Crypto is Crashing. Time to Panic?

While the price of bitcoin has been falling over the past week, today it hit a milestone price of $59,889. A milestone because it’s below $60k and the media is absolutely fixated on every $10,000 price barrier.

As we continue to say in these pages, these short term movements don’t really matter. But we also understand that we have a lot of new readers.

And based on waking up to texts like the one below from our siblings, we suppose it might be worth quickly covering what the hell is going on.

Here are today’s reasons for the recent correction:

Geopolitical Tensions: On Saturday, Iran attacked Israel. While it was a relatively muted attack, it was enough to send the market into fear-mode. Reports also emerged today stating that Israel considered conducting a retaliatory strike against Iran today but have decided to postpone it.

Big boy Jerome Powell ain’t gonna cut rates: Is the Fed getting hawkish? It sure seems that way. At a meeting today Powell stated, “the recent data have clearly not given us greater confidence and instead indicate that it's likely to take longer than expected to achieve that confidence.”

Everyone is busy paying their tax bill: We probably don’t have to remind you that Monday was the dreaded tax deadline. And as hundreds of millions of American’s kissed their sweet earnings goodbye, only to be pilfered by a government that can’t keep its own coffers in order, it stands to reason that there may have been some unwanted selling of assets. As a side note, it’s worth mentioning that Canada is also passing a really fun bill that will tax capital gains at 66%, up from 50%.

The presidential race might be closer than crypto-enthusiasts would like: According to a new poll from NYT/Siena College, Biden has cut the 4-point lead Trump held in February. Trump now leads Biden 46% to 45% among registered voters. If you’re wondering what an election has to do with bitcoin, it’s because crypto investors in-large expect a republican’s to be more crypto-friendly.

Halving coming soon: Covered below.

Let us say this clearly: It’s. All. Noise.

Less than three months ago, BTC was trading below $40,000… We were writing about how the ETFs weren’t going as predicted… all while prosthelyzers were claiming there was a 0% chance prices would break ATHs before the halving…

Yet here we are.

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Welcome To Bitcoin’s 5th Epoch

Bitcoin’s 4th halving is upon on us, expected to happen on April 20th, just three days away.

While this event is being blasted on every front page in crypto media, here are the only two narratives investors really need to know:

Short-term: The halving could very well be a sell-the-news event. Remember ETF launch day? It was perhaps the most bullish event of the decade and BTC prices fell ~15% before recovering.

But, now, just thinking from a pure contrarian trading mindset, we wouldn’t be surprised if the opposite actually occurs here. Why? Because everyone is warning of a sell-the-news event, not just us. And bitcoin – dipping below $60k earlier today (see story above) – is already losing some momentum.

Ultimately, don’t take our word for it. Don’t take anyone’s. As always, anything can happen when it comes to these “landmark” events. If you don’t really care either way because you're just a long-term investor, keep reading…

Long-term: There’s hopium everywhere you look surrounding the long-term implications of another bitcoin halving. But most long-term analysis leans heavily on just cycle theory.

It goes something like this: Bitcoin’s price tends to move in four-year cycles. This week’s halving event marks the start of another one, also known as Bitcoin’s 5th epoch.

If we look back to each halving epoch, bitcoin’s price has appreciated substantially in the year following the event.

The major differences between past halvings and today’s are a Wall Street era of bitcoin with ETF-induced demand… inflation-riddled economies across the world… a few ongoing wars… higher-for-longer interest rates… more judges ruling in favor of crypto… and a full-fledged U.S. debt crisis.

No reason to be bullish on fiscally sound currencies like bitcoin at the moment, right?

The Big Picture:
Without troubling anyone with more number-go-up scenarios, all that matters is this: The halving mechanism is what separates bitcoin from every other form of fiat money – the inability to be “printed” or artificially created.

While the current fiat money supply inflates each and every day, bitcoin’s inflation rate is about to drop from ~1.8% to ~.9%, as it trends down to eventually 0%.

This is the power of bitcoin and why the halving is so important.

In today’s world, there’s really not a whole lot to be extremely stoked about. What are we but two millennials, voicing for our generation.

$1 million-plus starter homes… $20 cocktails… a bullshit siloed work remote society fixated on TikTok trends… a stock market riding on AI technology that, quite honestly, sucks… and a whole lot more inflation and lying politicians claiming that “everything is ok” to deal with in the coming years.

But unlike government entities, we can’t just magically increase our wages when we want. So please excuse this rant, but paying our “fair share” in taxes this week hasn’t left us in a great mood.

But, y’know, at least we have bitcoin.

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