Bears and bulls are mythical figures in the trading landscape. They die, only to rise again. Presently, long-term support for both the $total and $BTC has been broken. This means that the bull is (probably) dead. In the near term, you might see a bounce, however, so let's look at the details. Interested in watching this article as a video?

1 The TOTAL Market Cap

At the time of writing, the TOTAL has closed below its SMA 200 (red line) thus confirming an end to the run. Support zones (white lines) are only a few percent away, however, signalling that all might not be so bad. I do expect something on the order of an 80% decline from the Total's all-time high ($3.64t) = $728b. That's likely to follow if an historically typical low follows. Bitcoin, however, has outperformed significantly. Translate Post 2 A Look at $BTC Support

Unlike the TOTAL, $BTC has another ~14% more to decline before reaching a support zone. That would put the decline from its all-time high at 43%. There is only one time when $BTC pulled back so far and still recovered: in the last bull cycle after China banned $BTC mining. Were $BTC to reach its typical 80% market decline from $106,124, you'd be looking at $21,224. 3 How is This Different from the Chinese Miner Ban?

What makes this scenario different from the China miner scenario is that the broader economy was still strong during that period. After the ban, the market was thus able to pick up the slack and rebound. Today, it is the market itself that is causing the dive. If $BTC closes drops more than 39% from its all-time high (another 10% to $64,735), I think that the bull market is done. There is no reason to think that it will recover now as it did then. 4 Are We Headed Into A Recession?

Faster-updating indicators, such as the Atlanta Fed GDP Nowcast, suggest yes, but we can't have as much confidence in them. Slower indicators, such as the SAHM rule, suggest no, but perhaps they're just lagging. That's the truth and why everyone is so confused. You'll need to wait at least a month for the slower indicators to confirm.

5 Concluding Thoughts

The transition to a recession is painful. But I find the recession itself to be quite lucrative. I focus on three things. 1. Long-term projects, which typically require 4 years+ to materialize, are often quite cheap to pick up. 2. If you have a good strategy, then shorting the market is an obvious choice. In my course, The Art of The Bubble, I explain one approach, but I recommend that novices stay away from this one. 3. Crash Cost Averaging on a large coin, such as $BTC, has proven to be the best returning simple strategy we have. To explain a bit more, you need to wait until $BTC drops 60%+ from its all-time high. Then divide your potential buys into 10 -- say $1000 each. Buy at fixed intervals, such as every new -6%. Buy more as it declines more. For example, the following is a potential approach.

-60% -- Buy $1000

-66% -- Buy $1000

-72% -- Buy $2000

-78% -- Buy $3000

-84% -- Buy $3000

This one requires patience, but it's easy to execute. Historically, it has been exceptionally profitable. So, don't think that a bear is the end of this all. It's just another part of the cycle.  

Happy Trading!  

-Sebastian Purcell, PhD

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