Interpretation of cryptocurrency market on March 11th, 2023
Last night's non-farm payroll data exceeded expectations, which is positive. But the unemployment rate was also higher than expected, which is positive. The two data are consistent, reflecting the decline in stocks and the rise in increments. Combined with the layoffs of the tech giants, we can infer the situation of the U.S. job market: high-wage earners are losing their jobs, and jobs with average income are increasing. The overall picture should still be bearish.
But the crypto market bounced back, and yesterday's decline did not originate from counting the Fed's rate hike but rather a sudden black swan event or even a warning of a black swan. Now Silicon Valley Bank is also up for bankruptcy liquidation. The bankruptcy of a small bank will have a little material impact. It is a signal to suggest a possible future crisis. Once it rises to systemic risk, there is still room for all the current risky markets (U.S. stocks, crypto sector) to decrease.
But any crisis that can be seen should not evolve into a substantial problem. The Federal Reserve has the ability and obligation to avert a crisis.
Making significant probabilities and preventing little possibilities is the constant theme for investment. Blindly betting on important probability events, holding a fluke to believe that a small likelihood will not happen is not desirable. It is even more undesirable to bet directly on small probability events. Previous strategies have been designed to do this. For example, after the price of BTC falls through 21,000, only low-risk long-term positions are retained, and short-term funds need to be freed up to catch up after the subsequent move. Or, in the crisis, continue to buy cheap chips, the trading ability can be appropriate to open short hedge long term positions, is the prevention of small probability.
The final result to be achieved is a significant probability event that occurs to make money. A small probability event occurs, not to lose or loss within the range of tolerance. A significant probability of occurrence can earn, slight chance of occurrence can also make. There is no such option for both.
But the crypto market bounced back, and yesterday's decline did not originate from counting the Fed's rate hike but rather a sudden black swan event or even a warning of a black swan. Now Silicon Valley Bank is also up for bankruptcy liquidation. The bankruptcy of a small bank will have a little material impact. It is a signal to suggest a possible future crisis. Once it rises to systemic risk, there is still room for all the current risky markets (U.S. stocks, crypto sector) to decrease.
But any crisis that can be seen should not evolve into a substantial problem. The Federal Reserve has the ability and obligation to avert a crisis.
Making significant probabilities and preventing little possibilities is the constant theme for investment. Blindly betting on important probability events, holding a fluke to believe that a small likelihood will not happen is not desirable. It is even more undesirable to bet directly on small probability events. Previous strategies have been designed to do this. For example, after the price of BTC falls through 21,000, only low-risk long-term positions are retained, and short-term funds need to be freed up to catch up after the subsequent move. Or, in the crisis, continue to buy cheap chips, the trading ability can be appropriate to open short hedge long term positions, is the prevention of small probability.
The final result to be achieved is a significant probability event that occurs to make money. A small probability event occurs, not to lose or loss within the range of tolerance. A significant probability of occurrence can earn, slight chance of occurrence can also make. There is no such option for both.
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