FTX Collapse: This Is What a Crypto Bottom Looks Like

In June 2022, I wrote an email to my inner circle telling them that we might likely see the bottom of the crypto market in November. How did I know that? I have studied the sentiment of the crypto bear markets and I fully experienced one in 2018.

With Bitcoin at $30k, people were still saying, "buy the dip". I knew that was not the bottom. At the bottom, there is always despair. So much despair that even the biggest bulls give up.

The collapse of FTX was that gut-wrenching event. I know a few people who lost money. I know of someone who lost 45% of his net worth. I didn't see the FTX collapse coming. But I predicted that things would be this bad in November 2022.

Here is a snapshot of the email I sent in June 2022:

I didn't even send the email to predict the crypto market. I sent the email to talk about the incoming recession and how to prepare for it. And as you can see, crypto was point 7 on the list.

The point of this article is to answer 5 questions:

1. Can the bitcoin price go lower?
2. Is this a good time to buy?
3. Is it still okay to use centralized exchanges?
4. When will the bull market be back?
5. What is the best thing to do in a bear market like this?

So, let's start with the first question.

1. Can the Bitcoin Price Go Lower?

Yes! I predicted $17k or $15k as the bottom. And that has already happened. But it can go lower. However, I don't think it will get lower by much anymore.

And this is not because I am trying to be optimistic or sound encouraging. There is something you should understand about public markets. And that is leverage.

Leverage allows you to borrow money to trade. And leverage can only be done on sophisticated centralized exchanges. The point here is that there is a limit to their liquidity. Not all bitcoins are on centralized exchanges.

When most leveraged traders are facing a loss, they will have to make up for the lack of liquidity in some way. And it won't be the headache of people who don't have their bitcoins on centralized exchanges.

Those who have their bitcoins kept elsewhere and have no intention of selling will hold the price at a stable bottom. My guess is the bottom is around $15k. But that guess could be wrong.

Yes, the bitcoin price can go lower. But I don't think it can go significantly lower than it already has, even if more exchanges fail.

2. Is This a Good Time to Buy?

Every time is a good time to buy. There is no bad time to buy. There is only a wrong how. In crypto, it is not about when you buy, it is about how you buy. Find out more from my crypto book.

I strongly recommend against trying to game the system by timing the market. Timing the market will end in a bloodbath if you get things wrong. But a good strategy will have you protect the downside.

Every time is a good time to buy. You only have to buy with a strategy and not your feelings.

3. Is It Still Okay to Use Centralized Exchanges?

Yes, but be smart. Never keep a huge amount in centralized exchanges. Get a private wallet. You must have heard the saying; not your keys, not your coins.

Get yourself a cold wallet where the majority of your holdings will be. Only move to a centralized exchange what you want to actively trade. And from experience, I would say that you should not actively trade unless you are a professional trader.

Always have a reserve. Don't put yourself in a situation whereby the failure of an exchange will lead to huge losses for you. None of the crypto collapse have affected me thus far.

4. When Will the Bull Market Be Back?

I don't know. And frankly, I don't care. My best guess right now would be 2024 after the US presidential elections, if the recession is over by that time and QT is completed. However, I wouldn't take that prediction seriously.

The bull market is overrated. By the time it's here, it will be already late to make any incredible move that will make you a lot of money. The point here is that the bull market will come. It will arrive someday. Nobody knows exactly when. But the idea is to have a strategy that correctly positions you before that time.

If you seek to know when the crypto bull will return, you are already in a mental position to make mistakes or lose money. Crypto is still the wild wild west. Trying to time the market will end in tears.

But it will not always be bear. The bear doesn't last forever. Understand the cycle, play smart, and profit.

5. What Is the Best Thing to Do in a Bear Market Like This?

Build. This is the time I look for people building incredible things in this space. This is the time to get good heads together and build something that will revolutionize the world.

With all the tech layoffs, there are incredible talents on the market. Yes, the funding boom of 2020 and 2021 is gone. But projects that get funding during times like these are often solid projects.

Join groups of smart people with similar interests as you. Good ideas do come from conversations like that.

As I like to advise people in crypto during this time, if your idea will have you create your own token or coin before you have a product that people use, just drop the idea. The industry needs more use case products. We have enough blockchains already.

Even if you are going to eventually build your own blockchain, build a useful product first. This is not something that will be useful in the future. It has to be something useful today. Something that you would use today. Something that your friends, cousins, and schoolmates will gladly use today. And pls, not another centralized exchange.

Conclusion

With the FTX collapse, this looks like a typical crypto bottom. Although it can still go lower, but I guess it won't significantly anymore. However, no one can say for sure.

Don't try to time the market. Play smart. Only keep what you are actively trading on centralized exchanges. Keep your holdings on a good cold wallet. Not your keys, not your coins.

I rest my case.

P.S. None of this is financial advice. It is my perspective. Think for yourself and DYOR