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Will the Stock Market Recover?

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Will the Stock Market Recover?

The stock market’s volatility in the last few months has left investors wondering if further downside is in the cards or is it possible that the stock market recovers and sets new highs? Numerous micro-and macroeconomic factors affect markets, so it’s difficult to predict their future.

However, the stock market’s history has shown that corrections are normal. A price retracement doesn’t necessarily mean that a crash is imminent. Sellers may have temporarily stepped in, but higher buying pressure may resume the uptrend. Benzinga explored factors influencing a potential market recovery.  

Can the Stock Market Recover?

Rarely has the market gone up in a straight line in a bull run or straight down in a bear market. The market operates in waves, consisting of buyers and sellers battling for market positioning. 

Just because the price has dipped in a bull run doesn’t signify a reversal. Investors watched the S&P 500 lose 35% of its value in March 2020, then make a V-bottom and go on to set an all-time high in January 2022. The Dow Jones Industrial Average lost almost 40% of its value before also making a V-bottom and then setting an all-time high.

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Source: TradingView 

These two major indices have shown that the market can make a recovery after a significant crash. Recently, factors such as interest rates, geopolitical events and supply-chain issues have played a big role in determining stock market trends and are likely to determine the market’s long-term future.

Why is the Stock Market so Unpredictable?

The market consists of many participants, each with their own sentiments and needs. It’s the collection of those sometimes-erratic behaviors that determine market direction. Considering the market consists of numerous participants, it’s difficult to determine how they will position themselves.

Some factors that influence investor sentiment are news and events. Bad news is usually associated with the bearish sentiment so that may give investors an understanding of market direction. But even such factors don’t enable investors to determine how much the market will drop before a reversal.

The other problem with news affecting markets is that announcements are unexpected and cause drastic price volatility. And there’s always the possibility that the market may misinterpret the news, causing price action to counter sentiment.

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Emotions have a tremendous impact on markets. Fear and greed play a role in how investors trade, but the degree to which it affects market direction is difficult to determine. Although a fear and greed index attempts to determine sentiment, investors can’t rely on it to be completely accurate.

Company earnings and CEO resignations are almost impossible to predict, yet they affect markets. It’s common for company results not to match expectations, making sentiments swing and prompting traders to react emotionally — usually yielding adverse trading results.

Global economic indicators influence the market’s price. Even though a U.S. company is listed on the New York Stock Exchange (NYSE) or Nasdaq exchange, its operations may be international. So global events have a direct impact on its operations and market price.

Combining all those factors to determine price direction is extremely difficult, making the stock market unpredictable in the short term. It’s easier for investors to make money in the stock market by investing long term. Although the stock market is volatile and crashes, it’s shown to provide consistent returns over a long period.  

What is the Long-Term Outlook for the Stock Market?

The 2008 global financial crisis caused markets to crash. But some indices quickly recovered and have rallied since then to set all-time highs. Regardless of how severe crashes have been, the stock market has proven that it recovers.

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The key thing for investors is time and patience. The market needs time to recover, often several years after a massive crash. The Wall Street Crash of 1929 had devasting effects on economies, and hope was scarce. But just like prices go down after rallying, they can go up after a multi-year bear market.

Warren Buffett, one of the most successful investors of all time, stressed the importance of long-term investing. He stated that investors who weren’t prepared to own a stock for 10 years shouldn’t think about owning it for 10 minutes. 

Buffett follows a buy-and-hold investment strategy, requiring him to buy equities and hold them for long periods. One of the reasons Buffett believes in that strategy is that stock prices fluctuate during short periods, but strong stock fundamentals tend to provide significant returns.

Another strategy that Buffett follows is value investing. He spends several hours a day reading company financial reports and choosing stocks based on their overall potential. Value investing involves buying stocks that may be trading below their actual value. 

Bad news may cause traders to overact and result in short-term price volatility, causing the market to underestimate a stock. Value investors believe that a stock’s current price doesn’t correctly reflect the company’s strong long-term fundamentals.

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Are all Market Downturns bad?

No financial market has rallied without incurring a correction or a crash. It’s normal for markets to retrace after significant price action and to be in bear markets for years before rallying again.

