The short answer is – nobody knows for sure. But macro-finance legend Michael Burry is calling for it, and he is a known expert who has called it correctly in the past. He called the housing bubble in 2007, which led to the Great Recession. He was a bit early of course, like two years early, but he could see it coming and he is predicting the next bubble now. As an amateur I personally would take his sudden re-emergence on Twitter calling out warning alarms quite seriously.
Suddenly Michael Burry is raving on Twitter that we are today much like Weimar Germany was before their collapse 100 years ago. He is calling today’s situation “the greatest speculative bubble of all time in all things. By two orders of magnitude.” That is no light passing thought but a well researched conclusion that is warning of the biggest financial collapse in modern history.
If we take the Great Depression of 1929 as the greatest financial collapse in modern history, then Burry reckons that the next one is about to arrive and it will be worse. Even if he is early in his call again, the forecast is still correct. Whether it arrives now, in the second half of this year, or whether it arrives next year, will certainly make a difference, particularly to the cryptocurrency market and I’ll explain why.
If the collapse happens now, it will ripple across all sectors including the stock market. And if stocks plummet then it will probably drag crypto markets and bitcoin down with it. And since we are in the middle of the bull cycle, it would be devastating to this bull run. If however, it arrives in Q1 2022, six months from now, then it will at least allow this current bull cycle to play out and allow bitcoin and the altcoins to reach the next ATH (all time high) sometime toward the end of this year.
Then the traditional markets can collapse if they must, as the Fed tightens the QE or free money printing around the same time, at the end of this year. By then bitcoin will have topped out and the bull market cycle will be over. Profits can be taken and the cryptocurrency market crash can join in with the traditional economy. It will make 2022/3 a terribly hard time financially for those who stick to mainstream legacy markets, as only the crypto enthusiasts will have made any significant profits.
If you don’t sell near the top or take profits some time at the end of this year, then your bitcoin and crypto holdings could well also crash in value as the everything bubble bursts. Commodities like gold and silver might retain some value, as they are known to in such times of financial crisis. Bitcoin will have a bear market though, and will not be a good safe haven next year. The volatility will cause a loss of value, up to 70% from the top, as the correction takes place like clockwork.
I’m no expert and this is not financial advice, but I will be taking profits in my crypto holdings toward the end of this year, which is when the blow-off top and peak of the bull market is predicted, based on previous bull market cycles. I will sell and go into cash, although if the crash comes then cash may not be the best asset to be holding. However, I need that cash to survive and I don’t want to see my crypto portfolio lose value. I will rather be in fiat and buy the future bitcoin dip just before the next halving in 2024.
It just means that 2022/3 will be some mighty lean years. I saw the bear market of 2018/9 and watched bitcoin plummet in value, dragging all the altcoins down with it. There is no crypto safe haven during a bear market cycle of two years or so. Except perhaps stable coins (not Tether though). If you don’t need any of your money to live off, then you could just hodl your bitcoin all the way through the crash and bear market, and wait for the next bull market if you have diamond hands and no need for cash.
I won’t be that flush financially so will need to take profit to eat and survive. It’s a pity to sell but everyone is different and my third world conditions and the lockdown have severely limited my normal income stream. I’m more dependent on crypto profits to survive right now. And if the next big market crash and global recession is around the corner, then some cash will be crucial.
It sounds dire when experts predict an imminent global financial crash but then the entire global economy is in very bad shape, so it appears inevitable. I know nobody likes bad news so just remember that the good news lies with us crypto hodlers for the next six months still, so we have that in our favor. By taking profit at the right time and avoiding the bear market crash, we can use our profits from crypto to survive the lean years until the next halving.
Then the challenge will be to still have some fiat available to buy the next bottom of the bear market. We need to repeat the cycle in 2024 when bitcoin bottoms out before the next halving. That will be a bigger challenge than last time if the world is in a recession. Cash will be scarce. No one can predict that far ahead though. Conditions are simply too uncertain on the planet. The Great Reset is under way and CBDCs are arriving. It could be a whole new world by 2024.
So let’s hope the coming burst of the “everything bubble” is still six months away and we can ride out this year’s bull market first. The current sluggish behavior of bitcoin and the altcoins right now is leaving us all in uncertain territory already but I’m more confident in the second leg of the bull market cycle playing out over the next six months than I am in most other predictions regarding the macroeconomic cycles of the planet. We have a window of hope and opportunity this year so I’m all in on crypto for now. My life depends on it.
(images pixbay)