Several prominent, well-respected crypto peeps seem to think so. The best case for a bear market was presented by Arthur Hayes Medium post, which paints a very vivid and violent ending to the 2- yr bull run.
Arthur Hayes is a hyper-intelligent financial educator and crypto veteran who does his best to explain what’s to come. He starts off with a Bitcoin price lesson from the covid crash of March 2021.
“The point of this Bitcoin price history lesson is to tee up a discussion about how I’m positioning my portfolio this year, in advance of what I believe will be a string of trading days as disastrous as 16 March 2020. As usual, this relates to the Fed reducing the growth of their balance sheet to 0%, and subsequently raising rates one to three times in 2022.”
“I will start off with a short discussion on why interest rates matter, and then get into how positive short-term policy rates set by the central bank of the Empire will, on a three-to-six-month time horizon, inflict max pain on global risk assets. I ultimately believe that the Fed and other lemming central bankers around the world have no choice at the moment but to continue printing money — but at some point soon, the domestic politics of many nations will likely necessitate a tighter monetary supply in order to quell dissent from the plebes whose cost of food, shelter, and transportation is going up and to the right bigly!”
From simply reading those two quotes, the message is loud and clear: Max Pain is incoming due to rate hikes, and it’s time to pay the price for spending our stimulus checks on illiquid JPEGS.
Arthur’s main argument of why rate hikes are incoming is that the Fed wants to show they’re making an effort to calm down inflation. The masses are starting to feel it and complain, so they, at the very least, have to go through the motions.
“The villagers woke up because the cost of meat, veggies, a taxi ride, rents, and other essentials is rising faster than their wages. Now they are trained on Public Enemy №1 — inflation. If domestic politicians worldwide want to keep riding the gravy train, they have to pretend to do something. Therefore, it’s time for central bankers to put on some kabuki theatre and, at least for a short while, pretend like they are willing to unwind their balance sheets and return to positive interest rates that reflect the reality of various domestic economies.”
If you’ve been on crypto Twitter, you’ve noticed we’ve been screaming about money printing and inflation for the past 2 - 3 yrs at least.
And die-hard crypto maxis who have been around for the last 5 - 10 yrs have been talking about inflation from irresponsible monetary policies for what feels like forever.
However, the Fed and the government acted very surprised and recently claimed that inflation wasn’t transitory.
So why the sudden flip?
The government once flexed how they saved families $.14 on the cost of BBQ during July 4th, 2021. I guess the peasants weren’t all that thrilled about the pennies in savings after they suddenly realized how much the price of bacon has gone up.
The pitchforks come out when you fuck with people’s bacon and the next step is tarring and feathering.
That’s how the government and their goon squad works – They push as far as they can, steamrolling your rights until they reach a point where they have to at least pretend they’re doing something about it.
The masses either forced the Feds to play the surprise inflation card, or maybe it was all a part of the long-term plan? Tough to say, but either way, Arthur’s argument is money printing won’t stop, but rate hikes are incoming to calm inflation fears, which could signal a blood bath for the crypto markets.
And he’s not the only one.
Barry is a sharp dude with a great sense of the markets. This tweet essentially says the bull market is over, and the next one will start during the next Bitcoin, halving in roughly 2.5 yrs.
The 2021 bull run hero Sam Bankman-Fried is offering suggestions of what to do during a bear market. The best thing to do, he suggests, is to build. The best projects rise from the ashes of a bear market.
Prominent crypto trader big cheds also suggests this is a bear market. Not a bad person to trust, as he trades crypto day in and day out.
“While wealthy individuals who run large TradFi companies can withstand a serious drawdown in price, the lemmings that follow them cannot.”
That quote from Arthur basically means that big institutions have the supplies to withstand a 2.5 yr bear market siege from the Fed, but the peasants do not. So they will surely get liquidated, or panic sell at a major loss causing even further downside.
When will this all happen?
March – June spells crypto doom!
“During this time period, the Fed will have either hiked or not hiked.”
What should you do to prepare, you say?
Arthur offers some advice with what is the best quote of the entire article:
“Armed with fiat dry powder, I stand ready for the capitulation candle. I’ve been trading these markets long enough to spot the last-gasp, puke-out candle that breaks the soul of the speculative bulls. Even though I’m confident in my abilities to spot a bottom, I learned the hard way not to try and catch a falling knife. So what if you don’t bottom-tick the market? Let the market heal, and buy it higher with more confidence that the marginal paper-handed seller is finished.”
Will The Devs Please Do Something?
One of the best memes of this crypto bull run is “Will The Devs Please Do Something,” which is commonly said in Discords and Telegrams when a project’s price suddenly goes sideways, down, or outright gets rugged.
In this case, there’s nothing the devs can do in a bear market but stick around and build for the next bull run. No news or amount of building will make the price jump like it did the last 2-years.
In a crypto bull market, especially one so juiced by the Feds money printing, you can throw a dart and hit a 5x - 10x return. The simplest, most trivial news could send a coin or NFT project flying!
The effect is the opposite in a bear market, especially after the last few months that saw roughly $3 Billion in liquidations.
When people get liquidated in a bull run, there’s enough money flowing through the system where they can dust themselves off and run it back! Unfortunately, those same opportunities don't exist in a bear market with higher interest rates.
Suddenly even the most bullish news won’t impact the market, and people are risk-off. So most will wait on the sidelines, especially the institutional investors and tradfi giants who have the resources to wait out the storm.
Once the dust settles and we get closer to the Bitcoin halving again, the markets will suddenly pick back up like nothing ever happened.
So, do you think we’re in a bear market, or is it all a bunch of BS?