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The S&P 500 closed more than 20% below its January all-time highAnd so, we entered a bear market. S&P Global Dow Jones Indices senior index analyst Howard Silverblatt confirmed the milestone.
While the index had fallen below that point in recent weeks, it had never closed below it, which is the official bear market marker.
According to CNBC reports, “Since the modern S&P 500 Index began in the late 1920s, the average bear market has translated into a 38% price decline lasting an average of nearly 19 months.”
The Great Depression saw the longest downturn, with a bear market lasting more than five years. The most recent bear markets, in the last two decades, have been caused by Covid-19, a housing market crash, and the tech bubble.
Now, we are facing a different kind of economic monster.inflation and not just any inflation But inflation is at its highest point in forty years, caused in part by massive spending packages passed in the wake of a global pandemic. Supply chain issues, also caused by pandemic shutdowns, help drive up prices. And at the same time, a major war is brewing in Eastern Europe.
With all the talk about crypto winters, you may not be aware of external global economic conditions. In fact, certain commentators and bureaucrats would have you believe that cryptocurrencies, and only cryptocurrencies, are experiencing a downturn.
They would ignore the day last month when the Dow lost more than 1,100 points in a single day. They would ignore the almost 900 point loss he had last Friday. But now, as the S&P 500 officially enters a bear market, it can no longer be ignored.
Traditional markets are also suffering. The crypto markets are not alone. Investor fear is high. As the Fed tightens interest rates, investors will be even more concerned. What is important to remember is that this drop is the product of external factors. And it is affecting both traditional and digital markets.
Of course, some projects have already succumbed to the economic conditions we face. Some projects will not survive. But as the economy as a whole begins to return to some semblance of normalcy, so will the digital asset industry. It’s important to remember that if you were impressed by the fundamentals of a certain project, the current valuation is just a reflection of economic conditions and investor fear.
When will the bear market for the S&P 500 end? Historically, after the index reaches its minimum and then increases by 20%. By that time, the rally will be well underway and many investors hoping to bottom out will have already bought back at an extreme discount.
The question becomes thisWhat projects do you think have long-term value? What projects do you think will alter the way the world does business? Which projects provide real value? If you can identify projects that provide that value and encourage innovation, then you are already seeing the light at the end of the tunnel.
Richard Gardner is the CEO of Modulus. He has been a globally recognized subject matter expert for more than two decades, providing complex insights and analysis on cryptocurrencies, cybersecurity, fintech, surveillance technology, blockchain technologies, and general management best practices.
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Disclaimer: The opinions expressed in The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrencies, or digital assets. Please note that your transfers and transactions are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl is involved in affiliate marketing.
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