Market Sell-off


After 8 consecutive years of Bull Market, the Dow Jones Industrial Average (DJIA) index, on yesterday, finally met the sell-off, slumped 1,033 points, in which many traders didn't anticipate the pitfall. Conversely, many well-known investors and analysts, in fact, had already issued warnings in months ago abt this correction to come. Even me not an expert had posted a teaser in my personal FB account that the DJIA'll have a 2,500pts correction soon coming on Feb 4 afternoon, right before the Monday's ~1,000pts slide. Of course, press media mostly pointed out the sell-off was triggered by the fear of inflation in after all. But historically, except in 2011, the US inflation rate, has maintained at ~2% since 2009 after the Bubble Burst, shouldn't cause severe fears to the investment firms and bankers. And my question is what really tipped off the correction?

The whole reason I write abt this here is to inspire some long-term investors to take deep thinking and reexamine their current investment strategy before they lost their fortune in the next "Crash". As well, review this selloff from a different prospective. I never enjoy getting involved into any intensified political or economical conversation bc most of time it ended up to become a pointless argument. Even being so, I would always like to warn all my associates ahead of time to prevent noteworthy loss in their investments.

In here, no detail evidence will be laid out. Or any economy thesis is going to be shared. Rather, all I wanted to point out is one of my observations for you all to study and decide what is going on in the investment market, particularly how the current stock and bitcoin market are possibly being manipulated by a group of people, in a matter of fact, I strongly believe in (Not Day Traders or Speculators, but, at some degrees, their participation did also contribute some minimal efforts to the sell-off). Not a conspiracy theory. To me, the global economy reaches a very dangerous point that it'll collapse at any given time if this group is deliberately seduced by greed and can't no longer leverage/obtain more capital to cover their loss in either market.

Starting from the week of Nov 24, 2016, the trade volume of Bitcoin dramatically hiked up and its price too spiked up to ~100X multiplier (figure 1). Also, be kindly noticed that the Bitcoin in Circulationis very steadily grown since Jul 09, 2016 without any hiked supply, and its Market Price and Market Capitalization stayed relatively flat until late Nov 2016. Coincidentally, at abt the same period, the trade volume of DJIA has suddenly doubled from the average trade volume comparing to the last 8 years recorded (figure 2). Since then, both Bitcoin and DJIA price indexes are growing in a very, very similar trend. Where are those capital coming from?

Furthermore, there's a strong reason why multiple governments in worldwide are now stepping in to strictly regulate the trading of Bitcoin and other Cryptocurrencies is to impede criminal activities like the money laundry and stop the worst of all, the infiltration of the Monetary and Finance System. On Dec 11, 2017, the U.S Securities and Exchange Commission (SEC) Chairman, Jay Clayton, had already issued the "Statement on Cryptocurrencies and Initial Coin Offerings" to address some of the public concerns. In this case, I foresee the SEC will soon take unyielding action to all Cryptocurrencies and ICOs trading in a matter of time after their full investigation's completed.

In regardless of whether my observation is wrong or right, please always make cautious decision in your investment strategy.

My Advice: "Don't Put All Your Eggs In One Basket."

(Figure 1. Bitcoin Trade Volume Chart)

(Figure 2. DJIA Index and Trade Volume Charts)

Ref.

1. What Bitcoin Says About the Next Move for Stocks (Feb 12 by Barron's)

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