In the previous edition of the market report, we discussed how October could outperform September. However, two new events call for attention. One, the US economy has officially entered a state of recession. Two, Credit Suisse shares free fall. 

Let's discuss how these events can affect the crypto market. 

Technically, a recession is a period of low economic activity. When GDP falls in two successive quarters, we say a country is going through a recession. Most European countries are in a recession, and now the US has joined the list. 

So recession is just a technical, economic term, which is not synonymous with a financial crisis. A recession only slows economic progress and decreases trade and consumer spending. 

Do crypto holders need to worry about the recession? At least not this one. Bitcoin can see lower prices towards the end of the year. It is a possibility and an opportunity too. 

But to understand further, let's check previous bear markets and find common ground. 

The 2022 bear market is way less scary than the previous ones. One could argue that the macroeconomic situation is different. Yes, the condition is different indeed. But does that threaten Bitcoin's 18k level?

Firstly, let's check the days spent in a bear market. The number of days between the previous bull market top and the bear market bottom can give us the days spent.

2011 - 159 days

2013 - 411 days 

2017 - 364 days

2022 - 319 days

Apart from 2011, most bear markets last for more than 300 days. 2022 is no exception. So clearly, there is no strict duration for a crypto winter. 

Let's also check the percentage retracement from All-Time Highs in various bear markets.

2011 - 93%

2013 - 84%

2017 - 84%

2022 - 72% so far

Is it the bottom already? Probably not. Since we don't have a crystal ball, it is safer to ride the tides rather than swim against them. If the majority believes the bear market is not over yet, it probably isn't. 

In other words, bull markets and bear markets derive from a set of shared beliefs. 

With that in mind, let's discuss the second economic event - Credit Suisse.

What is Credit Suisse, and why a Bitcoin holder should care?

Credit Suisse is one of the largest banks in Europe and the second biggest bank in Switzerland. When Europe is fighting inflation and recession, a big bank failing can reignite memories of the 2008 Lehman brothers crisis.

Let me summarise what happened at Lehman for context. Lehman was a major investment bank in the US. In late 2003, Lehman invested heavily in the US housing market. Unfortunately, the US housing bubble caused the bank to fail. Long story short, Lehman filed for bankruptcy in 2008, which led to the infamous 2008 economic crisis. 

The impact of such ripple effects is undermined, but let's not make the same mistake. If Credit Suisse fails, the safe haven investors fail together. It can open up two extreme possibilities.

1. a collapse of the crypto market

2. a strong interest in bitcoin as a perfectly liquid asset

However, such a crisis can attract investors to defi protocols. But defi is not yet prepared to see massive institutional liquidity because one smart-contract hack could unsettle the market for years to come. 

But remember, these are extreme possibilities, and reality might not even be close enough. I expect a 15-22% move (UP) for Bitcoin in October. 

A relief rally? Yes, probably. The bear market is not over yet.

But why?

A few things happened in the last three months.

1. Miners are at a loss.

2. Ethereum miners lost their stronghold and shifted to other chains. Some even sold their mining equipment.

3. Bitcoin hash rate spiked and reached All-Time High.

Bitcoin price, however, remains in the same range (18.5k-20k). But the rising hash rate shows the confidence of miners in the long-term future of bitcoin. Ideally, it reflects the overall health of the crypto market and is evident from the high correlation between gold and bitcoin.  

Other than that, Miner Balance has seen high outflows in September. Miners spend around 8000 $BTC to cover their expenses. So the absence of volatility in recent weeks has its roots in forced selling and equivalent buying (Microstrategy, long-term holders).

Notice the fast depleting miner reserve (blue line) from August level.

The overall sentiment is still following a bearish trend. But since miners are unable to hold and accumulate bitcoin, the bear market bottom is not easy to find. If you think about it, the rising energy cost is a vicious bear cycle. 

Conclusion

The UN has warned world leaders that the entire global economy is on the verge of a recession, and developing nations could bear the brunt of it. 

So the remaining three months of 2022 are crucial. The market might find a sharp bottom level in these months. 

