First downturn after Corona liquidity market

Since all three major US stock markets reached ATH levels in 2016 after IT bubble, there have been two declines so far. They were between the 3rd-4th quarter of 2018 and march 2020(Corona dump). Afterthe corona dump, the Fed aggressively increased its balance sheet through unlimited quantitative easing, thus strong bull market continued for a year led by big-tech and growth stocks.

Though, neither Fed and Powell are not going to do/say anything that would shock the market. The current employment indicators are “bad” and even if corona is over, inflation will be a very temporary phenomenon. Even before the coronavirus, economy was not good and we were supposed to concern about deflation, not inflation. In this situation, the disappearance of the corona does not mean that the economy will continue to improve. Therefore, the Fed will continue to maintain their stance on stimulating the whole economy.

However, since the bubble aroused by unlimited quantitative easing had been in all assets over the past year, it will be quite difficult to avoid the retreats right away. Additionally, the Fed and Powell are repeatedly maintaining their policy tones such as keeping interest rates,economic stimulus, and tapering in advance for so long. Therefore, it seems difficult to stop the stock market sink which had soared in the short term just by repeating the same words now.

(To be honest, the Powell and Fed’s announcements had been consistent enough that anyone would possibly predict what they will announce in current situation. Of course they would not score their own goals saying useless comments.)

Large tech companies, such as Apple,Tesla are already retreating despite their great performances.

In addition, there is “momentum” in the market. Current 10 year US bond yield had recovered 100% from the drop in corona dumping. This can be analyzed as one of momentum conversion signals, which occurred when Nasdaq reached monthly high peak, so it is caught asa market direction change signal to traders. (Keypoint to judge the market change)

Bitcoin’s market cap reached $1 trillion. Bitcoin is volatile, but it has proven that hedging against unlimitedly issued paper dollars is perfectly possible scenario. As BTC market size had already reached trilliondollars, large funds are inevitably forced to incorporate on bitcoin.

Also, BTC volatility is decreasing and stability is increasing as the market size increases. Rather considering the volatility of the dollar which had been issued indefinitely these days, BTC is covering the decline of the dollar quite well compared to other assets or markets.

Every asset follows the global liquidity flow trend, so when the stockmarket collapses/climbs, BTC market collapses/climbs together. Therefore BTC can hedge against dollar devaluation but not the stock market.

Even though the BTC market cap has reached trillion dollars, but it is still ridiculously small compared to other asset markets. And there is not enough institutional incorporation or major financial companies’ entry in the market. At the end, market will rise upward along with tech stocks in the long term. BTC market is originally designed to ride fluid flow very well, and now it is definitely on the flow. (The relationship between the number of BTC and the structure of capitalism)

Assets can be stored without third parties like banks or countries and digital storage of any amount is possible without any space restrictions. Even having 10 million dollars of gold or dollars right now needs ‘physical’ space constraints. In addition, since the number of btc is limited, it has a very excellent structure to preserve the asset value. I think that you do not need to worry about survival anymore when you are fully on the liquidity market.

Tech stocks and bitcoins are going to decline soon, but this will be avery healthy correction especially for bitcoins. I believe it will be the last chance to buy. March 2021 will not be good as like march 2020,but on the other hand, it could be a new great opportunity.

[Technical Analysis]

1. Nasdaq’s monthly candle chart had been declined downward for two months and converted into bearish candle pattern.

2. 10 year US bonds have recovered all corona dumps

3. Most of the altcoins are in bad shapes after Ethereum CME future listing.

4. Apple / Tesla’s downward trend

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