Potential Altcoin Overhang Could Turn Into 'Unfortunate Snowball Effect' Amid FTX Concerns: Advisor

Bitcoin jumped above $26,000 reversing Monday's decline to three month lows under $25,000. Joining us now to discuss the crypto markets is Tact wealth Advisor Eddie Griffin. Welcome back, Eddie. Thank you for having me. Good to see you. So, uh you know, we saw a little bit of action uh in the markets when it came to uh shorts being liquidated. Uh that's helped bring Bitcoin's price back up uh above 26. Uh What are your, what are your thoughts here? And uh what, what are your thoughts on any uh potential bull market triggers? Well, uh we are in a time of year where uh investors generally speaking, are a little bit more risk off. August September are historically just like bad months in general for investors. So we're not seeing any difference this time around. Uh Obviously, we've had a lot of rallies and a lot of risk assets this year. So the question is whether or not this is, you know, uh investors taking a breather and looking to build positions or if this is investors unloading because there's something bigger on the horizon. You know, when we're looking specifically at Bitcoin and what's happened over the last couple of days. Yeah. Uh, you know, definitely had a little bit of a short squeeze recently. But if you look at it like more big picture broadly, we are below the 50 day moving average, uh, the 50 day moving average just crossed over the 200 day moving average, which in, uh, tech technical land is called a Death Cross, which is generally speaking very bearish. And so there's a, there, there's not a lot of um I guess optimism uh around Bitcoin uh right now, but you know, the, the so the way to play it would be to trade it, right? You know, um from a standpoint of in this scenario, what you're probably doing is selling the rallies, uh buying the dips that they're uh really large, but you have to have a long term conviction to Bitcoin right now if you're going to be in. And I think that that's where investors are kind of being tested right now. Is OK. How much do I really believe in this? The, the old adage sell Rosh Hashana by Yom Kippur, I think is the uh is what we would have in the, in the equities market back in the day. And Rohan is coming up in on Friday evening. So, uh I don't know if that necessarily holds in crypto, but it sounds like you think it might uh oh, sorry. No, no, go ahead. I I think that, you know, it, it doesn't matter like who you're dealing with. Investor psychology and investor behavior, uh really kind of always mimics itself. So when, when you're uh on edge anyways and things are starting to look a little bit unclear or, or more unclear, it's a lot easier just to say, hey, like, you know, we're up this year, let's take some money off the table and, and, and we'll wait until after September or we'll wait until uh we get a little bit more clarity, right? I mean, there's obviously a lot of stuff that we're looking at. Uh you know, uh if we end up getting a spot ETF approval, I think that'll be good uh in general, but the lack of liquidity out there and the fact that inflation is kind of creeping its ugly head back into the picture. I think that affects all risk assets and, and we saw that in 2022. Uh let's just hope that we don't have a super go in commodities that really crushes not only the stock markets, but the Cryptocurrency markets as well. Eddie, where is that optimism gonna come from? Do you think you mentioned this pending ETF approval? There's the Bitcoin having coming up. What, what are you watching? When do you think the next uh bull market is going to be triggered? Well, I think what you need to pay attention to is where we're at with moving averages in general, if we can get back above the 50 day moving average. And if we could see that 50 day cross back over the 200 day, uh We're, we're in a scenario where at least technically speaking, we're bullish. And so we need to see some type of trend develop to the upside. Now, the catalyst for that, I'm not sure yet. Uh a a cut in interest rates could definitely be a catalyst for that because that's typically good for any type of currency uh as the dollar becomes weaker against other currencies in that scenario. Uh The other thing is, is, yeah, if, if the timeline uh gets moved up and we see a faster approval on a spot ETF we would see potentially more money flowing into cryptocurrencies and, and Bitcoin in general. So I think that those are both two potential catalysts. Uh But I think that in general, when you look at the broad markets, whether you're looking at crypto or you're looking at stock market, looking at equities, everything just feels like there's a lot more downside than upside right now. So you just gotta be very careful and, and just make sure that you're very disciplined and in how you're trading it. Uh and, and if you have a position that you're really, really interested in uh dollar cost averaging for that thing over the next, you know, 12 weeks, uh just a little bit of over 12 weeks and forever and ever and ever should always be dollar cost averaging no matter what it is. Even if you're buying like, you know, oats or something like it should just always be dollar. No, I'm serious, like dollar dollar cost for the average investor. Like, you're not a day trader, you're not good at it. Let's not kid ourselves. So, I mean, I, I'm not saying you, Eddie, you, you're a fantastic trader but uh just the average person, you, you have a long term view of something, your dollar cost average. I the, the uh the thing that you brought up though, a couple of things with interest rate and the likes, I mean, those are still kind of far fetched. Uh not far fetched, but the potential of a, of a cut in interest rates any time soon doesn't seem to be something that we're going to see. But one thing that we might see here, uh Solana, as we mentioned at the top of the show, uh and the al coins potentially flooding the market over the next few weeks. And, and what have you, first of all, what's your take on that? Second of all, if there is a drop in the price of all coins, does that take down? Actually the, the major, if you will Bitcoin e do they go down or do they go up in, you know, kind of like a flight to safety? What's going to be the, what would happen in that situation. I think they're still down. I just don't think they're down as much. Obviously, if, if we were to kind of make a comparison to the traditional stock market, it would be small cap stocks versus large cap stocks. Right. So when you see that big selloff in anything and, and, and this is a potentially really big sell off, if you look at it from the fact that they can unload 700 million plus coins and there could be like no actual equity available of just Yeah, just salon, right? And, and, and then you have the ripple effects of everything else of like, oh my gosh, people that are following. Well, yeah, ok. Don't say ripple. We don't want to tweet, don't say ripple. We don't, we don't want to go there, right? Um But the the Yeah, yeah, the but, but the effects, you know, uh it carries over because not everybody is watching this show, not everybody understands that there's uh a reason specifically for Sala going down and because of that, they just might start dumping like everything. And so it could definitely turn into a uh unfortunate snowball effect. I think that uh that does create a buying opportunity though. Uh you know, any time you have a significant sell off and, and you know, the most recent example would be COVID where we saw markets go down by 35% in 20 days. That was a huge buying opportunity. So the there, there's definitely if you have some liquidity and we do see a 2030 40% sell off, I would say that that's an opportunity now, it's scary for most, but it's an opportunity for the people that are really invested uh have that investor mindset. So um what happens in that scenario? Uh There's not enough extra liquidity, we see it go down, we, we see Bitcoin and Ethereum kind of follow in suit by not by as much. Uh Maybe we see some money get repositioned and, and so it's a little bit more stable in, in the blue chips if you will. Uh But we, we kind of when you look at just Bitcoin in general, uh you know, that's in a very, very bearish condition right now so that, that, that could get real bad. Uh But I would look at that as a buying opportunity. I mean, don't, don't run away when things are going bad that that's the time to, to take the risk. You know, it's when everything is when we're up at 100,000, that's when we should be taking profits. Eddie, thanks so much for joining us this morning. It's always a pleasure having you on and hearing your perspective on the markets. Appreciate it guys. Thank you. That was active wealth adviser, Eddie Gifford.