S&P 500’s Bear Market Illustrates How External Actors Have Affected Crypto


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The S&P 500 closed more than 20% below its all-time high, set in January – and so, we enter a bear market. S&P Global Dow Jones Indices senior index analyst Howard Silverblatt confirmed the milestone.

While the index had dropped below that point over the past few weeks, it had never closed below it, which is the official marker of the bear market.

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 almost 19 months.”

The Great Depression saw the longest decline, with a bear market lasting for over five years. More recent bear markets, over the past couple of decades, have been caused by Covid-19, a housing market collapse and the tech bubble.

Now, we face a different kind of economic monster – inflation. And not just any inflation – but inflation that is at its highest peak 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 closures, help to drive prices higher. And at the same time, there’s a major war brewing in Eastern Europe.

With all of the talk about crypto winters, you might not be aware of the external global economic conditions. In fact, certain commentators and bureaucrats would have you believe that crypto, and crypto alone, is seeing a downturn.

They would ignore the day, just last month when the Dow Jones lost more than 1,100 points in a single day. They’d ignore the nearly 900-point loss it took this past Friday. But now, as the S&P 500 officially enters a bear market, it can no longer be ignored.

Traditional markets, too, are hurting. Crypto markets are not alone. Investor fear is high. As the Fed tightens interest rates, investors will worry all the more. What’s important to remember is that this dip is the product of external factors. And it is hitting traditional and digital markets alike.

Granted, some projects have already succumbed to the economic conditions facing us. Some projects won’t survive. But as the economy as a whole begins to return to some semblance of normalcy so too will the digital assets industry. It is important to remember that if you were impressed by the fundamentals of a certain project, the current valuation is only a reflection of economic conditions and investor fear.

When will the bear market end for the S&P 500? Historically, after the index hits its low and then increases by 20%. At that point, the recovery will be on, and many investors waiting for the bottom will have already bought back in at an extreme discount.

The question becomes this – which projects do you believe have long-term value? Which projects do you believe will alter the way the world does business? Which projects provide real value? If you can identify projects which provide that value and encourage innovation, then you’re 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, offering complex insight and analysis on cryptocurrency, cybersecurity, financial technology, surveillance technology, blockchain technologies and general management best practices.


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Featured Image: Shutterstock/Tithi Luadthong/Natalia Siiatovskaia

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