Will the crypto markets melt? | Nasdaq

By Frank Corva

It seems almost inevitable that we are headed for a recession – or possibly worse.

But the big question is: will the markets “melt” before they crash? In other words, will we have one last major rally in the markets – all markets including crypto – before it all comes crashing down?

What is a merger?

A merger occurs when investors buy assets out of greed or fear of missing out (FOMO) rather than for fundamental reasons.

During a merger, asset prices – especially risky assets (e.g. tech stocks and crypto) – soar before falling into oblivion.

Buying into a merger is the opposite of how someone like Warren Buffet — someone who buys stocks based on the fundamental value of the company he represents — invests.

Who is talking about merger?

One of the biggest proponents of the merger thesis is David Hunter, a “contrarian macro strategistwith half a century of experience on Wall Street.

On Twitter, Hunter posted a pullback ahead of a parabolic meltdown for most of the past year.

So far, the “hindsight” part of his thesis has proven true. Hunter proponents are eagerly waiting to see if the price spike part of the thesis holds up.

Plus, it’s not just the contrarian guy on Twitter making such calls.

In April 2022, CNN Business published an article titled “Beware of ‘Merger’: Analysts Say Stocks Could Soar Before Crash”.

The article’s author, Nicole Goodkind, describes the merger as an “explosive rally before the crash”. Goodkind says investors are waking up to the sad reality that we’ve been living in a bull market for some time now and some are bracing for one last hurrah before the music stops.

Will Crypto Markets Participate in a Merger?

The prices of major crypto assets such as Bitcoin (BTC) and Ethereum (ETH) have moved mostly in tandem with risk asset ETFs like QQQ, which tracks the Nasdaq.

So if QQQ starts to soar, you’ll likely see crypto markets take off for a brief trip to the moon – before not only falling back to Earth, but likely crashing through the first layers of the crust. terrestrial and to remain deeply rooted. there for a while afterwards.

BTC and ETH are institutional grade assets at this point. And when they take off, most of the roughly 18,000 other crypto assets tend to follow.

How to position yourself for a merger?

If you believe in the merger thesis, you might want to buy Bitcoin during this pullback.

But if you don’t want to deal with the stress of paying close attention to the market – waiting in anticipation of a merger to sell your BTC – then you might want to play it safer and wait for what appears to be an impending crash. or recession to play.

Either way, if you’re looking to get into the crypto markets, you may have the opportunity to buy Bitcoin for less than $10,000/BTC if things fall apart like Hunter and other merger thesis providers think so.

If less than $10,000 BTC sounds appealing to you, it’s best to create an account on a crypto exchange now so you’re ready to buy when the time comes. And don’t forget to plan to keep your crypto safe once you buy it!

Will a merger definitely happen?

NOPE. The merger thesis is just one of many market theses being floated at the moment.

If the Fed pivots and becomes more dovish in its approach, markets could rally and cause a meltdown. It’s not a given, however.

If you are looking to gain exposure to BTC or other crypto assets, dollar cost averaging has proven time and time again to be the most effective way to do so.

You can buy BTC now and sell quickly if prices suddenly explode – capitalizing on the meltdown to some extent – ​​but also keep your options open by keeping some cash aside in case asset prices rise. risk as BTC continues to decline as we suffer a recession.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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