**

**

In the previous edition of the market report, we discussed how October could outperform September. However, two new events call for attention. One, the US economy has officially entered a state of recession. Two, Credit Suisse shares free fall. 

Let's discuss how these events can affect the crypto market. 

Technically, a recession is a period of low economic activity. When GDP falls in two successive quarters, we say a country is going through a recession. Most European countries are in a recession, and now the US has joined the list. 

So recession is just a technical, economic term, which is not synonymous with a financial crisis. A recession only slows economic progress and decreases trade and consumer spending. 

Do crypto holders need to worry about the recession? At least not this one. Bitcoin can see lower prices towards the end of the year. It is a possibility and an opportunity too. 

But to understand further, let's check previous bear markets and find common ground. 

The 2022 bear market is way less scary than the previous ones. One could argue that the macroeconomic situation is different. Yes, the condition is different indeed. But does that threaten Bitcoin's 18k level?

Firstly, let's check the days spent in a bear market. The number of days between the previous bull market top and the bear market bottom can give us the days spent.

2011 - 159 days

2013 - 411 days 

2017 - 364 days

2022 - 319 days

Apart from 2011, most bear markets last for more than 300 days. 2022 is no exception. So clearly, there is no strict duration for a crypto winter. 

Let's also check the percentage retracement from All-Time Highs in various bear markets.

2011 - 93%

2013 - 84%

2017 - 84%

2022 - 72% so far

Is it the bottom already? Probably not. Since we don't have a crystal ball, it is safer to ride the tides rather than swim against them. If the majority believes the bear market is not over yet, it probably isn't. 

In other words, bull markets and bear markets derive from a set of shared beliefs. 

With that in mind, let's discuss the second economic event - Credit Suisse.

What is Credit Suisse, and why a Bitcoin holder should care?

Credit Suisse is one of the largest banks in Europe and the second biggest bank in Switzerland. When Europe is fighting inflation and recession, a big bank failing can reignite memories of the 2008 Lehman brothers crisis.

Let me summarise what happened at Lehman for context. Lehman was a major investment bank in the US. In late 2003, Lehman invested heavily in the US housing market. Unfortunately, the US housing bubble caused the bank to fail. Long story short, Lehman filed for bankruptcy in 2008, which led to the infamous 2008 economic crisis. 

The impact of such ripple effects is undermined, but let's not make the same mistake. If Credit Suisse fails, the safe haven investors fail together. It can open up two extreme possibilities.

1. a collapse of the crypto market

2. a strong interest in bitcoin as a perfectly liquid asset

However, such a crisis can attract investors to defi protocols. But defi is not yet prepared to see massive institutional liquidity because one smart-contract hack could unsettle the market for years to come. 

But remember, these are extreme possibilities, and reality might not even be close enough. I expect a 15-22% move (UP) for Bitcoin in October. 

A relief rally? Yes, probably. The bear market is not over yet.

But why?

A few things happened in the last three months.

1. Miners are at a loss.

2. Ethereum miners lost their stronghold and shifted to other chains. Some even sold their mining equipment.

3. Bitcoin hash rate spiked and reached All-Time High.

Bitcoin price, however, remains in the same range (18.5k-20k). But the rising hash rate shows the confidence of miners in the long-term future of bitcoin. Ideally, it reflects the overall health of the crypto market and is evident from the high correlation between gold and bitcoin.  

Other than that, Miner Balance has seen high outflows in September. Miners spend around 8000 $BTC to cover their expenses. So the absence of volatility in recent weeks has its roots in forced selling and equivalent buying (Microstrategy, long-term holders).

Notice the fast depleting miner reserve (blue line) from August level.

The overall sentiment is still following a bearish trend. But since miners are unable to hold and accumulate bitcoin, the bear market bottom is not easy to find. If you think about it, the rising energy cost is a vicious bear cycle. 

Conclusion

The UN has warned world leaders that the entire global economy is on the verge of a recession, and developing nations could bear the brunt of it. 

So the remaining three months of 2022 are crucial. The market might find a sharp bottom level in these months. 

**

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