs so new

all-time highs

for a lot of the coins that we're

investing in this is why as

a trader in cryptocurrencies i'm bullish

on cryptos for 2022 and i personally see

selloffs like this as buying

opportunities i did a little bit of

buying yesterday i plan to do a little

bit more buying today unfortunately

yesterday i bought a little bit

right before things started selling off

but sometimes that happens

fortunately before that i bought the dip

very nicely so hey you get sometimes you

do perfectly sometimes you don't that's

just the nature of trading you try to be

right 80 of the time and i'm hodling

these i've not sold any cryptocurrencies

uh i believe at least for the last month

but anyway at least last month uh

because i've been buying i've been

rebuilding the portfolio and that's

because i believe that regulation is

going to push us to new all-time highs

positive regulation is going to push us

to new all-time highs in 2022 and 2023

i'm very optimistic about that i might

be overly optimistic though and this is

where i have to caution that a lot of

the regulation that we're waiting for is

an act of congress

one of the issues that i foresee is that

if cryptocurrencies become a campaign

issue of 2022 then we might not see any

cryptocurrency legislation from congress

with the exception of minor amendments

to some of the disasters that we saw for

example in the bipartisan infrastructure

package with the kyc rules potentially

affecting minors which is completely

moronic uh but that aside if uh

cryptocurrencies become a political

issue going into 2022 uh or in 2022

since again we're going into 2022

already

there and it becomes a political uh

talking point for the november 2022

election we might not end up seeing any

regulatory progress until 2023 so in my

opinion as long as you are comfortable

hauling until 2023 end of 22 2023 uh

then then cryptocurrencies

are something that

could make sense as part of a

diversified portfolio i can't give you

financial advice but i keep

cryptocurrencies at about three to four

percent right now i'm willing to

increase this to a max of about eight to

ten percent if we get a larger

substantial sell-off i'm willing to

double uh maybe even slightly more than

double my cryptocurrency position as a

portion of my portfolio again right now

sitting around uh three-ish percent

so this gives you a little bit of

perspective now

let's go ahead and reconcile all of what

i just talked about uh i believe number

one cryptocurrency regulation is going

to be very very bullish for

cryptocurrency whether that comes in

2022 or 2023. number two it's very

important to separate blockchain

technology from tokenomics and

understand that in the very long term

there could be a compression of token

values but i believe that would only

come after the positive regulatory

catalyst that we would expect to see in

2022 or 2023.

next i believe that inflation will go

down i believe the suits are more likely

to be right along with the fed then

inflation is going to be

somewhere around that 2.8 percent it's

cbi inflation okay we're going with that

still an inflection point to the

downside even though real inflation's

probably higher right but i believe that

we're going to see inflation rotate down

if inflation rotates down much more than

expected there could be a headwind to uh

cryptocurrencies but i think that would

be offset by positive regulatory change

and therefore i'm hodling and i'm

actually recommend well i can't say

recommend because i can't give financial

advice but let's just say i'm buying

today so if you found this helpful

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for watching and folks we'll see you

next one bye