The everything crash is here, here’s why it will most likely get worse:
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HOW MUCH MONEY I’VE LOST INVESTING:
My stock portfolio is down 16% – I’ve lost close to $100,000 year to date. So stocks are obliterated. My crypto portfolio – I’m down over a 100%, I used to have $1.2 million at the peak – now it’s worth less than half that. The only thing that’s not doing so bad is real estate, and that’s only because real estate moves at a turtle’s pace but the pain is coming there too.
WHY IS EVERYTHING FALLING?
Here’s the explain like I’m 5 version of why everything is falling apart. Let’s rewind 2 years ago. We got the 2020 global pandemic – and people were let go. In response – the market was given an elixir of revival and it got drunk from all the free money from the government, to stimulate it even more – we dropped interest rates to 0 and flooded the economy with money.
The stock market became insanely happy, and it went on a 2 year binge where it partied like no tomorrow. Tech stocks took off, companies that weren’t even profitable were trading at crazy valuations, risky speculative stuff like NFTs flourished, people were buying pictures of rocks for over a million dollars, the average price of a house went to $428,000 and crypto went to the moon.
Now the buzz is slowly starting to end and we’re seeing who partied a little too hard. That’s the eli5 version.
WHAT’S THE TECHNICAL BREAKDOWN?
One of the reasons is – we got the CPI data in – the thing we use to measure inflation and Economists expected 8.1%, but we got 8.3% – rent, food, airline tickets and new cars were the biggest reasons inflation was high in April.
The glass half full way to look at that is it’s .2% lower than March when we got 8.5% so this could be a signal that we’re headed lower because we finally seen the worst of inflation. We’re cooling off. That’s the glass half full.
The glass half empty way of looking at it is – 8.3% is still insanely high. Normal inflation needs to be 2-3% and there’s no guarantee we’re slowing down. In fact if we look at the popular “core inflation” metric which doesn’t include food and gas prices – we actually doubled – from .3% in March to .6% in April. So in reality – even though the overall number is slightly smaller – inflation isn’t really slowing down.
WHY IS CRYPTO CRASHING THOUGH?
Crypto crashed partially thanks to Terra Luna which crashed over 99% of it’s value. Here is a more technical breakdown thanks to OnChain Wizard:
In a nutshell: it was a billion dollar attack which forced the Terra Luna foundation to start selling off Bitcoin to keep the peg of Terra to $1. If the attacker covers their “short” position – they’ll stand to make over $800 million in the process. Even though Bitcoin wasn’t directly affected, the price was indirectly impacted.
IS THE MARKET GOING TO GET WORSE?
Most likely, watch the video to find out how.
*None of this is meant to be construed as investment advice, it’s for entertainment purposes only. Links above include affiliate commission or referrals. I’m part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.