If you are reading this, congrats – you survived Febocalypse!
It was to be expected due to its rapid growth and assimilation into the mainstream population. Unfortunately, we were the ones to experience it. The God of Trading gave my portfolio a solid spanking. We all know that no asset continues to grow upwards forever, without any sign of a correction.
Whilst I don’t know the real reason as to why this happened, I can explain some of the potential factors as to why this created a perfect storm of disaster for the trading world and decimated
Febocalypse potential catalysts
- Correlation between bond yields and stocks. Bond yields are on the rise. This lead to the Fed Reserve raising rates. In doing so, it cooled down the sensational start stocks had to 2018 (I don’t remember anyone complaining that their stocks had gained 10% in the first few weeks of Jan!)
- When stocks cool down, the hype goes away and people start to sell. Everyone from the Asians to Europeans, Australians and the US were dropping stocks like it was fashionable.
- Correction of the indices – Indices had seen a phenomenal rise this year – the Dow was already up 8%
- The market, in general, was beginning to become overvalued and it was losing its touch. Many people were halfway to the moon with their cryptos in December, then January came around and smashed a lot of the traders… then those brave souls who HODLd got smashed again. There were stories of countries banning cryptos and crypto exchanges being hacked as well. So, all these contributed to the fear and misunderstanding of cryptos and ultimately a massive sell-off.
I personally lost about 12% of my portfolio‘s value over that week, it gained some traction last night and hopefully, I’ll be back in the green by the month’s end but I’m willing to ride out these waves as it most certainly won’t be the last.
Take a moment for our poor friend Warren Buffet – he lost $5billion off his personal wealth… that’s a lot!… I wonder if he would be a popular investor on eToro??
Anywho – that’s my brief take on what potentially influenced what happened this last week!
What do you think happened?