Jamie McNeill
According to MarketVestor’s Leinweber, despite the fact that there is little sign that interest rates may be falling in the coming months and asset prices may subsequently have more room to suffer, crypto may actually not suffer nearly as badly as stocks.
This is because the crypto markets, since their peak at the end of 2021, have already retraced significantly, and may well have bottomed out when Bitcoin hit its lows just under $16k.
Is most of the bad news in crypto priced in?
There are many who believe that the majority of the bad news in crypto may already be priced in. Bitcoin broke out of historic trends to the downside after the FTX debacle, and since then liquidity has been significant reduced in the sector.
However, the stock markets still have plenty more room to fall, and there appears to be no real catalyst for growth in this sector any time soon, other than new innovations such as artificial intelligence and robotics.
Leinweber believes that the fundamentals of the crypto markets remain extremely bullish, with transaction volume and user adoption now steadily increasing, and the Bitcoin hash rate continuing to break all time highs.
By contrast, valuations of many stocks remain high compared with historic norms for P/E ratios, and rising interest rates means that there could be plenty more pain in store.
Is it time to buy altcoins?
Many capital allocators aim to buy altcoins for the bull market thanks to the these their higher degree of volaility and lower degree of market saturation means that they will outperform Bitcoin in a bull market.
However, this does not necessarily mean that now is an appropriate time to begin speculating on altcoins, since altcoins’ dramatic outperformance of major assets typically happens within a concentrated time frame at the end of a bull market, rather than just as the bear market is ending.
Moreover, there are very few altcoins that outperform Bitcoin over longer term time horizons: in the last cycle, the only two altcoins that broke all time highs that were set in the cycle beforehand in BTC-denominated terms were BNB and DOGE.
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This article was written for Business 2 Community by Jamie McNeill.
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