Crypto Recovery! - Just Short Term Or Something Long Term?

It’s looking very green in the markets again! Obviously it does not mean that we are about to see major moon hikes any time soon but it is really nice to see that not every week is going to be a red slaughter fest with only bad news around. In this post I want to discuss the potential reason for this slight turn over, whether we can expect the markets to recover more over the past few weeks and last but not least how the future of crypto looks like.

Markets Recover!

We all know what situation we are currently in: GDP can be negative for a second consecutive quarter which would mean that the US economy is in a recession. Furthermore, there is the FED meeting at the end of the month where the next interest rate hike will be announced. All of this can have negative impact onto the markets but believe it or not, it can also have some positives. If the fear of recession will start growing there might be a potential turn in the FEDs interest as they might be interested in keeping the economy intact. After all, according to FED chairman Jerome Powell the interest rate hikes will not affect the rising gas and food prices because they are mainly caused by supply chain issues as well as the Russia-Ukraine conflict.

But let’s talk about some bullish news and the potential reasons for the recent rally in the crypto markets. I remember about a week ago writing about the BTC miners who can go out of business if the BTC price will fall even further. Well, according to other sources it costs around 8k to mine a Bitcoin which would make 8k the price that everyone should look out for. This is certainly more secure than the 13k that was mentioned in the precious article. I don’t think that BTC will see such a massive drop but I would not hesitate to buy more BTC for this price, that’s for sure!

ETH Date?

The main driver for this current rally is probably the ETH merge from the Proof of Work Consensus Mechanism to the Proof of Stake Mechanism. This is because the Ethereum developers seemed to have decided for a tentative date of when the Ethereum merge will happen. The merge is scheduled to happen at the end of September with some people even throwing out the 19th of September as a potential fixed date. This is a huge deal for the entire crypto industry and not just Ethereum!

For instance all the layer 2 scaling solutions on Ethereum are benefiting from this as well as all the Altcoins that are living on the Ethereum blockchain. We are still talking about the biggest smart contract blockchain out there and these news can and will move an entire industry. Not only that but the competitors are also benefiting from these news as there is always a chance of a screw up. With the Ethereum blockchain messing up this big step, other smart contract blockchains might step in and take away this precious place. In order to diversify. Many investors are therefore looking in Ethereum’s competitors as well. Even Ethereum Classic is getting attention but I think it is rather FOMO and disinformation rather than actual use cases.

I am very excited about these news and can not wait to see the merge in action. I am not expecting for everything to go smoothly and I even kind of expecting another push back but once this merge will be up and running, I do see a lot of potential for Ethereum even though there is a lot of negative opinions about this blockchain. Just as disclaimer, I do hold ETH in my portfolio as well as some of its competitors and I think everybody who is holding ETH would be more than happy to see a successful deployment of this merge.

Further Outlook

With all these great news it really hurts to say it but the worst months are probably still ahead of us! With the winter coming up and the gas prices going up almost every minute, many Western countries and their industries will take a massive hit to the guts. It could be the worst winter of the past few decades. Furthermore, we still need to take the FED into account: Like mentioned before, there will be another FED meeting in the end of July where another interest rate hike will be determined. If this hike will be higher than investors expecting we could see a massive sell off and BTC price could even fall dangerously close to the mentioned 8k mark.

I think it is very pessimistic but I also tend to plan for the worst and hope for the best. Not only that, but I also hope that we will have a little bit more time to accumulate these assets at such low prices just so that the profits could be higher later on. In my opinion there will always be a turn around but I would rather have more time to accumulate rather than having a big return right now.

Conclusion

With this being said, I think that the current relieve and recovery is very short term. I think it all depends how the next two weeks will play out and what macro factors will change over the next few days. Additionally to that we have a big BTC leakage by the end of August when a high amount of BTC will be thrown into the markets due to a recovery from 2014. Many people are expecting the price of BTC to plumet at this point as well.

All in all, these next few months will be a real challenge for every crypto enthusiast and investor but as long as you have skin in the game and stay informed, you can interpret the risk for your portfolio and right now I see this situation as a chance to accumulate wealth in the future. We need to be brave in these kind of situations!

Published by ga38jem on
Steemit
On 18th July 2022