Crypto Crash

Strong stomachs required [Click to view in browser](. Good afternoon, We all knew it was a bubble. Everything about it felt like a bubble. So why were so many people surprised when it burst? [What The Heck Wtf GIF by Justin] Generation after generation of investors and traders fall prey to our arch-nemesis. Emotions. Why we fall for it We all hear stories about a friend or a friend of a friend who turned $100 into $100,000 with a well-timed bet. The longer the rise, the louder the noise. For weeks we listened to Roaring Kitty and the Reddit gang claiming untold riches from Gamestop. As that story died, the Shiba Inu Dogecoin took centerstage. Elon Musk put his stamp of approval on Bitcoin, if only to rescind it a month later. Narratives built on top of one another. Some of us were lucky enough to grab early and ride it higher. Yet, without closing the position, all we obtained were bragging rights and paper gains. Robert Shiller coined the term ‘Animal Spirits’ to describe how psychology drives market behavior. People make choices based on value and emotion. Today, market prognosticators look at sentiment indicators from market breadth to national surveys. [At the Investing Channel, we leverage our own proprietary TrackstarIQ Data to view stock search results categorized across retail and institutional advisors.]( In a microcosm, we see this play out in capitulatory behavior, where the fear of missing out (aka FOMO) drives buyers in as sellers eventually give up. Normalcy of corrections Nosebleeds look far worse than they are as does this correction. In fact, Bitcoin experienced a similar pullback in 2018. In the days before Covid, oh so long ago, Bitcoin rose from just below $3,000 to $20,000 in late 2017, a gain of 459.74% in 13 weeks. The following seven weeks saw a correction of nearly 70% from the highs. This time around, 32 weeks passed before the crypto gained 553%. So far, Bitcoin lost as much as 44% of its value from the highs. To match the 2018 drop, Bitcoin would need to fall back to $19,500. That would make a lot of sense since that was the first place we saw investors really take interest before Bitcoin soared. Our hot take People confuse cryptos with stocks. Not in the sense of what they are but of the risks involved. Even many small-cap companies probably hold less risk and volatility on the whole than cryptocurrencies. These assets are new and should be valued as such. Don’t assume the risk of Bitcoin comes anywhere close to Apple. The two are entirely different in terms of volatility. Treat them as such. With a lot moving the markets these days, it’s important to get a well-rounded view. Our collection of publisher articles below is designed to provide you with thought pieces and investment insights to help spark some ideas. 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