Stocks and Crypto markets analysis – 25th January 2022

Market analysis

The Standard and Poors (S&P 500) index measures the performance of 500 public traded companies in the United States. To arrive at the index, one must multiply the number of shares by the market price for every company. The multiplication would be providing the market cap (short for market capitalisation) for each company. The sum of the market caps for every company gives the total value of the S&P 500 in monetary terms. The figure obtained is then compared to the previous day’s and converted into an index. An index makes it easier to compare different trading days.

The S&P 500 lost close to 10% of its value from the start of the year. A loss in value of an index is caused by a sell-off, i.e. when people sell more shares than they buy, causing the prices to decrease. The situation signifies a lack of faith in the markets.

An imminent Russian invasion of the Ukraine, inflation and increased interest rates are the likely causes of a sell-off. Investors tend to flock to safe havens like gold.

The markets experienced a crash in March 2020 – at the start of the COVID-19. The index since went from a low of 2250 to a high of 4790 in late December 2021. The market doubled its performance in one year nine months.

Even though there is a lot of fuss around crashes, these happen frequently.

While no one knows how long the sell-off will continue, the S&P 500 rebounded with a 4% gain. While this is too early to see if the sell-off will continue, the positive news is a ray of home. However, the situation may be a dead cat bounce, a false hope during a negative economic period.

Other indices similar to the S&P 500s include the Nasdaq 100, Dow Jones Industrial Average, NYSE Composite, etc.

Certain chartists observed that trends in Nasdaq 100 and the S&P 500 indices could explain movements in the prices of Bitcoin. According to Bloomberg, the 40-day correlation coefficient for Bitcoin and the tech-heavy Nasdaq 100 index has reached almost 0.66.

In a nutshell, this means that one unit of change in these two indices explains a 66% change in the price of Bitcoin. Correlation is another word for relationship. The close the correlation to 1, the more related the two are. The closer to zero implies that one does not explain the movement.

Good news?!

It’s too early to say. However, it would be better to wait for other indicators, such as the number of consecutive increases in the market indices.

Most people tend to buy stocks when prices are exaggerated and sell at low prices. This strategy makes people lose money.

Ideally, one should buy at low prices and sell at higher prices. At the same time, no one knows whether the market will tank or do well. A good strategy is a long-term one – “get rich slowly.”

I define long-term as more than five years, even as long as ten years. I don’t day trade, and I consider fundamentals. Fundamental analysis looks at the company’s economic value rather than the market value. Unlike technical analysis, which looks at the charts and indicators, fundamental analysis looks at components like the company’s management, regulatory environment, partnerships, etc.

I only use technical analysis as potential entry points to purchase stocks and crypto that I consider good fundamentals. Short-term prices don’t affect me as long as the fundamentals remain intact.

I consider the list of crypto below as having good fundamentals as a long-term investment.

Ranking by
Market Cap
CoinsCurrent Price
1  week
price change
Coin Type
6Cardano €0.95-30%Web 3.0
8Solana €82.00-33%NFT
15Polygon €1.34-31%Other €0.33-16%Exchange token
33Decentraland €1.85-29%Metaverse
41Sand €2.66-35%Metaverse

The current correction may be considered an ideal period to accumulate a few of the coins above.


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