Market downturns provide several benefits. Investors who fear missing out on a surging stock get another opportunity after a downturn. After all, the point of investing is to buy low and sell high. Some investors believe that a market downturn is a great position to buy stocks. It’s referred to as buying the dip or buying at a discount, with the belief that the stock’s price has temporarily lowered before it rallies again.

Traders can profit from rising or falling prices. If sentiment has turned bearish, traders can place a sell position and profit if the price goes lower.  

Falling prices also give investors an opportunity to assess their risk appetite. After experiencing plummeting prices, investors can determine if they can handle such volatility should it happen again. If they can’t, that investment has shown it’s not for them. They’ve determined their appetite to be risk-averse and should seek such investments. 

Compare Stock Brokers

Knowing which stocks to buy and when to buy them requires investing with a reliable stock broker that offers signals and trading education. Benzinga searched the market and found the best stock brokers.

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Frequently Asked Questions

Will the stock market recover in 2022?

Determining market recovery in any year is difficult because of the numerous factors that impact it. The market may recover in 2022, but nobody can state that with certainty. However, what has proven to provide market recovery is long-term investing.

Investors such as Warren Buffett believe that a stock yields the highest return when held for several years. Investing long term enables investors not to worry about short-term price volatility and rather concentrate on long-term potential.

Even if the stock market doesn’t recover in 2022, its history has proven that it will when given enough time.

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Should I pull out of the stock market?

Each investor should make their own decision about when to invest and when to pull out. A market correction doesn’t mean that it will lead to a crash. Prices may be dipping lower before reversing and making new highs.

It’s important for investors to determine market direction using technical and fundamental analysis. Using emotions to decide market positioning usually yields an incorrect decision. Trading decisions should be devoid of emotions.

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Biggest Movers: SHIB Surges 10% On Saturday, As NEAR Hits 2-Week High

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Biggest Movers: SHIB Surges 10% On Saturday, As NEAR Hits 2-Week High

SHIB was trading by as much as 10% higher on Saturday, as crypto markets were mainly in the green. NEAR was also higher on Saturday, prices having now risen for three consecutive sessions. Overall, crypto markets are up 2.73% as of writing.

Shiba Inu (SHIB)

SHIB was one of the notable movers in crypto markets on Saturday, as prices rose by over 10% to start the weekend.

The price of the meme coin rose to an intraday high of $0.00001178 in today’s session, which is the third straight daily gain in SHIB.

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As a result of Saturday’s surge, SHIB/USD is now trading nearly 50% higher in the last seven days alone, making it one of the biggest movers within that period.

SHIB/USD – Daily Chart

Looking at the chart, today’s rally has seen prices near this week’s high of $0.00001209, which is the highest the token has hit since May 31.

Should this week’s momentum continue upward, then bulls will likely attempt to recapture this point over the next few days.

A stumbling block could come via the 14-day RSI, which is currently tracking at a resistance point of 56.60, which is also its highest point since late March.

If SHIB bulls were to apply even more pressure on current bears, then we would likely need to see a breakout of this ceiling.

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Near Protocol (NEAR)

NEAR was another big gainer on Saturday, as bulls extended recent gains to a third consecutive session.

The world’s 25th largest crypto token rose to a peak of $4.39 earlier in the day, and this comes as its ceiling at $4.20 was breached.

The move sees NEAR climb to its highest point in over two weeks, with traders likely fixed on taking prices over $5.

NEAR/USD – Daily Chart

In order to do this, there looks to be a slight ceiling at $4.75, which bulls must overcome, if they are to recapture this level.

As of writing, the 14-day RSI is tracking at a three-month peak, which is also a point of resistance, and could potentially prevent prices from climbing further.

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Do you expect NEAR to break into the $5 level this weekend? Let us know your thoughts in the comments.

Eliman Dambell

Eliman brings a eclectic point of view to market analysis, having worked as a brokerage director, retail trading educator, and market commentator in Crypto, Stocks and FX.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Albania To Start Taxing Crypto-Related Income From 2023

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Albania To Start Taxing Crypto-Related Income From 2023

Authorities in Albania are finalizing regulations that will allow the taxation of income and profits from cryptocurrency investments. The government intends to begin imposing the levy in 2023, after adopting the necessary legislation which has been proposed for public consultations.

