[DDIntel] Crypto, Tech Geopolitics, and Growth Mindset

DataDrivenInvestor

Feb 5, 2023

For those who want to build wealth, investing in stock or cryptocurrency markets can be profitable. However, it can be risky for those without the necessary knowledge and experience. Therefore, reading and researching are essential prior to making any investment decisions and reducing mistakes.

For instance, in the stock market, traders can gain valuable insight into a company's financial health and future performance by reading financial statements, news articles, and analyst reports. By remaining informed about a company's earnings, growth projections, and market trends, traders can reduce risk and “beat” the market. With good research, they can build the best portfolios possible.

Similarly, crypto traders can determine a cryptocurrency's potential for growth and adoption by researching its blockchain and consensus mechanism in the cryptocurrency market. Additionally, it is essential to remain informed about the regulatory environment because changes in regulations can have a significant impact on cryptocurrencies' value.

Keeping up with news and trends in the market is another important part of reading and researching. This may entail keeping up with market changes and major events like government regulations, mergers and acquisitions, and economic indicators. Traders who are aware of these changes are better able to anticipate market trends and modify their investment plans accordingly.

If you are interested in cryptocurrency, it is also essential to comprehend the current macroeconomic situation and how it affects the markets for digital assets. This is the first time in the history of the digital asset market that the US Federal Reserve has simultaneously increased interest rates and reduced its balance sheet. The price of Bitcoin dropped by almost 85% as a result of the previous interest rate increase. The Federal Reserve is notoriously opaque when it comes to monetary operations, making it impossible to anticipate its goals.

Global financial markets faced a catastrophe when the derivatives market, which had a notional value of over $600 trillion in 2008, collapsed. The consequences would have been severe and politically unthinkable had central bankers allowed the banking system to collapse at this point. The fact that bad actors are punished without the need for bailouts is one advantage of digital asset markets, which are managed according to the rules of the code they are based on. In contrast, in 2008, rather than unclogging the clogged drain, global central bankers decided to construct a larger sink for the financial market.

As a result of the COVID-19 pandemic, the money supply was increased by central banks in an effort to boost the economy. Asset prices rose as a result, but the connection between asset prices and the money supply also suggests that asset prices can drop significantly when the money supply decreases. When the Federal Reserve will turn back on the fire hose, which could have a significant impact on asset prices, is the current hot topic in the digital asset market. However, it’s anyone’s guess what will come next, since there are so many macroeconomic variables like the ongoing war, the tensions with China, and the ripples that Covid-19 left on the world and the global economy. Some say that it’s time to accumulate crypto in the current situations, which may be a good idea if history repeats itself when it comes to crypto. Others say that the doomsday for crypto is here, and it will all fall to nothing - however, this is extremely improbable, since crypto has already become a critical part of the internet.

As stated at the beginning of the newsletter, it is your responsibility to conduct research, gain knowledge, and make your own decision. While losing money as a result of your decision is bad enough, nothing is worse than losing money as a result of allowing others to make that decision for you.

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