Negativity takes over crypto after ‘Black Monday’ crash – Was Warren Buffett right all along?

There is a lot of fear among crypto and stock investors after Monday’s fall, which was compared in Asia to the famous ‘Black Monday’ crash of 1987. Even the normally very serene Wall Street Journal had that as the title for one of their editorials . Social media was flooded with memes showing how much crypto-investors lost in a single week.

All that is actually quite remarkable because although we have been off the top for a while, Bitcoin is still up with a very nice profit this year. Most stock exchanges also still have a positive figure for 2024. What will happen next?

Fear and greed

Both crypto markets and stock exchanges have a so-called panic gauge, known as the ‘fear and greed index’ for crypto and the ‘VIX’ for stocks. It shifted to ‘extreme fear’ on Monday and recuperated slightly on Tuesday. Investors are no longer used to declines like the ones we saw in recent weeks.

According to the VIX, the worst market events of our lives were the 2008 financial crisis, COVID, and the Bank of Japan raising interest rates by a quarter percentage point. pic.twitter.com/yyS7VwYyGT

— Douglas A. Boneparth (@dougboneparth) August 5, 2024

For Bitcoin, for example, Monday’s fall was similar to the volatility we noticed during the beginning of the Corona pandemic, when Bitcoin plunged from $8,000 to $6,000 in one day, only to be trading back above $10,000 just a few weeks later.

The largest digital coin started this year at a price of $43,000, reached a high of $74,000 and at the time of writing is trading around $56,800.

As already mentioned, still a very nice profit for the year.

But it is clear that nervousness is high. I don’t expect to write any articles in the coming weeks about memecoins that are climbing by hundreds of percent per week (like we did in March and April).

Omaha

Meanwhile, major investors are looking to Warren Buffett, the legendary Omaha investor. It was announced this weekend that he had converted half of his investments in Apple into cash last week, which turned out to be a stroke of genius at this point.

Elon Musk says Warren Buffett is "clearly expecting a correction of some kind or otherwise simply cannot see better investments than Treasury bills.”

After Berkshire sold nearly HALF of its $AAPL pic.twitter.com/rEIkhQ1Dn4

— Benzinga (@Benzinga) August 5, 2024

Buffett’s investment company Berkshire Hathaway, meanwhile, is sitting on a cash reserve of about $277 billion (in treasury bills), which would be worth much less if he had experienced last week’s tech correction.

Elon Musk, CEO of Tesla and the richest man in the world, said on social media: “He [Buffett] is clearly expecting a correction of some kind or otherwise simply cannot see better investments than Treasury bills.”

The next few weeks will show whether Buffett was right. The pressure now is on the Federal Reserve’s Jerome Powell, as investors and market commentators will urge him to give some signs of an upcoming rate cut in order to calm markets.

Problem is that the next Fed meeting is not scheduled until September 17 and 18, which is still more than a month away. Look like we’ll be biting our nails for a few more days at least.