Albania Set to Impose Crypto Tax as Early as Next Year

The Albanian state should begin collecting taxes on income from crypto assets as of 2023 in accordance with a new income tax bill, the local English-language portal Exit News reported on Friday. The government also hopes to pass a number of other laws and bylaws this year in order to comprehensively regulate the matter.

The special tax legislation is currently open for public consultations. It introduces the concept of taxing crypto holdings and income derived from virtual assets. The latter have been defined as “a digital representation of a value that can be deposited, traded or transferred in digital form, and that can be used for payment or investment purposes or as a medium of exchange, including but not limited to cryptocurrencies.”

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However, the definition does not cover central bank digital currencies (CBDCs), the report notes. That’s despite a growing number of monetary authorities around the world developing a digital version of their national fiats. The list includes major powers such as the United States, the European Union, China, and the Russian Federation.

The Albanian law also defines cryptocurrency mining as an activity using computing power to confirm transactions and gain virtual assets in exchange. The extraction of cryptocurrencies has been a grey area although law enforcement has been going after illegal mining facilities in the country and pressed charges against some of their operators.

Under the new legislation, any income from crypto transactions or mining will be classified as corporate income when it’s received as a result of business activity. And when the beneficiaries are private individuals, they will have to pay capital gains tax of 15%.

Financial Watchdog Tasked to Expand Crypto Regulatory Framework

Earlier this month, the Albanian parliament ordered the Financial Supervisory Authority (AFSA) to prepare and adopt new regulations regarding cryptocurrencies by the end of 2022. Albanian law allows crypto trading platforms to legally work in the country but no licensed entities are currently operating in Albania, Exit News remarked.

Two years ago, Albania also adopted a law titled “Financial markets based on distributed ledger technology.” While many have welcomed the legislation, critics have questioned whether the small nation in South East Europe, still an EU hopeful, is capable of properly regulating its crypto sector to prevent it from being used for money laundering, something it’s struggling to achieve in the fiat space.

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The legislature referenced a recent report by the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (Moneyval), which recommended additional steps regarding the risks associated with cryptocurrency. In November 2021, the AFSA approved its first two regulations implementing the crypto markets law, which introduced capital and licensing requirements for entities working with digital assets.

Do you expect Albania to adopt comprehensive regulations for its crypto space by the end of the year? Tell us in the comments section below.

Lubomir Tassev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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NHL enters the NFT space partnering with Marketplace Sweet

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NHL enters the NFT space partnering with Marketplace Sweet Abdulrasaq Ariwoola · 42 seconds ago · 1 min read

The NHL partnership with Sweet will offer a variety of digital collectible experiences to its fans, tradable in the marketplace

1 min read

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Updated: June 25, 2022 at 3:59 am

Cover art/illustration via CryptoSlate

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The National Hockey League on Thursday announced its partnership with NFT Marketplace Sweet. This partnership will be the league’s first dive into digital collectibles.

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The partnership, of which the NHL’s players and Alumni’s association are part, will go live in October to mark the start of the 2022-2033 NHL season.

The NHL Marketplace

The NFT marketplace is expected to offer a range of experiences to NHL fans. Including digital collectibles that showcase historical moments, past and present season game highlights, and NHL stars top plays.

The marketplace will also feature gamified collection experiences, specialty packs, and 3D interactive trophy rooms where users can display their collections. Among these offerings there are also dynamic NFTs designed to change based on current team data.

Additionally, fans would be able to buy, sell, collect and trade the collectibles on the marketplace.

However, the announcement did not state which blockchain would host the marketplace.

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NFTs in the sporting space

The NHL  joins a long list of sporting institutions that have embraced digital collectibles.

In 2020, the NBA launched Top Shot NFTs, its digital collectibles marketplace, in partnership with DapperLabs. Likewise, the NFL launched its play and own NFT game while the MLB is to launch its NFT game soon.

However, the extreme sell-off in the crypto market has seen crypto companies pull out of sports deals. This is so as crypto companies strive to stay afloat as the severe sell-off continues in the market.

FTX recently pulled out of a partnership deal with Los Angeles Angels. Similarly, sources suggest a patch deal between NBA Washington Wizards and a crypto company has crashed.

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