Longevity Risk
Bear markets end in less than 200 days, or they tend to extend beyond 300
Usually you hear this phrase with respect to retirement income planning. The #1 fear of retiree’s is that they will outlive their money or said another way that they will run out of money.
That’s not the type of longevity risk that I am referring too today though.
If you are active on CT (Crypto Twitter) you hear exasperation in the voices of many an anon PFP (Profile Picture). I guess they didn’t want to shorten that to PP, for what reason I can’t imagine. There is a constant search for bottom signals, capitulation, and a menagerie of other terminology that equates to the broken hopes and dreams of many basking in their collective agony of being “down bad”.
Pictured is one of the 14,999 NFTs minted recently in the highly anticipated y00ts release by the DeGods team lead by founder and CT legend: Frank. I loved the fact that they did a combination approach to rewarding their most loyal DeGods holders with the ability to mint using their utility token DUST, which can be bought and sold on places like FFF Token Market or Jupiter. However, unfortunately in this type of market many NFT holders and traders are in fact “down bad” and aren’t smiling, wearing gold chains, or fur coats.
I’d caution anyone reading this to get sucked into the mentality that the bear market is almost over. I’ve heard friends jokingly say that it’s time to mortgage the farm and go all in $BTC
The below chart is a bit cluttered, but if you look at it carefully what you are seeing are a number of different bear markets throughout history and they all have an interesting gap where no bear market has troughed within the 200 to 300 day timeframe. If we were to trough within that period 2022 would be the first bear market since 1927— barring cherry picking points within prolonged bear markets that lasted well more than 300 days.
If you’ve read any of my past market related posts you’ll recognize that I am of the belief that the crypto market is leveraged bet on risk assets aka stonks, because the data shows it.
I started writing this article on Monday, November 7th — a lot has happened in the last 24 hours with Solana dropping into the teens from the high 30’s within just a few days.
If you think this is a bottom signal then you’ve never traded a bear market before. We will see some green days and weeks within the broader context of a bear market that will make you feel like you want to get bullish, but in fact they are bear market traps.
The global macro environment with rampant inflation and declining growth as reserve banks around the world continue to be hell bent on raising interest rates is NOT an environment that makes me bullish nor should it you. I’ve been writing and saying for a while that it was likely Solana would make it into the teens before we get out of this, but I continue to not be bearish enough with my thoughts so perhaps we should expect a move towards single digits not teens.
However, this article isn’t meant to be about bottom picking. It’s meant to help you identify the broader trend at play and how much longer we could be in the rough and choppy seas of a bear market. The best thing to do is to protect your capital in these environments, survive, and then thrive when the clouds part and the storm subsides.
Longevity risk is your ability to survive long enough to get to the other side and make profits again when brighter days inevitably return. It just could take a LOT longer than you hope or expect.
Thanks for stopping by The Metaverse Illuminated, I trust this edition has brought more to light for you. Remember, you call the shots, take what works for you, discard the rest.
Stay alert for the next edition of TMI, until then you can follow me on my: socials.