- 20 November 2022
- Posted by: Vincenzo Stefanini
- Categories: Investing & Trading, Money
Dear copiers and followers, click the link below to watch my video about the latest market update:
Video in English Audio
Video in Italian Audio
Video Transcript
Hello, welcome to this special Market Update.
Today is the 20 November 2022.
My name is Vincenzo Stefanini and my eToro username is vincenzost.
I am making this video because many people want to understand what’s happening on the market and what is the outlook for the next few months.
First of all, I post a video every month about the status of my portfolio, but I am going to make a special video like this one more often, when necessary.
I am also aiming to post every day a technical analysis on bitcoin.
In this video I am going to talk about the current macro situation, I am going to show you a technical analysis of bitcoin, I will explain how I am managing my portfolio, what you can do now with your investment and the positive expectations for the future.
Looking at the macro level, we have multiple topics which are affecting the market.
The first one is high inflation. As you know, the inflation in the US (and the rest of the world) is very high at the moment. The latest report shows that inflation is increasing less than expected and it seems that it’s slowing down.
This news pushed the stock prices higher in the last few days.
We don’t know yet if inflation is already peaked or if it can increase again in the next few months.
The second one is rising interest rates.
Because inflation is very high, the Federal Reserve (and other central banks like the ECB) are increasing the interest rates. They do this because they want to reduce inflation. However, this also pushes down the prices of stocks and cryptos. In fact, both stocks and cryptos have been in a downtrend since November of last year, when the tapering and the increase of interest rates were announced.
The third one is recession.
The quantitative tightening will reduce the supply of money available, which will bring down inflation because there will be less liquidity in the system. However, this is very likely going to trigger a recession soon.
In fact, the yield curve indicator is already predicting a recession in the US.
The yield curve, the difference between the 10-year and 2-year bond yields, is currently inverted.
This event has historically been a reliable indicator of a recession.
The fourth one is market sentiment.
The Fear & Greed Index, which measures the sentiment in the stock market, is currently in Greed mode.
This is because investors are currently optimistic and believe that inflation has already peaked and that the FED will slow down the interest rates increase.
This is not confirmed yet, so don’t get too excited at the moment. I believe we haven’t reached the bottom of the market yet.
A lot of things happened in the crypto market in the last few days.
As you might already know, the crypto exchange FTX filed for bankruptcy.
This event affected negatively the whole crypto market, pushing prices lower.
The collapse of FTX has damaged the sentiment toward crypto for both retailers and also for institutions.
In fact, the Crypto Fear & Greed Index is currently in “Extreme Fear” mode.
However, this should be a contrarian indicator that cryptos can also bounce higher despite the negative sentiment.
Because of the collapse of FTX, very likely there will be more regulations around cryptocurrencies and digital assets.
Bitcoin investors have been increasingly moving their holdings to self-custody solutions following the collapse of the world’s second-largest crypto exchange last week.
On-chain exchange flow data is showing a surge in withdrawals to self-custody wallets.
Hardware wallet manufacturers Ledger and Trezor both reported a huge spike in sales last week as consumers rushed to self-custody solutions to safeguard their digital assets.
Last week saw Ledger’s highest sales week in history.
In the past few days, the Bitcoin price has been trading sideways in a small range between around $16,000 and $17,000.
If the price can get above the resistance at $17,000, the next target will be the $17,600 level ad then $18,400.
On the other hand, if Bitcoin doesn’t hold the support level at $16,000, the next support line is at $15,500.
The price is now trading well below all the key moving averages.
The daily RSI is slightly outside the oversold zone, but still in the bearish area, at 37.
In summary, the short-term (daily timeframe) still looks bearish.
I am keeping my long positions open on cryptos, but I have low exposure at the moment.
I am also following the stock market and I could potentially open new positions, but I am waiting for the right time.
So, based on the current situation, what is the best thing to do now?
The first thing to do is to be patient.
As you know, it’s normal to have some months negative, but in the long term, I am always making a profit.
In fact, I am still in a profit if you consider the last 2 years of trading.
So, if you are already invested in my portfolio, keep the copy open, make sure the copy stop loss is set at the minimum and relax. Remember that this is an investment for the long term.
If you have some cash that you don’t need in the next few months, consider adding more funds to the copy.
If you are not copying my portfolio, now might be a good time to start investing.
If you have a large sum to invest I suggest starting small and adding a fixed amount to the copy every month. In this way, when the market recovers, you will make a big profit.
Despite all this negativity, there are some positive expectations.
Stock and cryptos might rally in the upcoming days, because of the positive news about inflation.
Also, we can make a profit even when the market is going down.
We will have also the opportunity to buy again crypto and stocks at a much lower price in the future.
When the FED will stop increasing rates and will start to reduce rates again, it will begin a new bull market.
This might happen sooner than expected.
The fundamentals of Bitcoin remain the same.
Cryptos move in cycles, so after this negative cycle, there will be again a positive cycle. Cryptos are not dead.
This is instead a great opportunity for the long term.
I hope this video has been helpful to you.
If you liked this video, please press the like button and subscribe to my channel.
If you have any questions, you can contact me on eToro or on my social media accounts.
Follow me for more updates and videos like this.
Hope you have an amazing day.
See you in the next video. Bye.
Vincenzo Stefanini
eToro Popular Investor
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