Just so you know that the stock and crypto markets are for full grown men and women. What you see happening right now in these two markets are not new. Part of it is a reflection of the global economic post the first wave of COVID-19. There is also manipulation from the financial institutions that include hedge and mutual funds.
To understand what I am referring to, you need to take a look at what was going on at these markets for the last three months. Notice as the stock market has been bearish for the past three months from March to May even if the major index S&P 500 (SPY) did not get affected for the most part, the crypto market was in a bullish trend during that period. In fact, many financial experts had already referred to the term “crash” for the stock market during the last three months, in exception of a few, such as Cathie Wood who has urged the investors and traders to buy the dips (Purchase when prices drop with the belief that prices will go back up).
What effects did the term “crash”, alluded to the stock market by some financial advisors, have on investors and traders?
It has stimulated a financial tension, which has led many investors and traders to leave the stock market by fear of losing their capital. They sold off their entire investments which has plummeted the stock market even further. Thus, this has created a “domino effect” where one event generates a series of related events. Ideally, selling off your investments before an alleged “market crash” would make perfect sense in terms of risk management, which is to me the most important concept for investors; however, there is a missing piece here.
Many of these investors, after leaving the stock market, have transited to the crypto market in hope they will catch up the next bitcoin since the crypto market was blooming. Unfortunately, it seems like they were a bit late (not necessarily) to the party. After they were forced to sell off their entire portfolio in the stock market at lower prices because of market manipulation, they went on to buy many cryptos that their prices were already very high. What they have seemed to miss is the rulers (the powerful financial institutions) that mostly decide the direction of the markets are everywhere. There you go again; these institutions have been taking their profits in the crypto market at its high peek with no regards to the new investors who bought at the same peek. As a result, this creates another financial panic where the newly crypto investors are selling off their cryptos at the dips after the initially bought them at the peeks. Meanwhile, the powerful financial institutions are buying at discounted prices what the just sold off for significantly high prices.
As I stated earlier, the stock and crypto markets are for full grown men and women. My suggestions to anyone who plans on investing in the stock and crypto markets are please ensure that you understand the psychology of investing and trading. Also, research about fundamental and technical analyses. Lastly, the most important one to me is to learn about money management before you make any move in the market.