Zoom Out: Bear Market Insights

In a bull market, floor prices rise. In a bear market, it plummets. Bear or bull, "it's a build market" says the man, the myth, the legend @Warbucksssss. For many of you, this is your first real crypto bear market.

Perspective: We’re in very volatile markets which have been exacerbated by macroeconomic factors and events that are unique to crypto. NFTs are a highly speculative asset class and are tied to the crypto market. The ebbs and flows of crypto comes with its nature of both major upside and major volatility. 

We’re seeing swift destruction of wealth following black swan events with Luna, and gray swan events with Celcius and 3AC. Zooming out, there’s a host of geo-political and social factors at work, from the war in Ukraine to global restrictions from the pandemic to the Federal reserve’s hawkish stance and arguably one of the most contributing factors, interest rate hikes because inflation is at an all time high. Not to mention, a global food shortage. Combine these factors together and we have the perfect shitstorm to set the stage for what experts are saying is the worst recession in history. 

Needless to say, it’s a nerve-wrenching, anxiety-inducing time. ATHs seem like a distant dream. The greed and fear index marks a period of “extreme fear”. Your portfolios are in red. Flippers don’t confidently jump in and out of secondary positions. Those who went long are now liquidated. We’re down bad. Math is scary. 

Given this tense mental backdrop, people run high on emotions during a bear market. In a fearful state, panic follows. People are looking to exit the market to rotate liquidity into “safer” assets. Sell pressure floods the market. As people liquidate their bags and positions, they take Ls. Supply is inflated, however demand is reduced. This mismatch in supply and demand leads to a depreciating value of the asset class. In NFTs, we see this as a large number of listings coupled with a low floor price.

In bear markets, we all want wins. We’ll settle for tiny ones (might explain the rise of degen mints and minuscule paper flips). Perhaps, that’s why every mistake in a bear market stings a little bit more. To ease the pain, gain a long-term perspective. Some may say that bear markets are more important than bull markets. “Bear markets are innovation incubators”. Prices fluctuate but the technology remains, and there are victories every day. So, position yourself for success by understanding and growing your skills, knowledge, networks, in preparation for the bull run that will eventually follow. You know what they say… success is 99% hard work and 1% luck. 

Interest in NFTs (as illustrated by the amount of google searches) hit its peak in early 2022 and started to decrease at the end of January. @EC_NFTea explained that if the federal reserve takes a more aggressive stance on interest rate hikes, there’s a downside risk to risk-on assets. NFTs as speculative digital assets are ‘risk-on’ assets (also extends to the stock market which is pretty tech-weighted). This would deter genuine interest and subsequent involvement in NFTs as newer entrants are getting to know NFTs under the context of a bear market. For existing market players, there are less entrants. 

This presents a silver lining and golden opportunity. Keen observers, students and followers of the market can capitalize on current market conditions.

• CT can become an echo chamber. Be careful not to get lost. (maybe, purge your follows while you’re at it). Yes, SOL is way down from its ATH, but the technology keeps improving. Take time to educate yourself and understand the underlying technology behind it all: the blockchain. 
• “If you want to buy dips, find teams that have capital, vision, and a willingness to grind through slow times."
• During a bull run, people forget to take care of their liquidity flow because they think they don’t need it. Observe and stay as liquid as possible. Raise capital if possible. You need cash flow to invest and stay in the game. 
• “Current mindset: long to think, slow to act. Market takes longer than you think to play out; play the long game.”

It’s understated but patience is the key. The bear market could last for months to years. We can’t say for certain. What’s certain is uncertainty. In bear markets, value gets built. If you are long on blockchain technology and bullish on this industry, you don’t have to time the market. You can win regardless.

Thanks for reading,
 

Ann

P.S Lean on your support system. As we navigate through the bear market, we're also navigating novel emotions. So, be kind to yourself. You're only human. Know your limits. Take breaks. Breathe. Here for you and as always, DMs are open.

🪄 CT's most insightful hits 

• Explainer on Luna collapse and Celcius’s insolvency
• 3 stages of a bear market - we just entered stage 2
• Some SOL positivity: promising charts that shows immense growth
• BTC & ETH previous market cycle stats 
• Solana crossed 7 million 7-day active accounts for the first time this month

🪄 Congrats, this week's top performing collections on ME! (6/8-14)