As inflation soars to record highs and global economies battle recession and currency devaluation, many investors and market watchers expect the financial systems, including stocks and crypto, to crash in response to these inauspicious macroeconomic conditions. A notable Bitcoin analyst has noted that the markets are already seeing the worst of these expectations.
PlanB thinks the markets are bottoming
Bitcoin analyst and creator of the S2F model, PlanB, took to Twitter to make this assertion, using an IFO Business Sentiment chart as a guide. He noted that considering the path world economies take, there is a global expectation of unfavourable macroeconomic conditions, such as inflation and recession.
PlanB mentioned that this was bad news, stating that, as a consequence, market watchers are expecting the financial markets to plummet to the lows witnessed during the 2008 global financial crisis that plunged the values of assets originally worth trillions of dollars to near zero; and the 2020 pandemic period that put production and global economies at a standstill.
However, “the good news,” PlanB said, “this expectation is already priced in.” Concluding, from the chart, the worst expectations from market watchers appear to converge with the current market realities the financial system, including crypto, is experiencing. “That’s why rates are high, and stocks/bitcoin low,” PlanB added.
The crypto markets have lost over $1.2T in market cap this year
PlanB’s analysis suggests that the markets have bottomed or, at the very least, are close to the bottom, and investors should expect some positive reversals in market situations soon.
As of press time, the entire crypto space has a market capitalization of $962B – a significant decline from the $2.3T seen at the end of 2021. The Crypto Winter has been further aggravated by aggressive macro policies, as governments increase interest rates to combat growing inflation.
The traditional stock markets have also not been spared. The S&P 500 has been underperforming this year, with an average decline of 7% since January. Furthermore, the Nasdaq-100 index has seen a plunge of 14% since the beginning of the year. Netflix (NFLX), Coinbase (COIN) and Amazon (AMZN) have seen YTD declines of 62%, 75% and 20%, respectively.
Bitcoin (BTC) and Ethereum (ETH) have been down by 49% and 53% since the start of the year. While some disagree with PlanB’s assertion, a few are confident that he’s not far from the truth.