Written by Allesia Pomopliana
* The meme on everyone’s lips today is IMPEACHMENT !
The latest allegation from U.S. president Donald Trump’s former lawyer Michael Cohen, who, next month will be incarcerated in a federal prison for three years, claims, that President Trump instructed him to “Make it Happen” –as reported by BuzzFeed and every other daily last week.
If the president did in fact say “Make it happen“ … the prospect of impeachment will hit critical overload, and when the fuse blows in Washington DC, the lights flicker on Wall Street and around the world.
During the last impeachment in the late 90s, Standard & Poor’s 500 fell almost 20% in the month or so leading up to President Bill Clinton’s meltdown, of which he was acquitted. Unlike today however, Clinton’s impeachment occurred during a bull market and strong economy. In 2019, we’re in a long winding recession and a bear market, so if the president IS taken down, the net result could be even more dramatic then the last time. The market recovered quickly during Clinton’s scandal and even set a new all-time high AFTER he was acquitted, but that was then and today’s global markets are much more volatile.
The takeaway here is that if there IS an impeachment, history tells us there’ll be a substantial correction, and when that happens opportunities present themselves, often fleetingly, so you have to be prepared.
During Nixon’s Watergate impeachment in the 70s, Wall Street, like today, was also mired in one of the toughest bear markets in history, and consequently, S&P, in a one month period dropped 14% – the stock market lost 42% of its value.
So, what does this mean for crypto?
Crypto is due for a shot of mainstream confidence, and needs to get up and run with conviction. It’s time to think strategically and stake a claim in the big game on the big boys’ financial battlefield.
When corporations are distracted with heavy loss, that’s the time to throw them a life-line and offer a solution. For example, show them how to reduce expenses by adopting a crypto portfolio and how to leverage blockchain technology to support it! In uncertain times small steps are sometimes all that’s needed to get executives who are wavering on the fence to explore alternatives in the name of a tighter and more cost efficient spreadsheet.
Crypto, working in tandem with blockchain can do that,
but c-suite executives, the gatekeepers, they don’t know it … at least not yet.
CCN recently reported, that as fear in markets goes down, Bitcoin’s price increases, and conversely, as fear in the markets goes up, Bitcoin’s price drops. Consequently, it means that Bitcoin is a RISK-ON investment as opposed to traditional investments like gold which, are RISK-OFF.
There is also strong speculation that in an extended bear market, cryptocurrencies will likely do worse than their stock counterparts. The good news, if this trend is accurate, is that in a bull market, crypto could do better. Again though, it’s speculation based on recent corrections.
In the long term, Bitcoin’s fall from grace isn’t all bad. The sell off could attract institutional investors who missed out on the 2017 run, and when they see the price troughing, it might be all the incentive they need to buy the dip of this relatively new asset class.
If the price drops to the 2,000 dollar range, it’ll be hard for institutional investors to ignore the possibility of a second run-to-profit in both the short and long term. If Bitcoin settled on a base price of 1,500 dollars or lower, it would signify that the asset is becoming a reasonable investment vehicle.
Now, if this happens, it means that crypto will be more closely tied to traditional fiat stock markets, which also means that new traders not familiar with Wall Street had better improve their knowledge base, because overnight, Bitcoin could go from being a gamblers bet to becoming a legitimate investment. It will be important for example to know the difference between the Dow, Nasdaq, and S&P 500, which I’ll cover in my next Crypto Trading Update.
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