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The foremost investorsThe analyst and economist who became very popular in mainstream financial circles after the release of the film Big Short, shares important charts investors should see before entering a highly leveraged market and betting on a full recovery.
The S&P500 chart shared in a recent tweet clearly shows the dynamic market witnessed nearly 20 years ago. During the Dot-com bubble, there were at least two attempts by the market to breakout, all of which failed.
Possible. pic.twitter.com/VrIL3OuE9f
— Cassandra BC (@michaeljburry) January 24, 2023
Considering the high dependency between traditional and digital asset markets, we may see the right scenario occur in the future as cryptocurrencies and traditional assets slowly reach local resistance levels, which might confirm Burry’s theory.
The phenomenon that caused the move is related to the psychological thinning among investors after months of unstoppable downside in the market. Once the majority of the big players have given up and the market is left without liquidity and interest, the slightest occurrence of buying activity from a retail investor is enough to propel the asset forward.
Fundamentally, things for crypto and traditional markets have not changed. Financial regulators are still pushing a tight monetary policy narrative and are now willing to ease it until the world inflation target is achieved.
Due to high interest rates, investors show less demand for risky assets like cryptocurrencies, stocks, etc. However, when the market is severely depressed and most institutional players allow it, retailers take control and start pushing their selected assets upwards. However, without institutional support, significant moves will not occur, and eventually all the buying power that emerges in a bear market turns into fuel for further declines.
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